K+S Aktiengesellschaft

Welcome to our Capital Market Day today. And believe me, I'm very happy to have the possibility to meet you in person today. The last time that we met in person was on the 12th, March 12th, 2020. So almost two years ago. It's really about time to have such meetings again. And together with my board colleague, Holger Riemsberger, our new COO sitting over here, and Torsten, whom you know, you have been knowing for years. I also welcome everybody following us via Teams and the webcast. Before I give you a short overview of our Q3 results, I would like to give you more details on our ad hoc announcement of October 26th. After the EU Commission referred the antitrust clearance procedure to the Federal Carto Office in Germany, the review of the REX transaction is still ongoing. We continue to expect that a release can be granted. It is even still possible that the transaction could take place this year, so in 2021 still. Nevertheless, the review might also take a little bit longer. And therefore, we published an outlook for EBITDA 2021 only including the operating business. We now expect an increased EBITDA of 630 million euros. This is compared to our previous guidance excluding RECs of 500 to 600 million euros and the current census figure of 603 million. The repeated guidance increase was possible mainly because of further risen prices in the agriculture business segment. This guidance increase will even translate into a break-even free cash flow after we still had expected in August a negative figure of minus 180 million euros without the cash in from the REX transactions. Besides the higher EBITDA figure, this improvement is coming from postponements in capex due to long lead times of needed materials. It is only a shift into the next year, not affecting our production processes. Now let's turn to slide four to talk about the valuation of our potash assets. We had to recognize the full reversal of the impairment loss that we booked exactly one year ago. And this write-up results from significantly increased long-term potash price assumptions. You are all aware that the valuation of the potash and magnesium products cash generating unit is the subject of the examination of the full year 2019 and the half year 2020 financial statements by the DPR. As we published this morning, we received preliminary findings in this regard. Until this morning, we postponed the publication of this not counteracting the ongoing proceedings. But due to the regular Q3 report, we were obliged to publish it today. Following our own comprehensive review and the involvement of external advisors, we consider the primary findings to be unfounded. And ladies and gentlemen, what are we talking about? We talk about evaluation of a business with a lifetime of more than 150 years. We talk about a dispute which is based on discretionary decisions of the management and we as a management take such decisions every single day. And most importantly, there is no cash at risk, there is no equity at risk. With this right up to date, the discussion has no real economical relevance. That's very important to note. And now let's turn to slide 5 to get a short overview of our Q3 results. Looking at the results of the continued operations, we achieved significantly higher revenues and EBITDA year on year. The higher MOP prices since the beginning of this year are rolling into our P&L step by step. In agriculture, the average selling price was significantly higher versus the level of last year's Q3, as well as compared to Q2 this year, and reached 300 euros per ton. We saw a strong demand in the agriculture customer segment, and together with product availability, higher product availability, this led to additional sales volumes of 100,000 tons. With a total sales volume of 760,000 tons, production is running very well at all our sites. In the industry plus customer segment, we saw an increased demand of chemical and pharmaceutical applications following the COVID-19 impacts during last year's Q3. Together with a good early fill season for the icing salt, we increased sales volumes by about 380,000 tons. Combined with strict cost discipline, we were able to more than compensate higher prices for freight So, EBITDA of 121 million euros is four times the Q3 2020 figure. Back then, EBITDA amounted to 25 million euros after excluding the positive non-cash one-off effects related to the preparation of direct transactions. As already described, we increased the value of our potash assets by another 1.42 billion euros in Q3, positively influencing our earnings per share. Adjusted free cash flow was impacted by a higher tied up of funds in working capital. Accordingly, it amounted to minus 69 million euros. And finally, I would like to give you a sneak preview on 2022 on slide six. We consider an EBITDA of 1 billion euros in 2022 in reach. Here too, the positive one-off effect of direct strength transaction is not included. We believe that the positive market environment will carry us well into the year 2022. And this will result in a significant base effect of prices in the agriculture customer segment. Nevertheless, we should not forget cost inflation, which is incorporated in that one billion. Higher gas prices will lead to higher energy costs, yet we are very well prepared here as well. We looked in prices for two-thirds of our gas consumption for the next three years before we experienced the spike in gas prices. Inflation will also hit us on raw materials and personal costs. we expect our free cash flow to be significantly positive in 2022. This will enable us to even further improve our balance sheet so that we will get even closer to an investment grade rating. Last but not least, some organizational remarks. For starting the workshops, all participants with a green colored dot on their name text Stay here with Holger and me. The other participants follow Torsten to the room next door, please. The virtual participants just stay in the current team session. The workshop will start at 2 a.m., p.m., of course. Sorry. We don't want to stay that long here. A note on data privacy. Please note that the team session will be recorded, webcasted, and be available as replay on our homepage afterwards. People asking a question from the room or the team session have to be aware that by turning on the camera and mics, they give content to saving and replaying video and audio sequences. We wish you all an interesting day. We