ubs roadshow london · the company may not notify you of changes and disclaims any obligation to...

16 August 2019

Lutz Grüten, Head of Investor RelationsJulia Bock, Senior Investor Relations Manager

K+S Group

UBS Roadshow London

1

K+S Group

K+S Group

Disclaimer

No reliance may be placed for any purpose whatsoever on the information or opinions contained in the Presentation or on its completeness, accuracy of fairness. No

representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its respective directors, officers, employees, agents or

advisers as to the accuracy, completeness or fairness of the information or opinions contained in the Presentation and no responsibility or liability is accepted by any of

them for any such information or opinions. In particular, no representation or warranty, express or implied, is given as to the achievement or reasonableness of, and no

reliance should be placed on any projections, targets, ambitions, estimates or forecasts contained in this Presentation and nothing in this Presentation is or should be

relied on as a promise or representation as to the future.

This Presentation contains facts and forecasts that relate to the future development of the K+S Group and its companies. The forecasts are estimates that we have made

on the basis of all the information available to us at this moment in time. Should the assumptions underlying these forecasts prove not to be correct or should certain

risks – such as those referred to in the Annual Report – materialise, actual developments and events may deviate from current expectations. Given these risks,

uncertainties and other factors, recipients of this document are cautioned not to place undue reliance on these forecasts.

This Presentation is subject to change. In particular, certain financial results presented herein are unaudited, and may still be undergoing review by the Company’s

accountants. The Company may not notify you of changes and disclaims any obligation to update or revise any statements, in particular forward-looking statements, to

reflect future events or developments, save for the making of such disclosures as are required by the provisions of statue. Thus statements contained in this

Presentation should not be unduly relied upon and past events or performance should not be taken as a guarantee or indication of future events or performance.

This Presentation has been prepared for information purposes only. It does not constitute an offer, an invitation or a recommendation to purchase or sell securities

issued by K+S Aktiengesellschaft or any company of the K+S Group in any jurisdiction.

K+S Group 2

K+S Group

K+S at a Glance

IndustryAgriculture Consumers Communities

Group financials 2018

Revenues

€ 4.04 billionEBITDA

€ 606 millionEBITDA-Margin

15%Earnings after taxes, adj.

€ 85 million

Customer Segments

Revenues€ 1.74 billion

EBITDA€ 275 millionMargin 16%







43%

28%

11%

18%

41%34%

7%18%

OU Europe+: Revenues: € 2.59 billion; EBITDA: € 443 million; Margin: 17%

OU Americas: Revenues: € 1.45 billion; EBITDA: € 222 million; Margin: 15%

Current Trading

4

K+S Group

K+S Group

EBITDA again with a nice improvement: +24%

Europe+: Price increase across all PMP products

Americas: Maintenance measures and elevated logistics costs showing impact on EBITDA especially in a seasonally low quarter

FCF plus €150m to €102m best Q2 FCF since 2011; supportive on our path to strengthen our balance sheet

Highlights Financials

€ million Q2/18 Q2/19 YoY

Revenues 812 879 +8%

t/o Europe+ 572 627 +10%

t/o Americas 239 251 +5%

D&A -92 -104 -13%

EBITDA 105 130 +24%

t/o Europe+ 100 128 +29%

t/o Americas 22 14 -38%

Adj. net profit -9 3 -

Adj. EPS (€) -0.05 0.01 -

Operating cash flow 59 193 -

Adj. FCF -49 102

CapEx 91 93 +2%

-

Net fin. debt/EBITDA (LTM) 4.6x 4.4x -

Q2 2019 at a glance

105

13047

-3 -1

-18

Q2/18 Price Volume/Mix

FX Costinflation,Others

Q2/19

EBITDA in €m

- General costinflation

+ Mainlyprices in Agriculture

Main effects:+ Volumes

Agriculture- Volumes

Industry andCommunities

K+S Group 5

K+S Group

Deeper dive into our customer segments

Consumers Communities

IndustryAgriculture

+48%

-71%

EBITDA

383

64

440

95

Revenues EBITDA

Q2/2018 Q2/2019

+15%

• Better prices• Increased volumes• General cost

inflation and inventory built-up

277

61

282

56

Revenues EBITDA

Q2/2018 Q2/2019

+2%

-8%

• Better prices• General cost inflation

103

7

109

9

Revenues EBITDA

Q2/2018 Q2/2019

+6%

+21%

• Better prices, especially for water softening

-2%

48

-11

47

-18

Q2/2018 Q2/2019

• Lower volumes in Q2

• … but YoY up in H1

Revenues

6

K+S Group

K+S Group

Pricing (Source: FMB)

