K+s Ag · XETR:SDF
K+s — K+S Aktiengesellschaft — Q1 2022 Earnings Presentation
70 slides from K+s's earnings presentation, May 11, 2022
Slide 1: Compendium May 2022
Compendium May 2022
Slide 2: Content
Content 1. K+S Group 2. Sustainability 3. Customer Segment Agriculture 4. Customer Segment Industry+ 5. Production 6. Financial Data 7. Investor Relations 2
Slide 3: 1. K+S Group
1. K+S Group
Slide 4: K+S at a glance
K+S at a glance Customer Segments K+S Group financials Q1/2022 (continuing operations) Agriculture Revenues €1,212.3 mln Revenues €944.1 mln 78% EBITDA Potassium chloride (MOP) and fertilizer specialties €524.1 mln Industry+ consisting of Industry, Consumer and Communities EBITDA-Margin 43.2% 22% Re
Slide 5: Global Presence
Global Presence Revenues of the continuing operations by regions in 2021 56 % 7% Employees by region 2021 5% Germany 91% 13 % North America 4% 19 % Europe (excl. Germany) 4% Rest of the world 1% Total number: 10,711 FTE 5
Slide 6: Adding value along our entire supply chain
Adding value along our entire supply chain Our potash and salt deposits came into being millions of years ago. They are either our property or we Exploration have corresponding rights or approvals that allow the extraction or solution mining of the raw material reserves. We extract raw materials in
Slide 7: Board of Executive Directors
Board of Executive Directors The Supervisory Board has mutually agreed with Mr. Boeckers to terminate his service agreement at the end of February this year. Dr. Burkhard Lohr, Chairman of the Board of Executive Directors, will also assume the function of Chief Financial Officer on a transitional ba
Slide 8: Signing achieved for complete OU Americas sale
Signing achieved for complete OU Americas sale Key data of the signed agreement Stone Canyon Industries Buyer: Holdings LLC, Mark POINTE-CLAIRE Demetree and affiliates Gross proceeds: USD 3.2 billion CHICAGO 1 EV/EBITDA: 12,5x 2019 EBITDA of USD 257 mln Closing: April 30, 2021 Preliminary net €2.6 b
Slide 9: Important megatrends and their implications
Important megatrends and their implications 8.6 billion 0.2 ºC Global population in Average global warming 2030 ▪ Arable land shrinking Today: 7.9 billion Per decade ▪ Yield needs to be improved ▪ Higher efficiency of fertilization and Implications for K+S irrigation needed ▪ Plants have to be more
Slide 10: Strategic financial objectives – Economies in cycles
Strategic financial objectives – Economies in cycles ▪ Positive free cash flow from 2023 even with a low potash price and mild winters ▪ Earn cost of capital over a cycle of 5 years (WACC 2021: 9.7%) ▪ At the same time, an EBITDA margin of > 20 % is targeted over this cycle The basis for these strat
Slide 11: Guiding principles of strategy and management focus
Guiding principles of strategy and management focus 11
Slide 12: Clear focus of our sites
Clear focus of our sites 70 % Bethune Zielitz Werra Neuhof-Ellers ▪ Long-term ramp-up to up ▪ Improvement of the cost ▪ Optimization of product ▪ Improvement of the to four million tonnes of position mix & production volumes mineral content through AI capacity ▪ Optimization of ▪ Optimization of ▪ I
Slide 13: Optimize the existing
Optimize the existing 70 % Agriculture Industrie+ Supply Chain ▪ Increase of marketing in ▪ Focus on potash ▪ Warehouse and network USA ex Bethune product groups for optimization for industrial product sales European salt logistics ▪ Increase of trading ▪ Capacity expansion of ▪ Optimization of busi
Slide 14: Grow the core
Grow the core 20 % We enable farmers to achieve greater economic success ▪ Expansion of the portfolio ▪ Fertilization ▪ Micronutrients ▪ Biostimulants ▪ Concepts for soil health ▪ Further additions to the portfolio Logistics access • Circular economy • Last Mile Distribution Digital sales ▪ Agronomi
Slide 15: New business areas
