Welcome to the K+S First Quarter 2025 Earnings Call. My name is James, and I'll be your Evercall webinar host. Please note that all attendees are in a listen-only mode before the Q&A portion of the call. I’d like to point you have an opportunity to ask questions live. I will now hand over to Julia from K+S for some technical notes.

Ladies and gentlemen, also from my side welcome to our call. We hope you've had a chance to review our posted slides as well as our Q1 documents available on our website. After the opening remarks by Christian Meyer, we will jump directly into the Q&A session. Some technical notes. Please refer to our disclaimer on Page 2 of the presentation. The note on data privacy. Please be aware that the teams session will be recorded, webcast and available as an audio replay on our homepage afterwards. People who ask a question in the Teams session should be clear that by switching on the camera and microphone they agree to the recording and replay of video and audio sequences. Before we start into the opening remarks of our quarter, I would like to tell you that our IR team member Nathalie Frost is moving on within K+S. She will be heading our forecast and planning department as part of the controlling department from June onwards. Also I will miss her a lot. I'm very proud that she will do this step. I enjoyed working with Nathalie very much. Thank her a lot for all her efforts and wish her all the best in the new role. Now I would like to hand over to Christian Meyer, our CEO as of June for the opening remarks.

Thank you, Julia and welcome from my side as well. As we announced at the end of April, first quarter EBITDA and free cash flow are significantly above our annual expectations. This was driven by the higher ASP in Agriculture, our strong production performance leading to a positive inventory effect and lower-than-expected costs. We are very happy with the spring season facing strong global demand for potash and limited supply. Therefore, we have also raised our previous expectations for the full year. We now expect EBITDA to range between €560 million and €640 million. This corresponds to a €40 million increase of the midpoint to €600 million. For this we assume that the price level achieved in Brazil at the end of April will continue to have a positive spillover effect on the other markets and product groups. In addition, this level needs to be maintained on average in the second half of the year. For the upper end prices would need to increase further. Now we expect free cash flow to be slightly positive in 2025 despite the planned elevated CapEx. Just to give you a sense of the phasing of figures for the rest of the year. Keep in mind that Q1 and Q4 are our strongest quarters, due to seasonality in both business segments. As a maintenance quarter, Q3 typically has the weakest EBITDA contribution. Q2 is normally better than Q3, but significantly below Q1 or Q4 levels. For this year's phasing please also note that Q1 benefited from the positive inventory effect and Q2 will see an inventory reduction. This alone should result in a mid-double-digit million euro swing, between the quarters. In addition, Q2 will see higher personnel costs, as the collective bargaining agreement was concluded as of April 1. On the other hand, we will see positive price effect. I'm looking forward to answering your questions together, with my colleague Jens Christian Keuthen, our CFO as of June and together with Julia from Investor Relations. Now, I will hand over to the operator to start the Q&A session.

Thank you, Chrisian. At this time, we will conduct a question-and-answer [Operator Instructions] This brings us to our first question by Aron. Aron, please state your name and company.

Q – Aron Ceccarelli: Hello, good morning, Aron Ceccarelli with Berenberg. I have three questions, please. The first one is on Belarus. At the beginning of the year, Belarus announced 1 million tonne reduction in exports in the first half. If I look at Q1, we have seen rather the opposite with a record high exports. I'm just wondering, should we expect this reduction to come through in Q2? And how this is affecting your price negotiation, if it is happening? The second one is on energy cost...

Can we start with the first one?

Q – Aron Ceccarelli: Sure.

One by one. Yes, with regard to Belarus, that's a little bit surprising. You're absolutely right. They announced by the end of the last year, that they will cut the production due to maintenance in the first half of the year. We haven't seen a cut in the Q1, on the sales side. So we expect that they were able to sell their inventories. And that if they reduce the volumes due to maintenance that we will see the effects in Q2, and maybe also in Q3. But even in the current situation, we saw a strong demand and increasing prices. So regardless, if they will finally cut the production, we don't see any -- or we don't assume any big effects to the price trends.

Q – Aron Ceccarelli: Thank you. My second question is on your energy cost and your hedging strategy. Perhaps, could you elaborate, if you taken any advantage of the recent decline in gas prices for your procurement in 2026, please?

Yes. Thank you for the question. We hedged 50% of our gas consumption for this year, at a good of €40 per megawatt hour. And yes, with regards to the further price development, we are facing spot prices. At the moment, we are profiting from them. They are below €40 and -- at the beginning. And presumably at the end of the year, we will have a slight increase, which will affect our P&L.

