Bloomberg News

K+S Jumps Most in Five Months on Profit Outlook: Frankfurt Mover

March 15, 2012

K+S AG (SDF) jumped the most in five months in Frankfurt trading after Europe’s biggest potash producer outlined a better-than-expected outlook for profit.

Shares of the crop nutrient supplier rose as much as 6.6 percent, the biggest gain since Oct. 5, to 38.95 euros. Earnings will fall “moderately” this year before recovering in 2013, Kassel, Germany-based K+S said today. Analysts had predicted a 6 percent drop in earnings before interest and tax to 918.3 million euros ($1.2 billion), Bloomberg data showed.

“The guidance downgrade was less than feared,” Wolfgang Fickus, an analyst at WestLB AG, who recommends buying the shares, said in a note to clients. The forecast cut “is slightly more optimistic than current company consensus expectations.”

K+S said today that higher crop prices will benefit farmers and prompt them to order more fertilizer. The company, which purchased Morton Salt from Dow Chemical Co. in 2009 for $1.68 billion to diversify, cut its outlook from “stable” earnings as a mild winter damped demand for de-icing road salt.

Shares of K+S were up 6 percent at 38.73 euros as of 9:54 a.m. The stock has gained 11 percent this year giving the company a market value of 7.4 billion euros.

Earnings before interest and taxes excluding some hedging transactions, referred to as Ebit I by the company, rose 9.2 percent in the fourth quarter to 216.9 million euros, beating the average analyst estimate of 205.8 million euros in a Bloomberg survey. Sales gained 1.2 percent to 1.3 billion euros.

“The outlook for 2013 shows that the dip in earnings isn’t a trend,” said Lars Hettche, an analyst at Bankhaus Metzler who has a “buy” recommendation on the stock. “It’s just a blip and then earnings will recover again.”

To contact the reporter on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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