Recovering potash prices lift K+S Q3, 2014 forecast #potash
Recovering potash prices lift K+S Q3, 2014 forecast
Thu Nov 13, 2014 2:02am EST
* K+S Q3 EBIT up 16 percent on year
* K+S hikes FY forecast for revenue, EBIT
* K+S says potash price to remain below 2013 levels (Adds CFO comment on cost savings)
FRANKFURT, Nov 13 (Reuters) – German potash miner K+S raised its expectations for full-year earnings after its quarterly operating result rose 16 percent, helped by a recovery in prices for potash products.
Third-quarter earnings before interest and tax (EBIT I), adjusted for the effect of currency hedging, edged up to 134 million euros ($166.7 million), surpassing the 104 million euro average estimate in a Reuters poll of analysts.
Potash prices have stabilised since the global potash market plunged into turmoil in July 2013 when Russian producer Uralkali quit a powerful sales alliance with Belarus’ Belaruskali, creating more competition among producers.
Improving prices for potash and magnesium products led K+S to raise its full-year forecast. K+S now expects revenues of between 3.7-3.9 billion euros for 2014, and operating earnings of between 580 and 640 million euros.
It had previously forecast revenues of between 3.65-3.85 billion euros and operating earnings of between 490 to 570 million euros.
The average per-tonne price of K+S’s potash products in the third quarter was 278.7 euros per tonne, 0.6 percent below the level a year earlier, but up 4 percent from the second quarter, the group’s financial report shows.
K+S said it expects prices for potash and magnesium products to remain below 2013 levels.
The salt and potash mining company, formerly part of BASF on Thursday said it intends to return to a dividend payout ratio of between 40 and 50 percent as soon as possible.
In response to lower potash prices, K+S launched a cost-cutting programme, aimed at saving a combined 500 million euros by end-2016. Around 70 percent of the cost savings have been achieved, Chief Financial Officer Burkhard Lohr said on Thursday.
Rival potash supplier Israel Chemicals earlier said prices for the crop nutrient look to set to rise. (1 US dollar = 0.8036 euro) (Reporting by Edward Taylor and Andreas Kroener, editing by Thomas Atkins)