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K+S Aktiengesellschaft
UniCredit – Kepler Cheuvreux German Corporate Conference Frankfurt, January 18, 2016 Norbert Steiner, CEO
K+S Group 2
Content K+S Group
K+S’ Unique Strategic Position A
Current Trading B
Outlook C
Salt 2
Potash and Magnesium Products 1
K+S Group 3
Investment Case K+S Group
Complementary Activities
Salt Business Unit
Potash and Magnesium Products Business Unit
K+S Group
Unique position in Europe and specialty fertilizers
Legacy Project heading closer to commissioning in 2016
Salt business to improve earnings substantially
Ongoing cost reductions and efficiency improvements
Dividend payout of 40-50%
Attractive mid-term EBITDA guidance: ~ € 1.6 billion in 2020
K+S Group 4
Content K+S Group
K+S’ Unique Strategic Position A
Current Trading B
Outlook C
Salt 2
Potash and Magnesium Products 1
K+S Group 5
Long-Term Dynamics Positive for Fertilizer Potash and Magnesium Products
4.300 m2 2.100 m2 1.800 m2
Global population development
Arable Land per capita
Protein per capita
60 g/ day 80 g/ day 130 g/ day1)
Jahr
3.0 billion
Less arable land – but more protein consumption per capita
Each year additional 80m people need to
be fed – this equals to the population of
Germany
Available arable land per capita will
decrease at the same time
By 2050 an expanded world population will
be consuming two thirds more animal
protein than it does today
In 2050, less than half of a soccer field will be available to feed one person year round -
80 percent of future growth in crop production will come from yield advancements
driven by balanced use of fertilizers
6.9 billion 9.7 billion
1960 2010 2050
Sources: UN, World Population Prospects, 2012 Revision, UNDP, 2013; FAOStat 2014 1) FAO 2014 - forecasts based on the expected increase in animal protein
K+S Group 6
Utilizing Entire Range of Minerals in Complex Deposits
Potash and Magnesium Products
KCl 16.1%
Kieserite 20.4%
Residue 63.5%
e.g. Neuhof 2014
Mineral extraction
Reducing specific costs of our MOP products
Kieserite
Korn-Kali
Magnesia-Kainit
MOP
K+S product offering
SOP
Extending our product offering
$$$
Raw
Sal
t
KCL (MOP)
3.2
Industrial products
0.7
Specialties
3.0
Basis: 2014 Sales volumes in million tons
6.9
SOP
Korn-Kali
Kieserite
Industrial potash
Health Care & Nutrition
Fertilizer Industrial
Applications Health Care &
Nutrition
K+S Group 7
K+S Potash and Magnesium business proven robust K+S Group
Source: Company reports
-30%
-20%
-10%
0%
10%
20%
30%
Since Q1 2010 Since Q3 2013 YTD
Average selling price comparison with potash peers
K+S Peer 1 Peer 2
K+S Group 8
Leading Position in Europe
Potash and Magnesium Products
Europe
South America
Asia
Other regions
K+S Group 9
Strengthening our Global Presence
Legacy Project
China India South East Asia
North America
South America
Expanding our current production portfolio in Germany with a North American production site Second source supplier
Securing a good asset base with competitive production costs
Sales and distribution through existing distribution structures of the K+S group
Exclusive outline agreement with Koch Fertilizer about supply and sales of Potash fertilizers in the US
Regional growth projects in China and SEA
Flexible multi-product strategy Located in the Heart of Saskatchewan’s Potash-Rich Basin
Regina
Two additional potash permit areas in the Esterhazy potash region
K+S Group 10
On Time and Budget
Legacy Project
October 2015
0%
50%
100%
~ 70% of CapEx spent
0%
50%
100%
Main parts awarded to suppliers
2013 2014 2015 2016 2017
2014 and 2015 years of main construction
and CapEx
Sustaining CapEx going
forward
August 2015 September 2015
K+S Group 11
Legacy Valuation Legacy Project
~90
2017 2018 2019 2020 2021 2022 2023
Volume ramp-up (m metric tons) /costs per ton (CAD)
Production costs Logistics costs Mining taxes/ royalties
