K+S report Q2 2014

When K+S arrived with their half year report last week the answer of the market was to give the cold shoulder and the price of the shares dropped with around -4% which is a lot and much more than what I would have expected for an already pushed down company.


If you want to see the previous summary of K+S report Q1 2014 then please click on this link and if you want to go to the homepage of K+S to read full report K+S H1 2014 that all information comes from then please go here.

Here are the highlights that the management consider to be good and of them I consider zero to be good news. Most of them are loose comments without any substance at all and then once with some backing up are all looking bad and I especially want to find out what did the price stabilise at...

In the table below, which concerns only the Potash fertilizers, we see that the revenue (comparing the blue circles) has significantly dropped with -17.5% and the sales volume (from pink circles) have happily enough only decreased by around -4% which then means that the sales price (the black circles) has dropped by almost -15% and is now down at 264.7 €/t eff. I did not expect that the price would stabilise at this low level and I assumed that the price decrease would be much more of a temporary thing when Uralkali started their argument...

Finally a little closer look at the finances and we see that the revenues dropped by -10% compared to Q1 2013 and on the running half year we are down by -8.4% compared to 2013. We now have 1.16 € earnings per share and they claim in the report that they hope to be able to go back to 40-50% dividend payment for 2014 so nothing else changes then I expect to receive 0.9 € per share in dividend which I wanted to have had already for 2013 but never got.

Conclusion: It is continued tough and for me the cold shower was with the realisation that they are happy with the stabilisation of the Potash price at the low level it is now at. That worries me as shareholder since that means they do not expect it to increase in any close future at all which I had expected it to do. I will not sell my shares but I will have to reconsider the length of this investment which will become much longer due to the low potash price. For more information please go here for the previous analysis of K+S 2014.