New business areas 10 % Reuse of existing assets and development of new business areas Renewable and green energy Carbon dioxide (CO2) ▪ Increasing use of renewable energies (wind, sun) at our locations ▪ CCS: underground storage (solid and gaseous) ▪ Use of available space at our locations ▪ CCU: U
Slide 16: 2. Sustainability
2. Sustainability
Slide 17: K+S Sustainability Goals
K+S Sustainability Goals We have set ourselves ambitious goals in these three areas of action: Society & Employees, Environment & Resources and Business Ethics & Human Rights • The human being is our focus • Active commitment to environmentally friendly production • Integrity & a sense of responsibi
Slide 18: K+S Climate Strategy (1)
K+S Climate Strategy (1) Germany compared to K+S (German potash production, Scope 1) K+S -79 % Values in million t CO2 D -40 % % 1,248 4.7 100 80% of CO2 emissions already 80 Germany reduced (1990 – 2020)… 739 K+S … through fuel change, increased energy 60 efficiency and site closures 40 1.0 20 0 19
Slide 19: K+S Climate Strategy (2)
K+S Climate Strategy (2) Short-term goal ▪ Introduction of a “K+S climate protection fund” from 2022 to reduce our CO2 emissions. Mid-term goal ▪ Reduction of our CO2 emissions by 10% by 2030 compared to 2020. Long-term goal ▪ K+S supports the goals of the "Paris Agreement": Climate neutrality in 20
Slide 20: Environment & Resources
K+S Sustainability Goals 2030 Goal Achievement of KPI 2021 Target value 2030 Base year (Sponsor) targets Injection of saline wastewater in Germany 0 1.0 2017 (1.2) 100% (million m³ p.a.) (starting January 2022) -0.5 Additional reduction of saline process water Environment & Resources Resource (exclu
Slide 21: Employees
K+S Sustainability Goals 2030 Goal Achievements KPI 2021 Target value 2030 Base year (Sponsor) of targets Health & Safety 0 Injury with lost time (LTIR)* 11.3 2017 (11.5) Employees (Holger 2% Society & Vision 2030 Riemensperger, COO) Diversity & Inclusion Positive perception of an inclusive work 60%
Slide 22: Ratings & Rankings
K+S Sustainability Management Organisation Rating Scale 2018 2019 2020 2021 Rating scale 0 to 100 34 35 (The lower, the better) Rating scale from AAA to CCC Ratings & Rankings A A A A (A: average) Rating scale from A+ to D- C- C- C- C- Climate C C C C Rating scale from A to D- Water C B- B B Rating
Slide 23: The contribution of our products to the SDGs
The contribution of our products to the SDGs Agriculture Industry Consumer Communities Direct effect Longer-term, overarching, indirect effects 23
Slide 24: 3. Customer Segment Agriculture
3. Customer Segment Agriculture
Slide 25: Customer segment Agriculture at a glance
Customer segment Agriculture at a glance Revenue split by region 2021 (%) Revenue split by products Q1/2022 (%) others 6 Fertilizer specialties Asia 17 34 Europe 42 Potassium thereof Germany chloride 11 66 South America 27 North America 8 Characteristics in € million Q1/2021 Q1/2022 ▪ Close proximit
Slide 26: Why use fertilizers?
Why use fertilizers? „The growth and yield of a plant is limited by the nutrient available in the smallest amount “1 ▪ Plants need sunlight, water and minerals to thrive. ▪ There are few soils on earth which have a sufficient content and availability of plant nutrients to achieve high yields over a
Slide 27: Long-term demand drivers
Long-term demand drivers Agriculture – Demand Drivers – Industry+ Industry & Pharma Agriculture Arable land shrinking Water scarcity Increasing standard of living Consumer Population growth Economic growth and industrialization Urbanization Communities Winter weather conditions Infrastructure develo
Slide 28: Long-term key drivers for our fertilizer business
Long-term key drivers for our fertilizer business Less arable land – but more protein consumption per capita Jahr 1960 2010 2050 Global population Each year, an additional 80 million people needs to be fed – development this equals the population of Germany. 3.0 billion 6.9 billion 9.7 billion Arabl
Slide 29: What makes us different?