are looking very forward to it. And you are not having the opportunity to ask questions now. But you have plenty of time to ask questions also to the Q3 figures later in the workshops. Thank you very much, and see you then. Strategies quarterly, but this is not the case at KplusS. The last one was in 2017, shaping 2030. The world has changed, but the megatrends are still intact. And we have been working, we worked with our management teams for a year on this new strategy. We looked into the megatrends, as I said, we looked into the markets, the egg markets, and we believe that we are on the right track and we want to share this with you today on the capital markets day. And before I really talk about the core parts of our new strategy, let's share our view on the egg markets. Farmers are making good money with their business. And we believe that will continue to be the case in 2022. You see here on this page on the left side, the development of some selected crop prices. And on the right side, the profitability of the farmers with some selected crop prices. And granted, it looks as if we have achieved a peak in 2021, but it will continue to be on a very sound basis. And at the same time, we see that the pipeline is really empty. The inventories are very low. Our inventories are low, those of the competitors, those of our customers. so that we will believe that we will continue to have a sound environment for the potash business and for potash price developments. And as we have together very often discussed the balance between supply and demand, the risk of overcapacities, and we have seen over the last couple of years that the utilization rate of capacities was increasing continuously. And if you look into that projection, and I rather believe in the upside scenario, we need to have new capacities to make sure that the industry is able to serve the market. And we have fully modeled in every announced new capacity, including BHP, for example, with the first volumes in 2027. I personally see that as a very optimistic assumption. with only 50% design of a project. We will rather see the first tons in the 30s instead of 2027. But it's modeled in here as they have announced it. And we will see we are moving towards a very balanced situation. So in a nutshell, we are in the right spot in the potash business, in the fertilizer business. And we want to enlarge our footprint. And that is the main purpose of our new strategy. And this is our mission statement and we are very proud about that because the employees say that's perfect, that is exactly what we are doing and where we should move to. And this is our, if you wish, our qualitative ambition. You might have heard that on the AGM, we enrich life for generations. Unfortunately, enriched doesn't have the double meaning that the German word has. In German, we say, wir fördern Leben für Generationen, and fördern has two meanings. It's mining on the one hand and supporting on the other hand. And what does that mean for us? Of course, we ensure nutrition, health, and safety, as we have done in the past. And we started with our... a strategy shaping 2030 to get the customer more in the focus of our activities. We implemented the customer segment at that time. And with this strategy, we continue to get even closer to the customers. We see ourselves as a pioneer in environmentally friendly and sustainable mining. And that is not only due to the current discussion about sustainability everywhere, We have started investing lots of money in clear water, in CO2 footprint reduction. We come back to that later. That is really part of our DNA. And we do that also to secure the license to operate. And that is really a totally new element of our strategy. We are going to make good money with our extraordinary infrastructure that we have developed. You will see later on what we mean with that. And finally, we act as a partner with our communities and we want to continue doing this. So I've defined the qualitative ambition and with which business do we want to achieve that ambition? Now we are talking about the core business. What is the core business of the new K plus S. Our core business is when it comes to products, potash and magnesium. And we want to develop K plus S to a global supplier of plant nutrition and services in the agriculture sector. The second part of the core business are new business activities all around our extraordinary infrastructure. And the framework for these core businesses is our climate strategy. You see that I'm not talking about salt anymore on this page. Salt is no longer core business to us. And I come back later to that and explain you why and what that means to our salt business. That's a busy slide, but it's a core slide. It's very important to understand this one because I'm talking about the three key elements of our strategy. Both in a framework, all three in a framework of our climate strategy, which will be a big part in the next workshop. But I talk a little bit about that here in this workshop. And the next framework are our sustainability goals. And here we also define our financial targets, the financial ambitions, the qualitative, quantitative ambitions. The first key element is optimizing the existing. And Holger will, in his part, explain more precisely what we mean with that. But let's talk about one thing. Of course, Bethune is the born growth initiative in our existing business. We want to ramp up Bethune up to four million tons. The second key element is grow the core business. And we talk about in a minute what that means. And the third is new business areas. And as I mentioned earlier, all around ideas how to better use our existing infrastructure. And the numbers here are describing the management attention. So we want to invest 70% of our time in optimizing the existing infrastructure. because here we have the opportunity to raise profitability options quicker than in the other areas. And 20% in grow, the core, and 10% in new business areas. Of course, we are aware that at the end of the day, it will not be 70-20-10, but it should be pretty clear for everybody externally and internally where we have to invest most time, and that is clearly optimizing the existings. And when it comes to financial targets, I need to explain why we have chosen this cycle. In shaping 2030, we have targeted a number for 2030. From today's perspective, it was a mistake to pick just one year because we all know how volatile potash pricing is. And potash price cycles usually take three to five years. So if we look into a cycle of five years, we definitely have at least one cycle. And in such a cycle, we want to create values. So ROSI, bigger than WEG. That might sound not too ambitious, but it is very ambitious. Please look into the numbers of our competitors. This is a very capital-intense industry, and achieving a ROSI bigger than a WEG is an ambitious target, and we want to achieve that in one cycle. The first cycle begins with 2021, so we are talking about the time between 2021 and 2024, including four. And in the same cycle, we want to achieve an EBITDA margin of more than 20%. And the last financial target incorporates the message 2020 was the last year for K plus S with a negative free cash flow. Because I have already told you 2021, we will have a break-even number. 