K+s Ag · XETR:SDF
K+s — K+S Aktiengesellschaft — Non-Deal Roadshow (August 2007)
68 slides from K+s's roadshow presentation, Aug 30, 2007
Slide 1: Experience growth. Roadshow USA
Experience growth. Roadshow USA 27-30 August 2007
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. Corporate Structure B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Businesses D. Strategy E. Financial Data and Outlook F. K+S Share Appendix August 2007 K+S Group 2
Slide 4: Corporate Structure
K+S Group Corporate Structure K+S Group Revenues EBIT I Potash and Magnesium Products 1,238.9 158.6 Core business fertilizers and COMPO 552.4 29.2 plant care fertiva 556.2 16.7 Core business Salt 485.8 67.6 salt Waste Management and Recycling 69.4 13.8 Complementary businesses Services and Trading 5
Slide 5: Worldwide Presence
K+S Group Worldwide Presence Overseas Europe Kassel Revenues by region (2006) Germany 23.6% Rest of Europe 48.1% Production Overseas 28.3% Sales August 2007 K+S Group 4
Slide 6: Content
K+S Group Content A. Corporate Structure B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Businesses D. Strategy E. Financial Data and Outlook F. K+S Share Appendix August 2007 K+S Group 5
Slide 7: Why Fertilize?
K+S Group Why Fertilize ? z There are only few soils on earth which have a sufficient content and availability of nutrients to achieve high yields over a longer period without fertilization z Indispensable supplement to the natural nutrient content of soils z Compensation of the nutrient losses by h
Slide 8: Fertilizer Business
K+S Group Fertilizer Business z Global food production has to increase despite decreasing availability 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 als
Slide 9: Yields of Cereals in Selected Regions
K+S Group Yields of Cereals in Selected Regions dt/ha 70 60 50 40 30 20 10 0 North America Latin America Western Europe Eastern Europe South Asia Far East Africa Source: FAO 1980 1985 1990 1995 2000 2004 z Highest yields of cereals per hectare to be found in Western Europe and in North America thank
Slide 10: Meat Consumption per Capita
300 K+S Group Meat Consumption 250 per Capita 200 kg / person 150 North America 100 Europe* South America 50 Asia Africa 0 1961 1970 1980 1990 2002 source: Food and Agriculture Organization of the United Nations (FAO) * comparable data for Europe is not available before 1992 z Rising prosperity goes
Slide 11: World Production/Demand of Cereals and Corn
K+S Group World Production/Demand of Cereals and Corn Production, consumption, stocks of cereals Production, consumption, stocks of corn 120 40 80 50 60 40 30 80 30 20 40 20 40 million tonnes million tonnes 10 20 10 0 0 % 0 0 % -20 -10 -10 -40 -20 -20 -40 -30 -80 -30 -60 -40 -120 -40 -80 -50 1 /86 1
Slide 12: Rising Prices of Agricultural Products
K+S Group Rising Prices of Agricultural Products Index: January 2005 = 100 z Agricultural output cannot keep 220 Corn up with demand Palm oil 200 +101% z Low worldwide inventories Wheat of agricultural products 180 Soybeans z Increasing demand of 160 +55% renewable raw materials +53% 140 Î Fertilize
Slide 13: 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 14: Bio Diesel Production - Objectives of the EU 25
K+S Group Bio Diesel Production - Objectives of the ‘EU 25’ 22.000 According to the EU guideline from 08.05.2003 for the promotion of the use of 20.000 bio fuels, the member states have to guarantee a minimum share of bio fuels. 18.000 1.000 t/year 16.000 14.000 14,000 13,450 12.000 12,000 11,500 10
Slide 15: 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 16: World Potash Production and Demand by Region
Potash and Magnesium Products World Potash Production and Demand by Region Million tonnes 17.2 16.2 20.8 8.2 9.5 6.9 4.4 7.9 8.4 1.5 0.7 World potash production: World potash sales: incl. sulphate of potash 2006: 51.0 million t 2006: 50.7 million t and low grade potash 2005: 56.6 million t 2005: 54.
