Baader Helvea Virtual Roadshow - K+S Aktiengesellschaft Julia Bock, CFA Alexander Enge
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16 April 2020 K+S Aktiengesellschaft Baader Helvea Virtual Roadshow Julia Bock, CFA Alexander Enge Senior IR Manager IR Manager
K+S at a Glance
Group financials 2019
Revenues EBITDA EBITDA-Margin Earnings after taxes, adj.
€ 4.07 billion € 640 million 16% € 78 million
OU Europe+: Revenues: € 2.54 billion; EBITDA: € 437 million; Margin: 17%
OU Americas: € 1.53 billion; EBITDA: € 230 million; Margin: 15%
Customer Segments
Agriculture Industry Consumers Communities
18%
42% Revenues Revenues 12% Revenues Revenues
€ 1.72 billion 28% € 1.15 billion € 0.48 billion € 0.72 billion
15%
EBITDA EBITDA EBITDA EBITDA
46% 9%
€ 295 million € 218 million € 60 million € 94 million
34%
Margin 17% Margin 19% Margin 12% Margin 13%
2 16.04.2020 Baader Helvea Virtual Roadshow
Slight increase of revenues and EBITDA in 2019
despite adverse conditions
▪ EBITDA
EBITDA FCF DIVIDEND improved
REVENUES
- in € million - - in € million - - in € million - - in € - again in the
third year in
+1% a row
640
606
+6% ▪ Synergies
4,071 +346 contributed
Payout ratio
more than €
4,039 640 56% 37%
606
100 million
0.25
0.15
140
2018 2019 2018 2019 2018 2019 2018 2019*
-206 *Proposal
3 16.04.2020 Baader Helvea Virtual Roadshow
Social contribution
With our products, we ensure system-
relevant basic services.
• High-purity pharmaceutical salts for medicine and use in dialysis and
infusions
• Potassium salts for the production of a wide range of medical products
• Salts for the manufacture of disinfectant materials, soaps and
hypolyes
• Table salt for food production
• Salts for animal feed and animal nutrition
• Potassium fertilizer for agricultural food production
• Disposal services in the field of underground reutilization and
disposal
4 16.04.2020 Baader Helvea Virtual Roadshow
Securing production
Our locations are our backbone: production
and supply chains are stable.
• Corona prevention teams established
• Shift times shortened and staggered
• Number of shift dialogues reduced
• Use of respiratory masks during work steps with a short
distance (e.g. to go down the mine shaft in the shaft elevator)
• Use of gloves on machines and vehicles
• Additional disinfection dispenser set up
• Instructions for behavior sent to 3,000 suppliers
• External truck drivers only leave the vehicle for load
securing
5 16.04.2020 Baader Helvea Virtual Roadshow
Currently sufficient liquidity situation
• Short-term access to financial markets
difficult due to Corona
• Sufficient leeway in our credit line agreed
with banks
• Examination of government support
programs to further secure short-term
liquidity
• The next major financing instruments are
due in May 2021
6 16.04.2020 Baader Helvea Virtual Roadshow
6 Baader Helvea Virtual Roadshow
New focus
▪ Complete sale of OU Americas
▪ Comprehensive realignment and
restructuring of K+S
▪ Noticeable cost reduction
▪ Advanced efficiency and productivity
measures
▪ Future-oriented solutions in the
environmental sector
▪ Sustainable positive free cash flow
contribution from all sites
➢ The new K+S: lean and performance-
oriented with a solid financial base
7 16.04.2020 Baader Helvea Virtual Roadshow
7 Baader Helvea Virtual Roadshow
Complete Sale OU Americas on schedule
1 Unique position in the salt market
• Leading brands with high • Revenues: EUR 1.5 billion
emotional customer loyalty (2019)
• Established customer- • EBITDA: EUR 230 million
oriented network with 28 (2019)
locations in North America
POINTE-CLAIRE • Stable cash flows
and cost-effective production
in South America
CHICAGO
1 •
•
Broad portfolio of interested parties
Initial talks held
• Investment banks mandated
SANTIAGO DE • Signing expected in 2020
CHILE
• Sale process is proceeding according to plan even
under current conditions with regards to Covid-19
• Uninterrupted interest from potential buyers
• Present framework conditions are no obstacle for
the current phase of the process
8 16.04.2020 Baader Helvea Virtual Roadshow
Restructuring and crystallizing values
• Bethune is an integral part of the company's
future asset sale currently not planned
• Restructuring of administrative functions
• Focus on the core business by selling non-core
activities (e.g. Sale of Baltic Train or K+S
Entsorgung Schweiz)
• Future-oriented solutions in the environmental
sector
• Capital expenditure under review
• Sustained positive free cash flows at all German
production sites
9 16.04.2020 Baader Helvea Virtual Roadshow
K+S: Focus remains on strengthening the balance sheet
Dec. 2019: Net financial liabilities: EUR 3.1 billion Net financial liabilities/EBITDA: 4.9x
Sale of OU Americas
OU Europe+ measures
Restructuring
End of 2021
• Reduction of net financial liabilities by significantly more than € 2 billion
• Stable cross over rating targeted
