K+s AG · XETR:SDF
K+s — K+S Aktiengesellschaft — Investor Presentation (February 2006)
67 slides from K+s's investor presentation, February 2006
Slide 1: Experience growth.
K+S Group - February 2006 Experience growth. February 2006 K+S Group 0
Slide 2: Growth Lies at the Heart of Our Vision
K+S Group Growth Lies at the Heart of Our Vision K+S is one of the world‘s leading suppliers of speciality and standard fertilizers, plant care and salt products. Achieving healthy and sustained growth is our goal as a company and a challenge at the same time. We offer agriculture, industry and priv
Slide 3: Content
K+S Group Content A. The K+S Group Business Model B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Business Segments D. Strategy and Outlook 2005 E. Financial Data: - Financial Year 2004 (German GAAP) - IFRSs Impact - 9 Months 2005 (IFRSs) F. K+S Share February 2006 K+
Slide 4: Business Model
K+S Group Business Model Core business Core business fertilizers and plant care salt Potash and Magnesium COMPO fertiva Salt Products KTG Waste K+S AG Services Management Support and and Recycling Functions Trading Complementary business and support functions February 2006 K+S Group 3
Slide 5: Worldwide Presence
K+S Group Worldwide Presence Overseas Europe Kassel Revenues by region (2004) - Germany 23.2% - Rest of Europe 53.8% - Overseas 23.0% Production Sales February 2006 K+S Group 4
Slide 6: Content
K+S Group Content A. The K+S Group Business Model B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Business Segments D. Strategy and Outlook 2005 E. Financial Data: - Financial Year 2004 (German GAAP) - IFRSs Impact - 9 Months 2005 (IFRSs) F. K+S Share February 2006 K+
Slide 7: Fertilizer Business
K+S Group Fertilizer Business z Global food production has to increase despite limited availibility of arable farm land worldwide (steadily increasing world population, rising qualitative demand) z As a consequence fertilizing with key nutrients nitrogen (N), phosphate (P) and potash (K), but also i
Slide 8: Fertilizer Business - Gene Technology
K+S Group Fertilizer Business - Gene Technology z Objectives of gene technology: - improved crop resistance against broad-band herbicides as well as pests and diseases - breeding of plants with elevated use value for the customer z Cultivation of genetically modified crops (GMO) mainly in the USA, A
Slide 9: Market Impact on Fertilizer Suppliers
K+S Group Market Impact on Fertilizer Suppliers +++ very strong Relative market impact ++ strong per class of nutrient + low o very low/non existent Nitrogen Phosphate Potash (N) (P) (K) K+S + o +++ Agrium +++ +/o + Kemira GrowHow +++ + o Mosaic + +++ ++ PCS ++ ++ ++ Yara +++ o o Explanatory note: T
Slide 10: Potash and Magnesium Products
K+S Group Potash and Magnesium Products IFRSs HGB * Key figures (€ mill.) 2004 2003 Revenues by product group Revenues 1,031.2 1,004.7 (in %) Operating earnings 69.3 31.6 * German GAAP Brief description Crude potash and magnesium salts are extracted from six mines in Germany and form the basis for t
Slide 11: World Potash Capacity, Production and Demand
Potash and Magnesium Products World Potash Capacity, Production and Demand Million tonnes Technically available Capacity z Significant increase in demand (incl. announced capacity expansions) during the last years 70 Production z Shortfall in Eastern Europe demand (incl. announced capacity expansion
Slide 12: MOP Prices for Selected Markets
Potash and Magnesium Products MOP Prices for Selected Markets Overseas Northwest Europe USD / t (standard, cfr) USD / t (standard, fob) 240 160 158 Thailand/Taiwan 218 220 Brazil 150 200 213 140 180 130 160 120 140 110 120 100 100 90 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 13: Agricultural Potash Consumption by Region