Slide 17: Supplier Structure on the World Potash Market
Potash and Magnesium Products Supplier Structure on the World Potash Market 30.2% 23.7% 13.4% 10.6% 8.2% 9.1% 3.2% 1.6% zMosaic Belarus- z K+S zSilvinit ICL- APC SQM Others zPCS kali IPC Group participation participation China, of PCS of PCS Intrepid, zAgrium Uralkali z zDSW CVRD, Canpotex BPC zIber
Slide 18: World Potash Capacity, Production and Demand
Potash and Magnesium Products World Potash Capacity, Production and Demand Million tonnes Technically available Capacity z The shortfall of Eastern European (incl. announced capacity expansions) demand after the collapse of the Production (incl. announced capacity expansions) Soviet Union was more t
Slide 19: Agricultural Potash Consumption by Region
Potash and Magnesium Products Agricultural Potash Consumption by Region Index 1980/81 = 100 Index 1980/81 = 100 350 350 World Developed markets 300 300 North America, Western Europe, Australia, Japan 250 250 200 200 150 150 100 100 50 50 0 0 80/81 82/ 84/ 86/ 88/ 90/ 92/ 94/ 96/ 98/ 00/ 02/ 04/ 06/0
Slide 20: MOP Prices for Selected Markets
Potash and Magnesium Products MOP Prices for Selected Markets Overseas Northwest Europe US$/t (standard, cfr) US$/t (standard, fob) 310 230 Thailand/Taiwan 280 Brazil 282 210 209 273 250 190 220 170 190 150 160 130 130 110 100 90 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2003 2004
Slide 21: Recent Price Increases/Announcements
Potash and Magnesium Products Recent Price Increases/Announcements Western Europe granular MOP z Price increase of € 12 to approximately € 190 cfr (implemented); further price increase of € 8-9 to approximately € 200 cfr from 1 July standard MOP z Price increase of about € 25 to approximately € 180
Slide 22: Loader (up to 20 tonnes)
Potash and Magnesium Products Loader (up to 20 tonnes) August 2007 K+S Group 21
Slide 23: Potash and Magnesium Products
K+S Group Potash and Magnesium Products 1st Half Financial Year Revenues by product group € million 2007 2006 2006 2005 2006 (%) Revenues 708.2 655.0 1,238.9 1,197.2 EBIT I 108.7 83.8 158.6 151.8 Brief description Crude potash and magnesium salts are extracted from six mines in Germany and form the
Slide 24: USD Currency Management 2006 - 2010
Potash and Magnesium Products USD Currency Management 2006 - 2010 z Revenues less overseas freight costs and a safety margin are hedged three years in advance (until 2009 by means of double barrier options) z Double barrier options: no classic hedging mechanism, only effective within certain barrier
Slide 25: System of USD Hedging Transactions
Potash and Magnesium Products 1,70 System of USD Hedging Transactions 1,65 1,60 USD/EUR 1,55 1.55 1,50 1.50 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 1 Jan. 1 July 1 Jan. 1
Slide 26: COMPO
K+S Group COMPO 1st Half Financial Year Revenues by segment € million 2007 2006 2006 2005 2006 (%) Revenues 374.0 343.3 552.4 541.7 EBIT I 28.2 26.0 29.2 25.0 Brief description Consumer business: high-quality branded products such as potting soil, plant care products, lawn and garden fertilizers. Re
Slide 27: COMPO - Market Entrance Consolidated
COMPO COMPO - Market Entrance Consolidated z New plant protection products thanks to cooperation with Syngenta - “COMPO Axoris Insekten-frei“ introduced at the beginning of 2007 - Four further new developments based on Syngenta substances and 13 new formulae pending approval z Further development of
Slide 28: fertiva
K+S Group fertiva 1st Half Financial Year Revenues by product group € million 2007 2006 2006 2005 2006 (%) Revenues 304.5 269.8 556.2 568.3 EBIT I 9.9 8.8 16.7 14.8 Brief description fertiva represents the K+S Group’s nitrogen fertilizer activities. It markets the agricultural fertilizers produced e
Slide 29: 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 volumes and product mix z Joint use of BASF technologically leading production facilities at competitive cost by fertiva and COM
