* Q2 operating profit down 94.5 pct at 18.1 mln euros
* Sees sharp decline in profits in 2009
* Sales volume outlook cut
* CEO plays down options for collaboration with EuroChem
* Shares rise 2.6 pct
(Recasts lead, adds sales volume outlook, CEO comments)
FRANKFURT, Aug 13 German fertilizer and salt
company K+S AG SDFG.DE predicted full-year earnings would fall
sharply and lowered its sales volume outlook after operating
profit plummeted in the second quarter.
"There is no sign yet of the normalisation of demand," Chief
Executive Officer Norbert Steiner said on Thursday.
Quarterly operating profit, excluding currency hedging
instruments, slumped to 18.1 million euros ($25.6 million) from
326.4 million euros a year earlier, and was below the average
estimate of 33 million euros in a Reuters poll of 13 analysts.
Sales at the world's fourth-biggest potash supplier dropped
37.6 percent to 738.7 million euros, slightly worse than the 747
K+S, soon to be the world's largest salt producer, estimated
that 2009 potash products sales volume would slump to 4 million
tonnes, down from a June estimate of up to 4.5 million tonnes
and well below the 7 million tonnes chalked up in 2008.
Demand for potash -- a key nutrient in synthetic fertilisers
alongside nitrogen and phosphorus -- has been buffeted by the
boom and bust of financial markets over the last two years as
investors rushed into and later abandoned agricultural
Fertiliser peers including Potash Corp (POT.TO) (POT.N), the
world's largest, Mosaic Co (MOS.N) and nitrogen specialist Yara
(YAR.OL) have also recently reported sharp falls in
second-quarter profit.[ID:nBNG368711] [ID:nN22333827]
POTASH PRICE BELLWETHER AWAITED
Global potash suppliers, dominated by Canadian and Russian
miners, have reined in production but prices have still crumbled
in recent months. The industry is eagerly awaiting the outcome
of bellwether price negotiations with China's import monopoly,
the world's largest potash user.
"We see no indications of a potash volume pick-up, and the
pricing situation remains highly uncertain," said BHF bank
analyst Annett Weber.
K+S shares rose 2.9 percent to 38.3 euros at 0735 GMT, while
the European DJ Stoxx Chemicals Index .SX4P was up 1.3
percent. Before today K+S shares had lost 5.5 percent this
Sales of global potash miners could slump to 40 million
tonnes this year and the industry is unlikely to see a return to
levels of about 60 million tonnes before 2011, Stainer said in
an interview with Reuters TV.
"We think (2010) should be a transitional year but we should
be back to normality in 2011," he said.
Asked about forms of cooperation with its largest
shareholder EuroChem, backed by Russian investor Andrei
Melnichenko, Steiner said options were limited.
EuroChem, which has so far focused on nitrogen and phosphate
fertilisers, last year auctioned one of three licences to
exploit the world's second-largest potash deposit, below
Russia's Ural mountain range.
"They have a mine in preparation ready for production in
2013 or later and there they want to be on their own," Stainer
said, adding that collaboration would have to benefit both
K+S, which traces its roots to a late-19th-century salt
mine, said it still expected a significant decline in sales and
now saw a sharp decline in earnings this year.
K+S shares change hands for 13 times estimated earnings for
the coming 12 months, according to Thomson Reuters StarMine,
which weights estimates according to analysts' track record.
That is roughly in line with multiples for Potash Corp of
Saskatchewan and Mosaic.
(Reporting by Ludwig Burger; Editing by Richard Hubbard)