Equity Story

K+S as an attractive, sustainable and future-oriented investment

K+S Equity Story

2018: Severe drought led to production restrictions at German potash sites due to disposal bottlenecks for saline water
2019/20: Due to low agricultural prices, farmers had little incentive to fertilize efficiently to increase their harvest, which led to a further decline in fertilizer prices
2020: Partially negative cash flows further increased the already high level of indebtedness due to the construction of the Canadian potash plant. Net financial liabilities/EBITDA increased to over 7x and the rating was downgraded to B (outlook: negative)
Suspension of the dividend payment for 2020.
2021: Sale of the US salt business achieved a multiple of 12.5x EBITDA despite implementation of the transaction under Covid restrictions and leads to a cash inflow of USD3.2 billion, book gain of €0.7 billion
2021: Rising agricultural prices led to a recovery in demand and an increase in fertilizer prices
Since 2022: Net financial debt fully eliminated through operating business development and strategic realignment; rating back in the BBB- investment grade range. Significantly improved waste disposal safety and permit situation. Excellent growth prospects in Canada.

Our capital expenditure will be increased in the course of the sustainable and economic transformation (especially in the years 2024 to 2026).
Nevertheless, our strong balance sheet and improved operating cash conversion ensure at least break-even free cashflows – even at the lower end of the cycle.
Adjusted free cash flow and therefore the distribution potential will improve significantly after the period of increased capital expenditure even with low potash prices, potash price increase would result in additional improvement.

We have already reduced our CO₂ emissions by around 80% since 1990.
At the same time, we continue to set ourselves ambitious goals and have developed a transformation path to becoming greenhouse gas neutral (Scope 1 and 2) by 2045 (reduction of CO₂ emissions by 25% until 2030 and by 60% until 2040).
We also comply with strict environmental regulations, particularly in production water, and are working on producing potash and salt with the smallest possible CO₂ footprint.
With our products, we are making a direct contribution to the Sustainable Development Goals (SDGs).

With our fertilizers, we support farmers in combating world hunger.
Every plant needs the three macronutrients nitrogen, phosphorus, and potassium (N, P, K), for which there is no substitute.
Potassium makes plants more resistant to weather extremes and increases their water use efficiency.
Alongside traditional potassium chloride (MOP), we provide farmers with a broad portfolio of specialty products for various nutrient requirements, which are also approved for organic farming.

With our potash sites on two continents, we can take advantage of logistical benefits and react flexibly to environmental influences.
We are continuously expanding our range of advisory services in order to provide local farmers with added value and support them in efficient fertilization. In Africa and Asia in particular, we see the greatest potential.
High barriers to entry, in particular the availability of resources in the earth, the time required to set up a plant and the necessary capex volume prevent a significant increase in capacities. Demand for potash is growing at a CAGR of 2-3% and makes new projects or expanded capacities averaging around 2 million tonnes per year urgently necessary to meet rising demand.

With our highly diversified customer structure and products, our results are only slightly affected by industry specific crises.
Our salts are also used in pharmaceutical products and the food industry, making them an important part of everyday life.

Our new potash plant in Bethune, Canada, offers steady growth prospects: We increase our production by >100kt p.a. As a result of the solution mining process, the plant will position itself within the most cost-effective 20% of potash producers with a final production rate of 4 million tonnes per year.
At the same time, we are optimizing our German sites, e.g. through our Werra 2060 project, to ensure our position also at the lower end of the cycle and further improve our environmental footprint as part of our sustainable transformation.
We recognize global trends and are expanding our range of specialty products.
Our unique infrastructure offers many opportunities such as the storage of gas in caverns, underground farming, tailings pile covering, waste management and circular economy.

We want to earn our cost of capital on average over a 5 year cycle ROCE > WACC).
We are also aiming for an average EBITDA margin of more than 20% over this cycle.
Furthermore, K+S wants to maintain a strong balance sheet and generally strives for a maximum leverage ratio (net debt/EBITDA) of 1.5x
The capital distribution takes the form of a dividend, which can be combined with a share buyback, also to counteract strong fluctuations in the
annual dividend.