K+S Aktiengesellschaft

Ladies and gentlemen, I would like to welcome you to our analysts conference and we appreciate your great interest and the opportunity to meet a few of you here in Frankfurt and the rest virtually. Before I come to our very favorable business development, allow me to start with the following. After the supervisory board and Mr. Böckers had agreed to terminate his contract at the end of February, Dr. Christian Meyer was appointed as the company's new CFO. He will join us in spring 2023. I know Dr. Meyer very well as an auditor at Deloitte, also for K++. He is a proven financial expert with many years of experience, and I look forward to working with him. For the time being, I will also assume the role as CFO. I would like to thank Thorsten Böckers, for the good cooperation over the past years. And now let's look into the business development during 2021 on slide number two. In one sentence, it was a very successful year for KplusS. We successfully completed important measures during this period. With the sale of the operating unit Americas, we have significantly reduced our debt as planned. The associated restructuring of our organization makes us leaner, more efficient and unburdens our cost base. Shortly before the end of 2021, we also successfully completed the merger of our waste management activities in the new joint venture REX. This was also a key element of the strategic realignment of K++. Last but not least, The proceedings with the threat and buffing were concluded. The final findings did not trigger any value adjustments in our financial statements. Now let's turn to slide three. In terms of operations, we once again achieved an excellent production performance at all our sites. We succeeded in meeting higher demands for our customers and increasing sales volumes. We also continue to master the challenge of the ongoing COVID-19 pandemic by taking measures at our sites. Please turn to slide 4 for a closer look at the very positive agriculture market development. Our own performance benefited from this over the course of the year. High demands accompanied by fully utilized supply resulted in a significant increase in potash price. In Brazil, prices have even tripled. Due to weather conditions, our de-icing salt business also developed very positively in both the first and the fourth quarter. And now let's take a closer look at slide number five. We translated our strong operating performance and favorable market conditions in higher earnings and cash flows. In the course of 2021, we raised our outlook three times and generated significantly higher EBITDA of around 970 million euros for the full year 2021, compared with around 270 million in 2020. This included the one-off gain of around 220 million euros from the REX transactions. Our share price development from around €8 at the beginning of the year to more than €20 is just another proof that confidence in our company is returning. Looking at Q4 2021 on slide 6, we achieved the strongest quarter in our history with an EBITDA of €611 million. The biggest contributor was a higher polish price. About 220 million euros were coming from the REX transaction. Combined with strict cost discipline, we were able to more than compensate higher prices for freight, energy and raw materials. Adjusted free cash flow could be increased to 245 million euros after minus 100 million in Q4 2020. Slide 7 shows that we achieved a major act of liberation in reducing the company's debt. With the sale of our North and South American salt business completed in April 2021, we have massively reduced our net financial liabilities. The rating agency Standard & Poor's has already responded to this with the first improvement in our rating to B+, with a stable outlook. Now we are aiming for an investment-grade rating. Please turn to slide 8. Our new corporate strategy sets the guiding principles for the successful development of K plus S. We are focusing on the core business with potash and magnesium products, and are working intensively on further optimizing our existing business. The goals of our new corporate strategy are clearly defined. From 2023 onwards, the KplusS Group in total, as well as each of our plans, should generate a positive free cash flow, even in the event of temporary low potash prices. Over a five-year circle, We aim to earn our cost of capital and target an EBITDR margin of more than 20%. With slide number nine, I want to highlight that we are first of all focusing on optimizing our existing business in implementing our new strategy. The teams at our site are already working very hard on many initiatives and projects. In Bethune, we want to increase production capacity to up to 4 million tons in the long term. At the same time, as at our commodity site in Cilitz, we are planning to implement specific measures to continuously improve our costs. At our specialty plant in Werra and Neuhof, the focus is on further optimizing the product portfolio. And slide number 10 shows that we are also making further improvements in the areas of sales and marketing as well as in the supply chain. Projects have been launched here that will soon make a positive contribution to our operating earnings. Ladies and gentlemen, please turn to slide 11. Our focus on the environment, nature and climate protection remains unchanged. Every business decision we make must be in line with our climate strategy and sustainability goals. Between 1990 and 2020, we already reduced our CO2 emissions by 80%. Looking ahead, we have set ourselves the goal of reducing CO2 emissions by another 10% by 2030. We can achieve this With our own efforts, it is also technically