Our business is heavily dependent on potash prices, and ultimately, the stock price also reflects this development. From discussions, such as those during our roadshows, I know that our investors understand they are investing in a cyclical business. Analysts are also very understanding of this. We are, after all, a mining company – our investments pay off in the long term. In contrast, the time horizon that is considered in the stock market is generally a maximum of 18 months. When we compare the performance of K+S shares with that of the MDax over a three-year period, we don’t look so bad at all. The same applies when comparing with other publicly traded competitors who are also burdened by weak potash prices. The fact is that the potash price is currently challenging, and we are also facing large investment projects. Therefore, we forecast at least a balanced free cash flow for the entire year. In short: One needs a longer time horizon when investing in K+S shares.

Globally, we are now back in balance regarding supply and demand. The major players, Russia and Belarus, specifically Uralkali and Belaruskali, have returned their supply to pre-war levels from 2021 in the potash market. However, sanctions from the EU, the US, and Canada against Belarus, which aim to support demands for free and fair elections and the release of political prisoners, are still in place. These were imposed in 2021 and expanded in 2022. In contrast, Uralkali has never been sanctioned because fertilizers also serve food production, and thus fall under the exceptions of sanctions against Russia. The fact that the two companies temporarily had significant problems offering their production was primarily due to logistical reasons.

Belaruskali was denied access to the Baltic Sea through Lithuanian ports. As a result, Belaruskali, Uralkali, and Eurochem had to share port capacity at St. Petersburg. But when you are moving bulk goods, you eventually hit capacity limits at the ports. Moreover, there were likely additional challenges, causing these potash producers to neither produce nor get the usual quantities to the ports.

They have changed their focus and are now serving Asia, especially China and India, and Brazil, much more intensively than before. In contrast, the European market is closed for Belaruskali, and Russia is only selling about 50% of its pre-war sales volume here. This has allowed K+S to strengthen its market position in Europe. Additionally, we serve sales regions where Russian and Belarusian suppliers are not strong, allowing us to achieve higher revenues.

After the sanctions against Belarus came into effect, and following the beginning of the Russian attack on Ukraine, there was an overstatement in the potash price. Now there is an understatement.

In principle, the potash market is a spot market – with two important exceptions: China and India, where state organisations sign massive import contracts for one year. For this, you need the big players: Canpotex, the Canadian distribution organisation of Nutrien and Mosaic, and Uralkali – because only these producers can deliver such large quantities. We at K+S, with a global market share of 10%, are one of the smaller players and are unsuited to the dimensions involved in these contracts. Once these contracts are placed, it is important for the overall market to see whether they were concluded at, above, or below the expected price level. The recent annual contracts with China and India have shown market participants that the bottom has apparently been reached in the potash price. In other regions, a premium is usually paid on the prices negotiated with China and India.

Regarding the commodity flows, the market has shifted due to sanctions and the Ukraine war. The war of aggression is a matter between Russia and the northwest hemisphere, i.e., NATO. As a result, Russian and Belarusian potash producers have successfully opened up sales markets, especially in Asia.

Basically, yes. The major players serve the global markets, though there are not only Canpotex and the Russian and Belarusian sellers but also smaller suppliers like the Israeli ICL and us. However, in the end, the prices are determined by the large producers.

The annual contracts set a basis for the market. But prices can certainly change significantly during the year. The prices of agricultural products – such as wheat, corn, soybeans, palm oil, etc. – also influence potash prices. At the end of the day, the question is: Can farmers afford fertilizer or not? And we see that, on average, agriculture is not doing so badly. They may not be as euphoric as they were recently, but in the long-term perspective, agriculture is currently doing quite well globally. For certain agricultural products, fertilizer use is definitely worthwhile at the current price level. One factor that additionally encourages us is that potash is underrepresented in comparison to other fertilizers like nitrogen and phosphate in terms of application. And it is also cheaper.

More than ever. 2017 marked the commissioning of Bethune. The plant is located in the Canadian province of Saskatchewan, where the world's largest potash deposit is situated. It is one of the very few greenfield projects in the potash sector in the western hemisphere in the past 40 years. Between 2006 and 2008, around 130 new projects on greenfield sites were announced, but only three were realized. The reason is that implementing such a project is a significant challenge. It requires a lot of money, expertise, and investment in the right regions.

