K+S Aktie

Welcome to the K+S First Quarter 2026 Earnings Call. I will now hand over to Julia from K+S for some technical notes.

Ladies and gentlemen, also from my side, welcome to our call. We hope you've had a chance to review our posted slides as well as our full year -- as well as our Q1 documents available on the website. After the opening remarks by Christian, we will jump directly into the Q&A session.

Some technical notes: Please refer to our disclaimer on Page 2 of the presentation.

A note on data privacy: Please be aware that the Teams session will be recorded, webcast and available as a audio replay on our homepage afterwards. People who ask a question in the Teams session should be clear that by switching on the camera and microphone they agree to the recording and replay of video and audio sequences.

Now I'd like to hand over to Christian Meyer, our CEO, for the opening remarks.

Thank you, Julia; and welcome from my side as well.

We have published the key figures for the quarter and our 2026 outlook already on the 22nd of April, so I will keep this brief.

Starting with the quarter. Q1 EBITDA was almost 40% above the prior year quarter at nearly EUR 280 million. Firstly, this was due to the successful de-icing salt business because of the strong winter weather. Following the strong start at the beginning of the year, performance continued to exceed expectations in the second half of the quarter. Secondly, in the Agriculture customer segment, sales volumes and the average prices exceeded expectations, particularly in March. Free cash flow reached EUR 87 million; cash CapEx, EUR [ 126 ] million.

Let's look at our full year guidance. We raised our 2026 EBITDA forecast to range from EUR 630 million to EUR 730 million from EUR 600 million to EUR 700 million before. This is due to a strong performance in the first quarter and the positive price trend that has continued in the Agriculture customer segment over the past few weeks. This is also driven by the revised U.S. dollar exchange rate assumption of $1.17 instead of $1.20 for the remainder of the year. However, the rising prices of materials, energy and freight resulting from the conflict in the Middle East since March are having a negative impact compared to the original assumptions.

The midpoint. The midpoint of the EBITDA range assumes current market price levels for gas and logistics, stable potash prices in Brazil, persistent positive spillover effects on other sales markets and product groups of K+S. Additionally, it assumes that the increase in sulfur prices will continue to benefit the prices of K+S Cyprus specialty products. The price level achieved for the product portfolio in the Agriculture customer segment by midyear will then roughly need to be maintained on average in the second half of the year.

If the prices continue to rise overseas with corresponding persistent spillover effects, the upper end of the range could be achieved. This could, for example, happen if potassium is given greater weight in compound fertilizers, thereby increasing demand. The lower end of the earnings range could be realized if the conflict in the Middle East persisted for a longer period. Thereby, it could either limit the availability of nitrogen and phosphate fertilizers or the earnings situation of the farmers and therefore, potash application. This could reduce sales prices and volumes over the course of the second half of the year.

Overall, the effects related to the conflict in the Middle East continue to be of limited predictability. I would like to give you a feeling for the phasing of figures for the rest of the year. Keep in mind that Q1 and Q4 are our strongest quarters due to seasonality in both business segments. As a maintenance quarter, Q3 typically has the weakest EBITDA contribution. Q2 is normally better than Q3, but significantly below Q1 or Q4 levels. Last year, Q2 saw a seasonal drop in EBITDA of EUR 90 million versus Q1. This year, the gap between the first 2 quarters is expected to even bigger because of the extraordinary de-icing business in Q1 and the higher cost for energy and logistics.

After this brief introduction, I'm now looking forward to answering your questions together with my colleagues, Jens and Julia. With this, I now hand over to the operator to start the Q&A session.

[Operator Instructions] This brings us to the first question of [ Christian ].

So 2 questions. I'll ask them one at a time as instructed. First of all, in your specialties in potash and namely in your sulfur-related products, can you give us an idea of price increases we should expect for Q2 given the strained sulfur supply situation of your SOP peers?

