Business Segments of the K+S Group

COMPO Business Segment

Variance analysis in %	Q2/08	H1/08
Change in revenues	+ 30.7	+ 28.6
- volume/structure	+ 8.3	+ 10.8
- prices	+ 21.9	+ 17.1
- exchange rates	(0.3)	(0.2)
- consolidation	+ 0.8	+ 0.9
Consumer business	(2.4)	+ 1.7
Professional/ industrial business	+ 57.3	+ 47.1

€ million	Q2/08	Q2/07	%	H1/08	H1/07	%
Revenues	205.0	156.9	+ 30.7	480.9	374.0	+ 28.6
Earnings before interest, taxes, depreciation & amortisation (EBITDA)	31.6	11.5	+ 174.8	70.2	33.2	+ 111.4
Operating earnings (EBIT I)	29.1	9.0	+ 223.3	65.0	28.2	+ 130.5
Capital expenditure	2.1	1.3	+ 61.5	3.4	3.8	(10.5)
Employees as of 30 June (number)	–	–	–	1,288	1,260	+ 2.2

 

Market environment

While the consumer business in Germany, Austria and Switzerland went relatively well in spite of changeable weather conditions, demand in other European states declined due to poor weather and rising inflation. The professional business, however, was once again characterised by high demand and significant price increases.

Revenues by segment
Jan. – June 2008
(in %)

Revenues

In the second quarter, revenues rose by 31 % to € 205.0 million, due both to price and volume factors. In the consumer sector, however, price-related declines resulted in a fall in revenues of 2.4 % to € 68.1 million. Revenues earned with professional products increased by 57 % to € 136.9 million due to price and volume effects. During the first six months, revenues of the business segment rose by just under 29 % to € 480.9 million, due to price and volume factors.

Development of earnings

In the second quarter, operating earnings amounted to € 29.1 million and have thus more than tripled. Significant price increases in the professional segment were able to more than make up for higher acquisition costs for the raw materials phosphate, ammonia and potash. During the first six months, operating earnings of this business segment amounted to € 65.0 million and were thus 131 % higher than in the same period last year.

Outlook

We expect a sharp increase in revenues in 2008. Primarily considerable increases in prices and sales in the professional segment should contribute to this. Against this backdrop, operating earnings should rise significantly in spite of the steep rise in raw material prices.