UpdateK+S Group Q1 profit jumps 70% on strong fertilizer demand

11 May 2011 12:45  [Source: ICIS news]

(adds further company quotes and UBS rating upgrade throughout)

LONDON (ICIS)--K+S Group’s first-quarter profit rose 70.4% year on year to €293.6m ($425.5m), as sales grew on the back of higher prices and stronger demand for fertilizers, the German chemicals company said on Wednesday.

K+S Group’s earnings after tax rose to €293.6m in first quarter 2011, from €172.3m in first quarter 2010, the company said in a statement.

Revenues rose 15.8% year on year to €1.78bn in first quarter 2011, while earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 33% to €443.1m compared with the year-ago period.

“Strong demand for fertilizers and an above-average de-icing salt business were mainly responsible for the positive course of business in the first quarter,” K+S said.

“We had a successful start into the new financial year,” Norbert Steiner, chairman of the board of executive directors at K+S, said.

“This allows us to look towards the coming quarters with confidence,” he added.

In its outlook, K+S said revenues in 2011 should “rise significantly” against the previous year, especially in its potash and magnesium products and nitrogen fertilizers business segments.

K+S also expects “stable revenues at a high level” in its salt business segment.

The group’s EBITDA, meanwhile, should rise strongly driven by growth in earnings in the potash and magnesium products segment, alongside a tangible improvement in operating earnings in the nitrogen fertilizers business, K+S said.

“However, the operating earnings of the salt business segment will probably decline moderately,” it added.

Meanwhile, investment bank UBS upgraded its share rating for K+S from “sell” to “neutral” after the global potash market saw a resurgence in pricing momentum. Swiss-headquartered UBS said potash prices are expected to rise throughout 2011.

K+S also raised its 12-month price target from €53 to €57 on UBS’s positive outlook.

At 12:00 BST on Wednesday, K+S shares were trading on Germany’s XETRA Stock Exchange at €54.46, up 0.91% for the day.

Additional reporting Nurluqman Suratman

($1 = €0.69)

For more on K+S, visit ICIS company intelligence

By: Franco Capaldo
+44 (0)20 8652 3214

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