Potash and Magnesium Products Agricultural Potash Consumption by Region Index 1980/81 = 100 Index 1980/81 = 100 300 300 World Developed markets 250 250 North America, Western Europe, Australia, Japan 200 200 150 150 100 100 50 50 0 0 80/81 84/ 88/ 92/ 96/ 00/ 03/04 80/81 84/ 88/ 92/ 96/ 00/ 03/04 In
Slide 14: Potash Production and Potash Sales by Region
Potash and Magnesium Products Potash Production and Potash Sales by Region Million tonnes 19.6 16.9 19.8 11.5 8.6 7.7 4.1 6.6 10.1 1.3 0.6 World potash production World potash sales: incl. sulphate of potash 2004: 53.0 mill. t 2004: 53.8 mill. t and low grade potash 2003: 48.3 mill. t 2003: 48.6 mil
Slide 15: Supplier Structure on the World Potash Market
Potash and Magnesium Products Supplier Structure on the World Potash Market 35.2% 23.6% 12.6% 9.6% 7.8% 6.4% 3.6% 1.2% Canpotex: BPC: K+S ICL Silvinit APC SQM Others z Mosaic Belarus- z Group: participation paticipation China, of PCS of PCS Intrepid, z PCS kali z DSW CVRD, z Agrium Uralkali z z Iber
Slide 16: USD Currency Management 2005-2008
Potash and Magnesium Products USD Currency Management 2005-2008 z Revenues less overseas freight costs and a safety margin are hedged 3 years in advance by means of double barrier options z Double barrier options: no classic hedging mechanism, only effective within certain barriers; restructuring in
Slide 17: USD Double Barrier Option System
Potash and Magnesium Products 1,60 USD Double Barrier Option System 1,55 1,50 USD/€ 1,45 1.45 1,40 1.40 1,35 1.35 1,30 1.30 1,25 1.25 1,20 1.20 1,15 1.15 1,10 1.10 1,05 1.05 1,00 1.00 1 Jan. 1 July 1 Jan. 1 July 1 Jan. 1 July 1 Jan. 1 July 1 Jan. 1 July 30 Dec. 2004 2004 2005 2005 2006 2006 2007 200
Slide 18: Potash and Magnesium Products Strategy
Potash and Magnesium Products Strategy z Focus on the European market als well as on important overseas markets in the case of potash z Expansion of global market leadership in potassium sulphate and magnesium products z Consistent development of the product refinement strategy in agriculture and in
Slide 19: COMPO
K+S Group COMPO IFRSs HGB * Key figures (€ mill.) 2004 2003 Revenues by segment Revenues 525.1 490.4 (in %) Operating earnings 23.9 25.4 * German GAAP Brief description Consumer business: comprehensive assortment of high-quality branded products such as potting soil, plant care products, lawn and ga
Slide 20: ENTEC - New Ways in Nitrogen Fertilization
COMPO ENTEC® - New Ways in Nitrogen Fertilization ENTEC® represents an important innovation in the nitrogen fertilization: The more efficient nitrogen use of stabilised fertilizers has been proofed in more than 1,000 trials, conducted by BASF R&D-department and other independent agricultural institu
Slide 21: COMPO Market Position in Western Europe
COMPO Market Position in Western Europe Market volume 2004 € 2.1 billion *) 20% COMPO *) estimate; market volume based on producer prices February 2006 K+S Group 20
Slide 22: COMPO Strategy
COMPO Strategy z Development of market leadership position in Europe using high quality products and strong brands z Further development with innovative products z Growth through acquisitions and cooperation arrangements - additional geographical markets - larger, market-oriented product portfolio F
Slide 23: Advantages of Joint Production of fertiva/COMPO
K+S Group Advantages of Joint Production of fertiva/COMPO z BASF produces fertilizers on an exclusive basis for fertiva and for COMPO; fertiva and COMPO control production process z Joint use of BASF technologically leading production facilities at competitive cost by fertiva and COMPO (economies of
