K+S said it was seeking potash acquisitions despite "very low demand" for the nutrient cutting its contribution to group revenues by 30% in the first quarter.

The German chemicals group, which is growing its salt division through the purchase of Morton Salt, unveiled an appetite for deals to exploit a long-term revival in potash demand set to start in the second half of this year.

Norbert Steiner, the K+S chief executive, said the group was "continuing to review all opportunities for acquiring additional capacity around the globe", in particular for bolstering its Potash and Magnesium Products division which, in a normal year, runs at full tilt.

The division's capacity had been cut by 2.0m tonnes in response to a "reluctant volume" of orders from farmers responding to the drop in commodity prices.

The unit's first quarter revenues dropped to E366.0m from E522.5m a year before, with operating profits slumping 43% to E97.0m.

Normal service resumed

However, K+S forecast revenues for 2009 as a whole coming in line with those of 2008 thanks to a rebound fostered by higher crop prices and trade fertilizer stocks running dry.

"A normalization of demand for fertilizers should be able to be assumed for the second half of the year," K+S said.

Longer term, the recovery in demand coupled with the expense of starting up potash mines means the nutrient will "remain in short supply".

"There are indications that the growth in capacity in the potash industry in the medium term will at best only be able to keep up with the growth in demand," the group said.

Earnings slip

The group forecast a less buoyant 2009 for its nitrogen division, which would continue to be held back by price decreases blamed in part for a 30% fall to E342.1m in first quarter revenues. Operating profits slumped 81% to E8.1m.

Group earnings, which fell by 25% to E122.5 excluding one-off factors, would be "significantly lower" than in 2009, in part down to higher costs offsetting the reviving potash sales.

K+S shares closed down E1.16 at E47.29 in Frankfurt.