Market and product
K+S ups profit hopes, citing potash market revival
The German-based fertilizer and salt company nudged higher to E3.7bn-3.9bn, from $3.65bn-3.85bn, its forecast for group sales this year, reducing the decline expected from last year's E3.95bn result.
Operating profits will come in at E580m-640m, below the E656m achieved in 2013 but well above the E490m-570m that K+S had previously guided to.
"The main reason for raising the outlook is the expectation that average prices in the potash and magnesium products business unit will now be slightly better than previously assumed," the group said.
'Prices tending higher'
Indeed, on a global basis, industry potash sales now look like reaching 62m tonnes, including 3m tonnes of lower grade product - up 2m tonnes from the previous estimate, and 3m tonnes year on year, K+S finance director Burkhard Lohr said.
Potash prices for 2014 will record a "moderate decline", rather than the "tangible" drop the group had foreseen.
The Brazilian market - particularly important at this time of year, as main-crop sowings proceed - was seeing "continued good demand with prices tending higher", he told investors.
South East Asia is seeing "competitive pressure easing".
Prices recover
The comments came as the group unveiled results showing a 3.6% rise year on year to E110.8m in operating profits in potash for the July-to-September period, a sharp improvement on its performance in the previous quarter, when profits fell 13%.
Potash revenues slowed to 1.2% their descent in the latest quarter, from 16% in the previous period, as sales volumes recovered to within an age of year-ago levels, while prices recovering too.
World potash prices, and shipments, slumped in the last five months of 2013 after Russia's Uralkali, the world's biggest producer of the fertilizer, walked out of the Belaruskali Potash Company cartel, prompting buyers to stand-off to see where values would settle.
K+S sold its potash for an average of E278.70 a tonne in the latest quarter, up E16.90 a tonne from the nadir reached in the January-to-March period, taking the price to wining E2 a tonne of the year-ago level.
Market reaction
"Demand for potassium chloride remained extremely robust in the [July-to-September] quarter in spite of the fall in soft commodity prices," K+S said.
Orders in South America and South East Asia in particular, when "availability of product was limited at times… led to further price increases".
K+S added that it was "continuing to make good progress as planned" on its so-called "Legacy" project, to develop a potash mine at a greenfield site in Saskatchewan, Canada.
K+S shares stood 1.9% higher at E22.725 in midday deals in Germany.
The fresh profits guidance implies an upgrade of about 3% to consensus forecast for the group's full-year earnings per share, Credit Suisse analysts said, but restated an "underperform" rating on K+S shares with a price target of E20.00.
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