Slide 24: fertiva
K+S Group fertiva IFRSs HGB * Key figures (€ mill.) 2004 2003 Revenues by product group Revenues 513.8 474.1 (in %) Operating earnings 10.0 6.6 * German GAAP Brief description fertiva represents the K+S Group’s nitrogen fertilizer activities. It markets the agricultural fertilizers produced exclusiv
Slide 25: fertiva Market Position in Western Europe
fertiva Market Position in Western Europe Consumption of nitrogen fertilizers 2004/2005: 9.0 mill. t N Imports 30% 7% fertiva Other Western European Producers * 63% * Yara, Kemira GrowHow, Grande Paroisse, Fertiberia, Terra, SKW, Agrolinz, DSM and other February 2006 K+S Group 24
Slide 26: fertiva Strategy
fertiva Strategy z Expansion of our core business in Europe and in attractive overseas markets z Cooperation arrangements with strong partners to benefit from global supply and sales opportunities z Ongoing improvement of profitibility by the use of optimised pricing policy and rigorous cost and log
Slide 27: Content
K+S Group Content A. The K+S Group Business Model B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Business Segments D. Strategy and Outlook 2005 E. Financial Data: - Financial Year 2004 (German GAAP) - IFRSs Impact - 9 Months 2005 (IFRSs) F. K+S Share February 2006 K+
Slide 28: Salt Business
K+S Group Salt Business z Salt is... ... a fundamental part of our lives ... essential for a whole range of uses (e. g. for domestic use, bread and bakery products, meat and sausage products, canned food, infusion solutions, chemical industry, oil-drilling fluids, water softening, animal nutrition,
Slide 29: Salt
K+S Group Salt IFRSs HGB * Key figures (€ mill.) ** 2004 2003 Revenues by product group Revenues 357.8 206.2 (in %) Operating earnings 57.3 27.2 * German GAAP ** 2004: 100% esco; 2003: 62% esco Brief description Salt products of highest purity and quality are used as food grade salt, industrial salt
Slide 30: Main European Crystallized Salt Suppliers
Salt Main European Crystallized Salt Suppliers Supply in million tonnes 5.6 3.6 * 3.6 3.4 1.7 1.4 1.2 0.8 0.6 esco Akzo SWS/ Salins Poland Salt Italkali Salinen British Südsalz Group Union Austria Salt (GER) (NL) (GER) (F) (GB) (I) (A) (GB) * for the market basis: 2003/2004 (partly estimated) Februa
Slide 31: Salt Strategy
Salt Strategy z Consolidation and selective expansion of our strong market position in Europe based on our customer-oriented assortment, our high product quality and delivery flexibility z Exploitation of numerous synergies, especially in the case of coordinated, pan European production and logistic
Slide 32: Content
K+S Group Content A. The K+S Group Business Model B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Business Segments D. Strategy and Outlook 2005 E. Financial Data: - Financial Year 2004 (German GAAP) - IFRSs Impact - 9 Months 2005 (IFRSs) F. K+S Share February 2006 K+
Slide 33: Waste Management and Recycling
K+S Group Waste Management and Recycling IFRSs HGB * Key figures (€ mill.) 2004 2003 Revenues by segment Revenues 59.2 54.6 (in %) Operating earnings 8.2 4.2 * German GAAP Brief description This business segment uses the caverns as well as the existing infrastructure in the active mines created by u
Slide 34: Services and Trading
K+S Group Services and Trading IFRSs HGB * Key figures (€ mill.) 2004 2003 Revenues by segment Revenues total 126.7 115.1 (in %) Revenues with third parties 51.5 56.4 Operating earnings 22.1 17.0 * German GAAP Brief description Service activities being essential for K+S are bundled in this business