Slide 30: Content
K+S Group Content A. Corporate Structure B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Businesses D. Strategy E. Financial Data and Outlook F. K+S Share Appendix August 2007 K+S Group 29
Slide 31: Salt
K+S Group Salt 1st Half Financial Year Revenues by product group € million 2007 * 2006 2006 * 2005 2006 (%) Revenues 275.2 225.4 485.8 398.0 EBIT I 26.7 47.9 67.6 62.7 * since 1 July 2006 including SPL Brief description Salt products of highest purity and quality are used as table salt, industrial s
Slide 32: Mining Chamber in Germany
Salt Mining Chamber in Germany August 2007 K+S Group 31
Slide 33: SPL: Salt Extraction in the Atacama Desert
Salt SPL: Salt Extraction in the Atacama Desert August 2007 K+S Group 32
Slide 34: SPL: The Optimal Strategic Complement for K+S
Salt SPL: The Optimal Strategic Complement for K+S z SPL has developed into a strong player in the Americas • one of the most cost effective salt producers in the world • enjoys favourable logistical location to attractive overseas markets • high earnings capacity with growth opportunities z SPL ope
Slide 35: Main Salt Suppliers Worldwide
Salt Main Salt Suppliers Worldwide Capacity in million tonnes (crystallized salt and salt in brine; excl. captive use) 18.7 16.0 6.5 14.0 13.7 13.1 9.0 9.5 7.5 7.0 5.3 4.1 3.8 3.6 China Cargill Compass Morton Dampier Artyom- Expor- Südsalz Salins Mitsui Akzo National Minerals Salt Salt sol tadora Gr
Slide 36: USD Currency Management 2007 - 2010
Salt USD Currency Management 2007 - 2010 z Hedging of USD net position approx. three years in advance as for the Potash and Magnesium Products business segment (until 2009 by means of double barrier options) z Double barrier options: no classic hedging mechanism, only effective within certain barrie
Slide 37: System of USD Hedging Transactions
Salt 1,65 System of USD Hedging Transactions 1,60 1,55 USD/EUR 1,50 1,45 1,40 1,35 1,30 1,25 1,20 1,15 1,10 1,05 1,00 1 Jan. 1 July 1 Jan. 1 July 1 Jan. 1 July 1 Jan. 1 July 1 Jan. 1 July 1 Jan. 1 July 1 Jan. 1 July 31 Dec. 2004 2005 2006 2007 2008 2009 2010 USD/EUR Upper barrier (min.) Lower barrie
Slide 38: Content
K+S Group Content A. Corporate Structure B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Businesses D. Strategy E. Financial Data and Outlook F. K+S Share Appendix August 2007 K+S Group 37
Slide 39: Complementary Business Segments
K+S Group Complementary Business Segments Waste Management and Recycling Services and Trading 1st Half Financial Year 1st Half Financial Year € million 2007 2006 2006 2005 € million 2007 2006 2006 2005 Revenues 35.1 34.7 69.4 56.0 Revenues 26.3 27.4 55.0 54.5 EBIT I 6.3 7.3 13.8 8.1 EBIT I 12.8 13.6
Slide 40: Raw Material Prices Favour Recycling Business
Waste Management and Recycling Raw Material Prices Favour Recycling Business Index: January 2003 = 100 600 Price of copper z Recycling: high prices for Price of aluminium aluminium granulate being obtained by the recycling of salt slag 500 z Reutilisiation: stricter legal 400 requirements for the tr
Slide 41: Content
K+S Group Content A. Corporate Structure B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Businesses D. Strategy E. Financial Data and Outlook F. K+S Share Appendix August 2007 K+S Group 40
Slide 42: 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: One of the leading suppliers worldwide Potash z Leader in Europe z Fourth-largest producer worldwide Sulphate of potash and magnesium sulphate z Leading position in the World The green market z Leader in Europe with COMPO
Slide 43: 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 core business sectors through acquisitions and cooperation arrangements z Ongoing focus on improving efficiency and cutting costs as well
Slide 44: Content
K+S Group Content A. Corporate Structure B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Businesses D. Strategy E. Financial Data and Outlook F. K+S Share Appendix August 2007 K+S Group 43