No, not since a long time. Of course, there were some hiccups at the beginning – but that is normal. Today, we are able to export granulated potash to all parts of the world. This is, by the way, not as easy as it sounds. The potassium chloride must arrive at the port, such as in Vancouver, not only unclumped but must also be stored at the destination, for example in Brazil, where there is a completely different humidity level, in such a way that it does not clump together.

We operate solution mining in Bethune, meaning that we do not go underground with miners, as we do in our plants in Germany, but we pump fresh water into soluble salt rock through a borehole, creating caverns. Subsequently, the saturated brine is pumped to the surface through another pipeline. After this pumping phase is complete, the injection fluid is switched from fresh water to saturated brine. This marks the beginning of secondary mining. The potash is now selectively extracted from the surrounding rock, while the salt largely remains in the cavern.

Currently, we are able to produce more than 2 million tons annually in Bethune. It was clear from the beginning that the capacity there would gradually increase. It will take about 20 years from the commissioning in 2017 to reach the planned final capacity of 4 million tons per year. This is because the development of a cavern can take up to five years before it is fully operational.

What makes Bethune economically viable for us is that we can utilize the physical properties of potash there. Potash crystallizes at low temperatures, and the site experiences frost for half the year, with temperatures dropping to minus 50 degrees Celsius. We can then harvest the crystallized potash from the cooling ponds. This process requires very little energy and is therefore cost-effective. This makes it highly profitable. The first 2 million tons from Bethune will be produced through primary mining, and the second 2 million tons through secondary mining. In the latter stage, the costs per ton are minimal. With the Bethune plant, we will have one of the most efficient and profitable – because cost-effective – potash mines in the world. Moreover, the ramp-up in Bethune is also a sustainability project, as secondary mining is very water-efficient and leads to a significant reduction in the plant's CO2 footprint.

The production primarily goes to Brazil and Southeast Asia, with a small amount going to China and India.

It is true that the energy costs – namely natural gas – are higher in Bethune than for personnel. We have 500 employees there for 2 million tons of production capacity. We produce the other 5 million tons in Germany with 8,000 employees. This shows how highly efficient our Canadian plant is. Additionally, Canada has significant gas reserves, so supply security is ensured. The price level for gas is also significantly lower than, for example, here in Europe.

We won’t comment on that.

We operate in two currency areas. Potash is a global market that is priced in US dollars. Therefore, we hedge the dollar for the quantities we have sold, thus securing the cash inflow in US dollars. On the other hand, we have many expenses in North America in US dollars. This partly results in a natural hedge.

We hedge the US dollar in stages over three years to offset significant fluctuations upward or downward with an average exchange rate. For the current year, for example, we are fully hedged.

We have significantly more personnel in Germany, which is reflected in the ratio to the ton of potash produced. Through the ramp-up in Bethune with the crystallization of potash, we will need even less energy per ton there, further widening the gap with our German plants. In Germany, the fixed cost share is about 80%, while in Canada it is about one-third of total costs. Ultimately, we will become one of the most competitive potash mines in the world with Bethune.

It involves our integrated plant at Werra, which we will modernise to prepare for the coming decades. We will rebuild two of our three sites there: we will transition from wet to dry production. This means we will no longer extract potash from rock salt by adding water but will use an electrostatic process.

Compared to traditional wet processing methods, energy consumption and production waste in dry production are significantly reduced. Starting in 2028, this processing will also not produce any more production wastewater, which previously had to be primarily discharged into the River Werra. Additionally, we will significantly reduce further stacking because we will use the residue for backfilling – i.e., filling voids created underground. This will also reduce our CO2 footprint by around 50% – but, of course, we will also become significantly more economical.

We expect an investment volume of around 600 million euros over several years. Through these measures, we will extend the lifespan of the integrated plant at least until 2060. However, this does not mean that operations will cease in 2060. In 20 years, there will surely be new ideas on how to economically extract the resource and thus extend the lifespan.

