* Cuts dividend to 0.25 eur/shr amid uncertain potash market
* 2013 adjusted EBIT, sales above forecast
* Says abandons dividend payout target ratio for now
* Shares drop 1.8 pct
(Adds background on potash market, Canada project, shares)
By Ludwig Burger
FRANKFURT, March 12 German potash miner K+S
slashed its 2013 dividend and suspended its long-term
payout goal to preserve cash for a new mine it is building in
Canada despite a slump in prices of the fertiliser ingredient.
The market for potash has been in turmoil since Russian
producer Uralkali quit a powerful sales alliance with
Belarus' Belaruskali in July last year, leading to higher output
volumes and lower prices.
K+S has remained committed to a C$4.1 billion ($3.7 billion)
expansion project in Canada, planning to bring the new mine
called Legacy on stream in 2016, even though lower potash prices
have upset its previous funding plans.
The group, which is also the world's largest salt supplier,
said on Wednesday it would cut its 2013 dividend to 0.25 euros
($0.35) per share from 1.4 euros a year earlier. Analysts had on
average expected a payout of 0.54 euros per share.
The dividend equates to just 11 percent of adjusted net
profit for 2013, far below the company's long-term goal to pay
out 40-50 percent of adjusted earnings, which it said it
intended to return to as soon as possible.
"Against the background of the still uncertain potash
markets and especially with regard to its investments in Canada
we think this was a reasonable decision of K+S to cut the
dividend," said DZ Bank analyst Heinz Mueller.
At 1400 GMT, K+S shares were down 1.9 percent at 24.585
euros, underperforming a 1.6 percent decline in Germany's
blue-chip DAX index.
K+S, which used to be a division of German chemicals group
BASF, said adjusted earnings before interest and tax
dropped 18 percent to 656 million euros last year, beating the
average estimate of 635 million in a Reuters poll of analysts.
Full-year sales of 3.95 billion euros were also above the
average forecast of 3.86 billion.
There are signs of Uralkali and Belaruskali setting
differences aside to rejoin forces but Uralkali in January cut
prices by 24 percent in a new semi-annual supply deal with
China, one of the world's largest importers.
Demand from India, another key potash consumer, looks set to
be subdued by plans to cut potash subsidies by nearly a fifth
there as the government tries to contain a ballooning fiscal
K+S sells potash mainly to European farmers but the ups and
downs in prices follow the same patterns globally.
The company last month achieved a technical milestone at its
Canadian Legacy mine by drilling a connection to the first
cavern for extraction of potash brine solution.
It is aiming for the site to have annual output capacity of
2 million tonnes of potash by 2017, adding to the capacity of
7-7.5 million tonnes at its German mines, which face depletion
in about four decades.
($1 = 0.7212 Euros)
($1 = 1.1086 Canadian Dollars)
(Editing by Louise Heavens and Mark Potter)