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K+S Q1 revenue slumps YOY to €1.10B, sees more production outages ahead at Werra plant

K+S AGsaid May 10 that its revenues for the first quarter slumped 20% year over year to€1.10 billion due to deteriorating sales in potash and magnesium units, as wellas lower average prices.

EBITDA likewise also slid 26% to €285 million while operatingearnings fell by 31% to €218 million.

K+S sales totaled 1.69 million tons, down from 1.94 tons recordeda year earlier due to pre-purchasing of specialties in Europe in December 2015 anda slower seasonal start.

Operating earnings at the company's salt business decreased by14% to €123 million as lower sales of de-icing salt were offset by stable volumegrowth and slightly better prices in the non-de-icing salt business.

At the company's potash and magnesium products business, operatingearnings slumped 44% on a yearly basis to €102 million on the back of lower salesand prices, particularly for potassium chloride in the overseas markets.

The group's average product prices have dropped to €272 per tonin the March quarter from €314 per ton in the corresponding 2015 period.

For the full year, the company expects a significant declinein average prices in the potash and magnesium business units, as well as lower salesvolumes. The company is sticking to its earlierforecast of moderately lower year-over-year revenues in 2016 despitepotash prices in overseas markets starting to stabilize.

"While the markets are still waiting for direction, especiallyfrom China, we have seen trading activity picking up slowly. We had, volume-wise,a slow start into the year, and this mainly affected our specialties. There wasgood buying activity from customers in Europe by the end of 2015," K+S CFOBurkhard Lohr said during an earnings call.

At the company's potash business, K+S has reduced cost per tonneto €201 from €212, driven in part by lower energy costs and freight rates, Lohrnoted.

Commenting on the liftingof short-time working restrictions at the Werra plant for disposing saline wastewater,Lohr added that "we are still working on the limited permits for deep-wellinjection [which] makes us especially cautious. We continue to expect the long-termpermit for summer this year. The Q1 impact was very small. However, we are now approachingspring, which is usually dryer than winter time and thus further outages at theWerra plant cannot be excluded."

Production at the Unterbreizbachand Hattorf potashmining sites was suspendedin April as low rainfall reduced water volumes in the Werra River, which was preventingthe company from utilizing the river to dispose of tailings.