Yes, absolutely. Our SOP products, there we see increasing price levels in overseas, that's already the fact. In Europe, it's a little bit different due to the fact that the Mannheim producers have high stocks of sulfur, and we have a price list until the end of May. Then in the summertime, there we have a weaker season for SOP, so there, we will see stable prices, and that's finally a good news based on the fact that this will be a weaker season. So a little bit different Europe versus overseas.

Okay. Great. Second question and final question for me for now is, we had a strong start to the winter season and we saw this being reflected, obviously, in this solid Q1 results from de-icing. Yet the last part of the quarter saw rather moderate winter conditions in Europe. Hence, the question, if you see any elevated inventory levels at the municipalities, for example, that could mean lower sales volumes at least in Q3 when preorder typically starts for the upcoming winter season then?

Yes. No, that's -- we see it a little bit different. Especially in March, we had high demand. And due to the weather conditions, and that's already brought to the street. And we have a good demand for the next month, so we expect that it should be on a normal level. And then finally, at the end of the year, it depends on the weather conditions in November and December. But there are no stocks that are built up.

Our next question comes from the line of Angelina.

I will also have 2, please. And my first one is a little bit of a follow-up regarding sulfur. So you have mentioned that for the midpoint of the guidance, you have assumed the higher sulfur prices will still support the sulfur-based specialties. I'm just wondering what exactly you are assuming with regards to sulfur prices? Do you expect them to increase further from current levels or are you assuming, for the guidance sake, that they stay elevated at these levels? So it would be great to get a bit more color on that.

Yes. That's what's very important. We have different sulfur products. On the one hand, we have the SOP, but we also have the Kieserit, that's a sulfur and magnesium product; and in addition, the so-called Korn-Kali, that has also included sulfur. And our expectations is that there are some spillover effects to these products over the next weeks. That's a little bit behind compared to the MOP developments, but there should be some small increases.

And as Christian elaborated, it is also a positive effect that sulfur prices are not seeing the seasonal dip they have seen in earlier years, yes? So after the price list of prices just remained stable, this is already something positive with regards to our original assumptions.

Great. And my second question will be on demand. Maybe as you go into the second quarter or almost halfway through the second quarter, you could give us a bit more color how you're seeing demand developing by region and maybe as early look into the second half? I'm just trying to understand if you're already seeing any evidence of farmers, maybe in the Southern Hemisphere, starting to change their plans for application and for specific crops in light of the fact that nitrogen fertilizer prices are very high. So are you seeing any impact there?

Yes. No, we see a real good and strong demand also on our side. It's pretty close to our competitors. And we are still able to optimize our netbacks by logging in the different contracts. So we -- what we see finally is a good application globally. You see the high volumes that are finally imported in Brazil and the additional demand in China, where the price levels -- domestic price levels are pretty high -- still pretty high, the acceptance of higher prices from China for cross-border deliveries from Russia, and also, we expect some increases in India. These are smaller volumes, but also some increases. And what's also very important, we still see a strong demand compared to last year in Southeast Asia based on the fact of the good palm oil prices. So we -- currently, we don't see a decrease of demand.

Our next question comes from David.

It's David Symonds from BNP Paribas. Could I ask about the bridging items quarter-on-quarter between the first quarter and the second quarter? You mentioned you expect a significant step down and possibly a more significant step down than you saw last year. I remember last year, there was an overproduction impact in Q1, which then sort of reversed in Q2. And I think you've seen that again this year. But maybe you could help us with the bridge quarter-on-quarter.

Yes. Thank you, David, for that question. Last year, you are right, that was an inventory buildup in Q1 and inventory drawdown in Q2. And when we had the ad hoc release, we also discussed this. One of the positive effects that we saw in this year's Q1 was that we did not have a negative inventory development, because we had a good production in Q1 this year again as well, yes? So that old dropdown that we have seen from Q1 to Q2 seasonally will also -- I mean, maybe not exactly in the same magnitude, but ballpark, happen this time because also production in this year's Q1 was good as last year.