80%

90%

100%

110%

120%

130%

140%

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19

SOP Europe

MOP Brazil

H1/19:

Robust demand in Europe and Brazil, weather effects

postpone demand in North America, constant

deliveries on contracts in China and India, SE Asia

demand weaker due to palm oil price

However, MOP price momentum remains supportive (YoY)

Specialty prices were picking up but are still lagging

behind

K+S Agriculture average selling price:

FY/18: 254 €/t (FY/17: 241 €/t);

Q4/18: 268 €/t; H1/19: 277 €/t

Outlook:

FY global demand 2019 stable compared to record

demand in 2018 of a good 71mt KCl

Strong demand expected in Brazil in autumn season,

demand in China temporarily subdued due to MOP

import stop

Trading Update: Customer Segment Agriculture

MOP Europe

7

K+S Group

K+S Group

Trading Update: Customer Segments Industry and Consumers

Solid demand, gradually increasing

sales volumes

Logistic costs after inflation,

especially in North America, in 2018:

“new normal” for 2019

Consumers customer segment

showed first success in H1/19 to

pass on higher costs, especially for

logistics

2.47 2.52 2.572.74

2.44 2.47

0.48 0.41 0.420.50

0.48 0.40

Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19

Industry Consumers

Sales volumes (in mt)

YoY:Sigmundshall

volumes missing

8

K+S Group

K+S Group

Trading Update: Customer Segment Communities

Pricing trends in customer segment Communities

Mixed picture in our regions in winter

2018/19

Good business in US Mid-West and

Canada

Highly competitive US East Coast

Europe:

Q4: mild weather

Q1: average demand

In total, Q4 almost on and Q1 above

long-term average

Widely promising bidding season 2019

6.86

0.93 1.53

4.00

7.11

0.86

Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19

Sales volumes in customer segment Communities (in mt)

9

K+S Group

K+S Group

Our wastewater management makes us less vulnerable to droughts

54%

August 2018

37%

600k cbm

600k cbm

August 2019

up to1,000k

cbm

Capacity Utilization rate

August 2019: Approval received for an additional (temporary) underground wastewater storage capacity of up to 400k cbm.

Offsite disposal of saline wastewater by truck and railcar

Basin capacity andutilization¹(as of 14 Aug 19)

400k cbm

¹Basin capacities were at 500k cbm in 2018 , but adjusted for comparative purposes

~22%

K+S Group 10

K+S Group

Bethune: Product quality is improving

Quality improvement already in 2019 but somewhat lower production (~1.7mt). Customers will recognize this improvement early 2020.

Installation ofgrinder pumps in

July 2019

Preparation andinstallation of

cooling-, sievingand crushingequipment in

September 2019

Implementation in Q4/2019

11

K+S Group

K+S Group

EBITDA 2019: €730m to €830m (2018: €606m)

Free cash flow 2019: at least €+100m (2018: €-206m)

606

700-

850

730-

830

FY18 Price Volume/Mix

Others Costinflation

FY19guidance in

May

+ - CurrentFY19

guidance

EBITDA in €m

+ Bethune+ Absence of

droughteffect

- Roof stabilityNeuhof

- Average de-icing saltbusiness

+ Sigmundshall+ Shaping- FX+/- Others

+ ASP in CSAgriculturemoderatelyup

+ Supportiveproduct pricesin other CS

- Inflation returning: Higher personnel, energy, freight andmaterialcosts

High probability to have no weather-related standstills - even in the case of an extended drought !

More precise EBITDA and FCF guidance*)

+ Changedassumptionregardingthe EUR/USD exchange rate (1.15 vs. 1.20 EUR/USD)

- Bethune:Quality initiative causingextendedmaintenanceshutdown

- Temporaryslowdown in H2on the back ofChinese MOPimport stop

*) Assuming no weather related outage days

K+S Group 12

K+S Group

Deleveraging is making progress

8.1x

7.2x 7.3x

6.6x6.5x

5.6x

5.2x 5.3x

4.7x

4.4x

H1/17(LTM)

2017 2018 Q1/19(LTM)

Q2/19(LTM)

