Edited from: ‘Quarterly financial report Q1/09 January’ – March and annual report 2008
K+S states that the downturn in the global economy has continued unabated into the first quarter of 2009 and now encompasses all regions. “Weak growth in the industrialised countries could no longer be offset by the decelerated growth experienced by emerging market countries. Despite the vigorous efforts made by governments and central banks to stabilise and stimulate the economy, there are no indications of a turnaround for the time being,” says chairman, Norbert Steiner.
The company will further identify opportunities that will allow the company to grow. It will do so through initiatives such as cost management and through optimising businesses such as specialities. It will also continue to grow through selected acquisitions. Innovation too will be at the forefront of the company’s strategy. The main goal and challenge for K+S is to achieve “healthy and sustained” growth at the same time.
Through the consolidation and selective expansion of its market positions, it will continue to enhance its market position in selected business sectors by intensifying the marketing of speciality products. This specialisation strategy will give the company the opportunity to achieve “value-added” products and to become less dependant on what it calls “standard products”.
It will also enhance and exploit synergies to ensure its lasting presence on world markets. K+S will continue to work consistently on further enhancing its potential for synergies in production, on markets, in distribution as well as in logistics.
In the field of acquisitions, the company wants to achieve external growth in its fertilizer, plant care and salt business sectors. However, in doing so the company states that it will not risk its “strong” financial base and will continue to do so “prudently”.
Individual businesses segment strategies
Potash and Magnesium Products
In 2009, K+S expect revenues of the Potash and Magnesium Products business segment should be on about the same level as a year ago. Its forecast is based on a significant decline in sales volumes to just under 6m tonnes (2008: 7m tonnes) with a stronger US dollar exchange rate and markedly higher average prices compared with the previous year.
(1) Focus on the European market as well as on important overseas markets in the case of potash;
(2) Expansion of global market leadership in potassium sulphate and magnesium products;
(3) Consistent development of the product refinement strategy in agriculture and industry;
(4) Constant increasing of efficiency in production processes; and
(5) Growth through cooperation arrangements.
Nitrogen Fertilizers
K+S expects the Nitrogen Fertilizers business segment to see a marked decline in revenues, attributable to both lower demand for nitrogenous fertilizers as well as a significantly lower price level.
In addition, the consumer segment should be influenced by a lower level of the propensity to consume as a result of the financial and economic crisis.
Following the record result achieved in 2008, and in spite of considerably lower raw material costs that are to be anticipated during the course of the year, K+S expects operating earnings to be down significantly on the previous year.
Salt
K+S states that the effects of the intended acquisition of Morton Salt have not been taken into account in the forecast issued for 2009.
As a result of the very good start to 2009 for de-icing salt in both Europe and North America, it expects the Salt business segment to see a marked rise in revenues in 2009.
By contrast, in the case of salt for chemical use, K+S expect significant decreases in sales volumes due to the marked economic downturn. On the costs side, in 2009 lower freights and energy prices will provide relief. Overall, operating earnings will be significantly above the level seen in 2008.
(1) Consolidation and selective expansion of its strong market position in Europe;
(2) Exploitation of numerous synergies, especially in the case of coordinated, pan European production and logistics;
(3) Swift expansion of the global salt business; and
(4) Growth through acquisitions and cooperation arrangements.
Complementary Business
K+S expects to see a moderate decrease in revenues for the "Complementary business segments" sector, primarily attributable to volume decreases in the third-party logistics business as well as lower revenues for waste management and recycling.
For operating earnings, however, it expects a significant decrease compared with 2008, which will also result from lower contributions to earnings deriving from logistics and waste management and recycling.
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Financial highlights: K+S, year ended 31 December
|
|
2008 |
2007 |
2006 |
2005 |
2004 |
|
Sales (€ m) |
4,794 |
3,344 |
2,958 |
2,816 |
2,539 |
|
Operating Profit (€ m) |
1,192 |
-106.9 |
278 |
251 |
163 |
|
Net Profit (€ m) |
979 |
175 |
229 |
-- |
-- |
|
Total Assets (€ m) |
3,474 |
2,965 |
2,831 |
2,259 |
2,148 |
|
Diluted earnings per share (€) |
5.94 |
1.06 |
4.27 |
3.81 |
2.43 |
|
Number of Employees |
12,368 |
12,033 |
11,873 |
11,012 |
11,068 |
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K+S
Company Structure
K+S is a supplier and producer of speciality and standard fertilizers, plant care and salt products for the agriculture, industry and private consumer markets.
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