K+S Predicts Earnings Will Rise This Year on Demand for Potash
K+S AG (SDF) predicts earnings and sales will rise “slightly” this year as Europe’s largest potash maker benefits from stable demand for the fertilizer ingredient and a recovery for the de-icing salt business.
Volumes for potash will probably hold steady this year, after 2012 was the second-best year in history for the unit, Chief Executive Officer Norbert Steiner said today in a statement. Wintry conditions at the start of this year are ensuring a recovery for the salt business, he said. The stock rose the most in more than seven months.
The potash business has done better than rivals because it’s less focused on the two large consumer countries China and India, Steiner said today in the Kassel, Germany-based company’s annual report. Canada’s Potash Corp. of Saskatchewan Inc. and Russia’s OAO Uralkali have both cut output amid faltering export volumes.
“The outlook was surprising,” said Marc Gabriel, an analyst at Bankhaus Lampe KG. “Growth in earnings and sales wasn’t expected.” Gabriel rates the stock hold.
The stock jumped as much as 4.2 percent, the biggest intraday gain since July 30, to 37.59 euros in Frankfurt trading. It was up 3.7 percent at 37.38 euros as of 9:12 a.m. local time. The company has a market value of 7.1 billion euros ($9.2 billion).
Earnings before interest and taxes and excluding some hedging transactions, called Ebit I, fell 12 percent to 183.2 million euros in the fourth quarter, in line with analyst estimates. Sales dropped 7.8 percent to 941.6 million euros, after a late start to winter weather in North America hurt demand for salt. Analysts had estimated 952.3 million euros in a Bloomberg survey.
While sales volumes for potash will probably hold steady this year, the average price will be lower than in 2012. The salt business will see “tangible recovery,” the CEO said.
“We experienced a very decent start into the new business year in both of our business units,” Steiner said in a video on the company’s website.
K+S will propose an annual dividend payment of 1.40 euros per share, up from 1.30 euros, the company said. Analysts predicted 1.35 euros, according to data compiled by Bloomberg.
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