2022 is a significantly positive number. And from 2023 onwards, we will be able, with all our initiatives, we'll be able to have a positive free cash flow even at the lower end of the cycle. Now you might ask yourself, what is the lower end? That is an environment comparable with what we have seen in 2020. So now I elaborate a little bit more about the three key elements. First optimize the existing and the first box shows you again, our target to be free cashflow positive by 2023, even with a low potash price. And that means it means not only K plus S as a group, But also every single site should be able to achieve that. And when we talk about the big POTF sites, we have to differentiate between commodity business and specialty business. So Bethune and Seelitz are clearly commodity sites. And we want to run these sites according to the strategic principle of cost leadership. That means we want to achieve decreasing cost per ton year by year. We are following a different approach with our specialty sites. Vera in Neuhof. He wants to optimize the portfolio and at the same time reduce our environmental footprint. As you all know, all these water discussions are around the specialties, less around the commodities. In the salt business, The focus is operational improvements at all sites. And in addition, we want to promote digitalization and automation. Not that we are here at zero. We have done a lot, but we want to do more in this sense. And not only on our sites, also in all other elements of our value chain. We have a lot of ideas here, and I guess Olga will present the one or the other later on. The framework for the three, third key element, grow the core, starts with the target again. We want to develop K plus S to a global supplier of plant, nutrients, and services in the agriculture sector. And here you might find some elements that you have seen already in shaping 2017, we call it that time, enlarge the specialty footprint. Precisely, we talk about biostimulants, water soluble products, and many, many more. Fertigation is a very interesting segment. And here again, we are not at zero. We have done a lot, but we want to have a far bigger footprint. And we want to be the company where the farmers think about when they think about these kinds of products, the K plus S should be the preferred supplier. And here for another important element, we want to deliver value-added services and digital services to our end customers, to the farmer. And with this achievement, we can come closer to the end customer, to the farmer. And all that delivers tremendous growth opportunities But we have made pretty clear for those who love to do M&A activities, that is not what we are going to do for the time being. We want to grow mainly organically to ensure that our balance sheet keeps in a healthy situation or comes in an even more healthy situation. And finally, the third key element, new business areas. And here we have the perfect example, the joint venture with Rex. That, on the one hand, allows us to be more professional in a business that we are already doing, underground waste disposal and underground waste recovery. But on the other hand, there are tremendous opportunities when it comes about tailing pile coverage. And my next page will show the opportunities and the potential that I'm talking about. But there are much more ideas to further use our infrastructure and make good money with it. These ideas are circling around decarbonization. I'm talking about CCS, CCU, storage of renewable energies, and things like that. That obviously is a long-term view on additional businesses. That's why we only invest 10% of the management focus into that. But don't get me wrong, we are not doing this sequentially. We do all three key elements at the same time, but with different management focuses. And here we see tremendous potential to grow again, so that's why I'm so excited about that. But here, we want to grow with partners. Partnership is the key word here, and REXT also is a good example. We are talking about a 50-50 partnership And I'm sure after we have the approval from the authorities, this will be a success story. And why do I believe this? Because we have this tremendous potential. We have different tailings piles in Germany and all together deliver the potential of 300 million tons of material to accept from customers And per ton today, we achieve sales earnings of 35 tons, 35 euros per ton revenues, 35 euros per ton. That's the price today. And in some areas, it's even higher. In Bavaria, for example, it's close to 100 euros per ton. And as the areas are getting shorter and shorter, there is... potential in the future for significantly rising prices. Yes, this is a long-term business, and if you divide the number by the years, you will still end up in a very nice additional earning stream, starting pretty soon. And when we talk to 300 million tons, we talk about 40 times the Cheops Pyramid volume. So it's really amazing. Now I've talked to you what we are going to do. Now it's time to talk about the salt business and why the salt business is not core anymore. You all are aware about the disposal of our America salt business, which was a very, very successful transaction. And we are very proud on the outcome. But on the other hand, that means we are not a global player in salt anymore. Mainly focused on Europe. And the European business is showing tremendous competition. Still a high dependency on de-icing and global warming will at least in Europe deliver less white winters in the future. The last one was a nice one. My gut tells me