📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

K+S expects high potash prices to offset gas shortage hit, maintains outlook

Published 11/08/2022, 04:11 pm
Updated 11/08/2022, 08:18 pm
© Reuters. FILE PHOTO: A headframe of salt producer K+S Group is pictured at a K+S potash mine near Unterbreizbach, near Bad-Hersfeld October 1, 2013. REUTERS/Ralph Orlowski
SDFGn
-

By David Latona and Ina Kreutz

(Reuters) - Potash and salt miner K+S reiterated its full-year profit guidance on Thursday, as it expects higher fertiliser prices to offset the impact of a potential gas shortage in Germany.

The group confirmed its April forecast for 2022 core earnings (EBITDA) in a range of 2.3 billion to 2.6 billion euros ($2.37 billion to 2.67 billion) but now included a gas bottleneck scenario in its calculations.

This scenario assumes a 25% reduction in natural gas availability in the fourth quarter, which together with a new gas levy would lead to a cost burden in a low-triple-digit million euro range, CEO Burkhard Lohr said in a statement.

For now, the company expects the gas shortage to only affect its final quarter and early 2023, not the entirety of next year, Lohr told analysts in a call.

Last week, Germany's cabinet imposed a levy on gas consumers from October to help suppliers hit by exploding import prices caused by Russia's invasion of Ukraine.

Potash demand remained "significantly" below last year due to limited supply, Lohr said, though he predicted spot prices would stabilise at a high level in the second half of the year.

Western sanctions on rivals Belaruskali from Belarus and Russia's Uralkali, which together account for about one third of the world's potash production, have made the key crop fertiliser more scarce and expensive.

Lohr also dismissed concerns about low water levels at the group's sites on the Werra river, saying K+S did not expect any standstills as it could use alternative storage basins.

Stoppages at its main mine network have plagued the company in recent years due to environmental restrictions limiting the discharge of saline wastewater, a byproduct of processing potassium ore.

K+S's EBITDA rose more than six-fold year-on-year to 706 million euros in the second quarter, beating analysts' average forecast of 664 million euros.

© Reuters. FILE PHOTO: A headframe of salt producer K+S Group is pictured at a K+S potash mine near Unterbreizbach, near Bad-Hersfeld October 1, 2013. REUTERS/Ralph Orlowski

K+S shares were up 4% at 1002 GMT.

($1 = 0.9720 euros)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.