K+S Q1 Profit Climbs, Backs FY22 Earnings View; Stock Dips

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German chemical company K+S Group reported Wednesday significantly higher profit and revenues in its first quarter mainly driven by higher prices, despite weak volumes. Further, the company maintained its fiscal 2022 outlook for strong increase in earnings. However, K+S shares were losing around 6 percent in the morning trading in Germany.

Burkhard Lohr, Chairman of the Board of Executive Directors, said, "We have again translated our continued strong operating performance and favorable market conditions into increased earnings and higher cash flows."

For the full year 2022, K+S Group continues to expect strong increase in adjusted earnings after tax, compared to last year's 525 million euros.

Further, the company now expects EBITDA to be in the range of 2.3 billion euros to 2.6 billion euros, which was raised in mid-April from its previous expectation of 1.6 billion euros to 1.9 billion euros. In 2021, EBITDA was 969 million euros. The new outlook corresponds to more than double the operating earnings compared with the previous year.

The outlook assumes unrestricted production for the rest of the year.

Adjusted free cash flow is now expected to range between 1.0 billion euros and 1.2 billion euros, compared to previously expected 600 million euros to 800 million euros. In 2021, adjusted free cash flow was 93 million euros.

For the first quarter, earnings climbed to 310.9 million euros from last year's 182.2 million euros. Earnings per share grew to 1.62 euros from 0.95 euro last year.

Adjusted Group earnings after tax was 312.7 million euros, compared to 229.3 million euros last year.

EBITDA operating earnings more than quadrupled to 524 million euros from last year's 126 million euros.

Revenues in the first quarter rose 65 percent to 1.2 billion euros from prior year's 733 million euros.

Higher average prices in both customer segments and positive currency effects more than offset lower volumes and increased costs for energy, logistics, and materials.

In the Agriculture customer segment, first-quarter revenues more than doubled to 944 million euros, mainly attributable to significantly higher average selling prices and positive currency effects. Sales volumes fell 11 percent due to occasional logistical shifts and lower inventories at the end of 2021.

Revenues in the Industry+ customer segment edged up 1.5 percent, while sales volumes fell 24.7 percent mainly hurt by weather conditions.

In Germany, K+S shares were trading at 27.84 euros, down 6.07 percent.

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