Understood. And then if I do some sort of quick math on where you sit on the guidance, it seems to imply like at the midpoint, the second half will be lower year-on-year than it was in 2025. And I'm struggling to understand why that will be the case given that the midpoint assumption is that prices stabilize from midyear at a higher level than they were last year. I understand there's some freight cost increase, but it seems like the net benefit should be -- second half should be higher year-on-year.

First of all, you have the energy cost increase and you have the logistic cost increase, both low double-digit million amount burdens kind of for the year. And then for sure, it depends on the final ASP that we reach until the end of Q2 and which will then, on average, be stable during H2, yes? But the -- I mean, last year, the ASPs were quite good in the second half of the year. Yes.

So there's no special effect beyond ASP and then raw materials and energy, et cetera. Okay.

[Operator Instructions]. We have a follow-up question from [ Christian ].

Yes. Just a small technical follow-up. What was the reason for the rather high interest expense in your P&L of, what was it, almost EUR 60 million-or-so, and what should we consider for Q1 going forward -- for the remainder of the year going forward, sorry?

The rather high interest expense in the P&L should be related. I will check that and maybe come back to you. Could be related to the -- there are always -- yes, in the financial result, there are always changes with regards to the exchange rate. And as we have seen changing exchange rates that can be the reason. Within the cash flow statement, the cash interest was actually quite stable.

[Operator Instructions]. This concludes the time allotted for Q&A, handing it back to Christian Meyer of K+S for any final remarks.

Yes. Thanks a lot for your participation and your questions. And as we already published our numbers, that's maybe the reason why a lot of questions are already answered. And yes, maybe tomorrow, we have our AGM, and then we see you for the half year results soon. Thanks a lot, and see you.

This concludes today's Evercall. Thank you all for joining today, and have a great day.

Good day, and welcome to the K+S Full Year 2025 Earnings Call. My name is Barbara, and I'll be your Evercall webinar host. I would now like to hand over to Julia from K+S for some technical notes. Julia, you may now begin.

Ladies and gentlemen, also from my side, welcome to our call. We hope you had a chance to review our posted slides as well as our full year documents available on our website. After the opening remarks by Christian, we will jump directly into the Q&A session.

Some technical notes. Please refer to our disclaimer on Page 2 of the presentation. A note on data privacy. Please be aware that the Teams session will be recorded, webcasted and available as an audio replay on our homepage afterwards. People who ask a question in the Teams session should be clear that by switching on the camera and microphone, they agree to the recording and replay of video and audio sequences.

Now I'd like to hand over to Christian Meyer, our CEO, for the opening remarks.

Thank you, Julia, and to welcome from my side as well.

Starting with the quarter. Q4 EBITDA was 17% above the prior year quarter. Therefore, we reached the upper half of our full year guidance range. Firstly, this was due to better prices in both customer segments. Secondly, EBITDA was affected by a higher drawdown in inventories than last year. This resulted in a negative EBITDA effect, which was overcompensated by a positive FX effect due to our hedging. Full year free cash flow reached EUR 29 million. Full year CapEx, EUR 546 million.

In accordance with our dividend policy, we pay out 43% of our free cash flow and therefore, propose a dividend of EUR 0.07 per share to the AGM. In the Q4 impairment test, we saw a value recovery over EUR 484 million. Just to remind you, as long as we remain below the book value, there will be fluctuations with even minor changes in the parameters due to the long term of the valuation model.

Regarding our full year guidance, we expect global potash demand to rise again this year, following full capacity utilization in 2025. Potash prices are tangibly higher year-on-year, which will benefit Q1. Further developments will depend on the course of the spring season when demand from many regions must be met simultaneously. Demand for non-de-icing products in the Industry+ customer segment is also likely to develop positively overall in the current year. Here, we continue to expect moderate price increases for our salt products.

You have all witnessed the exceptional and prolonged winter weather we experienced in January and February throughout Germany and large parts of Europe. This has resulted in a significant upturn in our de-icing salt business. Therefore, we expect significantly stronger sales volumes than in 2025, assuming average winter weather in Q4 2026.