What makes us different? Fertilizer specialties ▪ Mainly used for special applications (e.g. chloride-sensitive crops) ▪ Products containing a broad range of nutrients (e.g. potash, magnesium, sulphur) ▪ Premium products used for high-value crops Potassium Chloride ▪ Can be applied universally to al
Slide 30: Potash price development
Potash price development USD/t 1.200 1200 EUR/t 1.100 1100 1.000 1000 900 900 Potassium 800 Potassium 800 Chloride Sulfate (MOP) Brazil 700 (SOP) 700 Europe 600 600 500 500 400 400 Potassium 300 Chloride 300 (MOP) Europe 200 200 MOP gran. Brazil USD/t, cfr (left scale) SOP Europe EUR/t, cfr (right s
Slide 31: World potash production and sales by region
World potash production and sales by region 26 in million tonnes 24 36 5 12 6 6 17 16 2 2 2020 2019 World potash production 75.3 mt 71.0 mt Sources: IFA 2021, K+S Basis: Year 2020 – incl. Potassium sulphate and low-grade potash World potash sales volume 77.3 mt 68.5 mt 31
Slide 32: Supplier structure on the global potash market
1 Supplier structure on the global potash market Global potash sales volumes 2020: 77.3 mt 28% 2019: 68.5 mt 16% 16% 13% 9% 7% 3% 3% 3% 2% Canpotex BPC Uralkali ICL APC EuroChem SQM China Others • Nutrien Belaruskali • DSW > 20 Intrepid, Compass, • Mosaic • CPL Producers Uzbekistan, Turkme- • Iberpo
Slide 33: Between desire and reality
Between desire and reality Classification of potash projects announced since 2006 (Greenfield) Projects announced or in early Projects with a high probability Projects in ramp-up phase development phases of realization until 2025 2 160 6 33
Slide 34: Increasing demand for potash
Increasing demand for potash New potash capacities needed to meet rising demand 1,000 tonnes 120,000 100,000 +3.0% (Upside Scenario) +1.6% (IFA Forecast) 80,000 60,000 Worldwide Sales Volume 40,000 Capacity Missing supply 20,000 New capacities ,0 Production '00 '05 '10 '15 '20 '25e '30e Source: IFA,
Slide 35: Potassium use by crop in selected countries
Potassium use by crop in selected countries 100% 6% 90% 18% 8% 80% 42% 4% 1% 70% 60% 11% 49% 70% 50% 1% 4% 40% 11% 30% 14% 20% 16% 10% 1% 10% 17% 12% 3% 4% 0% 2% EUR-28 Brasil Indonesia Wheat Corn Oil seed Sugar Soybean Rice Oil palm Fruits and Vegetables Rest Source: IFA, “Fertilizer Use by Crop” b
Slide 36: Farmer profitability of corn (USA)
Farmer profitability of corn (USA) ▪ The expenditure for potash products of an agricultural holding amount to only about 4% of the total costs. ▪ The earnings prospects should give the agricultural industry with sufficient incentive to increase the yield per hectare by using plant nutrients. Profit
Slide 37: Global potash sales volume by region
Global potash sales volume by region million tonnes 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Western Europe 5.9 5.6 5.8 6.2 6.0 5,9 6,2 6,2 6,0 6.2 Central Europe /FSU 4.4 5.1 4.7 4.4 4.8 4.8 5.2 5.4 5.5 5.6 Africa 0.7 0.7 0.8 1.0 1.0 1.1 1.4 1.6 1.4 1.6 North America 10.2 9.1 9.7 11.8 9.5
Slide 38: 4. Customer Segment Industry+
4. Customer Segment Industry+
Slide 39: Industry+ customer segment at a glance
Industry+ customer segment at a glance* Characteristics Revenue split by products Q1/2022 (%) ▪ Emerging markets: Growth, especially in Asia, leads to increasing demand for electrolysis. Water softening 7 ▪ Electrolysis and specialties: Focus on product quality, service and proximity to the customer
Slide 40: Main areas of application
Main areas of application Chemical Food processing Pharma Oil and Gas ▪ Chlor-Alkali- ▪ Food processing ▪ Infusions, dialysis ▪ Drilling fluids processes (→ PVC) industry solutions ▪ Polycarbonates and ▪ Baking industry ▪ Pharmaceuticals MDI (Isocyanat) ▪ Condiment and (→ plastics, synthetic preserv
Slide 41: Main salt suppliers in Europe
Main salt suppliers in Europe Capacity in million tonnes (crystallized salt and salt in brine; excl. captive use) 9 8 7 Artyomsol Nouryon 5 4 Süd- salz Sal- ins Source: Roskill, K+S 41
Slide 42: Development of salt consumption and production
Development of salt consumption and production¹ Consumption (in million tonnes) Production (in million tonnes) CAGR: 2.0 % CAGR CAGR: 2.1 % CAGR 295 295 268 1.2 % 264 2.5 % 220 217 Others 3.3 % Others 4.0 % Asia Asia 1.0 % Europe Europe 1.3 % North North 1.5 % America 0.4 % America 2000 2009 2015 20
Slide 43: 5. Production
5. Production
Slide 44: Potash sites in Germany
