Linked In
News In
Linked In

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

K+S cites rising potash prices in upbeat guidance

Twitter Linkedin

German fertilizer and salt producer K+S AG expects a "tangible increase" in potash prices this year, as it spells out hopes for rising full year revenues and profits.

The board restated its conviction that a recent takeover bid from PotashCorp undervalued the company.K+S issued full-year earnings guidance of E780m-E860m, compared with E641m last year, and revenues of E4.35bn-E4.55bn, compared to E3.82bn last year, as potash prices remain above the the low levels seen in 2014.Price recovery

In the three months to June 30, K+S saw post-tax profits rose 46% to E118.7m, compared to the same period last year. Revenues grew by 16% to E914.4m."This improvement in earnings is due primarily to higher prices for de-icing salt in North America and the recovery of average prices in the potash and magnesium products business unit," K+S said.The company also gained from exchange rate effects, increasing the euro-denominated value of dollar earning.K+S noted that the earnings guidance "includes an initial estimate of the significant costs that K+S Aktiengesellschaft could incur as expenses in the current year on account of the unsolicited takeover proposal from PotashCorp".Takeover rebuffed

The board of K+S last week rebuffed a $9bn takeover bid from Canadian group PotashCorp, the world's largest potash miner.The K+S repeated its assertion that shareholders disagreed with the valuation placed on the company by PotashCorp.The merged business would have controlled up to 30% of the global potash market, and bought production from K+S's Legacy project in Canada, currently under development, under control of the North American potash cartel Canpotex, of which PotashCorp is the largest member. Along with two former Soviet Union miners, Canpotex is instrumental in setting world potash prices through supply contracts with Indian and Chinese buyers, which are used as a benchmark for other deals. Government oppositionHostile reaction

K+S shares soared when PotashCorp first made overtures in June, but the move was rejected by the board, who conducted a shareholder survey which indicated investors were unhappy with a second offer of E41 a share. The prospect of a Canadian takeover attracted a hostile reaction from the regional government of the German state of Hesse, and strong opposition was also reported from the federal German government. K+S' German mines have higher costs of operation, and lower profit margins than mines in North America and the former Soviet Union, and there were fears in some quarters that PotashCorp was more interested in pulling the legacy project into Canpotex, rather than maintaining the German operations. Cautious note

Last month PotashCorp struck a more cautious note for potash prices, noting that fertilizer prices were "not immune" to the global commodity slowdown.PotashCorp Jochen Tilk warned that "increased supply and ongoing competitive pressure have created headwinds most visible in spot markets like the US where prices have fallen by more than 10% since the beginning of the year". K+S shares were up 0.4% at E36.12 a share in early afternoon deals in Frankfurt.


Twitter Linkedin
Related Stories

Festive staff shortages 'likely' as British growers cut ties with UK supermarkets

Faced with mounting concerns over labour shortages and fears they may not be able to fulfil retailer contracts, some British growers have sought to cut ties with UK supermarkets in favour of companies elsewhere in Europe.

Hard Brexit to have 'catastrophic' effect on European meat industry; new report

A hard Brexit will have a ‘catastrophic impact’ on the European meat industry, according to a report published by Europe’s meat industry body, UECBV, as the UK and EU continue negotiations.

Manufacturers stockpile agrochemicals in bid to keep post-Brexit prices down for farmers

Manufacturers of crop protection products are stockpiling agrochemicals in warehouses in a bid to keep input costs down for farmers after Brexit, according to the chief executive of the Crop Protection Association, Sarah Mukherjee.

Dairy groups sidestep shockwaves from GDT price slump

Indeed, shares in the likes of A2 and Beston soar. Still, that does not mean there are no losers from the dairy price falls...
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069