Slide 35: Content
K+S Group Content A. The K+S Group Business Model B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Business Segments D. Strategy and Outlook 2005 E. Financial Data: - Financial Year 2004 (German GAAP) - IFRSs Impact - 9 Months 2005 (IFRSs) F. K+S Share February 2006 K+
Slide 36: K+S is the Leading Player in its Markets
K+S Group K+S is the Leading Player in its Markets Fertilizers and Plant Care: No. 2 in Europe Potash z Market leader in Europe z Leading market positions in the world Sulphate of potash and magnesium sulphate z World markt leader The green market z Market leader in Europe with COMPO Nitrogen z Very
Slide 37: Strategy
K+S Group Strategy z Consolidation and selective expansion of our leading market positions, particularly with regard to specialities z Further development of our business sectors through acquisitions and cooperation arrangements z Ongoing focus on improving efficiency and cutting costs as well as ex
Slide 38: Outlook for the Year 2005
K+S Group Outlook for the Year 2005 (as of 27 Jan. 2006) z Positive business development during Q4 particularly in the business segments Salt as well as Potash and Magnesium Products z Efficiency enhancement programmes as well as additional sylvinite capacity improve cost structures z US dollar hedg
Slide 39: Content
K+S Group Content A. The K+S Group Business Model B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Business Segments D. Strategy and Outlook 2005 E. Financial Data: - Financial Year 2004 (German GAAP) - IFRSs Impact - 9 Months 2005 (IFRSs) F. K+S Share February 2006 K+
Slide 40: Development of Revenues
K+S Group Development of Revenues € million, German GAAP 2,582 Services and Trading Waste Management 2,259 2,288 and Recycling 2,179 2,088 Salt fertiva COMPO Potash and Magnesium Products 2000 2001 2002 2003 2004 February 2006 K+S Group 39
Slide 41: Development of Earnings and Free Cash Flow
K+S Group Development of Earnings and Free Cash Flow € million, German GAAP 250 * 500 EBIT Net income Free cash flow Net liquidity 200 400 167 151 150 141 300 127121133 127 254 116 120118 104 101 213 195 100 200 168 73 153 68 47 50 100 0 0 -50 -100 -100 ‘00 ‘04 ‘00 ‘04 ‘00 ‘04 -200 ‘00 ‘04 * excludi
Slide 42: Capital Expenditure, Acquisitions, Share Buybacks
K+S Group Capital Expenditure, Acquisitions, Share Buybacks € million, German GAAP ‘00-‘04 Cancellation of shares: 112 Acquisitions: 276 350 Expansion capex: 199 300 Maintenance capex: 482 69 250 Total cash-outflow: 1,069 200 97 83 93 150 43 44 58 1 2 41 33 23 100 50 98 100 88 94 102 0 2000 2001 200
Slide 43: Revenues and Earnings as of 31 December
K+S Group Revenues and Earnings as of 31 December € million, German GAAP 2004 2003 ∆ 100% esco 62% esco Revenues 2.581,5 2.287,8 + 293.7 Earnings before interest, taxes and depreciation (EBITDA) 282,2 223,7 + 58.5 Earnings before interest and taxes (EBIT) 167,1 115,7 + 51.4 Financial result - 4,0 -
Slide 44: Cash Flow Statement as of 31 December
K+S Group Cash Flow Statement as of 31 December € million, German GAAP 2004 2003 ∆ 100% esco 62% esco Gross cash flow 268.9 209.1 + 59.8 Cash flow provided by operating activities 196.7 249.1 - 55.0 Cash flow used in investing activities - 217.1 - 124,3 - 92.8 Free Cash flow - 20.5 124.8 - 145.3 Cas
Slide 45: Balance Sheet Key Data as of 31 December
K+S Group Balance Sheet Key Data as of 31 December € million, German GAAP 2004 2003 100% esco 62% esco Fixed assets 792.8 735.8 Cash in hand and bank balances, securities 203.0 234.8 Equity 615,3 555.4 Provisions 83.0 753.2 Bank loans and overdrafts 57.8 19.4 Balance sheet total 1,892.8 1,754.5 Work