10 16.04.2020 Baader Helvea Virtual RoadshowCurrent market assessment 11 16.04.2020 Baader Virtual Roadshow
Good demand in Customer Segments Agriculture
• Agriculture and the food industry as a
system-relevant infrastructure is little affected
worldwide by Covid-19
• Sowing period in the Northern Hemisphere
has just started
• Ideal weather conditions and good farmer
economics in relevant agricultural markets
• Expected new China contract should also
stimulate demand there
12 16.04.2020 Baader Helvea Virtual RoadshowCustomer Segment Agriculture
Stable speciality business and regional diversification pay off
USD/t EUR/t ▪ Our unique German
400
Potassium
500 deposits enable a
375
Sulfate broad product portfolio
(SOP)
Europe
450 in the customer
350 segment agriculture
400
325 Potassium ▪ Higher value specialty
Chloride
300 (MOP) Brazil Potassium
350
products (SOP)
Chloride
(MOP) Europe
significantly more
275
300
stable than potassium
250
chloride
225
250 ▪ Domestic market
Europe significantly
200 200 more stable
SOP Europe EUR/t, cfr (right scale)
▪ MOP prices bottoming
MOP gran. Brazil USD/t, cfr (left scale)
out
MOP gran. Europe EUR/t, cfr (right scale)
Quelle: FMB Argus Potash
13 16.04.2020 Baader Helvea Virtual RoadshowCustomer Segment Agriculture
Between plan and Reality: Potash projects announced since 2006 (Greenfield)
Projects with a high
Announced projects or in early
probability of Projects in ramp-up
development phases
implementation by phase
2025
2
160 6
14 16.04.2020 Baader Helvea Virtual RoadshowCustomer Segment Agriculture
What is behind the greatly feared oversupply?
thousand tons
140.000
▪ Only 5 years ago, the technically
120.000 available capacity in 2025 was
estimated to be 12 million tons higher
100.000 than today
+3% (Scenario 2)
80.000 +1.3% (IFA prognosis) ▪ Even now, greenfield projects by potash
+/-0% (Scenario 1) newcomers will still account for a
60.000 significant share of the total until 2025
40.000 ▪ Non-utilization of capacity by existing
producers not taken into account
20.000
▪ Global capacity load should level off at
0 the long-term average by 2025
'05 '10 '15 '20v '25v
Technical available capacity of
Revenue
existing producers
revised forecast
Greenfield potash newcomers
technical available capacity from 2015
Source: IFA, K+S; including potassium sulfate and potash varieties with a lower K2O content of about 5 million tonnes eff.
15 16.04.2020 Baader Helvea Virtual RoadshowCustomer Segment Agriculture at a Glance
Key financials Characteristics
▪ Close proximity to our main customers provide logistical
in € million FY/18 FY/19 advantages
Revenues 1,741.3 1,715.6 ▪ Shipments to overseas customers at competitive costs
from Hamburg harbor
Sales volume (mt) 6.85 6.30
▪ Strong and long-standing customer relationships
EBITDA 274.5 294.9 ▪ Broad specialty portfolio provides flexibility and stability,
partly following different trends and seasons
Revenue Split by Region 2019 (%) Revenue Split by Products 2019 (%)
Fertilizer specialities
47
Asia Others
19 5
Europe
50
thereof Germany 1 2 Potassium chloride
12 57
South
America
22 1 Specialities
2 Commodities
North America
4
16 16.04.2020 Baader Helvea Virtual RoadshowCustomer Segment Industry at a Glance
Key financials Current trading
in € million FY/18 FY/19 ▪ Weaker demand due to Covid-19 in
some industries mitigated by
Revenues 1,132.8 1,148.0 diversified product portfolio
Sales volume (mt) 10.3 10.1 ▪ Strong demand by food industry
EBITDA 225.5 218.0
Revenue Split by Products 2018 (%) Growth drivers
Chemical
23
Pharma Increasing standard of living
5 Animal Nutrition
7
Oil and Gas
1 Population growth
Food
21
Other Economic growth and industrialization
24
Water Softening
4
Urbanization
Complementary
15
17 16.04.2020 Baader Helvea Virtual RoadshowCustomer Segment Consumer at a Glance
Key financials Current trading
in € million FY/18 FY/19 ▪ Consumers customer segment showed first success in
Revenues 453.7 484.7 2019 to pass on higher costs, especially for logistics
Sales volume (mt) 1.8 1.8 ▪ Good progress in the rollout of the German premium table
salt brand Saldoro® to retail sellers and gastronomy
EBITDA 43.3 59.7
▪ Stable demand situation also in times of Covid-19
Revenue Split by Products 2018 (%) Growth drivers
Other
Ice Melt 1
7 Increasing standard
of living
Culinary
39
Population growth
Economic growth
Water and Pool and industrialization
53
18 16.04.2020 Baader Helvea Virtual RoadshowCustomer Segment Communities at a Glance
Key financials Current trading
▪ Owing to the generally very poor start in the
in € million FY/18 FY/19 de-icing salt business for weather-related reasons in
Revenues 708.4 719.9 Europe and North America, we
expect sales volumes between 8 and 9 million tonnes
Sales volume (mt) 13.32 12.70 for the 2020 financial year (normal year: between
12.5 and 13.0 million tonnes; 2018:
EBITDA 121.8 94.4
12.7 million tonnes).
