12 March 2015

2014 Financial Year

Earnings at Upper End of Forecast

  • Revenues down slightly on previous year at € 3.8 billion
  • Operating earnings of € 641 million (Forecast € 580 – 640 million)
  • ‘Fit for the Future’ programme exceeds targets for 2014 and makes strongest contribution to results
  • Legacy Project makes good progress
  • Return to long-term dividend policy:  
    proposal of € 0.90 per share (2013: € 0.25 per share)
  • Outlook 2015: significant increase in EBIT I expected

“K+S generated a good result in 2014. This was assisted by the recovery of potash prices during the second half of the year and the overall much improved result in the Salt business unit. The main contribution was made by cost savings some of which were extremely painful. In this respect, the result was by no means a given,” said K+S Board of Executive Directors’ Chairman, Norbert Steiner, at the Company’s annual financial press conference today. “Our thanks are due to all the parties involved, but we have to consistently continue our approach in order to remain successful,” Steiner continued.

Revenues amounted to € 3.82 billion in the past financial year and were therefore slightly below the level in the previous year (€ 3.95 billion). In the first half of the year, higher sales volume in the Salt business unit was only able to partially offset falling prices in the Potash and Magnesium Products business unit. In the second half of 2014, the recovery of potash prices and sustained high demand for plant nutrients in the core regions compared with the same period in 2013, contributed to slightly higher revenues. In the fourth quarter of 2014, revenues rose by around 4% to € 1.02 billion compared with the same period in the previous year.

‘Fit for the Future’ programme exceeds expectations

The programme designed to improve cost and organisational structures launched in November 2013 aims to increase the efficiency of production as well as administration and sales functions. K+S is striving for total cost savings in the magnitude of € 500 million between 2014 and 2016 compared with previous planning for this period. The target for 2014 set in this context has been exceeded. Compared with operating earnings EBIT I in the 2013 financial year, this resulted in improved earnings of a good € 120 million. A large number of different cost items contributed to this, but it was also possible to make structural improvements, in the area of logistics, for example.

Operating earnings down slightly compared with previous year

Like revenues, operating earnings EBIT I of € 641 million were down slightly on the previous year (2013: € 656 million).

Increases in earnings due to better volume-related Salt business as well as the significant savings resulting from the ‘Fit for the Future’ programme already referred to were not able to offset the overall lower annual average price level compared with the previous year for potash and magnesium products. EBIT I also includes a positive special item of € 36 million resulting from an insurance payment.

K+S Group operating earnings (EBIT I) rose to € 130 million in the fourth quarter of the 2014 financial year (Q4/2013: € 100 million) despite higher provisions for mining obligations, increased depreciation and amortisation in the Potash and Magnesium Products business unit, and start-up costs for the Legacy Project.

Adjusted Group earnings fell

Adjusted Group earnings from continued operations fell by around 16% to € 367 million (2013: € 437 million). In the reporting year, adjusted earnings per share from continued operations reached € 1.92 (2013: € 2.28).

Increase in capital expenditure as planned

The increase in capital expenditure of € 411 million or 55% to € 1.15 billion is due mainly to the Legacy Project in Canada as well as other water protection measures in the Hesse-Thuringia potash district.

Legacy Project makes good progress

A first test cavern for extracting brine containing potash was completed at a depth of some 1,500 meters in the 2014 financial year. A long-term exclusivity agreement was signed with Pacific Coast Terminals Co. Ltd. (PCT) for the construction and operation of a new loading and storage facility in the harbour in Vancouver (Canada). Moreover, a camp supplying and accommodating workers at the site was opened. The first heavyweight evaporators, which are needed to crystallise the brine, were delivered in November. K+S is well on the way to commissioning the plant as scheduled in summer 2016 and meeting the investment budget of 4.1 billion Canadian dollars.

Dividends set to increase significantly

The Board of Executive Directors and the Supervisory Board will propose a dividend of € 0.90 per share (previous year: € 0.25 per share) to the Annual General Meeting and thus return to the long-term dividend policy due to the better than expected development of earnings. This corresponds to a payout ratio of 47% (previous year: 11%) and is again within the target range of between 40 and 50% of adjusted Group earnings after taxes (including discontinued operations).

Outlook for 2015: Significantly increasing earnings expected

The revenues of the K+S Group in the 2015 financial year should be moderately higher than the figure for the previous year (2014: € 3.82 billion).

K+S Groupoperating earnings (EBIT I) are set to significantly exceed the comparable figure for the previous year (2014: € 641 million). In particular, higher average prices in both business units and exchange rate effects (stronger US dollar in relation to the euro) in the Potash and Magnesium Products business unit should have positive effects. The ‘Fit for the Future’ programme will again also make a substantial contribution in the current year. Adjusted Group earnings after taxes should follow the trend in operating earnings and consequently also be significantly higher than in the previous year (2014: € 367 million).

Further details on the outlook can be found in the 2014 Financial Report from page 98.

Information for editorial departments

The 2014 Financial Report, the 2014 Sustainability Report and the K+S Q4/14 Facts & Figures (in English) are available from our website at www.k-plus-s.com/2014q4en. Moreover, a video message on business development from Dr Burkhard Lohr, Chief Financial Officer, and from 10 am, the presentation by Norbert Steiner, Chairman of the Board of Executive Directors, and Dr Burkhard Lohr, Chief Financial Officer, for today’s K+S annual financial press conference in Frankfurt-am-Main are also available on the website.

An analysts’ conference in English with Norbert Steiner and Dr Burkhard Lohr will also take place in Frankfurt am Main today at 1 pm. Shareholders, investors, press representatives and interested parties from the general public are invited to follow the conference via a live webcast (www.k-plus-s.com/de/audio-und-video/cc.html). The conference will be recorded and made available as a podcast.

About K+S

K+S is an international resources company. We have been mining and processing mineral raw materials for 125 years. The products we produce from them are used worldwide in agriculture, food and road safety and are important elements in numerous industrial processes. Potash and salt are integral nutrients for the megatrend of a constantly growing and increasingly prosperous global population striving for a higher standard of living. This will result in increasing consumption of mineral resources. We serve the resulting growth in demand from production sites in Europe, North America and South America as well as through a global distribution network. K+S is the world’s largest salt producer and one of the top potash providers worldwide. With more than 14,000 employees, K+S achieved revenues in financial year 2014 of about € 3.8 billion and an EBIT of € 641 million. K+S is the commodities stock on the German DAX index. Learn more about K+S at www.k-plus-s.com.

Michael Wudonig

Spokesman

Phone: +49 561 9301 1262
michael.wudonig@k-plus-s.com

Michael Wudonig
Spokesman

Bertha-von-Suttner Str. 7
34131 Kassel
Germany

Phone: +49 561 9301 1262
Fax: +49 561 9301 1666
michael.wudonig@k-plus-s.com

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Thorsten Boeckers

Board of Executive Directors

Thorsten Boeckers
Board of Executive Directors

Bertha-von-Suttner Str. 7
34131 Kassel
Germany

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