Slide 46: Yields as of 31 December
K+S Group Yields as of 31 December German GAAP 2004 2003 100% esco 62% esco EBIT margin 6.5 % 5.1 % Return on revenues 5.4 % 4.4 % Return on equity 22.8 % 17.3 % Return on total investment 9.4 % 7.2 % Return on capital employed (ROCE) 15.9 % 12,7 % February 2006 K+S Group 45
Slide 47: Content
K+S Group Content A. The K+S Group Business Model B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Business Segments D. Strategy and Outlook 2005 E. Financial Data: - Financial Year 2004 (German GAAP) - IFRSs Impact - 9 Months 2005 (IFRSs) F. K+S Share February 2006 K+
Slide 48: Impact of IFRSs on Balance Sheet
K+S Group Impact of IFRSs on Balance Sheet z Increased assets • fixed assets higher • derivatives and securities at fair values • recognition of deferred taxes, esp. from tax loss carry forwards z Slightly decreased provisions/liabilities • pensions provisions higher (esp. lower discount rate) • oth
Slide 49: Impact of IFRSs on Earnings
K+S Group Impact of IFRSs on Earnings z Operating EBIT: • essentially, no significant changes (without fair value changes) (tendency to be somewhat higher because of interest rate effects) • expected to be higher for 2005 because of operating improvements z Fair value changes: depends on USD trend (
Slide 50: Impact of IFRSs on Key Data
K+S Group Impact of IFRSs on Key Data z (Gross) cash flow per share: largely unchanged z Earnings per share: • compared with DVFA earnings, will tend to be higher • on net income basis, depressed by deferred taxes • 2005, operating improvements z Equity ratio: significant increase z Return on equity
Slide 51: Net Income as of 31 December 2004
K+S Group Net Income as of 31 December 2004 € million, reconciliation from German GAAP to IFRSs Net income in accordance with German GAAP as of 31 Dec. 2004 140.5 Measurement of revenues - 42.6 Depreciation - 13.8 Foreign currency result + 38.3 Change in provisions + 22.7 Market value changes in der
Slide 52: Revenues and Earnings as of 31 December 2004
K+S Group Revenues and Earnings as of 31 December 2004 € million, IFRSs Revenues 2,538.6 Earnings before interest, taxes and depreciation (EBITDA) 290.3 Operating earnings (EBIT I) 161.6 Earnings after market value changes (EBIT II) 135.2 Financial result - 14.8 Earnings before taxes (EBT) 120.4 Tax
Slide 53: Equity as of 31 December 2004
K+S Group Equity as of 31 December 2004 € million, reconciliation from German GAAP to IFRSs Equity in accordance with German GAAP as of 31 December 2004 601.4 Tangible fixed assets + 140.0 Intangible assets including goodwill - 0.2 Receivables, liabilities, cash and cash equivalents - 29.0 Market va
Slide 54: Balance Sheet Key Data as of 31 December 2004
K+S Group Balance Sheet Key Data as of 31 December 2004 € million, IFRSs Fixed assets 931.1 Securities 163.9 Cash and cash equivalents 91.5 Equity 884.4 Provisions 639.7 Bank loans and overdrafts 57.8 Balance sheet total 2,162.2 Working capital 308.9 Capital expenditure 131.0 Depreciation 128.7 Cash
Slide 55: Content
K+S Group Content A. The K+S Group Business Model B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Business Segments D. Strategy and Outlook 2005 E. Financial Data: - Financial Year 2004 (German GAAP) - IFRSs Impact - 9 Months 2005 (IFRSs) F. K+S Share February 2006 K+
Slide 56: Revenues and Earnings as of 30 September
K+S Group Revenues and Earnings as of 30 September € million, IFRSs 2005 2004 ∆ Revenues 2,099.7 1,907.9 + 191.8 Earnings before interest, taxes and depreciation (EBITDA) 297.3 227.9 + 69.4 Operating earnings (EBIT I) 202.1 132.5 + 69.6 Earnings after market value changes (EBIT II) 221.9 145.3 + 76.
