Future earnings, financial and asset position of the K+S Group
The following forecasts relate to the expected organic revenue and earnings development of the continued operations. Changes resulting from acquisitions, cooperations or divestments are not taken into consideration.
In line with the forecast policy discussed in the Financial Report 2011 on page 142, in the Quarterly Financial Report for the first quarter, the outlook for the current year is taken up and, if necessary, adjusted. The outlook still uses the qualitative classifications “slight”, “moderate”, “tangible”, “significant” and “strong/substantial”. The respective terms are generally based on the internally expected change in percentage terms in comparison to the corresponding figures for the previous year.
In 2012, revenues should remain stable
In the financial year 2012, revenues of the K+S Group should remain stable in comparison to the previous year. While in the Potash and Magnesium Products business segment, on the basis of the currently achieved potash price level, we assume moderately and in the Nitrogen Fertilizers business segment slightly increasing revenues, in the Salt business segment, we expect tangibly (previously: moderately) lower revenues. The revenue forecast assumes an average US dollar exchange rate of 1.33 USD/ EUR (previously: 1.32 USD/EUR ; 2011: 1.39 USD/EUR).
Costs will probably rise moderately
The following forecast of the development of costs is structured by cost type: The total costs of the K+S Group should rise moderately year on year. As regards personnel expenses, additional employees and effects from collective agreement pay increases should be approximately balanced by lower bonuses to our employees (previously: slight increase). Material costs will probably increase slightly, while energy costs should rise significantly due to higher prices. On the other hand, we expect moderately lower freight costs, while depreciation and amortisation should decrease slightly (previously: stable). Moreover, a negative currency result is to be expected after last year benefited from a positive hedging result.
Operating earnings should decrease moderately
For the financial year 2012, operating earnings EBIT I of the K+S Group should decrease moderately in comparison to last year’s figure. In the Potash and Magnesium Products business segment, we assume operating earnings that could again approach the good earnings achieved last year. The Nitrogen Fertilizers business segment should be able to achieve earnings at the level of the previous year. In comparison to last year, which benefited from above-average volumes of de-icing salt, the operating earnings of the Salt business segment will probably decline strongly.
Moderately lower Group earnings expected
The adjusted Group earnings after taxes should also moderately decline in 2012 in line with the development of operating earnings. Besides the effects described for revenues and operating earnings, our estimate is based also on:
- the expectation of consistently attractive agricultural prices;
- our customary, purely technical forecast policy, which maintains the currently achieved potash price level unchanged for the remainder of 2012;
- sales volume in the Potash and Magnesium Products business segment at about the same level as the previous year (2011: 6.9 million tonnes);
- a sales volume of crystallised salt of less than 19 million tonnes (previously: a good 19 million tonnes; 2011: 22.7 million tonnes), of which less than 10 million tonnes de-icing salt (previously: about 10 million tonnes; 2011: 13.3 million tonnes). For the fourth quarter, this, as customarily, assumes the average of multiyear de-icing salt sales volumes;
- a largely unchanged financial result;
- a slightly higher adjusted Group tax rate of 27% to 28% (2011: 26.1%).
