MOSCOW (MRC) -- K+S (Kassel, Germany) has reported an adjusted group net loss of EUR1.97 billion (USD2.33 billion) for the third quarter, plunging year on year (YOY) from a loss of EUR41.8 million, due mainly to a EUR2.0-billion write-down of the company's potash assets after it lowered assumptions for long-term global potash prices, said Chemweek.
The company says its adjusted earnings were “strongly negative” due to the extraordinary non-cash impairment of its potash assets and a higher cost of capital rate. EBITDA, however, rose 19% YOY to EUR96.0 million for the third quarter despite a 9% decline in sales to EUR821.7 million.
K+S says it expects a “slight recovery” in potassium chloride (KCl) prices for the rest of this year compared with the third quarter, with prices for fertilizer specialties to remain “largely stable.” It has reaffirmed its full-year guidance for EBITDA of about EUR480 million, down from EUR640 million in 2019. Adjusted net earnings will fall to a “significantly negative figure” as a result of the EUR2.0-billion impairment, it says.
The USD3.2-billion sale of the K+S Americas salt business to Stone Canyon Industries Holdings and affiliates, announced in October, is expected to complete in the summer of 2021, according to the company. “With the proceeds from the sale of the American salt business and the consistent implementation of our package of measures, we will significantly reduce the company’s debt and secure financing for the coming years,” says K+S chairman Burkhard Lohr. “With the impairment in the third quarter, we have now also adjusted the balance sheet. All this increases our flexibility for developing the company further."
The company’s Americas operating unit saw increased earnings contributions in its industry and consumers customer segments, which together with strict cost discipline almost completely offset the effects of lower early de-icing salt fills, it says. EBITDA of EUR24.4 million for the third quarter was down EUR1.0 million YOY on sales almost 9% lower at EUR257.7 million. A higher KCl price level could not compensate for lower volumes and an unfavorable exchange rate, it says.
The Europe+ operating unit saw operating earnings rise 26% YOY to EUR84.8 million despite a decline of more than 9% in revenue to EUR562.6 million, mainly attributable to the weaker KCl price as well as currency effects.
The ongoing restructuring of administrative functions within K+S in Germany is expected to be completed by the end of this year and reduce annualized costs by EUR60.0-140.0 million from 2021, it says.
As MRC informed earlier, in September, 2.014 million tons of mineral fertilizers were produced (in terms of 100% nutrients) against 1.993 million tons a month earlier. In general, in January - September 2020, Russian enterprises produced just over 18.5 million tons of fertilizers, which is 3.5% more than in 2019.
Also, in 2019, Russian enterprises produced 23.588 million tons of fertilizers, which is 3.2% more than in 2018.
MRC