Slide 45: Development of Revenues, Earnings and Cash Flow
5.000 500 K+S Group 4.500 450 Development of Revenues, Earnings and Cash Flow 4.000 400 € million € million 3.500 3,500 CAGR 7.0% 350 CAGR 20.2% 2,958 3.000 3,000 300 278 2,500 2.500 250 2,259 CAGR 14.1% 2,000 2.000 200 176 *** CAGR 29.0% 1,500 1.500 150 133 130 104 1,000 1.000 100 47 500 50 0 0 0 ‘
Slide 46: Capital Expenditure, Acquisitions, Share Buybacks
K+S Group Capital Expenditure, Acquisitions, Share Buybacks € million 2002-’07e 500 Share buybacks: 110 Acquisitions: 454 Expansion capex: 208 400 Maintenance capex: 603 Total cash-outflow: 1,375 300 358 200 93 43 67 64 1 2 27 22 100 41 33 21 94 105 109 121 88 86 0 2002 2003 2004 2005 2006 2007e z 2
Slide 47: Key Figures as of June 2007
K+S Group Key Figures as of 30 June 2007 € million H1/2007 H1/2006 % Revenues 1,723.3 1,555.6 + 10.8 Operating earnings (EBIT I) 172.7 172.5 + 0.1 Earnings before income taxes (EBT), adjusted* 156.6 166.4 - 5.9 Group earnings after taxes, adjusted* 104.8 110.2 - 4.9 Effective tax rate (%) 33.1 33.8
Slide 48: Changes in Revenues as of June 2007
K+S Group 1.900 Changes in Revenues as of 30 June 2007 1.850 € million 1.800 1.750 1,750 1,723.3 1.700 1,700 +126.9 1.650 1,650 +167.7 1.600 1,600 +69.9 -29.3 +0.2 1.550 1,550 1,555.6 1.500 1,500 1.450 1,450 1.400 1,400 Revenues Volume/ Prices Exchange Consoli- Revenues H1 structure rates dation H1
Slide 49: Development of Earnings per Share, Adjusted
K+S Group Development 2,50 of Earnings per Share, Adjusted* 2,25 € 2,00 2.00 1.85 1.73 1.75 1,75 1.52 1.50 1,50 1.42 1,25 1.25 0.97 1.02 1.00 0.95 1,00 0.86 0.76 0.75 0,75 0.83 ** 0.56 0.50 0,50 0.25 0,25 0.00 0,00 Q1 - Q4 2005 Q1 - Q4 2006 Q1 - Q2 2007 EPS H1* € 2.40 € 2.67 € 2.54 EPS FY* € 3.81 €
Slide 50: Outlook for the Year 2007
K+S Group Outlook for the Year 2007 (as of 7 August 2007) z Strong increase in global potash demand due to excellent farm economics. Recent price announcements for overseas and European countries to materialise in the second half of the year; production to reach 8 million tonnes in our Potash and Ma
Slide 51: Content
K+S Group Content A. Corporate Structure B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Businesses D. Strategy E. Financial Data and Outlook F. K+S Share Appendix August 2007 K+S Group 50
Slide 52: Key Data of the K+S Share
K+S Group Key Data of the K+S Share *** 2007 2006 2005 2004 2003 2002 ** Earnings per share, adjusted (€)* 4.27 3.81 2.43 2.42 2.43 Dividend per share (€) 2.00 1.80 1.30 1.00 1.00 Book value per share, adjusted (€)* 26.08 25.71 22.58 20.76 13.76 12.42 Year-end closing price (XETRA, €) 82.20 51.05 39
Slide 53: Dividends and Share Buybacks (10 Years)
K+S Group Dividends and Share Buybacks (10 Years) 150 2,50 € million € per share Dividend per share (rhs) (for the prior financial year) 2.00 120 Share buybacks (lhs) 2,00 2.00 66.70 1.80 Total dividend payment (lhs) (for the prior financial year) 90 69.36 1,50 1.50 1.30 43.38 82.50 1.00 1.00 1.00 7
Slide 54: K+S Share Price Compared with DAX and MDAX
K+S Aktiengesellschaft K+S Share Price Compared with DAX and MDAX Performance of K+S share Market capitalisation (Index: 31 December 2006 = 100) (€ million) 150 140 +715 4,106 130 3,391 120 K+S +21% +1,285 110 DAX +14% MDAX +7% 2,106 100 90 80 Jan. Aug. 2005 2006 2007 2007 2007 31 Dec. 31 Dec. 22 Au
Slide 55: K+S Share Price Compared with Peer Group
K+S Aktiengesellschaft K+S Share Price Compared with Peer Group Index: 31 December 2006 = 100 190 Mosaic +89% 180 170 PotashCorp +78% 160 150 140 130 120 K+S +21% 110 Yara +10% 100 90 80 Jan. Aug. 2007 2007 source: Bloomberg; as of 22 August 2007 August 2007 K+S Group 54
Slide 56: Shareholder Structure
K+S Aktiengesellschaft Shareholder Structure Switzerland permanent BASF France 2.1% holdings employees* (permanent 3.9% 10.3% 2.2% holdings) Rest of the World USA & Canada 10.3% 1.0% 17.9% freefloat private German institutional UK & Ireland 89.7% investors* investors 21.2% 14.4% 27.0% foreign instit