The megatrends are intact, such as a growing world population that needs to be fed. This increases the demand for fertilizers, so that optimized amounts of agricultural products can be produced for global nutrition on existing agricultural land. Optimal fertilization only occurs in a few regions, such as Germany, France, North America, and Brazil. In many other regions of the world, there is a significant need to improve the use of potash fertilizers.

Our salt business is highly profitable, and we want to improve efficiency in one way or another. Given the volatile potash business, it also provides a degree of stability. We are seeing increasing demand for salt, especially from more profitable sectors such as food, pharmaceuticals, and industrial applications. As a result, prices in these segments are rising.

This is difficult to say due to the intermingling of our two business areas, Agriculture and Industry+, and in some cases also for products. About two-thirds of our revenues come from the agricultural customer segment, and one-third from the industry+ customer segment, which includes municipalities that primarily demand de-icing salt. Broadly speaking, one could say: the salt business grows roughly in line with inflation. Adjusted for this factor, sales volume and prices hardly increase, but they also do not decrease.

The contribution of de-icing salt is becoming increasingly insignificant in the overall view of the Industry+ segment to which the business belongs. Its share is still around 14%.

In specialties like pharmaceutical salt, where we are the world market leader, or in highly pure potassium chloride KCl 99%. For such products, ten times the price of de-icing salt is paid. Despite the much higher production effort, such high-purity salts have very strong margins.

The largest block, accounting for more than 40% of total costs, is personnel costs. Mining is, after all, very labor-intensive. Following that are materials, energy, and external supplies and services, such as maintenance of facilities.

Even though energy prices have come down significantly from their highs reached after the start of the Ukraine war, we are still well above the level that existed before the war. Due to this volatility, we have a hedging strategy by closing contracts for the current, next, and the year after.

The majority of the increased investment will flow into the transformation project „Werra 2060“ and the ramp-up in Bethune. In our integrated plant at Werra, the first investments are being made in the underground area, for which we have planned around 600 million euros in total by the end of 2027. In Canada, for example, we are building a highly efficient combined heat and power plant and further developing the caverns there.

We have a base capex of around 400 million euros. This amount is incurred annually, among other things, for maintenance measures.

We can handle this from our own resources – regardless of price fluctuations in the potash market. This would not have been possible a few years ago.

For the entire year, K+S now expects an operating result (earnings before interest, taxes, depreciation, and amortization, EBITDA) between 530 and 620 million euros, after 712 million euros in the previous year. Previously, the projected EBITDA range was 500 to 650 million euros. Thus, the midpoint was confirmed. The adjusted free cash flow should at least break even despite the increased investments due to the ramp-up in Bethune and preparatory expenditures for „Werra 2060.“ In 2023, we generated an adjusted free cash flow of 311 million euros.

In the potash business, we try to utilise our capacities optimally. This is also due to the high proportion of fixed costs in the total costs. In 2024, we want to sell between 7.4 and 7.7 million tons in the agricultural customer segment.

We will present the interim report for the first nine months on November 14. Recently, we clarified the outlook for the full year in August.

You need to know that K+S conducts maintenance at its plants in the third quarter. As a result, the third quarter is usually the weakest for us in the year. Demand from the market is good worldwide. Some competitors are sold out for one to two months. The price level in the summer remained at the same level as at the end of the second quarter, so we expect an average potash price of about 313 dollars per ton for the year.

We want to earn our capital costs over a five-year cycle, achieving a positive ROCE (Return on Capital Employed). Additionally, we aim for a return on sales based on EBITDA of at least 20% over this cycle. Last but not least, net debt to EBITDA should not exceed 1.5 times.

In the five-year period we are looking at, the average ROCE was last at 12.25%. Capital costs were just over 10%. So we are indeed earning our capital costs.

Currently, K+S is rated „BBB−“ by Standard & Poor's. The outlook is „stable.“

Investment grade is a quality seal for us, indicating that we manage our finances prudently and with foresight, ultimately maintaining a good financial policy. We carefully consider: What can we afford? What do we invest? Moreover, the investment grade rating naturally has an impact on the stock price. And above all, the rating was very important for our bond.

