Tuesday 18 March 2014

K+S annual report 2013

K+S, annual, report, 2013

Oh, the market was very unhappy with K+S and it did not come from the publication of the report but it came the press release that for instance suggested dividend of only 0.25 cents per share (1.4 in 2012). As well as having pushed down margins, flat revenue so decreased profits and a weak outlook for 2014. The classical drop of around -5% which in the end went to -7%.

All the data comes from the annual report which can be found here.

What is interesting here is that currently there is complications in Russia and Ukraine and in that region two of the trouble makers form last years dumping of the potash prices are sitting meaning that they must today have some complications with transport, dropping prices etc. which to a much lesser extent should influence K+S that have their customer base mainly in Europe and in North America.

From the annual report I decided to take out only this ten year data table that can be seen below which shows that 2013 was actually not a very bad year. Sure earnings has been flat for the last three years and dropped significantly from 2010 and the earnings have also decreased but I am still impressed that all that happened in spring 2013 has influenced them so little and they still managed to make a very nice profit of over 2 € per share.

Probably we shareholder should be happy that the US received a hard winter which meant that they bought a lot of salt for de-icing because in Europe the winter was extremely mild and very little was sold. Without that they revenue would have dropped a lot further because the sales and the profit margins on the Potash segment dropped significantly.

K+S, financial statement, report, 2013

To me the biggest disappointment is that even though my calculation was fairly accurate on their earnings based on Q3 report 2013 as can be seen here. The dividend that I would have expected with the 40-50% payment of earnings was cut and cut by a lot! I expected to receive out 0.9-1.2 € per share and instead I am getting 0.25 € per share and that is hurting me a lot this year and my possibility to re-invest my dividends.

Conclusion: Even though I am annoyed with the decision of the board to cut the dividend I accept and understand their reason for doing so. I see no reason to sell my shares due to this but I also see no reason to increase my holding unless a change can be seen (= increased profits and margins) which will most likely take more than a year from now.

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