We expect EBITDA to range between EUR 600 million and EUR 700 million. This translates to a midpoint above the 2025 level due to higher potash prices in Q1 and the strong de-icing salt business. Free cash flow should at least break even again despite elevated CapEx. For the upper end of the range, we would need an agricultural volume of 7.6 million tonnes, excluding trade goods and a moderate price increase for MOP in Brazil during the spring season. This has to spill over into other regions and product groups and hold up during the second half of 2026. The lower end would work with a volume of 7.4 million tonnes and prices at the level of the end of 2025.

Just to give you some thoughts on the first quarter, which should see a better EBITDA than in 2025. We anticipate positive effects from our strong start in the de-icing salt business and higher potash prices. However, negative effects arise from the fact that Q1 is the last quarter with an effect in the year-on-year comparison due to the collective bargaining agreement, as well as from the significant inventory buildup that benefited Q1 last year.

In closing, I would like to briefly outline the outlook for the future beyond 2026. We will position K+S as efficiently as possible in terms of resource allocation, structures and processes to make the company even more robust also regarding costs. We also want to direct attention to our second pillar, the salt business. In addition to the potash business, the European salt market has undergone structural changes due to the permanent loss of Ukrainian capacity. Therefore, I would like to clearly state that salt belongs to our core business. We are focusing on operational improvements as well as further developing our product portfolio and market position.

Now I'm looking forward to answer your questions together with my colleagues, Jens and Julia, and I now hand over to the operator to start the Q&A session.

[Operator Instructions] This brings us to our first question. It comes from Christian.

Christian, Jens and Julia and team, just 2 questions. So I'll ask the first one and then wait as asked for. So looking at weather data we had actually -- can you hear me?

Can you put the camera on, Christian?

I can't put the camera on for some reason. I cannot unfortunately.

You can try, Christian. I believe that your camera has been activated.

Alright. Now you can see me in all my beauty. So yes, first question. So I believe looking at current weather data, we had a relatively early start to the, let's say, at least growing season in Europe in the Northern Hemisphere. How -- what are your salespeople telling you about current demand, how that is happening? And also, can you maybe make some comments about in that context, farmer profitability. Farmers are squeezed. I know that farmers are complaining all the time, but they are complaining. So how is potash demand panning out at this point in time?

Yes. So the potash demand, there we see a good demand as our competitors has announced that they are fully sold out for the first quarter, okay, it's already at the end. And that's also the situation for us. And also for the first weeks in the second quarter, where we also have a good demand and that we see more or less globally. And the affordability of the farmers, that depends on the different regions. In general, we can say that the farmers are still earning money with some ups and downs. And if you, for example, see the current palm oil price levels, that's a good and healthy level. And as you know, that's a potash eater crop, there we see also strong demands.

Okay. Perfect. Now my second question, I believe at the end of -- or at the Q3 reporting level, you mentioned the planned big maintenance for Bethune for '26. How is that coming along? And can you tell us about timing there?

That's in the summertime. That's every 3 years, there are 3 months maintenance. But we are on a good way to keep the production level or to increase it a little bit compared to last year.

And our next question comes from Ben.

Great. Ben Isaacson and my research house is Scotiabank. Good to talk to you all. I just have maybe a high-level question on just everything that's going on in the Middle East. I -- when we look at Q4, when we look at fall, we started to see a little bit of resistance to potash demand in some markets, whether it was in North America, a little bit in Europe. And so now we look at nitrogen that's kind of not doubled in price but moving meaningfully higher and presumably other input costs for the farmers such as diesel and whatnot will also move higher. How can we not -- I mean, do you not see a scenario where we could actually have a potash demand destruction in the back half of the year? And I noticed in your guidance, your guidance said that you've included or your assumptions take into consideration what's going on in the Middle East. So maybe you can start by talking about that. And what the guidance have been? Or how are you thinking about those paths for future demand?