Slide 57: Financial Calendar
K+S Group Financial Calendar 13 November 2007 ¾ Interim report 30 September 2007 13 March 2008 ¾ Report on business in 2007 ¾ Press and analyst conference, Frankfurt am Main 14 May 2008 ¾ Annual General Meeting 2008, Kassel ¾ Interim report 31 March 2008 15 May 2008 ¾ Dividend payment for the year 2
Slide 58: K+S Aktiengesellschaft Contact Details
K+S Aktiengesellschaft Bertha-von-Suttner-Straße 7 34131 Kassel (Germany) phone: +49 (0)561 / 9301-0 fax: +49 (0)561 / 9301-1753 www.k-plus-s.com Investor Relations phone: +49 (0)561 / 9301-1460 fax: +49 (0)561 / 9301-2425 email: investor-relations@k-plus-s.com Experience growth. August 2007 K+S Gro
Slide 59: Content
K+S Group Content A. Corporate Structure B. Core Business Segments: - Fertilizers and Plant Care - Salt C. Complementary Businesses D. Strategy E. Financial Data and Outlook F. K+S Share Appendix August 2007 K+S Group 58
Slide 60: History
K+S Group History 1889 Formation of „Aktiengesellschaft für Bergbau und Tiefbohrung“, the oldest predecessing company of today`s K+S Aktiengesellschaft 1970 Merger of all three West-German potash producers to Kali und Salz AG; BASF is majority shareholder 1993 Merger of the potash and rock salt acti
Slide 61: Revenues and Earnings as of December 2006
K+S Group Revenues and Earnings as of 31 December 2006 € million 2006 2005 % Revenues 2,957.7 2,815.7 + 5.0 Operating earnings (EBIT I) 278.0 250.9 + 10.8 Earnings after market value changes (EBIT II) 361.6 271.7 + 33.1 Financial result - 20.1 - 12.1 - 66.1 Earnings before income taxes (EBT) 341.5 2
Slide 62: Changes in Revenues as of December 2006
K+S Group Changes in Revenues as of 31 December 2006 3.050 € million 3,000 3.000 2,957.7 2,950 2.950 +81.9 2,900 2.900 +142.0 +85.4 -0.8 2,850 2.850 2,800 2.800 2,815.7 -24.5 2,750 2.750 2,700 2.700 Revenues Volume/ Prices Exchange Consoli- Revenues 2005 structure rates dation 2006 August 2007 K+S G
Slide 63: Balance Sheet as of December 2006
K+S Group Balance Sheet as of 31 December 2006 € million 2006 2005 Non-current assets 1,396.6 1,020.8 of which: Intangible assets 189.0 82.2 Property, plant and equipment 1,082.6 791.9 Securities 42.1 56.0 Deferred tax assets 52.0 58.1 Current assets 1,434.3 1,238.2 of which: Operating current asset
Slide 64: Cash Flow Statement as of December 2006
K+S Group Cash Flow Statement as of 31 December 2006 € million 2006 2005 +/- Gross cash flow 342.7 341.5 + 1.2 Cash flow provided by operating activities 202.4 220.8 - 18.4 Cash flow used in investing activities - 429.8 - 94.3 - 335.5 Free cash flow - 227.4 126.5 - 353.9 Cash flow used in financing
Slide 65: Operating EBIT Margins as of December 2006
K+S Group Operating EBIT Margins as of 31 December 2006 Operating Operating earnings Revenues EBIT margin € million 2006 2006 2006 2005 Potash and Magnesium Products 158.6 1,238.9 12.8 % 12.7 % COMPO 29.2 552.4 5.3 % 4.6 % fertiva 16.7 556.2 3.0 % 2.6 % Salt 67.6 485.8 13.9 % 15.8 % Waste Management
Slide 66: ROCE as of December 2006
K+S Group ROCE as of 31 December 2006 Operating Net Return on earnings assets* capital employed € million 2006 2006 2006 2005 Potash and Magnesium Products 158.6 850.9 18.6 % 19.5 % COMPO 29.2 283.9 10.3 % 9.3 % fertiva 16.7 - 100.3 - - Salt 67.6 480.6 14.1 % 24.7 % Waste Management and Recycling 13
Slide 67: K+S Aktiengesellschaft Contact Details
K+S Aktiengesellschaft Bertha-von-Suttner-Straße 7 34131 Kassel (Germany) phone: +49 (0)561 / 9301-0 fax: +49 (0)561 / 9301-1753 www.k-plus-s.com Investor Relations phone: +49 (0)561 / 9301-1460 fax: +49 (0)561 / 9301-2425 email: investor-relations@k-plus-s.com Experience growth. August 2007 K+S Gro
Slide 68: 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
K+S Aktiengesellschaft — Non-Deal Roadshow (August 2007) on 6ix