feasible to become completely climate neutral by 2050 or even a bit earlier. This, however, requires the right framework conditions. Energy must be affordable and available where needed. We accomplished another major step towards improving water protection at the end of 2021. the injection of production water was finally terminated. Looking ahead, we assume that the permit for the underground storage of these waters will be issued during the year. At the same time, we are well prepared for compliance with the lower target values set by the authorities for discharges into the Werra River by the end of 2027. In the disposal of solid residues, we will have completed the ongoing tailings pile expansions at several sites early 2023. Further major capital expenditures and required permits will then not be needed before the end of the decade. Moreover, the projects to cover the large tailings piles at the Werra and in Neuhof have recently started. Ladies and gentlemen, this brings us to the outlook on slide 13. At this point, that's very important to me, I say clearly that it is unbelievable for me to witness another war in Europe. I'm hoping for a quick end and maybe even over the next couple of days. The situation is confusing and dynamic. Our revenues in the affected regions are very low and we do not have any assets there. Of course, we are observing further developments closely, especially regarding energy supply and sanctions. And now please turn to slide 14. Overall, the general conditions on the agricultural markets remain positive. it is true that the prices of input materials, including fertilizers, have risen for farmers. Prices for their agricultural products, however, have also significantly improved or remain at a high level. Additionally, global inventories for key agricultural products are at historically low levels. As a result, the yield prospects in agriculture continue to be attractive. They provide an incentive to increase yield per hectare with balanced fertilization. Against this background, we expect overall demand for potash to be very strong. The recent conclusion of potash supply contracts in China and India at significantly higher prices is evidence of the attractive market environment. An increase in global potash supply is hardly possible because of the limited global capacities. Ladies and gentlemen, please turn to slide 15. We expect EVTA to range between 1.6 and 1.9 billion euros. This would more than double our operating earnings compared with the previous year and even more. It would be the best result in our company's history. Even in view of the war in Ukraine and the associated dynamics in sales prices as well as energy risks, K++ is sticking to this forecast. Therefore, we also expect our adjusted free cash flow to increase significantly between 600 and 800 million euros based on a capex figure of 400 million. The range of the forecast results in particular from different scenarios for selling prices, costs, logistic availability and weather conditions over the course of the second half of the year. In view of this possible development, there is a question of how we will use the expected additional liquidity. We would like to answer this on slide 16. The key measures we are looking at are the repayment of our bonds due in June, the purchase of further CO2 certificates for the years 2026 to 2030, the accelerated increase in production capacity at our bathroom plant in Canada, the further reduction in factoring, payments of dividends, and finally, further capex for optimizing our existing business. These measures have not yet been included in the free cash flow forecast. And please turn to slide 17. It goes without saying that our shareholders should also benefit from the positive business development in 2021. The Board of Executive Directors and the Supervisory Board therefore intend to propose a dividend of 20 cents per share at the AGM on May 12. In accordance with our new dividend policy, the amount will be made up by a basic dividend of 15 cents and a premium of 5 cents. The total dividend payout would therefore amount to around 38 million euros. Ladies and gentlemen, an exciting and at the same time good year 2021 lies behind us. We have made the company more efficient and profitable. Furthermore, we have strategically realigned K++. The business prospects are all positive. Thank you for your attention and we are looking forward to your questions and now I hand over to Julia for some technical details. Julia, please.

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 in the team session have to be aware that by turning on their camera and microphone, they give content to saving and replaying video and audio sequences. Ladies and gentlemen, you now have the opportunity to ask questions to us. We start with the questions in the room and then come to the questions via Teams. If you would like to ask a question via Teams, please use the hand signal and write your name and the name of your research house in the chat function of MS Teams. We will then call you individually and you can ask the question live. Please switch on your camera. One more request as usual. We would like to answer your questions one by one. So if you have multiple questions, please ask one at a time and we will answer it first. After that, you will have the opportunity to ask further questions. This brings us to our first question.

Thank you very much. Two questions that were made one by one, all circling around Bethune. First of all, can you remind us on the volumes which are now being shipped into the U.S., which have been shipped in 2021, and what your plan is pertaining to gearing that up into 2022?