Yes. Maybe make a real general picture. With regard to the situation in the Middle East, there are different stories that you can hear in the market. Based on the fact that the fertilizer prices increase, that the energy cost increase, normally, they say that you have a spillover effect also to the crop price, crop prices increase and then it's affordable for the farmers and makes sense to apply fertilizers. The others say, if the prices are too high, then the farmers won't buy any fertilizers, there you have no clear picture. At the end, I expect that we are still 8 billion people on the Earth that there will be a demand for food and that they will apply potash maybe with some volatility. But from our perspective, we don't think that this will have a real big impact on the volumes because we see a good strong demand in Brazil. We see a good demand also in Asia and in Europe and the U.S., we expect a normal level.

And with regard to the situation in the Middle East, from our position, it's important to know that we have a real low exposure in this market. So that wouldn't be a problem to shift or relocate the volumes to other markets. And also for the logistics, from our perspective, as we have sites on 2 continents, we won't have big impact, maybe some increases for the oil price for the logistics for the ships that directly go into the real prices with the formula, but this is an impact for all competitors. So that's not a disadvantage, not an advantage for us. And from the region, that's correct. If you have a look to the Strait of Hormuz, 45% of the sulfur has to go through the Strait and it's blocked currently and also a huge volume of up to 30% of nitrogen is coming from this region. So that there are different stories in the market, what effect that finally will have. But...

Yes. Can I -- just one follow-up and then I'll pass it on. This may be difficult to answer. But on a regional basis, can you talk about which farmers or growers are in best shape and which ones are most at risk of seeing pushback, not necessarily to potash from K+S, but maybe just in general.

Yes. If you go through the different regions, as I just mentioned, U.S. and Europe, we expect a normal base. But if you have a look to Asia, especially with the palm oils and so on, the farmers have a good situation. U.S. farmers are not in a great shape with the sanctions. But I think they will apply potash, especially based on the high harvest of last year. And in Brazil, we see a growing acres of the farmers and also a good demand. So we think that's in line with their profitability. So in Brazil, I would say it's okay. And -- but especially Asia has a positive outlook.

And our next question comes from Angelina.

I hope you can see and hear me okay. It is Angelina Glazova from JPMorgan. I have one question, but it consists of two parts. So I will split it in two. I wanted to ask about your SOP business in Europe. What is the environment in general right now in terms of demand? I think in the context of the Middle East situation, there is an understanding that quite a lot of sulfur comes from the Middle East and from the affected regions. So there is possibly an upside risk to sulfur prices. And in this context, I was wondering if you think there is room to increase SOP prices in Europe if that happens, just depending on the demand levels because those prices have been at quite high levels already, and it's not quite clear whether there is room to further increase them.

Yes. As you mentioned, it's very important that around about 40% to 45% of the global sulfurs coming from the Middle East needs to go through the Strait of Hormuz. So they are blocked currently. But at present, you don't see much increases for sulfur prices. But from our perspective, it will stabilize the premium that we had in the past on a pretty good level. And then we -- it depends finally how long it takes. But what's the difference between us and our competitors, the SOP producers, the Mannheim producers have the challenges to get sulfur physically and the risk where the prices will go. And on the other hand, the higher energy costs will affect their production costs too. That's our advantage from our side as we have the sulfur already included in the rock salt. So we don't have higher cost for sulfur or the physical deliveries. And with our gas consumption, we already hedged 70% of our gas that we need for Germany.

That is clear. And the second part is a very quick follow-up. Could you please remind us the exposure of SOP business maybe both in terms of volumes and also to the extent possible in terms of earnings sensitivity to price increases?

Yes. So it is 700,000 to 900,000 tonnes. That is the number that we are having. And therefore, the earnings sensitivity is quite clear, yes, with that number because price increases directly go through here. And with that 700,000 to 900,000, you know that we can always decide intentionally which way we choose, yes. So if we decide for the so-called SOP MAX, that just means that we have a lower volume in total, but we would only decide for that if it makes most sense with regards to EBITDA and margin expansion.

