Investing.com -- K+S Group (ETR:SDFGn) on Thursday adjusted its financial guidance to the lower end of expectations, signaling a less optimistic outlook for 2024.
The company's EBITDA guidance for the full year now stands at approximately €540 million, hovering just below the consensus estimate of €550 million. This reflects a challenging market environment, with declining potash prices and macroeconomic pressures playing key roles.
The company’s third-quarter EBITDA reached €66 million, surpassing Stifel's projection of €56 million but falling short of the consensus estimate of €71 million.
K+S has maintained positive free cash flow, posting €24 million for the third quarter, which brings the year-to-date total to €110 million.
Despite this, the company faces mounting headwinds as it navigates fluctuating demand and pricing pressures in the global potash market.
Volumes in the agricultural segment remain on track, with Q3 deliveries totaling 1.8 million tons, a slight decrease from last year’s 1.84 million tons.
Average selling prices for potash declined marginally, reflecting broader market trends. The European market, however, continues to offer some price stability, with ASPs in the region ranging between €330 and €350 per ton.
Stifel points out that while potash prices globally seem to have bottomed out, there is cautious optimism for a potential price rebound in the coming months.
This is contingent on a shift in global supply dynamics, particularly in key markets like Brazil and Southeast Asia, and possibly influenced by production cuts from competitors.
The outlook for 2025 remains subdued, with anticipated challenges in achieving free cash flow breakeven, particularly as K+S pursues its "Werra 2060" investment program.
The initiative underscores the company’s commitment to long-term growth, though it will likely strain short-term profitability.
Analysts at Stifel emphasize that while K+S benefits from a strong European focus and a diversified portfolio, the high dependency on potash exposes it to price volatility.
This has led Stifel to maintain a "sell" rating on the stock, with a price target of €10, reflecting limited upside potential amidst ongoing market uncertainties.