Potash and salt miner K S reiterated its full-year core profit guidance on Thursday, as it expects soaring prices to offset the impact of a potential gas shortage in Germany.
The April forecast of 2022 earnings before interest, tax, depreciation and amortisation EBITDA were between 2.3 billion and 2.6 billion euros $2.37 billion and 2.67 billion, but the group has now included a gas bottleneck scenario in its calculations.
The scenario assumes a 25% reduction in natural gas availability in the fourth quarter, which would lead to a cost burden in the low triple-digit million euro range, Chief Executive Officer Burkhard Lohr said in a statement.
Last week, Germany's cabinet imposed a levy on gas consumers from October to help suppliers hit by the exploding import prices caused by Russia's invasion of Ukraine.
Lohr stated thatpotash demand remained significantly below last year due to limited supply, though he predicted spot prices would stabilise at a high level in the second half of the year.
K S's EBITDA rose more than sixfold year-on-year to 706 million euros in the April-June period, beating analysts' average forecast of 664 million euros in a company-provided poll, while revenues more than doubled to 1.5 billion euros.
Western sanctions on rivals Belaruskali from Belarus and Russia's Uralkali, together account for about one third of the world's potash production, have made the key crop fertiliser more scarce and expensive. Lohr said that we had very good general conditions for our business.
Canadian peer Nutrien posted record profits attributable to sanctions on Russia last week, but it also cut its full-year adjusted profit forecast because it expects higher gas costs to weigh on its nitrogen business.