Revenue Split by Region 2019 (%) Revenue Split by Products 2019 (%)
Europe
18 thereof De-icing bulk
Germany 98
9
De-icing packaged 1
North America 2
82
1 Commodities
19 16.04.2020 Baader Helvea Virtual RoadshowOutlook 2020¹
EBITDA
Main assumptions
2020e
• ASP Agriculture on the level of Q4/2019 (255 €)
€620m • Below average de-icing salt business in EU
EBITDA
• Below average de-icing salt business in NA
Upper case
2019
Sales volumes: • ASP Agriculture slightly below Q4/2019 (255 €)
€640m Agriculture: >7mt €560m • Below average de-icing salt business in EU
Communities: ~8-9mt • Weaker de-icing salt business in NA than upper case
Midpoint
• ASP Agriculture even more below Q4/2019 (255 €)
€500m • Weaker de-icing salt business in EU than midpoint
• Weaker de-icing salt business in NA than midpoint
Lower case
• Stable earnings for Industry and Consumer segment expected
• Positive Shaping effects should slightly overcompensate for cost inflation
• We expect free cash flow to break more or less even at the midpoint of the EBITDA range
20 16.04.2020 Baader Helvea Virtual Roadshow ¹Impacts from Corona virus not predictable; no effects from restructuring or sale of OU Americas includedIR Contact Details
K+S Aktiengesellschaft
Bertha-von-Suttner-Str. 7
34131 Kassel (Germany)
e-mail: investor-relations@k-plus-s.com
homepage: www.kpluss.com
IR-website: www.kpluss.com/ir
Dirk Neumann Christiane Martel
Head of Investor Relations Roadshow Management
Phone: +49 561 / 9301-1460 Phone: +49 561 / 9301-1100
Fax: +49 561 / 9301-2425 Fax: +49 561 / 9301-2425
d.neumann@k-plus-s.com christiane.martel@k-plus-s.com
Julia Bock, CFA Alexander Enge Janina Rochell
Senior Investor Relations Manager Investor Relations Manager Investor Relations Manager
Phone: +49 561 / 9301-1009 Phone: +49 561 / 9301-1885 Phone: +49 561 / 9301-1403
Fax: +49 561 / 9301-2425 Fax: +49 561 / 9301-2425 Fax: +49 561 / 9301-2425
julia.bock@k-plus-s.com alexander.enge@k-plus-s.com Janina.rochell@k-plus-s.com
21 16.04.2020 Baader Helvea Virtual RoadshowHousekeeping Items / Financial Calendar
Additional information on Outlook FY 2020
▪ Tax rate: ~30% ▪ Customer segment Agriculture:
▪ Financial result: ~€-130 Sales volume: >7.0mt (2019: 6.3mt)
▪ CapEx: Significantly up ▪ Customer segment Communities:
Sales volume: ~8-9mt (2019: 12.7mt)
▪ D&A: ~€450m
▪ Reconciliation (EBITDA): €-60m to €-80m
Financial Calendar
Q1 2020 Earnings Release 11 May 2020
Virtual Annual General Meeting tba
Dividend payment tba
Half-yearly Financial Report 2020 13 August 2020
22 16.04.2020 Baader Helvea Virtual RoadshowAppendix 23 16.04.2020 Baader Helvea Virtual Roadshow
Most important work done
in 2019
Increased product quality in
Bethune
Avoided shutdowns caused by
wastewater
Generated significant positive
free cash flow
Leveraged synergies of
EUR >100 million
24 16.04.2020 Baader Helvea Virtual RoadshowDeterioration of conditions in
the second half of 2019
Sluggish demand for potassium
chloride overseas
Production cutbacks in the entire
potash industry
Winter below expectations
25 16.04.2020 Baader Helvea Virtual RoadshowQ4 and FY/2019 at a glance
Highlights Financials
▪ Q4/19 EBITDA down to € 160m (2018: € 228m)
€ million Q4/18 Q4/19 % FY/18 FY/19 %
▪ FCF plus € 83m from € -147m to € -64m in 2019 Revenues 1,217 1,024 -16 4,039 4,071 +1
▪ NFD/EBITDA with 4.9x improved (31/12/18: 5.3x) t/o Europe+ 783 626 -20 2,585 2,536 -2
▪ Dividend proposal 0.15ct per share t/o Americas 433 491 +13 1,451 1,532 +6
EBITDA in €m +Deconsolidation D&A 103 103 -14 379 432 +14
K+S Real Estate
-18 +Sale Baltic Train EBITDA 228 160 -30 606 640 +6
