Market and product
Stabilising K+S flags 'high'demand for potash
The German potash group said that prices of the nutrient, which tumbled after the break-up of the Belarusian Potash Company cartel a year ago, had "continued to stabilise" in the April-to-June quarter.
"Especially in the regions of Europe and South America, which are important for K+S, demand remained high," K+S said.
And with potash supplies "limited to some extent… some competitors announced further price increases".
Canadian giant PotashCorp last month said that it is attempting some increase in Brazilian prices as the country's busy main-crop sowings period looms, and noted some success in lifting values by $10 a tonne to $360 a tonne.
'Significantly lower price level'
K+S said that its own fertilizer division had seen a return to rising price realisation, with the average value achieved rising by E6.3 a tonne to E268.1 a tonne during the April-to-June period, compared with the quarter before.
However, that remained below the E309.4 a tonne achieved a year before and, with volumes flat, the division's revenues dropped 15.9% to E461.1m.
"The principal cause of the revenue decrease was the significantly lower price level on the global potash markets compared with a year ago," K+S said.
Operating profits for the division were 12.5% down at E159.2m.
'Bleak outlook'
However, with the K+S salt business returning to profit, group operating earnings fell a modest 3.3% to E157.3m, on revenues down 10.2% at E785.7m.
While profits were inflated by a E30m insurance payout, following a carbon dioxide leak at its Unterbreizbach mine which killed three workers, the figure far exceeded market expectations of a E103m result.
Nonetheless, K+S shares lost early gained to stand 2.4 lower at E23.68 in mid-morning deals in Frankfurt.
Baader Bank, restating a "sell" rating on the shares, said that K+S's potash volumes for the quarter, while better-than-expected, were boosted by a one-time event of farmer restocking at low prices.
At an underlying level, "expectations regarding potash are bleak", Baader Bank analyst Markus Mayer said.
K+S refined its outlook for operating profits for the full year - including the insurance payout - to E490m-570m from a forecast of "significantly below" the 2013 result of E655.9m.
Analysts, who may not have factored in the insurance claim, have forecast in a figure of E491.5m.
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