Q – Aron Ceccarelli: Thank you. And my final one is on specialties and SOP. I noticed the premium versus MOP has reduced. But at the same time, sulfuric acid remains pretty tight. What would prevent the SOP premium to go back to the previous high, please?

Yeah. We saw a good increase of the MOP prices. And with regard to specialties, they have normally not the same volatility. So neither to going up and also when the MOP prices goes down, we saw a stable good SOP price, so that the premium will change a little bit due to the smaller volatility of the specialties. But we have a good demand for our SOP and we are facing also good prices for the rest of the year.

Q – Aron Ceccarelli: Thank you very much.

Thanks, Aron.

Thank you very much. Our next question comes from Christian. Christian, please state your name and company.

Hi, guys. It's me yes. Good morning, Julia, Christian and Burkhard. Great time by the way, truly I mean. Two questions please one by one. First, would you be able to give us an updated sensitivity of the potash price moves to your EBITDA? I believe the last sensitivity I have in mind was roughly €80 million EBITDA annualized, if Brazilian MOP moves around about $10 per tonne obviously Cider is Parab.

Yeah. Hi, Christian. With regard to the sensitivity, we have around about eight million tonnes of potash products around about 7.5 million in the Agricultural business and 500,000 tonnes in our Industry+ business. And if the MOP prices increases by USD 10 a tonne, then it finally depends if you see the spillover effect as soon in the specialties and also in the Industry+ segment. But the calculation is still -- okay if you see a €10 increase in MOP maybe a little bit time, but that you will see this also in the specialties.

Okay. Great. Thank you. And then my second question is actually two half ones on Bethune. First of all, the -- your current plan to ramp secondary mining in Bethune for 2025. And then any tariff consequence for your Bethune volumes into the US at this point or not?

Yeah. We are in line and in budget with our Bethune ramp up. And we want to ramp up from now currently a little bit more than 2 million tonnes to 4 million tonnes. It won't be each year as the same step. That depends on the development of the different caverns, but we expect a higher volume than last year, so that you can calculate around about an average of 100,000 tonnes each year increasing of volumes. And what's very important, the additional volumes are mainly coming from secondary mining where we have a real low cost production. With regard to the tariffs question, we won't have any effects of the potential US tariffs because the potash products, especially our MOP and SOP are excluded from tariffs. And -- that's based on the fact that the US they don't have real meaningful own deposits. So they finally need the imports. And they realize that potash is a critical mineral for the U.S., and they exempt the products from tariffs.

Thanks very much.

You're welcome, Christian.

Thank you very much. Our next question comes from the line of Tristan. Tristan, once again, please state your name and company.

Hi. Thanks. Tristan Lamotte from Deutsche Bank, a few questions, please. The first one is

I just wanted to understand your guidance. You say the midpoint assumes price rises from Q1, but if I take the -- and you say the low-end is the Q1 ASP. If I take that Q1 ASP for the full year, it implies a 2.9% price increase, which I think translates to about positive €80 million on EBITDA. You talked about cost increase of about €50 million, let's say. And you also had inventory write-downs last year as well. If I add those three basic parts, I'm coming to about €620 million for 2025. So I'm just trying to understand if you're being conservative or if there's something else in there that I'm missing. Thanks.

No, we are not conservative. On the one side, we have the expected increase of the price level that we will also see for the rest of the year. But you should keep in mind that we have a volatile energy market, especially with regard to gas. And in our calculation, we assume that we will have an average gas price of around about US$40 -- €40 per megawatt-hour. And if the volatility results in lower gas prices, then we will see that also in our P&L. But as of today, we are not expecting a decrease in the average cost for gas.

Right. Thanks. And the second question is around seasonality this year. I was just wondering, in terms of potash demand, and kind of leaving apart the fact that you have your maintenance quarter in Q3, when do you see the general potash market demand being highest and therefore the supply-demand being tightest? And is it fair to say that the demand should weaken in the next few months? Thanks.

Yes. In the spring season, you see the demand from all global regions. So there, you see strong demand in South and North America. You see good demand in Europe and also in China. We see -- yeah, we do have some seasonality; you are absolutely right. But what was very interesting, especially from autumn until the spring season, where the demand was pretty low, due to seasonality, we saw an increase in prices. And that's a real positive effect or message for the potash market. And we expect that for the rest of the year, we will see good demand, especially based on the fact that the inventories globally are not very high.