And in addition, it's important to know that the sulfur component is also included in our Korn-Kali and in our Kieserit, but on a lower level. The main effect will come from the SOP.

And our next question comes from Michael.

Yes, happy to do so. Hope you can hear me well. Michael Schaefer from ODDO BHF. So I want to come back to your outlook statement on the ag volume. So you are, I think, projecting an increase compared to last year's level, excluding also trading 7.5% is the lower end, which is even higher than what you reported last year. So I wonder where this is coming from, given where you are also with the major maintenance shutdown in Canada? And can you give us a bit of an indication to what extent netback optimization plays a major role in your planning i.e., more of the specialties maybe then on the potassium chloride, which we have seen in 2025?

So Michael, if you compare our outlook that we had given for 2025, you would have seen a 7.5% to 7.7%, yes. So 7.4% to 7.6% is still not kind of back at that part. And that is why the increased production-wise is totally possible, yes, with the 100,000 tonnes coming from Bethune. And now it's just a question of the product mix, yes, and we did not reach that 7.5% to 7.7% because we decided for SOP Max. And now it's -- the final outcome between the 7.4% and 7.6% will totally depend on SOP MIN or SOP MAX, not the increase in Bethune. That will come with 100,000.

Okay. Good. Understood. Second question is going back to what you what you flagged before, i.e., the overlooked salt business, which you have. So let's divide the question into two. Maybe give us a bit of an understanding. You talked about price increases and obviously strong volume evolution in de-icing. So can you give us a bit of an indication what kind of earnings contribution we should expect from those, let's say, non-de-icing and de-icing type of businesses underlying because obviously, you are not reporting that anymore, unfortunately, but just giving us a bit of a color here to -- on the sensitivities looking into '26.

Yes. We are very happy with our salt business. As you know, that we are not reporting the figures of the earnings, but you see it finally from the revenues, the increases. And as the cost levels are pretty close the same some smaller increases, then you can see that our earnings or netbacks are higher. And we have really low capital because the mines are pretty old. The book rates are written down. So we don't -- even have no high impact from depreciation, neither from CapEx volumes. We don't need higher CapEx volumes in this area. So that's a low capital intensity. And yes, the volumes coming from de-icing, these are not the highest prices or highest netbacks. So if we have high de-icing volumes, then the average price will go down. That's a normal effect. But in total, the absolute earnings will increase, especially if we are able to sell around about 500,000 tonnes more compared to last year with the de-icing business, but that has not the effect like pharma salt.

And our next question comes from Joel.

Joel Jackson, BMO. First of all, thanks for doing a North American-friendly call time.

Just for you, Joel.

I was interested in your FX assumptions where you're assuming a 1.2 exchange rate for the year, Euro-USD, but we're at 1.15. It makes a big difference on earnings. Can you explain that assumption?

Yes, sure, we can. So our assumption is 1.20 for the year. And obviously, we are hedged on a free cash flow level, but just only to some extent on an EBITDA level. So 0.05 lower exchange rate would end up in EUR 20 million higher EBITDA. So that's the sensitivity.

Sorry, the hedge, how much -- I may have missed how much are you hedged this year and at what rate?

Yes. So we have 70% on a cash flow level, so and the revenues...

On the FX?

On the FX, yes. So on the EBITDA level, it's around about 50% and the hedging rate is 1.14 for the worst case and the best case is 1.09.

And you're also 70% hedged for gas? That number is...

Yes, of course.

Okay. Just making sure. Okay. Second question I have for you is like obviously, sulfur is really extended here and might get more extended, and we all know why, and it was extended for March. Are there ways you can capture more because you've got a free use -- a free feedstock of sulfur that doesn't come to the Middle East. I mean is there a way you can -- you create a way -- unique way you can maximize the value of sulfur you have? Or is that just should we expect the SOP premium over MOP to rise substantially? Are you seeing that from customers? And you mentioned Korn-Kali as well, should we expect that premium to rise going forward?