this one will be a nice one as well. But you have to be realistic and assuming that the de-icing business will be under pressure. And we only have limited financial and management capabilities. And we have a lot of good ideas in the egg business, which delivers tremendous additional income streams. So this altogether led to the situation that we decided salt is no longer core for us. But what does it mean? First of all, it does not mean that we are milking a cash cow from now on. we will make sure that the business is in a proper situation. But the focus will be operational and tactical improvements like portfolio optimization, cost reduction, and efficiency measures. Major strategic considerations are no longer in the focus of the management. And that also means that we are not going to develop at the Ashburton project in Western Australia by our own. So we have to think about alternatives, maybe finding a partner, maybe even selling it after we have achieved the environmental approvals. That is one example which does not fit any longer to our strategy and we have to find answers for that. So let's give me the opportunity to talk a little bit about our climate strategy. It will be a long part in the next block, the next workshop, but only two or three slides. And I want to start with the development of the history. In Germany, the CO2 footprint of all industries has reduced by 40% between 1990 and 2020. At the same time, K plus S has reduced its footprint by 80%. Granted, partially we have closed sites, but we have also taken some measures to change from coal to gas to increase efficiency and others. So that was already a big step towards the climate change targets. We believe that we can do another 10% until 2030 by our own. Therefore, we will found a K plus S climate protection fund from next year on. And we are going to invest 2% of our EBTA into that fund every single year. And we're going to use that fund to achieve the minus 10% until 2030. And we have spent a lot of time in investigating, is it possible for K plus S to be CO2 neutral at all by 2050? That was at a time where it was the German target to be at zero at 2050, and the answer is yes. It's technically possible. And if you ask me, could be 45 possible as well? I think so, too. We are still working on that, but should be possible. But, the big but, and that is true for the entire German European world industry. We need to have the political support to find an environment by then with green energy with appropriate volume and to an affordable price. That is a prerequisite to achieve that. And talking about sustainability, You know that we have implemented or defined sustainability goals already back in 2017 with our shaping 2030 strategy. And we have redefined these targets. And by the way, these goals are linked to the compensation of the board of executive directors and of the top management level. But even without this link, we would really take it very, very serious to achieve these targets. And you can find in our report where we are standing, where we are going, and what are the targets. Now we have changed a little bit. Energy and climate goals are now more prominent in this pie. That's all I wanted to let you know about this. But one last page, this is my last page before I hand over to Holger. I think that's a very important message as well. With the permanent storage underground of our production waters, and we believe that there will be an approval pretty soon, we for the first time have a sustainable situation or solution to store our production waters. We don't have to invest in something like Oberwieser pipeline and North Sea pipeline, which besides a lot of costs would have caused another big trouble. We have a solution close to the site. We have a timely replacement of our deep well injection. As you know, deep well injection runs off by the end of this year. And we have further improvement of the water quality of the vera and Sevesa. That's a real game changer for our German polish activities, especially for the site in Tibera. And we are, again, we are very optimistic. Today we are not having the approvals in hand, but we are very optimistic that this is going to happen soon. So that was my last slide, my last message. I now hand over to Holger. And as I have explained the framework of the new strategy, he's being more precise and showing a lot of interesting strategic initiatives. Holger.

Thank you, Burkhard. Welcome from my side. This is my first Capital Market Say with KSS, as you know. And I'm very proud and happy that I can not only talk you through the way Okay. Sorry. This is not good. So hopefully this is better. So not only talk you through the way we want to execute our strategy, what I also want to talk about is why we believe that Capeless S has a role to play in overcoming some of the most challenging situations humanity is dealing with. And more precisely, I'm talking about food security, and climate change. So connecting to the slide that Volker already talked about, I want to get a bit more precise. So executing a strategy, the way I would explain it is like building a house. And when you're building a house, quite often you start thinking about a new living room with a nice fireplace, or even you think about the balcony on the south side with a nice view to the mountains or the sea. Yet reality is different. So the most important thing when you start building a house, a new house, is to make sure that the house stands on a robust foundation. And this robust foundation I would describe is our optimizing the existing When you look to K plus S from the outside even, you would recognize four key elements that we need to focus on. And the first and most obvious, of course, is the ramp up of our best human operations. The ramp up of the best human operations creates by far the biggest upside potential, the biggest lever we have to improve profitability. The next one I would mention is the VERA 26. So VERA is not only our largest site by volume, but also by profit contribution today. So it is of utmost importance for K plus S. But on the other hand, you also know that we are facing a lot of headwinds, specifically at that site, with regards to environmental issues or, well, measures. And that we had to invest a lot in the past and still have to invest. but I will get back to that a little later. The other one is covered under operational excellence. In this project, we are focusing mainly around