May 2, 2011 / 2:25 PM / 8 years ago

UPDATE 2-Fertiliser firm K+S beats profit forecasts

* Q1 sales 1.78 bln euros vs 1.64 bln euros I/B/E/S estimate

* Sees ‘strong’ year rise, previous forecast ‘significant’

* Shares extend gains, up 3.5 pct at top of DAX

(Adds trader’s comment, more details on outlook)

By Ludwig Burger

FRANKFURT, May 2 (Reuters) - German potash miner K+S SDFG.DE reported even better than expected profits in an early release of its first-quarter results on Monday, as high crop prices stimulate demand for fertilisers.

“The unchanged high level of agricultural prices favoured the earnings prospects of the agricultural sector, so that there is a significant incentive to raise yields per hectare through the increased use of fertilizers,” the company said.

K+S said its first-quarter adjusted net income rose 54.7 percent to 272 million euros ($403 million), above the average analyst estimate of 210 million according to Thomson Reuters I/B/E/S data.

Sales jumped 16 percent to 1.78 billion euros, higher than the 1.64 billion average estimate, while earnings before interest and tax were up 44 percent at 384.3 million euros.

The company also said that full-year sales should now rise significantly. It had previously described sales as rising “tangibly” this year.

Shares in K+S were 3 percent higher at 56.28 euros at 1530 GMT, the second-biggest gainer in the German market's DAX index .GDAXI behind Commerzbank (CBKG.DE).

It now sees earnings before interest and tax, depreciation, excluding the effect of currency hedging, rising “strongly” this year, having previously said it sees profits rising “significantly”.

“The good numbers were priced in the shares, but the outlook hike adds to confidence,” said one share trader.

The company is due to release more detailed results on May 12.

K+S said last month it will consider more fertiliser price increases in its main European market, following a hike in March. [ID:nLDE73D1EI]

Soaring grain prices also buoyed the quarterly earnings of larger rival Potash Corp POT.TO and helped Mosaic Co (MOS.N) offset technical problems in mining and shipping. [ID:nN28203376] [ID:nN30185905]

Farmers are scrambling to boost yields by using more potash fertiliser after prices for key crops such as wheat, corn and soy surged to two-and-a-half year highs earlier this year.

As the mineral stays in the soil for longer than other fertiliser types such as nitrogen, many farmers had suspended use of potash during the financial crisis, creating pent-up demand this year.

Demand for potash was hit hard by the economic downturn as investors who had initially rushed into agricultural commodities later abandoned the asset class. ($1=.6753 euros) (Additional reporting by Harro Ten Wolde; Editing by Greg Mahlich)

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