Business Segments of the K+S Group

fertiva Business Segment

Variance analysis in %	Q2/08	H1/08
Change in revenues	+ 48.6	+ 44.9
- volume/structure	(22.1)	(11.2)
- prices	+ 76.9	+ 61.6
- exchange rates	(6.3)	(5.6)
- consolidation	–	–
Complex fertilizers	+ 27.0	+ 20.5
Straight nitrogen fertilizers	+ 37.9	+ 40.3
Ammonium sulphate	+ 98.4	+ 88.6

€ million	Q2/08	Q2/07	%	H1/08	H1/07	%
Revenues	228.8	154.0	+ 48.6	441.3	304.5	+ 44.9
Earnings before interest, taxes, depreciation & amortisation (EBITDA)	15.2	5.5	+ 176.4	22.0	10.0	+ 120.0
Operating earnings (EBIT I)	14.9	5.5	+ 170.9	21.6	9.9	+ 118.2
Capital expenditure	0.1	1.4	(92.9)	0.2	2.4	(91.7)
Employees as of 30 June (number)	–	–	–	74	58	+ 27.6

 

Market environment

The positive development of demand for nitrogenous fertilizers also continued during the second quarter both in Europe and overseas. Against the backdrop of availability bottlenecks as well as rising ammonia, potash and phosphate prices, further significant price increases were implemented.

Revenues by product group
Jan. – June 2008
(in %)

Revenues

In the second quarter, business segment revenues rose by almost 49 % to € 228.8 million as a result of price factors. Revenues generated by complex fertilizers reached € 64.7 million and thus rose by 27 % because of price factors. In the case of ammonium sulphate too, clearly higher prices resulted in an increase in revenues of 98 % to € 72.5 million, and in the case of straight nitrogen fertilizers to an increase in revenues of 38 % to € 91.6 million. During the first six months, total revenues of the business segment rose by 45 % to € 441.3 million due to price factors.

Development of earnings

In the second quarter, the fertiva business segment posted operating earnings of € 14.9 million, representing an increase of 171 %. Substantially higher raw material acquisition costs could be more than offset by higher prices. Operating earnings thus increased by 118 % to € 21.6 million during the first six months.

Outlook

In 2008, we expect a strong increase in revenues, which is primarily attributable to higher average prices for nitrogenous fertilizers. Following the top result of the previous year, we are nevertheless, despite significantly higher than expected raw material costs as well as a probable increase in import pressure from countries with cheap supplies of gas, expecting operating earnings that should also clearly rise in comparison with last year.