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"If the price is right, such combinations could be interesting," says the K + S competitors Mosaic. The German potash producer was injured - and the quarterly report is still pending. A profit slump threatens.
Price erosion, mining disaster , downgrade - for the fertilizer company K + S is coming thick and fast at the moment. In addition, the lost profits of North American rivals Mosaic and Agrium numbers do not bode well for the company expect the Dax is presenting its results for the third quarter of next Thursday. Analysts currently expect on average believe that the adjusted income has halved compared to the previous quarter. K + S shares on Wednesday temporarily lost more than 5 percent and were the biggest loser in the leading index. Ultimately, a decrease of about 3 percent remained.
For the price slide traders blamed primarily the lowest rating. Moody's, the credit rating of K + S by two notches to junk status "Ba1" reduced. The rating agency justified this with the impending price drop of potash fertilizers after the collapse of the Russian-Belarusian export BPC alliance. In addition, K + S has to take more money for the opening of its new potash mine in Canada in the hand. Also, the S & P is currently considering whether to reduce the K + S rating.
Reduce debt quickly
A reduced credit rating by rating agencies usually leads to the fact that companies have to pay higher interest rates when they borrow money on the capital market. For K + S, the decision must be particularly galling: The company is considering, according to London's financial districts to fund its mining project in Canada on corporate bonds with a volume of up to 1.5 billion euros. A decision will learn in the coming weeks, the Reuters IFR daughter learned recently.
K + S can not understand the decision by Moody's and is convinced that despite the downgrade continues to collect funds on the capital market. The Group also disponer had cash of around 1.2 billion euros and a credit line of over one billion euros, a company spokesman stressed. A higher debt, which could accumulate K + S because of the costly opening of the mine in Canada, is only temporary and can be removed quickly after the commissioning of the mine, the spokesman added. "The goal was and is to have a rating in the investment-grade long-term."
Threat of a price drop?
The Russian K + S competitor Uralkali end of July, export BPC consortium terminated with Belarusian state concern Belaruskaly, triggering shock waves in the fertilizer industry. So far, BPC and Canpotex's North American counterpart have dominated 70 percent of potash fertilizer market and kept prices at a high level. Now put K + S and its competitors on a falling prices, many farmers hold because of the uncertainty about the further price development is currently back with orders.
As a result of winning the Canadian manufacturer Agrium fell by 70 percent in the third quarter by 41 percent to 76 million dollars, the U.S. provider Mosaic to 124 million dollars. The Americans consider because of falling fertilizer prices now, to curb the promotion in its potash mine in Carlsbad, New Mexico, USA. Basically, the company from Plymouth in Minnesota but was interested in expanding its capacity, underlined Mosaic CEO Jim Prokopanko. When asked whether he had interest in the U.S. rival Intrepid Potash or the new K + S mine in Canada, Prokopanko said: "If the price is right, such combinations could be interesting." K + S was puzzled by this statement, after the group has repeatedly stressed that despite the turmoil in the fertilizer market in the project and hopes to be able to hold it alone. "A sale or a partnership are not for us to discuss," said K + S spokesman.