K+S Aktiengesellschaft

Good day and welcome to the K plus S full year 2025 earnings call. My name is Barbara and I'll be your Evercall webinar host. I would now like to hand over to Julia from K plus S for some technical notes. Julia, you may now begin.

Ladies and gentlemen, also from my side, welcome to our call. We hope you had a chance to review our posted slides as well as our full year documents available on our website. After the opening remarks by Christian, we will jump directly into the Q&A session. Some technical notes. Please refer to our disclaimer on page two of the presentation. A note on data privacy. Please be aware that the team session will be recorded, webcasted, and available as an audio replay on our homepage afterwards. People who ask a question in the team session should be clear that by switching on their camera and microphone, they agree to the recording and replay of video and audio sequences. Now I'd like to hand over to Christian Meyer, our CEO, for the opening remarks.

Thank you, Julia. And welcome from my side as well. Starting with the quarter. Q4 EBITDA was 17% above the prior year quarter. Therefore, we reached the upper half of our full year guidance range. Firstly, this was due to better prices in both customer segments. Secondly, EBITDA was affected by a higher drawdown in inventories than last year. This resulted in a negative EBITDA effect, which was overcompensated by a positive FX effect due to our hedging. Full year free cash flow reached 29 million euros. Full year capex, 546 million euros. In accordance with our dividend policy, we pay out 43% of our free cash flow and therefore propose a dividend of 7 cents per share to the AGM. In the Q4 impairment test, we saw a value recovery over 484 million euros. Just to remind you, As long as we remain below the book value, there will be fluctuations with even minor changes in the parameters due to the long term of the valuation models. Regarding our full year guidance, we expect global potash demand to rise again this year, following full capacity utilization in 2025. Potash prices are tangibly higher year on year, which will benefit Q1. Further developments will depend on the course of the spring season when demand from many regions must be met simultaneously. Demand for non-deicing products in the industry plus customer segment is also likely to develop positively overall in the current year. Here, we continue to expect moderate price increases for our soil products. You have all witnessed the exceptional and prolonged winter weather. we experienced in January and February throughout Germany and large parts of Europe. This has resulted in a significant upturn in our de-icing soil business. Therefore, we expect significantly stronger sales volumes than in 2025, assuming average winter weather in Q4 2026. We expect EBITDA to range between 600 and 700 million euros. This translates to a midpoint above the 2025 level due to higher potash prices in Q1 and the strong de-icing soil business. Free cash flow should at least break even again despite elevated capex. For the upper end of the range, we would need an agricultural volume of 7.6 million tons, excluding trade goods, and a moderate price increase for MOP in Brazil during the spring season. This has to spill over into other regions and product groups and hold up during the second half of 2026. The lower end would work with a volume of 7.4 million tons and prices at the level of the end of 2025. Just to give you some thoughts on the first quarter, we should see a better EBITDA than in 2025. We anticipate positive effects from our strong start in the de-icing soil business and higher potash prices. However, negative effects arise from the fact that Q1 is the last quarter with an effect in the year-on-year comparison due to the collective bargaining agreement, as well as from the significant inventory buildup that benefited Q1 last year. In closing, I would like to briefly outline the outlook for the future beyond 2026. We will position Kplus S as efficiently as possible in terms of resource allocation, structures, and processes to make the company even more robust also regarding costs. We also want to direct attention to our second pillar, the soil business. In addition to the potash business, The European salt market has undergone structural changes due to the permanent loss of Ukrainian capacity. Therefore, I would like to clearly state that salt belongs to our core business. We are focusing on operational improvements as well as further developing our product portfolio and market position. Now, I'm looking forward to answer your questions together with my colleagues, Jens and Julia. And I now hand over to the operator to start the Q&A session.