~1 ~2 ~2.1 ~2.3 ~2.4 ~2.6 ~2.9 Sales volumes (m metric tons)
Implied Value Per Share (€)
Terminal growth rate
0% 2%
WA
CC
7% ~ 21
8% ~ 11
Conservative price assumptions for Legacy based on MOP gran. Brazil
Sustaining capex approximately CAD 100 million p.a. from 2018
Volume ramp-up (m metric tons)/ costs per ton (CAD)
K+S Group 12
Content K+S Group
K+S’ Unique Strategic Position A
Current Trading B
Outlook C
Salt 2
Potash and Magnesium Products 1
K+S Group
Demand driven by… Product category
Inevitable for life
De-Icing salt
Food grade salt
Population growth
Economic growth
and industrialisation
Winter weather
conditions
Infrastructure
development
Increasing
standard of living
Industrial salt
Salt for chemical use
Urbanization
Salt
13
K+S Group 14
Unrivalled Global Production Network Salt
Competitive edge: Unrivalled global
production network
More than 30 assets on 3 continents allow close proximity to customers in a business that is highly freight-cost sensitive
Broad range of products due to variety of production methods Best in class supply chain assets and competence Industry best cost production in Chile
Evaluating several opportunities that will enable K+S to
grow in Asia
K+S Group 15
Diverse Regional and Product Portfolio Salt
Food grade/
Consumer
Industrial
Chemical
2014 Revenue
Distribution
1) De-icing figure normalized for winter effects
K+S Group 16
Presence in Attractive De-Icing Markets K+S Group
Indicative regional strength of winter
2010 2011 2012 2013 2014 2015e
Europe North America
Great Lakes
US East Coast
Eastern Canada
Central Europe
Scandinavia
K+S Group 17
Broad Variety of Salt Products K+S Group
Main applications
Table salt Water softening Pool Salt Home (packaged) de-icing
Our competitive advantage
Brand equity supports price premiums over competitive brands and private labels
> 60%
25–35%
~35%
Consumer Products
Main applications
Soda ash (glass production) Chlorine production (PVC)
Our competitive advantages
Unrivalled footprint with close proximity to customers Chilean rock salt quality
nearly matches vacuum salt quality Low cost production Additional processing
by customers not necessary
Chemical Salt
Main applications
Salt for oil/ gas drilling fluids Dialysis / Infusions Commercial water softening Animal lick stones Food processing /
preservation Our competitive advantages
Broad production footprint with close proximity to customers provides unrivalled service and supply certainty
Widest product range in the salt industry
Industrial Salt
K+S Group 18
Salt 2020 Strategy – On Track Salt
238 211
62
118
173
250+
2010 2011 2012 2013 2014 2020e
Equals more than € 400 million EBITDA
Expected EBIT development
Safety first!
Remove silo thinking
Transparency/ Trust
High performance and engaged workforce
Fit for the Future
Business and technical processes
Supply chain and distribution network improvements
Market share growth
New segments
New regions
Normalized Actual results
Salt 2020 Launched
Priority areas
GROWTH CULTURE EFFICIENCY
K+S Group 19
Content K+S Group
K+S’ Unique Strategic Position A
Current Trading B
Outlook C
Salt 2
Potash and Magnesium Products 1
K+S Group 20
P&L K+S Group
€ million Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 YoY
Revenues 1,189 786 827 1,020 1,377 914 891 +8%
EBIT I 220 157 134 130 317 179 132 -1%
t/o insurance gain 0 30 6 0 0 0 0
EBIT I w/o insurance gain 220 127 128 130 317 179 132 +3%
Margin 19% 16% 15% 13% 23% 20% 15%
Financial result -27 -48 -24 -26 -41 -14 -7
EBT, adjusted 193 109 110 104 276 166 125
Tax rate, adjusted 26% 26% 31% 35% 28% 28% 29%
Net income, adjusted 142 81 76 68 198 119 89
EPS, adjusted 0.74 0.42 0.40 0.36 1.04 0.62 0.46
The adjusted key figures only include operating forecast hedges of the respective reporting period in EBIT I. In addition, related effects on deferred and
cash taxes are also excluded.
