Corporate strategy and strategic direction of the business sectors

Differentiation and sustainable margin growth through specialisation

The K+S Group aims to consolidate and expand market positions in its core business sectors, in particular through the increased marketing of speciality products. The refinement strategy makes it possible to achieve more attractive margins in the Fertilizer and Salt business sectors.

Increasing efficiency and exploiting synergies

In respect of the most important competitors in the main sales markets in the fertilizer and salt businesses, the cost position is a key success factor. In addition to consistently pursuing cost-cutting and flexibilisation initiatives throughout the whole process chain, there is a special focus on the optimisation of the international production network and the associated volume flows and logistics costs. Comparable mining processes make synergies possible between the Potash and Magnesium Products and Salt business segments in the exchange of technical, geological and logistics know-how as well as economies of scale in the procurement of machines and auxiliary materials.

Expansion of the balanced regional portfolio

Worldwide, both fertilizer and salt markets are characterised by seasonal and regional fluctuations in demand. The strategy of the K+S Group is aimed at a balanced regional portfolio, which makes a balance of weather-related fluctuations and a cushioning of cyclical market trends possible. Additionally, the fertilizer business and the salt business, which is less dependent on the economic cycle, also complement each other during temporary economic crises.

In the fertilizer sector, a balanced market presence in the important agricultural markets of Europe, South America and Asia makes the equalisation of seasonal fluctuations between the northern and southern hemispheres as well as a reduction of the impact of economic trends on regional demand possible. Expanding the market presence in important overseas markets and tapping into new attractive sales markets in future growth regions therefore continue to be pursued.

Local production is a decisive factor in the opening up of new markets in the salt business, which is strongly volume-driven. In the Salt business segment, the improvement in the earnings profile as a result of the reduction in dependence on the regional volatility of the de-icing salt business was an important driver of our acquisitions in South and North America (SPL and Morton Salt), which make an important contribution to compensating for the fluctuating winter season in Europe.

Setting standards for quality, reliability and service

The goal of the K+S Group is to be our customers’ preferred partner in the market. High product quality and reliability are decisive preconditions for this. In addition to the specialisation strategy, better and innovative services are promoted, where these create value. Particularly in the fertilizer area, individual advice to customers enables to identify needs-based solutions and thus to strengthen customer loyalty. With our offers such as electronic order processing or supplier-managed stock in the European de-icing salt business, we strive to set new standards in the market.

Strategic direction of the business sectors

With the Fertilizer and Salt business sectors, the K+S Group has two synergetically related business sectors with attractive growth prospects at their disposal which complement each other.

In addition to organic growth, we also strive to achieve growth via acquisitions and cooperations in the established business sectors. 

Thus, the purchase of Potash one, which will result in an expansion of the potash capacities and to an extension of the average useful life of our mines, is characteristic of our two-pillar strategy. This pursues the goal of focussing management and financial resources in future particularly on the Potash and Magnesium Products and Salt business segments. Against this backdrop, last year, we also announced that we would consider the sale of COMPO and have consequently commenced a carve-out process.

Strategy Potash and Magnesium Products

The future strategic fields of action arising for the Potash and Magnesium Products business segment:

Strategy Salt

The future strategic fields of action arising for the Salt business segment:

Strategic group structure

As regards the shaping of the Group structure in terms of company law, in addition to the presentation of our business segment structure, the question of optimising internal Group financing and of tax optimisation are the main focuses.

Strategic financing measures

Essentially we pursue the following goals with the financial measures that we have adopted:

• Ensuring a balanced capital structure
• Limiting refinancing risks through diversification of the financing sources and instruments as well as the maturity profile
• Optimisation of costs through capital procurement on sustainably favourable terms

Within the framework of this objective, we optimised the maturity profile of the financing instruments of the K+S Group in financial year 2010. This involved the aggregation of two revolving credit lines to one syndicated credit line with more favourable terms as well as the extension of the term from April 2012 to July 2015.

Furthermore, in the year under review, we switched the financing of the seasonal financial requirements of Morton Salt and ISCO in the American salt business from external bank loans to internal Group sources. We have thus achieved the goal of optimising costs by avoiding margin losses in the case of simultaneously investing and borrowing money.