efficiency measures. So I'm not a big believer, to be honest, in cost measures because cost measures are pretty short term. So what we really look for is to make each and every site and just the group stormproof for times When potash prices turn south again, even if they hit low price levels, as Bokert already mentioned. And all that, of course, and very important, mentioned before, to reduce our ecological footprint, but we will focus mainly around energy and CO2. Let me take you to the living room, so to speak, so you can see that the fireplace. Let me give a short view on our specialty strategy. So, looking to our core business, which is agriculture, and the way we interpret it ourselves, we do not consider KPSS as a potash commodity pure play. Already today, a significant portion of our business is in more specialty products. And that creates a situation where we already have today very strong sales and marketing arm deep into agriculture, which is one of the differential factors of KPSS compared to peers in the market. So this organization provides us an important starting point to get deeper into speciality products. And let's take a few from the balcony. Albeit, I have to say, and that's in the nature of it, this is the biggest part and the least concrete part of our strategy. However, our unique infrastructure, our deep, I would even say world-class know-how in mining, in process technology, but also in agriculture, provides a tremendous upside potential. And I'm not only talking about REX, that was already explained by Burkhard, but there's a lot of other things, like circular economy, what I mean with that, I'm coming to it, and of course, digitalization and automation, which is key going forward. I want to pick one thing, because it was very recently widely in the press, and I will get back later to that. Just to give you a sneak preview. Magnesium was in the press. A lot, as you know. Even the threat that key economies in Germany or Europe may come to a standstill because of that. And frankly speaking, when I looked to it, I had a smile on my face, to be honest. Because I was wondering why nobody talks about cable sets. We are sitting on some The largest magnesium reserves resources in Germany and in Europe. Coming back to this later. Talking a little bit about Bession. So where are we at? Yeah, basically where are we at? So currently the operations is running very smoothly. It's at about a 2 million capacity today. High quality product. and ramping up towards four million tons. Before I get a little more into detail how fast and when we will reach certain milestones, let me say a little bit something about what means ramping up a solution mine. So ramping up a solution mine is different than ramping up a conventional mine. It's very different actually. In a conventional mine, when you increase capacity, you open room by room, By the way, this takes you further and further away from the shaft. And I think we can say we know because we operate in conventional mines. And getting further away from the shaft increases your cost. And once you have reached the capacity of your shaft, which is the limiting factor, you have to build a new shaft. And we all know, looking into the industry, what that means. It is a long-lasting project. It's high investment, it's early cash out, and only later returns. And we also know that it is a very complex project, and the chain of delays is almost usual. So you would say it happens. Solution mining and ramping up solution mining is, if you ask me, it's almost completely different. So ramping up capacity in a solution mine mainly depends on the concentration of your valuable salts in the brine, so the brine input into evaporation, which is one step and that's important. So when you mature your caverns, so that means when the site is maturing, the concentration of your valuable components in the brain are increasing. So you have a natural increase of your brain concentration and thus a natural increase of your capacity. Simple as that. So this is, of course, way less investment incentive if you compare. And there are technical boundaries how you can do that and how fast you can ramp up. But keep that in mind because the second important thing here talking about is that we have two steps of concentrating the valuable components. And one is evaporation and the other one is cooling, cooling pumps. So in there in between, and sorry, allow me to get a little more technical at this stage because I believe you can only understand our strategy if I get a little bit under the skin of it. We need to reach an energetic optimum. And again, this is only possible once you mature. But over time, you reach that optimum. And so again, another factor, why your cost decrease over time when the site matures. So that brings me to another, I would say, point that was probably misunderstood over the last weeks and months. So some may argue that solution mining is more energy intensive and thus it is also more CO2 intense. And you know what? This is true. This is true today. But it completely ignores the fact that technology advances every day. And we are in concrete projects to increase energy efficiency and thus our specific CO2 footprint. And even if you allow me a look into further future, I would say we all know there is discussions not only about CCS. There's also a discussion about CCU, so the utilization of CO2 later on as a raw material for base chemistry, for instance. And you know what, this looks like a business opportunity going forward. Where are we at? So this is a complicated and it's a technical slide. But let me tell you what I want to show here. So again, our Bethune operations at the moment is at 2 million tons and if you think about that we're ramping up at the pace in the moment of about 100,000 tons per year. Within our midterm cycle, we expect to reach 2.3 million by 2024. But what the slide also tells you is that we are really and seriously up on our way towards the 4 million tons. And it shows you that we have already reached certain levels So I will not go exactly in this cell level definition things, but just for those with no engineering background, cell three is basically what you would say is a budget grade readiness of a project. So before it's preparation and so on and so forth. But you see that even in the next stage, and this is as the graph shows, beyond the three million capacity, we do have first parts at budget grade. And we