K+S Group 21
Cash Flow and Balance Sheet K+S Group
€ million FY/13 Q1/14 H1/14 9M/14 FY/14 Q1/15 H1/15 9M/15
Operating cash flow 756 379 516 624 707 309 433 630
- Investing cash flow (pre sale/ purchase of securities)
-707 -176 -362 -646 -1,013 -211 -532 -894
Adjusted free cash flow 49 203 154 -22 -306 98 -99 -264
CapEx 743 165 436 731 1,153 200 555 905
31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 31.03.15 30.06.15 31.09.15
Net debt (-) -1,037 -832 -1,098 -1,305 -1,676 -1,653 -2,019 -2,224
t/o Net financial debt (-)
-191 +9 -85 -275 -588 -437 -811 -1,005
Net debt/ EBITDA (LTM) 1.1 1.0 1.3 1.5 1.9 1.7 2.0 2.1
Equity ratio 45% 46% 46% 52% 51% 52% 52% 51%
K+S Group 22
Well Financed for Current Situation K+S Group
Bond I € 500 million (expn. June 2022; coupon: 3.000%)
Bond II € 500 million (expn. Dec 2021; coupon: 4.125%)
Bond III € 500 million (expn. Dec 2018; coupon: 3.125%)
RCF € 1 billion (undrawn)
Peak years in terms of leverage
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Financial instruments
Group capex (in €)
Capex spent of > € 1.0 billion per
year from 2014 to 2016 driven
by Legacy Project
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 20222012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
K+S Group 23
Potash and Magnesium Products K+S Group
€ million Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 YoY
Revenues 507 461 451 465 608 501 471 +5%
EBIT I 134 159 111 84 183 144 93 -17%
t/o special item 0 30 4 0 0 0 0
EBIT I w/o special item 134 129 107 84 183 144 93 -13%
Margin 26% 28% 24% 18% 30% 29% 20%
t/o Legacy OpEx -7 -7 -10 -13 -13 -20 -15
Average selling price (€/t) 262 268 279 291 314 310 310
Sales volumes (million tons) 1.94 1.72 1.62 1.59 1.94 1.61 1.52
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 LTM
Costs per ton (1,2,3) 189 189 206 231 212 209 239 222
(1) (Revenues – EBIT) / Sales volumes (2) Excl. anticipated insurance payment (3) Excluding OpEx Legacy
K+S Group 24
Salt K+S Group
€ million Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 YoY
Revenues 641 287 335 515 727 374 382 +14%
EBIT I 89 2 25 57 142 43 43 +75%
Margin 14% 1% 7% 11% 20% 11% 11%
Sales volumes (million tons) 10.5 3.2 3.9 6.1 9.1 3.6 3.8
De-icing 8.2 1.0 1.6 3.7 6.9 1.2 1.5
Non de-icing 2.3 2.2 2.3 2.4 2.2 2.4 2.3
Average selling prices (€)
De-icing 49 47 52 66 65 65 62 +19%
Non de-icing 101 102 104 108 119 120 124 +19%
K+S Group 25
Content K+S Group
K+S’ Unique Strategic Position A
Current Trading B
Outlook C
Salt 2
Potash and Magnesium Products 1
K+S Group 26
2015 Guidance – Significant Increase Confirmed K+S Group
EBITDA EBIT I Net Profit
€ 780 – 830 million
€ 1.06 –1.11 billion
€ 490 – 540 million
As of November 11th, 2015
K+S Group 27
Attractive Mid-Term Guidance Confirmed K+S Group
FY 2020
~ € 1.6 billion
Potash and Magnesium
Products
Salt
Group EBITDA expected to increase significantly by 2020
Despite current market turmoil, mid-term fundamentals of the potash business remain intact
Legacy will significantly contribute to the mid-term earnings goal
Our Salt business continues to grow its profitability
K+S Group
Target payout ratio of 40-50%
K+S Group Dividend Policy Implies Increase for 2015
28
0%
2%
4%
6%
8%
10%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2011 2012 2013 2014 2015e
Payout ratio (lhs) Dividend yield (rhs)1)
To b
e d
eter
min
ed
Current guidance implies dividend per
share of € 1.02 – 1.41 (2014: € 0.90)