Potash sites in Germany Share of annual production capacity (in %) Potash mining in the 1. Wintershall Werra-Fulda region 2. Unterbreizbach Verbundwerk Werra ~ 50 3. Hattorf 4. Zielitz ~ 25 5. Neuhof-Ellers ~ 20 6. Bergmannssegen-Hugo ~5 (production site, no mining) Potash seem Hesse 6 4 Kassel 1 2
Slide 45: Clear focus of our sites
Clear focus of our sites Bethune Zielitz Werra Neuhof-Ellers ▪ Long-term ramp-up to up ▪ Improvement of the cost ▪ Optimization of product ▪ Improvement of the to four million tonnes of position mix & production volumes mineral content through AI capacity ▪ Optimization of ▪ Optimization of ▪ Increa
Slide 46: Optimize the existing
Optimize the existing Agriculture Industry+ Supply Chain ▪ Increase of marketing in ▪ Focus on potash ▪ Warehouse and network USA ex Bethune product groups for optimization for industrial product sales European salt logistics ▪ Increase of trading ▪ Capacity expansion of ▪ Optimization of business i
Slide 47: Site costs (at mine gate) in comparison
Site costs (at mine gate) in comparison Bethune's further ramp-up to 4 million USD/t tonnes will bring Bethune to the -30% first quintile Best-in-class * K+S Bethune K+S Bethune K+S Zielitz 1st Quintile of the production quantity (mid-term) (today) (MOP site) with the lowest cost * Column width = So
Slide 48: Underground mining production cycle
Underground mining production cycle Potash production 1 2 3 4 Blasting after Muck pile load and dump Roof scaling Clearing shift end 9 5 Roof bolting Charging with explosives 8 7 6 Drilling Face cleaning Auger drilling 48
Slide 49: Potash processing above ground
Potash processing above ground Electrostatic separation Thermal dissolution Flotation (ESTA®) Heating Floatation brine Finely ground 25 °C 110 °C crude salt tFinely ground Mother brine Finely crude sal ground Conditioning Flotation Undis- crude salt agent solved residue + dissolved Air bubbles Tribo
Slide 50: Potash production: management of residues
Potash production: management of residues ▪ The mined rock salt only contains a limited share of usable material (max. 30%), therefore a residue accumulation is unavoidable. This challenge is shared among all potash producing companies in the world! ▪ The recycling of partial quantities takes place
Slide 51: Environmental investments create long-term planning security
Environmental investments create long-term planning security Tailings piles extensions Hattorf ▪ Completed by end of 2022 / beginning of 2023 ▪ Next permit and significant investments in tailings pile Wintershall extensions will not be necessary again until the end of the 2020s Zielitz Liquid residu
Slide 52: Tailing pile coverage and greening
Tailing pile coverage and greening Our objectives The procedure ▪ From 2030 onwards, K+S will be able to use three Soil and construction rubble are installed in several million tonnes of residue annually for purposes layers on the stockpile in a precisely defined process. other than rearming. → Form
Slide 53: Development of saline wastewater at the Werra site
Development of saline wastewater at the Werra site Potash Production 20 Utilization/Avoidance million cbm (CapEx: almost € 500 million) 6.0 4.0 3.0 5.5 1.5 million cbm Tailings pile waters 4.0 Deep-well Injection until 2021, Process waters 1.5 as of 2022: permanent storage Saline Waste-water from 19
Slide 54: Underground storage in Springen
Underground storage in Springen Our goal The procedure ▪ Stopping the injection of saline wastewater into the ▪ Highly concentrated saline solution from potash plate dolomite as of 2022. production is discharged into the mine field via existing lines. ▪ Stopping the discharge of saline wastewater in
Slide 55: Bethune – solution mining
Bethune – solution mining (e.g.: primary mining) In solution mining, freshwater is brought into solvent (salt) rock through a drill hole, therefore creating chambers, or caverns, filled with a water-salt solution. In a subsequent step, the saturated brine is brought to the surface through an additio
Slide 56: Bethune – primary versus secondary mining
Bethune – primary versus secondary mining Secondary mining [NaCl brine mining / crystallisation pond] ▪ Secondary mining uses exclusively saturated NaCl solution to selectively dissolve residual KCl from existing caverns ▪ Advantages (in comparison to primary mining): ▪ lower energy intensity (e.g.