2019e 2020e

Net Debt/EBITDA (incl. Provisions) Net Financial Debt/EBITDA

Halved vs. H1/17

• NFD/EBITDA of 4.4x again down on FY/18 of 5.3x

• 2018 and H1/19 (LTM) still negatively affected by Werra outage days

• On the right track to halve our leverage by YE 2020 vs. H1/2017

13

K+S Group

K+S Group

2019 FULL-YEAR GUIDANCE substantiated; midpoint slightly increased

CASH CONVERSION AND LEVERAGE improved

WASTEWATER MANAGEMENT improved

BETHUNE RAMP-UP on track

OPERATING PERFORMANCE improved

Shaping 2030 Strategy

K+S Group 15

K+S Group

Tapping the full potential of our existing assets... establishing the most value-creating portfolio combination

Exploring new adjacent growth areas... pursuing growth by venturing into new markets where we can use our existing capabilities

Increasing the share of our specialties business... ensuring an overall stabilized performance and reducing our dependency on standard products and weather

'One Company' ... thinking and acting as 'One Company' and lifting synergies between our businesses

We will be the most customer-focused, independent minerals company and grow our EBITDA to €3bn in 2030 by ...

Our vision for 2030

IndustryAgriculture

ConsumersCommunities

K+S Group 16

K+S Group

Phase 2: Growth

203020202017

Phase 1: Transformation

Realize synergies

Advance corporate culture

Net financial debt/ halvedEBITDA vs. H1/2017

Synergies > €150m

EBITDA-Ambition €3bn

ROCE > 15%

Revenue growthbeyond 2030

> 4%

Increased share of specialties

Tapping the full potential of our existing assets

Exploring new adjacent growth areas

Shaping the organizationand focusing towards our clients

Reduce indebtedness

Investment grade ratingachieved in 2023

We will implement our strategy in two phases

Phase I

18

K+S Group

K+S Group

SHAPING 2030

Lift synergies

Operations

Procurement

Supply Chain and Logistics

Commercial Excellence

SG&A Optimization

> €50m

Net synergies YE 2020 (vs. 2017)

> €30m

> €20m

> €20m

~ €30m

COO

Sponsor

CFO

COO

COO

CEO

∑ > €150m

Synergies: Breakdown by program

19

K+S Group

K+S Group

Shaping 2030 EBITDA impact

Costs Synergies > €150m

Total costs for synergy program: ~ €150m (end of 2020)

2018e 2019e 2020e

K+S Group 20

K+S Group

This NPV equals an EV per share of 25 EUR

Variation NPV change

MOP gran. Brazil +/- 10 USD/t +/- €200 million

“We create value for our stakeholders!”

Net Present Value (NPV) Bethune

Sen

siti

viti

es

NPV for Bethune EUR 4.8bn

21

K+S Group

K+S Group

Site costs (FOB) in comparison (2020)

* column width = production capability in million tonnesSource: CRU Report 2016, K+S

-30%

BU Potashw/o Bethune

(incl. Specialties)

Best-in-class

USD/t

K+S Bethune(in 2023)

K+S Zielitz(Purely MOP)

K+S Bethune*

The Bethune ramp-up to 2.86 million tons in 2023 (production capability) significantly improves K+S's competitive position.

Phase II

23

K+S Group

K+S Group

Implications for K+S

Arable land shrinking

Yield needs to be improved

Higher efficiency of fertilizationand irrigation needed

Plants have to be more stressresistent

Infrastructure needs to beimproved focus on renewable energy

Growing population, especiallyin Asia, needs more salt forvarious purposes

Today: 7.3bn

8.5bnGlobal population in 2030

Per decade

0.2Average global warming (ºC)

70% of water used for agriculture

40%of the population will suffer

from water shortage by 2030

2015: 3.0bn

5.4bnpeople will be

middle-class by 2030

Our strategy has incorporated important megatrends

24

K+S Group

K+S Group

Geo-expansion Fertilizer Industry

Africa

Asia

Increase of fertilizer specialties

Ramp of low cost commodities

Expand Pharma & Food portfolio

Chemical applications

Growth areas and ideas cover the full growth landscape

K+S Growth Landscape

Growth areas and ideas cover core and adjacent businesses

Financials

K+S Group 26

K+S Group

P&L

€ million Q1/18 Q2/18 Q3/18 Q4/18 FY/18 Q1/19 Q2/19

Revenues 1,170 812 840 1,217 4,039 1,264 879

EBITDA 237 105 36 228 606 270 130

Margin 20% 13% 4% 19% 15% 21% 15%

Depreciation 90 92 94 103 379 99 104

Financial result -31 -25 -26 -30 -112 -17 -21

EBT, adjusted 116 -12 -84 95 115 154 5

Tax rate, adjusted 28% 25% 27% 25% 26% 30% 52%

Net income, adjusted 84 -9 -61 71 85 108 3

EPS, adjusted 0.44 -0.05 -0.32 0.38 0.45 0.56 0.01

K+S Group 27

K+S Group

Cash Flow and Balance Sheet

€ million Q1/18 H1/18 9M/18 FY/18 Q1/19 H1/19

Operating cash flow 233 292 276 309 324 518

- Investing cash flow(pre sale/ purchase of securities)