On June this year, we issued a new benchmark bond of 500 million euros. This was primarily for the early refinancing of our bond from 2018, which was due to mature and be fully repaid in July. Its coupon was 3.25%. The nominal interest rate of the new bond, which runs until June 2029, is 4.25%. Without the investment grade from S&P, the interest rate would surely have been higher, given the market conditions at the time. Therefore, we want to defend this rating at all costs. From a net perspective, we have been able to benefit from the inverted yield curve – where long-term rates are lower than short-term rates. With this money, we have created a solid liquidity foundation for the projects that lie ahead of us.

We use various financial instruments, including the benchmark bonds. Additionally, we have a syndicated loan facility available for 400 million euros, which we currently do not need, just like our factoring program or the commercial paper program. Because at present, we have a net asset position with a high double-digit million amount. We have no net financial debt. Furthermore, we have a high liquidity position. Aside from the bond, there are no other outstanding liabilities.

No, absolutely not. You will have to do a long search to find even a handful of companies that, like us, have no net financial liabilities. That the asset position is slightly declining in light of our investment projects and the low price level for potash is not surprising. We are generally much more resilient to lean periods or even crises than we were before the sale of the American salt business.

We want to maintain our strong balance sheet and are focusing on two promising projects regarding return prospects: „Werra 2060“ and „Ramp-up Bethune“ – that’s where we want to concentrate. That is much more interesting to us than making an acquisition right now.

We are guided by free cash flow, i.e. operating cash flow less investments. We want to distribute 30% to 50% of this free cash flow to shareholders. For this year, we have forecast free cash flow to be at least balanced. Given this outlook, it is clear that the dividend is unlikely to be very high. But I consider this a healthy dividend policy: not distributing more than one actually earns or brings in. Additionally, the planned investment volumes and current financial structure are also considered in discussions about the dividend amount.

70 cents per share was paid for 2023 and 1 euro for the previous year, with the equivalent of around 1 euro being added in 2022, which benefited shareholders in the form of share buybacks. We still have the option for share buybacks, but we want to wait with further buybacks until our earnings situation has improved significantly.

In some of our German plants, we extract raw salt that already contains minerals like magnesium and sulfates, so that further processing into potassium sulfate, corn potash (a combined potassium and magnesium fertilizer), etc., is cheaper for us, allowing us to offer these products more easily and at a lower cost. This is a unique feature that distinguishes us from competitors. Furthermore, we are very strong in the European market. We currently have a market share of almost 60%. Compared to competitors, our location advantage benefits us here, while other suppliers first have to transport their products to ports and then to customers. Additionally, we are the only fertilizer producer mining potash on two continents – Europe and North America – which spreads the risks associated with energy, logistics, and other costs. This also gives us advantages in distribution, as, for example, the transport of products to South America typically originates from Bethune. Conversely, there are many markets that can be much more easily supplied from Germany.

We are currently seeing that competitors are having their problems. In part, there are huge write-downs. We are keeping a close eye on where the competition is stumbling. This reassures us that we feel very comfortable with our setup. We prefer to concentrate on and continue doing what we do well.

We are old economy, but we are still looking forward. We are addressing sustainability issues, automating and digitizing where it makes sense and is economical, and we are searching – including through artificial intelligence – for IT solutions to tap into further efficiency potentials.

We have 150 caverns in Canada. Each cavern has its quirks and specific properties. Imagine a mixing console in a music studio, with all the dials and buttons. There are so many variables when trying to optimally exploit a cavern. We are trying to use algorithms to process the experiences and insights from individual caverns so that we can better manage other caverns. If we can gain even just one or two grams more potash per kilogram with the same amount of effort using AI, it represents a huge lever for us.

There are still discussions with stakeholders such as environmental organizations, citizen initiatives, or residents. However, the sharp confrontations and entrenched positions of the past are history. We have done our homework and invested significantly to reduce the environmental burden attributable to. This includes, among other things, the discharge of saline waters into the Werra. From 2028 onwards, we will no longer discharge production waters from our Werra plant into the river. This has been communicated by us and is recognised by stakeholders. There are still a few legal proceedings where NABU or BUND have obtained interim injunctions against us, but these are basically about details. Above all, the parties involved are remaining in communication with one another.