K+S Sees First Signs of Potash Market Recovery, Beats Estimates

K+S AG (SDF), Europe’s largest potash supplier, said it sees the first signs of recovery in the market for the crop nutrient and reported first-quarter earnings that beat analyst estimates.

Earnings before interest, tax and some hedging transactions, or Ebit I, fell 21 percent to 219.6 million euros ($301.3 million) in the quarter, the Kassel, Germany-based company said today in a statement. Analysts had predicted 193.1 million euros, according to a Bloomberg survey.

Chief Executive Officer Norbert Steiner said today that price levels for potash fertilizers have bottomed out. The company still expects a “significant” profit drop this year as prices remain lower on average. The breakup of an industry cartel in mid-2013 led to a ramp-up in production of the commodity product and prompted a 24 percent price plunge within six months.

“Demand for potash as well as magnesium products is robust and we see signs that the pricing trough is behind us,” Steiner said in today’s statement.

Quarterly sales declined 7.1 percent to 1.19 billion euros, in line with analyst estimates.

The company aims to save 150 million euros this year as part of a 500 million-euro cost-cutting program as it spends less on materials and processes, according to the company.

K+S is sticking to a full-year forecast for a “moderate” decline in sales. The miner will propose a dividend cut of 82 percent to 25 cents a share at its annual shareholder meeting today, it reiterated today.

A $4 billion development of the Legacy mine in Canada will require an investment of about 800 million euros this year, the company said today. Capital expenditures will probably total 1.2 billion euros as the company invests in the prevention of water pollution in its Hesse-Thuringia producing region in Germany.

K+S plans to spend about C$1 billion ($917 million) a year from 2014 to 2016 on the mine, Chief Financial Officer Burkhard Lohr said in March.

To contact the reporter on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net

To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net Andrew Noel, Tom Lavell

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