Thanks. And maybe the last question. We've seen some recent drops in crop prices, which obviously flow through to demand for your products. I was wondering what you see as the key factors that might affect crop prices through the year? And is that a source of concern?

No. That's very important. Starting, for example, with China, we have low inventories and we have the strong demand -- strong domestic demand with pretty high prices --domestic prices in China. And with regard to Brazil, that we also see good economics for the farmers and a strong demand. And also for Europe and the US markets, there we see also a good demand and that the crop prices are still on a good level. And if you go to Southeast Asia the palm oil prices are pretty stable on a real good level. And that's why we also see there a strong demand and increasing prices. So we don't see risk with regards -- currently, we don't see risk with regard to the volatility in crop prices.

That's very helpful. Thanks very much.

You're welcome.

Thank you very much. Our next question comes from the line of Oliver. Please provide your company name.

Good morning. Oliver Schwarz, Warburg Research. Thank you for taking my question. We had fairly good weather here in Northern Germany and what I could discern from Christian's video feed right now that you, are also enjoying good weather in the Frankfurt area. So I guess that's let's say an overall German problem, so to speak, lots of sun which is not happening that often in the year at this time of the year at least and a lack of rain for a couple of weeks now. So our river levels are running lower to low. That has an effect on the Vara and also on the River Rhine. So my question is basically twofold. Let's for the sake of the argument, just assume that this trend would continue well into summer with water levels in the rivers in Germany running lower and lower. What would be A the effect on your production and B on the demand and C on transportation?

Yes. Thanks, Oliver for your questions. So the current weather conditions, especially in Germany, that's not globally, but in Germany. With regard to the production at the Vara side, that was the challenge in the past. But we finally solved the problem with the saline waters, saline production waters with different investments we made. So we don't see a production risk. With regard to the demand, we especially in the spring season, that the product is already brought to the farmers and sellers. We don't see any risk anymore during the summertime. Then we see more to the autumn and the next big application season. And that finally depends on the weather more at the end of the summer and the beginning of autumn. But currently, we don't see any risk from the market in Germany. And globally, we see a good demand and also a good application. With regard to transportation, we use the Rhine River also. There could be some restrictions due to the low water levels, but our logistics department is looking for alternatives. There could be -- it could have some impacts, but we don't see any risk that we are not able to sell our production volumes.

Thank you very much.

Some cost effects, but not meaningful.

Thank you.

Thanks Oliver.

Thank you very much. [Operator Instructions] Our next question comes from Akash [ph].

Hi. Can you hear me?

Yeah.

Yeah. Hi. This is Akash. I'm from JPMorgan. I have a couple of questions. So the first one is; could you talk about the current demand trends and the inventory levels in the key potash-consuming regions? And also, demand has been healthy so far this year. Are you seeing the continuation of this trend so far in Q2?

Yes. With regard to the inventory levels, we see globally low inventory levels. For example, with regard to China, they have a strategic inventory at the parts of normally three million tonnes. They are currently at around about two million tonnes. And we also see, based on the high domestic price levels, a good demand within China. So that's with regard to China. And also with regard, for example, to Brazil, based on the high volumes they imported and also, on the other hand, the good application -- the high application, we don't see that they have a real high inventory. So they need to import additional volume for the rest of the year, to be able to serve the farmers with additional products. And with regards to the effects to Q2, as we still see a good demand and increasing prices, we don't expect that -- we see more positive than negative effects.

Thanks, and I have one more. So in the lower end of your guidance, …

Yeah.

…you are assuming that potash prices may decline in the second half. So could you talk in more detail about the factors that can lead to this outcome? And how probable is this?

With our -- for the lower end, we assume that we see an average price for the whole year at the level of 325. That's the ASP that we saw in Q1. That will finally result in a small decline, especially in Q4, but that the price level will stay on the level that we saw in Q1 at the end.

Okay.

So we don't see a big risk of a decline.

Okay. Thank you.

You're welcome.

Thank you very much. [Operator Instructions] It appears we have a follow-up from Tristan.

Hi. Maybe just a couple of follow-ups, the first one is just in Q1, the €26 million beat versus consensus. Could you maybe break that down into where that comes from? And would it be fair to say the higher production maybe added about €10 million to that? And then where do the rest of that come from? Thanks.