Slide 57: Cash Flow Statement as of 30 September
K+S Group Cash Flow Statement as of 30 September € million, IFRSs 2005 2004 ∆ Gross cash flow 237.5 216.9 + 20.6 Cash flow provided by operating activities 260.8 230.9 + 29.9 Cash flow used in investing activities - 60.1 - 165.2 + 105.1 Free Cash flow 200.7 65.7 + 135.0 Cash flow used in financing a
Slide 58: Balance Sheet Key Data as of 30 September
K+S Group Balance Sheet Key Data as of 30 September € million, IFRSs 2005 2004 Fixed assets 924.4 914.9 Securities 133.6 151.4 Cash and cash equivalents 217.2 151.5 Equity 986.2 884.8 Provisions 596.2 636.7 Bank loans and overdrafts 30.0 19.0 Balance sheet total 2,301.4 2,100.2 Working capital 309.7
Slide 59: Content
K+S Group Content A. The K+S Group Business Model B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Business Segments D. Strategy and Outlook 2005 E. Financial Data: - Financial Year 2004 (German GAAP) - IFRSs Impact - 9 Months 2005 (IFRSs) F. K+S Share February 2006 K+
Slide 60: Key Data of the K+S Share as of 31 December
K+S Aktiengesellschaft Key Data of the K+S Share as of 31 December € 2004 2003 IFRSs HGB * HGB * Net income per share, adjusted ** 2.32 3.31 2.42 DVFA earnings per share - 2.16 1.53 Gross cash flow per share 6.38 6.33 5.00 Book value per share, adjusted ** 20.87 14.48 13.76 Highest share price 39.43
Slide 61: Dividend and Total Dividend Payment
K+S Aktiengesellschaft Dividend and Total Dividend Payment Year of payment 2000 2001 2002 2003 2004 2005 (for the prior financial year) 55.3 43.4 41.5 42.5 37.6 Total dividend payment 25.7 (€ million) (€ per share) Dividend 0.57 0.85 1.00 1.00 1.00 1.30 Share buybacks 1.39 - - 0.96 - - Total 1.96 0.
Slide 62: K+S Share Price Compared with DAX and MDAX
K+S Aktiengesellschaft K+S Share Price Compared with DAX and MDAX Index: 30 December 2004 = 100 2005 2006 160 MDAX +50% 150 140 K+S +42% 130 DAX +33% 120 110 100 90 Jan. Apr. July Oct. Jan. April source: Bloomberg; as of 30 January 2006 February 2006 K+S Group 61
Slide 63: K+S Share Price Compared with DAX and MDAX
K+S Aktiengesellschaft K+S Share Price Compared with DAX and MDAX Index: 29 December 2000 = 100 2001 2002 2003 2004 2005 2006 350 K+S +208% 300 250 200 MDAX +72% 150 100 DAX -12% 50 0 Jan. Jan. Jan. Jan. Jan. Jan. source: Bloomberg; as of 30 January 2006 February 2006 K+S Group 62
Slide 64: K+S Market Capitalisation
K+S Aktiengesellschaft K+S Market Capitalisation € million 2,285 2,106 1,662 986 925 781 2001 2002 2003 2004 2005 2006 Year-end 30 January 2001-2002: 45 mill. shares; 2003-2004: 42.5 mill. shares; 2005-2006: 41.25 mill. shares February 2006 K+S Group 63
Slide 65: Financial Calendar
K+S Aktiengesellschaft Financial Calendar 16 March 2006 ¾ Report on business in 2005 ¾ Annual report and analyst conference, Frankfurt 10 May 2006 ¾ Annual General Meeting 2006, Kassel ¾ Interim report 31 March 2006 11 May 2006 ¾ Dividend payment for the year 2005 10 August 2006 ¾ Interim report 30
Slide 66: Experience growth.
www.k-plus-s.com Experience growth. K+S Aktiengesellschaft Investor Relations Bertha-von-Suttner-Straße 7 phone: +49 (0)561 / 9301-1460 34131 Kassel (Germany) fax: +49 (0)561 / 9301-2425 phone: +49 (0)561 / 9301-0 email: investor-relations@k-plus-s.com fax: +49 (0)561 / 9301-1753 February 2006 K+S G
Slide 67: Forward-Looking Statements
K+S Group Forward-Looking Statements This presentation contains facts and forecasts that relate to the future development of the K+S Group and its companies. The forecasts are estimates that we have made on the basis of all information available to us at this moment in time. Should the assumptions u
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