Further strong increase in revenues, earnings, and cash flow
- Q3 revenues: €1.47 billion (Q3/21: €746 million);
9M revenues: €4.19 billion (9M/21: €2.14 billion)
- Q3 EBITDA: €633 million (Q3/21: €121 million);
9M EBITDA: €1.86 billion (9M/21: €358 million)
- Best-ever annual result already significantly exceeded after just nine months
- Adjusted free cash flow reaches €580 million in the third quarter and €1.04 billion after nine months before special effects (9M/2021: -€152 million)
- 2022 outlook (without gas levy or shortage in Q4):
- EBITDA outlook substantiated at around €2.4 billion (2021: €969 million; previous outlook: €2.3 billion to €2.6 billion including gas levy or gas shortage scenario).
- Measures from the German government's planned defensive shield (gas price cap) will not be utilized according to current knowledge
- Adjusted free cash flow (operative) expected to reach a good €1.2 billion (2021: €93 million; previous outlook: €1.0 billion to €1.2 billion, ~€1 billion forecast even taking into account known special effects)
“In the third quarter, we once again achieved very good results,” says Dr. Burkhard Lohr, Chairman of the Board of Executive Directors of K+S Aktiengesellschaft. “The strong increases in revenues, earnings, and cash flow after nine months confirm our expectation of achieving by far the best annual results in the history of the Company in 2022.”
Higher revenues in both customer segments
In the Agriculture customer segment, revenues increased significantly year-on-year to around €1.2 billion in the third quarter (Q3/2021: €529 million), in particular due to higher prices in Europe and overseas. In the same period, sales volumes decreased tangibly to 1.6 million tonnes from 1.8 million tonnes in Q3/2021 due to logistical challenges and a wait-and-see attitude on the customer side. A 50,000-tonne ship, for example, did not leave the port of Hamburg until early October, although it had been scheduled for the end of September. In Europe, the low water levels of the Rhine river in the summer combined with already strained rail logistics had a negative impact.
At €307 million, third quarter revenues in the Industry+ customer segment also significantly exceeded the previous year's figure (Q3/2021: €217 million). Following the above-average early-fills business of the prior-year quarter due to weather conditions, sales volumes of de-icing salt declined, but were nevertheless at an above-average level overall. Revenues from products for chemical, industrial, and pharmaceutical applications increased significantly, in particular due to higher prices for products containing potash.
Full year 2022: EBITDA and cash flow outlook substantiated
The strong increase in the average price in the Agriculture customer segment should significantly exceed expected cost increases, especially for energy, logistics, and materials. Assuming that there are no production restrictions at the German sites due to bottlenecks in the availability of natural gas, K+S now expects EBITDA for the 2022 financial year of about €2.4 billion (previous outlook: €2.3 billion to €2.6 billion including the gas levy or shortage scenario; 2021: €969.1 million, including €219 million one-off effect from the REKS transaction). K+S will, therefore, achieve the best annual result in the history of the Company and would exceed the previous record figure of 2008 (€1.5 billion) by almost €1 billion.
As far as it is known today, K+S will not make use of measures arising from the federal government's defensive shield (gas price cap). Therefore, the full ability to pay dividends would be maintained. With an average natural gas price of €50/MWh for the volumes fixed by K+S for 2023 (90% of the natural gas requirements in Europe), the Company has a high degree of predictability in terms of energy costs.
Adjusted free cash flow from continuing operations, excluding special effects, is expected to reach a good €1.2 billion (previous outlook: €1.0 billion to €1.2 billion; adjusted free cash flow in 2021: €92.7 million).
For the Agriculture customer segment, it is expected that, as a result of lower export volumes from Russia and Belarus, the record world potash sales volume of about 77 million tonnes (including about 5 million tonnes of potassium sulfate and potash grades with lower mineral contents) experienced in the two previous years cannot be achieved and will be significantly lower, in particular due to reasons of availability. The demand side is furthermore currently characterized by a wait-and-see attitude, as there is no imminent main potash application season in the last few months of the year in the sales regions important for K+S. With the observed normalization of potash prices at a high level, we expect demand to pick up in preparation for the application in the first half of 2023, as profitability in agriculture is intact in all sales regions.
All other assumptions underlying the full-year outlook can be found in the Q3/2022 Quarterly Report on page 10.
Further information and data on the development in the third quarter of 2022 can be found in the Q3/2022 Quarterly Report, the Q3/2022 Facts & Figures as well as in the interview on business development with Dr. Burkhard Lohr, Chairman of the K+S Board of Executive Directors. A Teams Conference for investors and analysts with Dr. Burkhard Lohr, Chairman of the Board of Executive Directors, will take place today at 10:00 a.m. in English. During this Teams Conference, Holger Riemensperger (Chief Operating Officer) and Dr. Burkhard Lohr will also present the Werra 2060 project. Members of the press and interested members of the public are invited to follow the conference via a live webcast. The conference will be recorded and will also be available as a replay afterwards.
We make an important contribution to society: We enable farmers securing the world's food supply. Our products keep numerous industries running. We enrich consumers' daily lives and ensure safety in winter. With around 11,000 employees, production sites on two continents, and a global distribution network, we are a reliable partner for our customers. At the same time, we are realigning ourselves: We are focusing even more strongly than before on fertilizers and specialties. We are becoming leaner, more cost-efficient, more digital, and more performance-oriented. On a solid financial basis, we are tapping into new markets and business models. We are committed to our responsibility towards society and the environment in all regions in which we operate.
This press release contains facts and forecasts that relate to the future development of the K+S Group and its companies. The forecasts represent estimates that we have made on the basis of all the information available to us at the present time. Should the assumptions underlying these forecasts prove not to be correct or risks - such as those described in the risk report contained in the current annual report - materialize, actual developments and results may deviate from current expectations. The Company assumes no obligation to update the statements contained in this press release other than as required by law.