-90 -198 -336 -515 -91 -183

Adjusted free cash flow 143 94 -60 -206 233 335

CapEx 63 154 278 443 73 166

Net financial debt 2,834 2,944 3,100 3,242 2,935 2,894

Net financial debt/ EBITDA (LTM) 4.7 4.9 5.5 5.3 4.6 4.4

Equity ratio 42% 43% 41% 41% 43% 42%

28

K+S Group

K+S Group

CapEx development 2015-2020

0

200

400

600

800

1.000

1.200

2015 2016 2017 2018 2019e 2020e

BU Potash (ex Bethune)

Bethune

BU Salt

Complementary Activities

in m€

K+S sustainability KPIs and targets 2030

30

K+S Group

K+S Group

Goal KPI 2018Target by

2030 at the latest

PEO

PLE

Health & Safety

Lost time incident rate (LTIR) 7.90

Vision 2030

Diversity & Inclusion

Employees’ favorable perception of inclusive work environment (percent)

68 (2015) >90

Human Rights

Sites covered by a human rights due diligence process (percent)

0 100

K+S sustainability KPIs and targets 2030 – People

31

K+S Group

K+S Group

Goal KPI 2018 Target by2030 at the

latest

ENV

IRO

NM

ENT

Water

Deep-well injection of saline wastewater in Germany (m³ p.a.)

1.0 0 starting January

2022

Additional reduction of saline process water from potash production in Germany (m³ p.a.)

+400,000-500,000

excluding reduction by KCF facility and

end of production SI

Waste

Amount of residues used for other purposes than tailings piles or increased amount of raw material yield (million tons p.a.)

1.0 3

Additional area of tailings piles covered (ha) 5.9 155

Energy & Climate

Carbon footprint for power consumed (kg CO2/MWh) (percent)

-1.5 -20

Specific greenhouse gas emissions (CO2) in logistics (percent)

-2.0 -10

K+S sustainability KPIs and targets 2030 – Environment

32

K+S Group

K+S Group

Goal KPI 2018Target by

2030 at the latest

BU

SIN

ESS

ETH

ICS

Sustainable Supply Chains

Critical suppliers aligned with the K+S Group Supplier Code of Conduct (SCoC) (percent)

14.7100

by end of 2025

Spend coverage of the K+S Group SCoC (percent) 29.4> 90

by end of 2025

Compliance & Anti-Corruption

All employees reached by communication measures and trained appropriately in compliance matters (percent)

71100

by end of 2019

K+S sustainability KPIs and targets 2030 – Business Ethics

K+S Group 33

K+S Group

Housekeeping Items / Financial Calendar

Tax rate: ~30%

Financial result: ~€-120m

CapEx: ~€600m

D&A (incl. Bethune): €380m to €400m

Reconciliation (EBITDA): €-60m to €-70m

Additional information on Outlook FY 2019

Financial Calendar

Customer Segment Agriculture:Sales volume: 6.9-7.1mt (2018: 6.8mt) and ASP moderately up (2018: 254 €/t)

Customer Segment Communities:Sales volume: 12.5-13.0mt (2018: 13.3mt)

Kepler CFO Roadshow, Frankfurt 16 August 2019

UBS Roadshow, London 16 August 2019

Commerzbank Sector Conference, Frankfurt 27 August 2019

MainFirst CFO Roadshow, Helsinki, Copenhagen 28-30 August 2019

34

K+S Group

K+S Group

IR Contact Details

e-mail: [email protected]: www.k-plus-s.comIR-website: www.k-plus-s.com/ir

K+S AktiengesellschaftBertha-von-Suttner-Str. 734131 Kassel (Germany)

Janina RochellInvestor Relations Manager

Phone: +49 561 / 9301-1403Fax: +49 561 / [email protected]

Lutz GrütenHead of Investor Relations


Christiane MartelRoadshow Management


Alexander EngeInvestor Relations Manager


Julia Bock, CFASenior Investor Relations Manager


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