Tristan, it's always a big question if you are asking for the explanation of the beat and consensus and I'm not asking you for your estimates on our inventory changes. That is why it's hard for me to really do that as a beat versus the consensus. For sure I can give you a feeling for our own expectations because we have that. And there I would say -- I would say half of the €26 million were explained by a better production and a higher move in the release of costs because of an inventory buildup. And the rest is because prices were flowing faster through our P&L and that we had a higher ASP versus consensus. These are the two main effects. But if you want to derive from that how big was the inventory support in Q1 it's a different question. It was definitely bigger. And if you then think and that was an opening remark by Christian how will this translate into Q2 it will be an inventory drawdown in Q2 as always just seasonal and this swing from inventory buildup to an inventory drawdown that explains Q2. So I think you have to make clear what is the question. With regards to consensus I cannot exactly compare. With regards to our own expectations I explained in with regards to Q2 as well.

That makes sense. I guess, I was kind of alluding to what you retain in Q2 which you pointed to there. But maybe the second part of that is do you see the better-than-expected realized prices also repeating in Q2? Or do you think that might reverse?

With regard to the price level of potash we picked or what we see is still increasing price levels that we already saw until the end of April. That was also the basis for our new midpoint. And we don't see decreases in prices for the rest of the quarter currently.

Thanks. And maybe another one just kind of broad one. But you -- the market has changed a lot this year versus last year. You've often talked about Belarus and Russia having a key effect on the potash prices last year. Do you think that there's anything else that has changed in the market this year that's reversed that pricing trend to make it more positive? Or is it really just the lack of low prices going into the market that you did have last year that is no longer there?

Yes. So in last year we also already saw that Russia and Belarus are back in the market with their pre-war volumes. And based on the announcement from Russia and Belarus they are not -- based on the fact that they have fighted back for their share in the global market that they are now also looking to increase the prices to have finally fair prices based on the higher production costs they are facing. And what we see in 2025 is that there's still a strong demand and the increase of the demand is higher than the additional supply. And then you see the effect that the prices increase.

Thanks.

Thank you very much. You’re welcome.

We have another follow-up from Oliver.

Yes. It’s me again. Sorry for that. Just a quick one in regards to your specialties business. It seems to me that especially the price for SOP is a function of both MOP price and the energy costs attached due to your competitors, mostly employing the energy-intense Mannheim process. So obviously, at year-end we had lower MOP prices but also higher gas prices. And now we have higher MOP prices but lower gas prices, which might explain the lack of -- or the lower volatility of SOP prices. Is that correct? Or am I missing something? That would be my first question.

With regard to the specialties and also for the SOP, normally you have a little bit of time lag compared to the MOP volatility or the MOP increase. That's maybe one of the reasons. But what's very important for us that we have a good demand and good prices still for SOP and that some of our competitors are coming back with some volumes but they are still facing some challenges. And that's also the reason why the SOP prices have still this good level.

Thank you for that. And second question regarding specialty is can you please elaborate on those specialties or the price development of those specialties that are comparable low on potash?

Yes. They have also nicely developed. Kieserite, for example, Korn-KALI, PatentKALI, these are the ones you are referring to. They are all increasing and they are increasing with a time lag like SOP. Yes, and SOP by the way, one addition to that sulfuric acid prices are another part of the equation that you were doing. So MOP energy costs and sulfuric acid prices, yes.

Thank you for clarifying that. That was my questions.

Okay. Do not forget the time lag with specialties.

I won’t. Thank you.

Thanks Oliver.

Thank you.

Thank you, gentlemen. [Operator Instructions] We have a question coming from the line of Aron.

Hello again. Sorry for a follow-up. The adjusted free cash flow in Q1 was clearly much stronger than expected as the EBITDA. Perhaps, could you elaborate on the midpoint of your guidance? What should we expect in terms of working capital changes for the full year? Thank you.

Yes. With regard to the working capital, we expect an increase based on the fact that we have higher potash prices so that the receivables price related will be higher at the end of the year compared to the last year. So that will have a negative effect to the free cash flow. And based on the higher taxable earnings, also the tax payments will be higher. So that will compensate a little bit the increase of the EBITDA.

Thank you.

You’re welcome.

It appears there are currently no further questions. Handing back to Christian for any final remarks.

Yes. Many thanks to all of you. And now, thanks to my colleagues with this new setup. And we hope to see you soon on the road and have a nice day. Bye.

Thank you. Bye.

This concludes today's call. Thank you and have a great day.