K+S AG, Europe’s largest producer of potash, pared its outlook for sales and profit this year and next as economic volatility prompts wholesalers to scale back orders.
Earnings before interest and taxes excluding some hedging transactions, the so-called Ebit I, will rise to between 950 million euros ($1.3 million) and 1 billion euros, the Kassel, Germany-based company said today in a statement. That compares with an earlier forecast for as much as 1.05 billion euros.
K+S’s move echoes that of Potash Corp. of Saskatchewan Inc., which two weeks ago reduced its guidance range for potash shipments. K+S also reduced the upper range of its forecast for 2011 sales and retreated from a prediction that profit will rise in 2012.
“The market’s expectations for 2012 were too high,” said Marc Gabriel, an analyst at Bankhaus Lampe KG, who has a “hold” rating on K+S stock. “The company has become a bit more careful and that could burden sentiment.”
K+S shares dropped as much as 8.3 percent, its biggest intraday decline in three months, to 40.80 euros in Frankfurt trading. The stock was down 6.2 percent at 41.73 euros as of 10:03 a.m. The potash miner has lost 26 percent this year, giving it a market value of about 8 billion euros.
Next year the company expects stable revenue and operating profit at about the same level as in 2011, it said today. Previously it forecast a “moderate increase” in profit. Sales this year will rise to as much as 5.25 billion euros instead of 5.3 billion euros, K+S said today.
“Our new forecast takes into account increasing uncertainty in the trade sector,” Chief Executive Officer Norbert Steiner said in a statement today. “This has also prompted us to be more cautious in our perspective for 2012.”
Ebit I rose 69 percent to 198.5 million euros in the third quarter, as volumes for potash and magnesium products and selling prices rose. That beat the 192.6 million-euro average of 16 analyst estimates compiled by Bloomberg.
Quarterly sales rose 17 percent to 1.17 billion euros. Profit after tax gained 19 percent to 91 million euros.
The company predicted “moderately lower” revenue and “significantly” lower operating earnings from its salt business next year on reduced demand.
K+S adjusted last year’s numbers to reflect for its garden- fertilizer unit Compo, which it sold to Triton last month.
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