+IFRS 16 t/o Europe+ 166 64 -61 443 437 -1
+Mainly +Synergies
pricing +FX t/o Americas 75 83 +11 230 230 −
Agriculture -122
Adj. net profit 72 9 − 85 78 -8
228 +67 Adj. EPS (€) 0,38 0,05 − 0,45 0.41 -9
− Production Operating cash flow 33 130 − 309 640 −
cuts 160
Agriculture Adj. FCF -147 -64 − -206 140 −
− De-icing
volumes CapEx 165 183 +11 443 493 +11
NFD/EBITDA (LTM) − − − 5,3x 4,9x −
2018 Price Volume/ FX/Others 2019
Mix
26 16.04.2020 Baader Helvea Virtual RoadshowClearly positive free cash flow generated
(Mio. EUR) 1.279
▪ Construction of the new
1.153 1.171 Bethune potash plant from
2011 to 2017
811
743
496 ▪ Around EUR 1 billion
443
140 environmental investment
49 over the last 8 years
-206
-306
-390 ▪ 2019: High capex discipline
-636 and improved working
-777 capital management lead to
clearly positive free cash
2013 2014 2015 2016 2017 2018 2019
flow
Investments Adjusted FCF
Promise of positive free cash flow from October 2017 fulfilled!
27 16.04.2020 Baader Helvea Virtual RoadshowSite costs (FOB) in comparison (2020)
USD/t
-30%
Best-in-class
*
K+S Bethune K+S Zielitz K+S Bethune BU Potash
(after 2023) (Purely MOP) w/o Bethune
(incl. Specialties)
* column width =
Source: CRU Report 2016, K+S production capability in million tonnes
The Bethune ramp-up to 2.86 million tons in the mid 2020s (production capability)
significantly improves K+S's competitive position.
28 16.04.2020 Baader Helvea Virtual RoadshowDisclaimer No reliance may be placed for any purpose whatsoever on the information or opinions contained in the Presentation or on its completeness, accuracy of fairness. No representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its respective directors, officers, employees, agents or advisers as to the accuracy, completeness or fairness of the information or opinions contained in the Presentation and no responsibility or liability is accepted by any of them for any such information or opinions. In particular, no representation or warranty, express or implied, is given as to the achievement or reasonableness of, and no reliance should be placed on any projections, targets, ambitions, estimates or forecasts contained in this Presentation and nothing in this Presentation is or should be relied on as a promise or representation as to the future. 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 Annual Report – materialize, actual developments and events may deviate from current expectations. Given these risks, uncertainties and other factors, recipients of this document are cautioned not to place undue reliance on these forecasts. This Presentation is subject to change. In particular, certain financial results presented herein are unaudited, and may still be undergoing review by the Company’s accountants. The Company may not notify you of changes and disclaims any obligation to update or revise any statements, in particular forward-looking statements, to reflect future events or developments, save for the making of such disclosures as are required by the provisions of statue. Thus statements contained in this Presentation should not be unduly relied upon and past events or performance should not be taken as a guarantee or indication of future events or performance. This presentation has been prepared for information purposes only. It does not constitute an offer, an invitation or a recommendation to purchase or sell securities issued by K+S Aktiengesellschaft or any company of the K+S Group in any jurisdiction. 29 16.04.2020 Baader Helvea Virtual Roadshow
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