continue to develop and hopefully in a year from now I can show you where we will be by the next step. So now the big question will be probably when do you reach 4 million tons? Here my answer will maybe not exactly satisfy you. But the way we look to this comes from a different angle. So other than in a conventional mining project where I'm building a shaft and I have to say, okay, I'm gonna finish the shaft by X and then we're gonna start up and capacity comes in and so on and so forth. That's not the way we look to that. So we do not look to a certain capacity at a given point in time. Because pollution mining is a more linear ramp up as I explained to you. So what we do is we adjust the pace of our ramp up. One, and that's an important one, of course, to the market situation. So prices and demand. But for me, personally speaking, more important, also our ability to invest from a cash perspective. Because we only want to invest in a healthy way. And this is how we adjust. Now, again, I said that's not going to satisfy you completely. But I would say if you think of the next couple of years, there's a fair chance that we continue to ramp up at 100,000. But keep in mind, it's in our hands to accelerate in times when we believe that the market needs more potash at a good price and when we have the cash available to do so. Where will all this bring us? And this is something that I can say with great confidence. So I'm focusing a little bit at the left end of the graph. So all in, you should expect that our best in operations will be in the first quintile of the industry with regards to cost competitiveness when it's ramped up to its full potential. And this is where we go to. Moving on to Seelitz. Within Cape Recess, Seelitz is a little bit the sister of Essunen, as Boca said, so we consider them both commodity. But if you have a sister or brother, you may agree that sometimes sisters could be pretty different. And these two sisters are different. And one of the most important differences is, of course, Seelitz is a conventional mining operation. And as I said, a maturing conventional mining operation carries the problem that you continue to move away from the shaft, increasing costs and so on and so forth. So it's obvious that we will focus, because we have to focus, on continuous efficiency improvements and cash cost reduction for the site. Yet that's not satisfying for us. So on the midterm, our plans, or mid and long term to be more precise, We are planning to escape the site from what I would say more unhealthy competitive, highly competitive commodity potash market into more speciality products. And the first that comes to mind of course is the 99 grade of potash which is used for industrial applications as well as for food or pharma. So this is one of the directions we're gonna take. There's a little more coming later. But there's one other thing that I want to mention here as well. You may know that we have also magnesium and sulfate resources at our sealant site. So there is an opportunity to move the sealant site also into that direction. Yet strategy is choice. And we have decided to not confuse the site at this stage, at this point in time, with additional complexity because we see that the most important thing is one to improve efficiency continuously and then take the next logical step into the product like 99 great but never forget the opportunity of moving there is a real one. The Vera side, as I mentioned before the Vera today is not only our largest site by volume, but also by profit contribution. So it is incredibly important to K plus S. On the other hand, the mentioned headwinds are prevailing. We are on a good way. We have done a lot of things. We have probably the peak of investments behind us, but we are not ready. So the point was how do we make sure that the site is viable going forward? So we have toned every stone, believe me. And we came up with a new concept, a total new concept. I would also call it a transformation of the site. And this transformation centers around increase of extraction rate, reduction of processed waters, reduction of solid residues, energy consumption, cost reduction, and so reducing CO2 footprint. If we would only focus on technical measures, improving efficiency and all kinds of stuff that comes in mind first place, I can tell you we would not be able to achieve. So what does it mean? It means we are taking the new perspective from the market side, from the outside in. We are targeting with the site a complete renewal of its production portfolio. We go towards what we would say close to raw material end product. That means less processing. And that means less energy input. It means less CO2 footprint. And actually it means less water consumption. And so we can only do that because And I can only repeat myself here. Because KPSS is a little different to many of our peers in the market, having this strong sales and marketing organization into agriculture, which has the ability to develop the new markets we need for this new portfolio. And I'd love to throw one green pot, actually. Just one. There's more to come. So our Neuhof site is a serious industrial operation. On the other hand, if you compare to market average world standards sites, you would say this is a relatively speaking small operation for potash production. Yet we believe this is a big advantage because it covers still the full cycle of product production from exploration to the farm product. And it is an industrial scale lab almost, I would say, a nice pilot that we can use and will use to develop new technologies which enable us to become more efficient and reduce our ecological footprint as well. So what I'm talking about here is specifically the increase of extraction rate. And what it means is just to give you an image of it. So this is about AI, machine learning, precision exploration, which brings you more valuable components, starting with the crude salt. It is about separation of the valuable components from the byproducts below ground in the mine. So you not even bring up the byproduct, so to speak, up and put energy in So we come with a higher purity into the factory, we reduce energy consumption, and we reduce at the same time also our CO2 footprint at that site. And talking about innovation, I want to introduce to you a new concept that we are implementing as we speak. So we have decided to go away from say, developing specific new technologies on each and