Slide 57: Bethune – Strengthening our global presence
Bethune – Strengthening our global presence Potash production ▪ Expanding our current production portfolio in Germany with a North American production site → Second-source supplier ▪ Securing a good asset base with competitive China India North America production costs South East Asia ▪ Sales and di
Slide 58: Main production methods
Main production methods Rock salt Sea/solar salt Evaporated salt Brine Conventional Crystallisation Recrystallization Controlled mining of sea water of purified brine borehole-brining ▪ Around 70% of worldwide salt production (more than 290 million tonnes including brine) is obtained from rock salt
Slide 59: 6. Financial Data
6. Financial Data
Slide 60: Key financial figures
1 Key financial figures Revenues (€ billion) EBITDA vs Net Financial Debt/EBITDA 7.2 4.0 4.1 5.2 5.3 969 3.6 3.7 4.9 3.2 606 640 577 445 0,6 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 EBITDA margin (%) FCF (€ million) 93 30 +140 -206 -42 16 15 16 12 -390 2017 2018 2019 2020 2021 2017 2018 201
Slide 61: Operating and adjusted cash flow
Operating and adjusted cash flow The figures relate to the continuing and discontinued operations of the K+S Group for the years 2013 to 2020. For the year 2021, the figures relate to the continuing operations of the K+S Group (in € million). 756 719 669 640 445 429 307 309 347 140 93 49 -42 -206 -3
Slide 62: Debt profile (promissory notes and bonds)
Debt profile (promissory notes and bonds) Financing instruments in € million Amount outstanding Coupon Maturity Promissory note loans 13 Senior unsecured notes due 2022 205 3.000% Jun-22 Senior unsecured notes due 2023 406 2.625% Apr-23 Senior unsecured notes due 2024 431 3.250% Jul-24 Debt maturity
Slide 63: Cash flow and balance sheet
Cash flow and balance sheet FY/20 3M/21 H1/21 9M/21 FY/21 3M/22 Operating cash flow 429 147 69 83 - thereof continuing operations 82 81 95 347 254 Investing cash flow -471 -110 2.480 2.063 (pre-sale/purchase of securities and other financial investments) - thereof continuing operations -381 - 97 -16
Slide 64: 7. Investor Relations
7. Investor Relations
Slide 65: Investor Relations Contacts
Investor Relations Contacts Nathalie Frost Julia Bock, CFA Esther Beuermann Investor Relations Manager Head of Investor Relations Investor Relations Manager Phone: + 49 561 / 9301-1403 Phone: + 49 561 / 9301-1009 Phone: + 49 561 / 9301-1679 Fax: + 49 561 / 9301-2425 Fax: + 49 561 / 9301-2425 Fax: +
Slide 66: K+S Share
K+S Share Key data Shareholder structure as of Dec 31, 2021 • WKN: KSAG88 Private Investors • ISIN: DE000KSAG888 45% • Type of shares: registered shares of no-par value Freefloat • Total number of shares : 191,400,000 100% • Trading segment: Prime Standard Institutional • Ticker symbols: Bloomberg S
Slide 67: K+S ADR Programm
K+S ADR Programm The K+S ADR Program offers North American investors the opportunity to take stock in K+S. Since the ADRs are quoted in US dollars and dividends are also distributed in US dollars, this financial instrument closely resembles an American share. Two ADRs represent one K+S ordinary shar
Slide 68: K+S bonds and issuer rating
K+S bonds and issuer rating Issuer rating (S&P): BB (outlook: stable), May 2022 Bond 06/2022 Bond 04/2023 Bond 07/2024 WKN A1P GZ8 A2E 4U9 A2N BE7 ISIN DE000A1PGZ82 XS1591416679 XS1854830889 Listing Luxembourg SE Luxembourg SE Luxembourg SE Issue volume EUR 500 mln EUR 625 mln EUR 600 mln Outstandin
Slide 69: Financial calendar 2022/23
Financial calendar 2022/23 Half-yearly Financial Report, June 30, 2022 11 August 2022 Quarterly Report; September 30, 2022 10 November 2022 Annual Report 15 March 2023 Quarterly Report; March 31, 2023 09 May 2023 Annual Shareholders’ Meeting 10 May 2023 More content available online ▪ K+S Website: w
Slide 70: Disclaimer
Disclaimer No reliance may be placed for any purpose whatsoever on the information or opinions contained in the Presentation or on its completeness, accuracy of fairness. No representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its respective direc
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