This represents a dividend yield of
4.3-5.9%2)
1) Based on year-end share prices 2) Share price of € 24 assumed
K+S Group 29
Cost Discipline Will Remain High K+S Group
2013 2014 2015 2016 2018
>120
>150
>120 Original
savings
30
30
30 30
>120
Initiated measures unfolding full effect
€ million
Additional savings beyond scope of Fit for the
Future resolved
K+S Group 30
From Capex to Cash K+S Group
Capex Phase Cash Phase 2020 Operating and Free Cash Flow
2015e 2016e 2017e 2018e 2019e 2020e
Operating Cash Flow Free Cash Flow (adjusted)
€ million CAGR > 10% Net debt:
€ 2.2 billion1)
Leverage:
2.1x1)
CapEx:
~ € 1.3bn billion2)
FCF:
Negative2)
EBITDA:
€ 1.06-1.11 billion2)
Net debt:
< € 2.0 billion
Leverage:
1.0-1.5x
CapEx:
Maintenance
FCF:
Positive
EBITDA:
~ € 1.6 billion
1) 9M 2015 2) Guidance 2015
K+S Group 31
Management’s Task List K+S Group
Low cost commodity production with Legacy in
Canada ensuring cost competitiveness and
participation in future growth in the potash
markets
German mines remaining attractive with broad
specialty portfolio and close proximity to
customers
Salt with unrivalled footprint and product
offering
Opening Legacy this summer
Managing environmental
challenges particularly in
Germany
Keeping cost discipline
beyond 2016
Successful execution of
Salt 2020 Strategy
Enhancing portfolio of
higher yielding products
K+S Group 32
IR Contact Details K+S Group
E-Mail: [email protected]
Homepage: www.k-plus-s.com
IR-website: www.k-plus-s.com/en/ir
K+S Aktiengesellschaft
Bertha-von-Suttner-Str. 7
34131 Kassel (Germany)
Martin Heistermann
Investor Relations Manager
Phone.: +49 561 / 9301-1403
Fax: +49 561 / 9301-2425
Thorsten Boeckers
Head of Investor Relations
Phone: +49 561 / 9301-1460
Fax: +49 561 / 9301-2425
Andrea Rach
Investor Relations Assistant
Phone: +49 561 / 9301-1100
Fax: +49 561 / 9301-2425
Matthias Jelden
Investor Relations Manager
Phone.: +49 561 / 9301-2204
Fax: +49 561 / 9301-2425
Patrick Kofler
Senior Investor Relations Manager
Phone.: +49 561 / 9301-1885
Fax: +49 561 / 9301-2425
K+S Group 33
Forward-Looking Statements K+S Group
This presentation contains facts and forecasts that relate to the future development of the K+S
Group and its companies. The forecasts are estimates that we have made on the basis of all the
information available to us at this moment in time. Should the assumptions underlying
these forecasts prove not to be correct or should certain risks – such as those referred to in
the Risk Report – materialise, actual developments and events may deviate from current
expectations. The Company assumes no obligation to update the statements, save for the making
of such disclosures as are required by the provisions of statute.
K+S Group
K+S Group 35
K+S Group
K+S Aktiengesellschaft · Bertha-von-Suttner-Straße 7 · 34131 Kassel | Germany · Internet: www.k-plus-s.com
Investor Relations · phone: +49 (0)561 / 9301-1100 · fax: +49 (0)561 / 9301-2425 · email: [email protected]
Financial Calendar
10 March 2016: FY report 2015 – 11 May 2016: AGM / Q1 report – 11 Aug 2016: Q2 report
K+S Share
• WKN: KSAG88
• ISIN: DE000KSAG888
• Ticker-Symbols:
Bloomberg SDF /
Reuters SDFG
K+S ADR
• CUSIP: 48265W108
• ADR Ticker-Symbol:
Bloomberg: KPLUY /
Reuters: KPLUY.PK
K+S Bond 06/2022
• WKN: A1P GZ8
• ISIN: DE000A1PGZ82
K+S Bond 12/2018
• WKN: A1Y CR4
• ISIN: XS0997941199
K+S Bond 12/2021
• WKN: A1Y CR5
• ISIN: XS0997941355