every site. So we are bundling our efforts, and we are creating centers of excellence. And the centers of excellence are selected in a way, or nominated, site nominated, are selected in a way, and we say, what are the site specifics from a technical, from a geological, and from a know-how perspective? Where does it make most sense to start with? So I already talked about Neuhof and what we are planning there. If you are looking to SILIT, autonomous mining is one of the key elements going forward. So they will take care for the group wide strategic project on that. And SILIT will also look into new business areas, mainly around renewable energy, CO2, but also hydrogen. I'm coming back on that specifically a little later. BESION. as our largest energy consumer and as our largest CO2 emitter. And that logic follows that those guys will focus around process automation, energy efficiency, and CO2 footprint reduction. And again, here's the nice thing, that other than in Germany, in Canada, there is an open discussion and a transparent discussion about using and applying CCS. It happens. And about using and applying CCO, it happens as well. And we are actually in discussions about projects in that direction. So last but not least, even, there's not a cross. I want to mention Bella. So we have decided, because of the chain transformation that this site is facing, to not load the guys additionally with group-wide innovation projects. That would not make sense, and it would go against our our logic of being focused on the specific issues for each site. That brings me to growing the core. And this is my matter. Come with me to the living room, take a seat, another seat at the fireplace. Let me talk a little bit about our speciality strategy. Growing the core for us means a commitment to help farmers around the world to deliver on the expectation to feed a growing world population with less arable land, water scarcity, climate or weather challenges and the continuous erosion of soil fertility. All this has to come at the same time with high yields and high efficiency but less fertilizer less pesticide and less crop protection. Now, how can K&S contribute to squaring the circle? Let me get one step back. If people think about agriculture, many still have a romantic picture in mind with a farmer sitting on a tractor, driving with his son through the blooming sunflower fields. Nice picture, but not reality. So agriculture today, modern agriculture is already an increasingly high tech industry and it's taking place. Many farmers today already use big data, laptops, automation, sensory technology on the field to deal with the challenges mentioned. So let me talk a little bit about on the left side portfolio expansion. and how we want to go forward here. And again, I want to make a step back to not get too technical and describe it in little different words. If you understand that the nutrient need does not only depend on the species of the crop, but also on the nutrient composition of the soil. And if you understand that the nutrient composition in the soil can vary significantly even on one acre of land. Then you probably start to understand that modern agriculture is not craftsmanship, but real science. The way I look to this, and you see me smiling a bit, but the way I look to this is that a plant is no different to a human, I'm saying. Macronutrients such as nitrogen, phosphate, potassium is the food or the Wiener Schnitzel with French fries for the plant. But you will probably agree that only eating Wiener Schnitzel and French fries is not a healthy diet. So if you do not eat vegetables and fruits, or if you do not use dietary supplements to compensate, you will not be in best healthy shape. And it's the same for plants. There is no difference. So it's not about only the macronutrients. It's also the micronutrients that play. So plants can only grow healthy delivering a healthy nutritional profile if they receive the combination of macro and micronutrients. And micronutrients, just to mention a few, like iron, manganese, zinc, and so on. However, A healthy diet does also not prevent you completely from getting sick. So some of you may use products like echinacea for immune or omega-3 fatty acids for mental health. These products are not essential, but they are stimulating processes in your metabolism to support the conversion of macro and micronutrients and therefore support your health. And again, it's the same. for plants and I said stimulate, so there is a word and it is biostimulants that play here. So, if you combine macro and micronutrients with biostimulants and if you ensure a fertile healthy soil, in that logic the plant doesn't get sick, it grows strong and healthy and you would reduce the need for pesticides and for crop protection. And this explains to you why the big players in crop protection and pesticides are engaging also in biostimulants. However, KNS has the advantage that we do not just look to the single effect of the biostimulants. Because as I said, they are actually supporting only the conversion of the macro and micronutrients. So you need to combine to get the best effect, and we can do that. Yet all of this is of less value if you are not able to apply the right cocktail precisely at the right spot on an acre of land, and if you are not able to adjust that cocktail over the entire crop cycle. Or in other words, just showing cheap fertilizer widely on the field does not serve the needs of modern agriculture. So what is required to make these cocktails applicable for smart and precision farming is water solubility or an adjusted particle size and shape to be able to either bring it with predication to the spot or with other means in a dry form to the right spot. And I already said that we are working on exactly this and just mentioned back the node of sight, we are working there as well on the improvement of the particle size, shape and water solubility. So this is not something that is found, this happens as we speak. Moving on to digitalization. How will digitalization help K plus S to execute its strategy? Digitalization for K plus S is more than just online sales and marketing platforms like we have in Spain already. Getting close to our customers. And we are rolling out as we speak exactly this sales and marketing strategy. into other selected countries and markets. So what we want to achieve is to be able to provide the required level of scientific consultancy to