UPDATE 1-K+S eyes higher 2012 dividend after Nitrogen sale

Tue Aug 14, 2012 2:29am EDT

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FRANKFURT, Aug 14 (Reuters) - K+S AG, the world's fourth-largest potash supplier, said on Tuesday it could lift its dividend this year on the back of a likely boost to profit from the sale of its K+S Nitrogen unit.

K+S said adjusted group earnings after tax, including the expected accounting profit from its sale of K+S Nitrogen, would be in a range of 630 million euros ($778 million) to 690 million euros, up from 582 million euros last year.

"For 2012, there are... opportunities for a higher dividend," K+S said in a statement. It paid 1.30 euros per share for 2011.

The company repeated that its dividend policy was to pay out 40-50 percent of its annual adjusted net income.

Group net profit from continuing operations was expected to be between 540 million euros and 600 million euros in 2012, down from 626 million euros last year, the company said.

K+S last month beat second-quarter sales and operating profit forecasts, as higher crop prices drive demand for fertiliser minerals in its main European market.

Prices of crops such as soy, wheat and corn have risen between 20 and 40 percent in global markets since early June -- just before the end of the quarter -- mainly driven by supply shortages due to drought in the United States.

Higher prices for produce give farmers a better return on expenses such as fertiliser.

While the severe drought in many U.S. corn growing areas may dent near-term fertiliser sales in North America, the resulting spike in global corn prices bodes well for fertiliser demand in Europe.

"The current demand development for potash and magnesium products in the markets relevant to us should therefore continue in the coming months and should cause this business segment to show even slightly rising operating earnings," K+S Chief Executive Norbert Steiner said in the statement

That rise should substantially offset a strong decline in the operating earnings at the company's Salt business, after mild temperatures at the start of the year depressed prices for de-icing salt.

K+S said adjusted group earnings from continuing operations rose 17 percent to 141.2 million euros in the second quarter.

($1 = 0.8096 euros) (Reporting by Ludwig Burger and Jonathan Gould; Editing by David Cowell)

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