K+s Ag · XETR:SDF
K+s — K+S Aktiengesellschaft — Q3 2022 Earnings Presentation
25 slides from K+s's earnings presentation, Nov 14, 2022
Slide 1: Q3/2022 Results
November 10, 2022 K+S Aktiengesellschaft Q3/2022 Results Dr. Burkhard Lohr CEO/CFO
Slide 2: 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
Slide 3: Low stocks-to-use ratios keep agricultural commodity prices and farmer profitability high
Low stocks-to-use ratios and unfavorable climate around the world keep agricultural commodity prices up and farmer profitability at high level Price development of important agricultural commodities US corn farmer profitability in USD/acre since 01/1996 since 01/2020 220 Corn 200 Soybeans 180 160 14
Slide 4: Further increase of ASP in Agriculture customer segment
Further increase of ASP in Agriculture customer segment Development of revenues, sales volumes, and average prices by region Q1/2021 Q2/2021 Q3/2021 9M/2021 2021 Q1/2022 Q2/2022 Q3/2022 9M/2022 Revenues € million 469.0 473.7 529.1 1,471.7 2,272.1 944.1 1,244.2 1,162.8 3,351.0 Europe € million 250.6
Slide 5: Q3/22 EBITDA saw five-fold increase YoY
Q3/22 EBITDA saw five-fold increase YoY Highlights Financials ▪ Q3/22 EBITDA increased to €633m (Q3/21: €121m) € million Q3/2021 Q3/2022 % ▪ Still stressed logistics system (especially in Europe) and a Revenues 746 1,470 +97 postponed 50kt ship main explanations for reduction in sales volumes t/o Ag
Slide 6: EBITDA record already exceeded
EBITDA record already exceeded Previous best-ever FY-EBITDA significantly exceeded after 9M/2022 EBITDA in €m 1,864 1,484 * FY/2008 9M/2022 * thereof €134m former group companies K+S Nitrogen and Compo 6
Slide 7: Successful 9M/2022 – Attractive prospects
Successful 9M/2022 – Attractive prospects 7
Slide 8: World potash supply according to IFA: Geopolitical effects
World potash supply according to IFA: Geopolitical effects ▪ Russia exports about 2/3 to "friendly countries" K2 O ~ 60% of t eff KCl ▪ More than 80% of the currently forecasted expansion of potash production comes from Russia ▪ Different assumptions for the recovery of the world's potash supply ▪ P
Slide 9: 2022 EBITDA outlook substantiates at about €2.4 billion
2022 EBITDA outlook substantiates at about €2.4 billion – Previous best EBITDA in K+S’ history (2008) would be exceeded by nearly €1 billion EBITDA in €m ▪ Higher prices YoY, both, in Agriculture and Industry+ customer segment ▪ Cost increases for energy, logistics, and materials to be significantly
Slide 10: Guiding principles of strategy and management focus
Guiding principles of strategy and management focus Energy transformation Financial ambitions ▪ Earn cost of capital over a 5-year cycle ▪ At the same time, an EBITDA margin of > 20% is aimed for over this cycle 10
Slide 11: Planned use of additional liquidity
Planned use of additional liquidity ✓ Repayment of factoring (done in 9M/22) ✓ Purchase of CO2 certificates for the rest of the trading period (done in H1/22) ✓ Dividend payment for the 2021 financial year (done in H1/22) ✓ Repayment of bond in June 2022 ▪ Repayment of bond in early 2023 ▪ Investmen
Slide 12: Housekeeping items / Financial calendar
Housekeeping items / Financial calendar Additional information on 2022 FY outlook – continuing operations ▪ Tax rate: 30% ▪ CapEx: about €400m (2021: €334m) ▪ Cash taxes: > €400m ▪ D&A: ~ €450m ▪ Cash interest: ~ €-50m (2021: €-126m) Financial calendar Kepler Cheuvreux Global Agriculture Forum, virt
Slide 13: Werra 2060 Securing a sustainable future
Werra 2060 Securing a sustainable future K+S Aktiengesellschaft
Slide 14: Werra region…
Werra region… …provides reserves for at least another 40 years! Start of 1893 operations: Crude salt ~20 mt/a (today) extraction: Production >3 mt/a (today) capacity: ~4,400, Employees: thereof 300 trainees Products: • Fertilizers (crude salt containing potassium, magnesium and sulfur) • Products fo
Slide 15: Werra 2060 – Securing a sustainable future
Werra 2060 – Securing a sustainable future How do we want to achieve this? ▪ Unterbreizbach and Wintershall sites: Focus on wastewater-free processing methods Innovations in Methods already ▪ Unterbreizbach mine: Expansion of secondary mining operations (drill and blast) extraction and tested or in
Slide 16: Significantly higher, more stable production over time
Significantly higher, more stable production over time Output comparison to unchanged operation of the Werra site in mt eff. Unchanged ▪ Lifetime of 3.800 operation: Closure Unterbreizbach Unterbreizbach increased by 8 3.600 years to 2040. 3.400 ▪ Secondary mining/dry 3.200 backfill Σ more than 10 m
Slide 17: All changes mutually dependent on each other
All changes mutually dependent on each other Improved ESTA® technology creates residues dry enough to be used for backfill underground Secondary mining/ Secondary mining New process enables dry backfill enables us to: us to: • process also dusty • exploit the high pillar rock salt ore content • avoi
Slide 18: Future-oriented product portfolio
Future-oriented product portfolio New processing methods have an energy-saving effect and also change the product portfolio ▪ Further development of specialties portfolio with unchanged production volumes. ▪ Expanding our market position in potash-magnesium fertilizers. ▪ We will serve the trend tow
Slide 19: Werra 2060 schematic course of capex
Werra 2060 Schematic course of capex ▪ Compared to unchanged 250 operation mode only +€300m within 10 years 200 ▪ Gross capex of about €600m 150 ▪ Additionally positive impact on opex: e.g. - 20% vs. unchanged 100 operation in 2030 50 Capex difference Werra 2060 vs. unchanged operation mode 0 2022 2
Slide 20: Value contribution of Werra 2060
Value contribution of Werra 2060 Ø FCF advantage NPV drivers p.a. 2026-2060 Significantly higher and more stable production over time/changed product mix +€100m +€45m ESG improvements • Reduction of solid residues and thus avoiding tailings pile expansions and enabling backfill and secondary mining
Slide 21: Sensitivities
Werra 2060 increases site NPV by > €0.5 bn to > €1.5 bn We create value for our stakeholders! Even an eternal price of ~330 $/t (MOP Brazil) after 2026 results in NPV of more than €1 billion. Even 50% higher initial capex would still result in NPV advantage of more than €300 million. Variation of MO
Slide 22: What does that mean for the valuation of K+S Group?
What does that mean for the valuation of K+S Group? Using data of our Half-Year Financial Report: K+S fair value (equity) as of 30 June 2022 • thereof: €6.2 billion book value (equity) €7.6 billion • thereof: €1.4 billion surplus recoverable amount Potash and Magnesium Products CGU (already reduced
Slide 23: Appendix
Appendix
Slide 24: Assumptions
Assumptions • MOP price development according to Argus as of 08/2022 • WACC (after taxes): 7.7% • Gas/electricity prices: elevated price situation until 2025/normalization after 2025 • CO2 price: continuous growth to triple digit € price • In addition, K+S will apply for subsidies for individual pro
Slide 25: Investor Relations Contacts
Investor Relations Contacts Nathalie Frost Julia Bock, CFA Esther Beuermann Senior 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
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