farmers. And that was a big struggle in the past over a whole entire crop cycle. Now, digitalization will provide the means for us to get direct to the customer in direct communication and support throughout the cycle. So now, of course, you should not expect KPSS to come up with a full-fledged cloud-based solution for farmers. But what you can expect from us is that we will find the right partners to enable us to make this happen. The last circle. Logistic access. So why do we even think about this? Let me ask you another question. What would Amazon be without and DHL or another logistic partner. Not much. So the key is also in the last mile. So the question for us is how can we make sure that our special cocktails arrive at the farm? And again here we will work with selected partners that can provide us this last mile service and together with our agriculture know-how and digital technology services, we can bring this to fruition. And another big advantage of being physically present on a site or on a farm is that it will open us total new business opportunities. Speaking about circular economy more precisely. We would be able to take nutrients from areas where there is excess of those nutrients, specifically you find that at places where you have animal farming. So just think about the west, north of Germany, the Netherlands, or Denmark, where you have big problems around this. So farmers even need to pay today to get rid of organic waste streams, manure, for instance. So what if we can take this, convert these waste products back into nutrients, and bring it to the places where they are needed. But that's a real thing. So the technology is there. And we believe that through this holistic concept, we can make this happen. And again, I just want to say, this is not dreams. This is reality. We have talks around exactly those type of stuff. Now, maybe you ask yourself, hey, if K-Process is moving into organic fertilizers, is that not in competition with the core business? And my answer is, no, it's not. because of some different things. Number one, in the organic waste streams, the main nutrients you find are nitrogen and phosphate. Only to a lesser degree, it's potassium. What you don't find there, which is practically not possible to recover, is the micro or trace elements. And the word trace, I think, explains it why. So this is technically not possible today. So the answer is, there's no way to completely walk away from mineral fertilizers and specifically not if you see the transformation of the agriculture towards precision and smart farming when you need to place a specific cocktail at a specific spot on an acre of land. So this is why I believe it is not possible One other thing, and then I'm moving to my last slide. No, not actually, but almost. Another important thing, soil fertility, soil health. If you combine the nutrients with biostimulants in a different way, you also can support soil health and therefore soil fertility. It accelerates humification and enables the soil to absorb more CO2. Nice, that helps climate change. But more so, more carbon in the soil means even a higher fertility. So what else can you wish? This graph is a little faster. So it just should show you why we have chosen the mentioned products and services. And where are we going? So this explains a little bit the attractiveness, but also what we consider is not just looking into attractiveness, it's like looking into dreams. So we also need to have the capabilities to make this happen, and that's what's described on the precision K plus S and strengths. And again, focus, focus, focus. It is important, so we have also selected the regions where we want to focus the implementation of our speciality strategy. And of course, first in mind is Europe. This is our home market, but not only our home market, it's also the market and the region where all these topics are highest on the agenda. And the logic, of course, of Brazil is it is not only our largest export market, it is also the global agri-powerhouse. And with a little less resource allocation, but still, we are implementing this strategy in China, India, the Middle East, the Levante, Sub-Saharan Africa. And let me just say, this is already happening as we speak. In China, we have implemented the speciality portfolio strategy. In India, we have implemented actually down to the farm, to the smallholder logistic access. In Africa, we have developed together with a partner, UC Africa, the digital means, to support and consult customers. So we are bringing all this together and I just want to say again, no dreams, this is real stuff. But maybe a few dreams. Strategy allows dreams as well. Let's take a last look from the balcony. And please keep in mind that this view is further out into the future and as I mentioned, it is our least concrete part. However, some of these ideas might be far out. Some are concrete, some in reach, some in preparation, and even in execution. And I don't want to mention again WEX, but it is a clear example of how we use our unmet assets. And also there's a role for K++ in the transformation of the German and European economy towards the use of renewable energy, as we have Available land, and we are a large energy producer and consumer, and we have to know how to deal with it. And provided the legal and regulatory frameworks, we have the asset base to enable safe CO2 storage as a transitional technology until CCU is real. And frankly speaking, when you can do this for CO2, you can do this for hydrogen as well. And not forget my favorite one. We hold the largest magnesium reserves close by. And then I want to share with you at least one crazy thing. Thinking about agriculture underground might sound crazy. In a world of reducing arable land, it might sound less crazy. And underground or city farming, what's the difference? I can't find hardly any. underground you have stable, good climate, atmospheric conditions that provide the opportunity of multi-harvest per year and closed conditions that reduce the need of pesticides and plant protection the same like in any other indoor farming concept. And let me close my presentation with the words of my kids. They said, Daddy, that sounds cool. Thank you very much.

So now we start the Q&A session. Some remarks before we open the Q&A session. And we are only standing this far away. We like each other. But if we would stand here, you know what happens. So that's the explanation for this.