K+S AG, Europe’s biggest potash producer, reported first-quarter profit that beat the average analyst estimates after demand for fertilizer rose in March, helping offset a decline in sales of de-icing salts.
Earnings before interest and tax excluding one-time items declined 24 percent to 281.1 million euros ($364.8 million) in the quarter, Kassel, Germany-based K+S said today in a statement. Analysts surveyed by Bloomberg had estimated 265.4 million euros.
Farmers ordered more potash fertilizer at the end of March after the European planting season started late. Chief Executive Officer Norbert Steiner today reiterated a forecast for operating profit to decline “moderately” and sales to remain stable this year. The company agreed to sell its nitrogen fertilizer distribution unit to OAO EuroChem, it said yesterday.
“K+S surprised with its potash fertilizer business and report of a rising fertilizer demand at the end of the first quarter,” Heinz Mueller, an analyst at DZ Bank AG, said in a note to clients today. “We appreciate the sale of the low-margin nitrogen business.” Mueller recommends investors buy the stock.
K+S shares fell 0.2 percent to 36.11 euros at 9:30 a.m. in Frankfurt trading. The shares have gained 3.4 percent this year for a market value of 6.9 billion euros.
Quarterly sales dropped 12 percent to 1.44 billion euros, compared with a 1.43 billion-euro estimate. Adjusted net income fell 29 percent to 193.4 million euros.
“Despite challenging framework conditions at the start of the year, our potash fertilizer business achieved a very good result,” Steiner said in today’s statement. “We were thus able to significantly mitigate the sharp decline for de-icing salts which was entirely due to weather conditions.”
The sale of the nitrogen fertilizer distribution unit to EuroChem values the business at about 140 million euros, K+S said yesterday. EuroChem, owned by Russian billionaire Andrey Melnichenko, purchased parts of BASF SE’s Antwerp-based nitrogen fertilizer business for 830 million euros earlier this month. The purchase of K+S’s distribution arm complements that acquisition because K+S has an exclusive agreement to sell output from the BASF plants.
K+S, which became the world’s largest salt producer after buying Morton Salt from Dow Chemical Co. in 2009, named Mark Roberts to the executive board from Oct. 1, when he takes responsibility for the salt business, the company said yesterday after markets closed.