* Q3 EBIT ex-forex hedging 9.4 mln eur vs 18 mln in poll
* Sees 2010 global potash demand at 45 Mt vs PCS's 50 Mt
* Cuts 2009 sales volume assessment; warns on prices
* Stock up 2.3 pct as cash call averted
(Adds analyst comment, shares)
By Ludwig Burger
FRANKFURT, Nov 12 German potash miner K+S
SDFG.DE was cautious on 2010 fertiliser demand and warned on
prices when reporting earnings on Thursday, although a feared
cash call failed to materialise, sending its shares higher.
The world's fourth-biggest potash supplier said global
demand for the mineral should rise to 45 million tonnes in 2010
from around 30 million in 2009, a year in which demand slumped
sharply, underlined by K&S's forecast-lagging quarterly
Industry leader Potash Corp of Saskatchewan (POT.N) recently
said it sees demand next year at around 50 million tonnes.
K&S's third-quarter operating profit, excluding currency
hedges, fell to 9.4 million euros ($14.08 million) from 502
million last year, on higher costs at its nitrogen business,
below an average estimate of 18 million in a Reuters poll.
The weaker than expected headline earnings figures initially
sent K&S stock lower, before the move was reversed on forecast
beating earnings at its main potash unit and the lack of a cash
call, which some in the market had expected.
The $1.7 billion takeover of U.S. salt miner Morton Salt had
strained K+S's finances, leading the German company to consider
a capital hike. [ID:nN23347298]
At 1336 GMT, shares in the company were trading up 2.3
percent at 38.7 euros, while Germany's main DAX index .GDAXI
Demand for potash has been hard hit by the economic downturn
as investors rushed into, and later abandoned, agricultural
commodities - and K&S's quarterly report suggested a strong
recovery was still some way off.
Third-quarter revenue at the former BASF BASF.DE
subsidiary more than halved to 698.1 million euros, slightly
worse than the 712 million expected, as sales volumes slumped.
"This remains a very difficult market environment. Average
euro potash spot prices are still sliding," Equinet analyst
Michael Schaefer commented.
Potash lasts longer in the soil than fertilisers like
nitrogen, giving farmers leeway to delay its use when they
foresee falling prices, which has aggravated swings in demand.
The industry is also awaiting crucial pricing news on new
exports to China, the world's largest buyer. [ID:nN2430059]
K+S, which traces its roots to a 19th-century salt mine,
reiterated its more stable salt business would only partially
offset a sharp drop in 2009 group revenue and fertiliser sales
volume, and that operating earnings would fall sharply.
Chief Executive Norbert Steiner, a former customs lawyer at
BASF who is said to take a no-nonsense approach to management
and to despise chain-of-command protocols, has taken a more
pessimistic view than global peers throughout the crisis.
K+S stuck to its initial assessment of output cuts earlier
this year, while major peers were forced to make follow-up
announcements of temporary closures of mine shafts.
K+S, also the world's largest salt producer, repeated on
Thursday that its 2009 potash products sales volume would slump
to 4 million tonnes from the 7 million chalked up in 2008.
Should potash prices slide further, the negative effect on
sales and the bottom line would be considerable, the company
Potash Corp said last month that quarterly profit fell 80
percent as fertiliser demand and pricing weakened, prompting it
to dim its outlook for the sector. [ID:nN22505738]
K+S trades at 16 times next year's estimated earnings,
according to StarMine, which weights estimates according to
analysts' track record. That is above multiples of peers
including Potash Corp, Yara (YAR.OL) and Mosaic (MOS.N).
(Additionals reporting by Andreas Kroener; Editing by Joel
Dimmock and Simon Jessop)