Yes. With the sulfur, that's depending on the situation, if it finally will spill over to the prices. We have limited access to the sulfur because that's included in the rock salt and there we are only able to, as we just explained, switch between 700,000 and 900,000 tonnes with SOP. As I just mentioned, based on the current situation, we expect that the premium will be at least stable for the year. If there will be some higher impact that at the end, our competitors won't have access to the sulfur, then it could increase. But that's also depending on the seasonality when you need the SOP and in this situation, then the sulfur finally is not accessible.

And finally, are you worried about European potash demand? It kind of dovetails a bit of what Ben was asking earlier, but...

No.

Specifically, there's -- No? Okay. Will gas price [ rebound ]? I know the season has been late for fertilizer in Europe. Like should we be worried about it?

No. From Europe, that we expect a normal demand.

And we're going to move to our next question. It comes from John.

Yes, it's John Campbell with Bank of America. I've got two, please, if I can. Could you maybe elaborate on perhaps your potash sales mix by individual regions, say, in 2025, so presumably Brazil, China, Europe, maybe if you could lay out those percentages, that would be helpful. And also if you could maybe give any guidance kind of where you expect volumes to be settling in terms of the different regions in 2026 as well.

Yes. Okay. Pretty close, the half of our volumes we are able to sell within Europe. So euro-based, that's also very important for us. There we are independent from the U.S. dollar FX rate. We have around about 1 million tonnes to Brazil and a little bit lower to Asia. So yes, these are the main areas.

Very good. And any steer on 2026? Would you expect a stable?

Yes, we expect -- yes, it could be stable there we have some volumes to China and to Brazil, but there we permanently optimize our regional mix to optimize the netbacks. So there, we are able to ship, for example, to Brazil or to Asia maybe to keep some more volumes in Europe depending on the price levels. And that also depends finally on the logistics situation and the logistic cost because there, we have the big advantage compared to our competitors that we have lower logistic cost compared to the others with our routes.

Okay. Very clear. Second question, do you have any kind of sense or reading on the levels of inventory in some of the major markets. So I think in 2025, Chinese inventories were a big topic. Presumably, there's a lot of other bigger topics going on at the moment. But do you have any kind of updates in China and Brazil and India?

Yes. Starting with India, the inventories are pretty low currently. Everybody is waiting for signing that India signs the contract with others. We are not at the table for the negotiations. With China, they are catching up a little bit with their port stocks to their strategic volumes. But what we still see is a good demand and keeping the price level at a pretty high level for the cross-border deliveries from Russia to China. So that reflects finally that there will be also a good demand. And Brazil is maybe a little bit lower, but coming back to a normal level. But in total, there we see a strong demand, especially in Brazil.

And our next question comes from Oliver.

Yes. Research house is Warburg Research. My name is Oliver Schwarz, and obviously, I'm taking the questions one by one. First of all, I'd like to challenge you on your guidance, the upper end. You stated that in that guidance is baked in slightly higher prices, both at the beginning of the year and also a sustainable level of those higher prices towards the end of the year, given the situation in the Middle East. Obviously, let's say, shipping rates are bound to go up, bunker oil is getting more expensive. Shipping room is getting more scarce. Transport routes are likely to expand to avoid the bottleneck we currently have at the border of Iran.

You, other than your competitors normally don't communicate prices ex factory, but including freight and insurance. Hence, if the freight prices go up, obviously, the prices go up as well because that's just the past-through item for you guys. But on the other hand, the price for your product that you receive for the product isn't increasing despite the overall price increase. So what would you say we will need on top of the current price that you see, for example, in Brazil, the EUR 380 million as a sustainable level for, let's say, the average of the current year to basically reflect the likely higher transport costs.

Yes. Finally, maybe important is that the higher logistical costs, the freight costs based on the mentioned tax from your side, that every -- also our competitors are affected by that could increase the prices maybe furthermore. But what's very important, what we expect for the current year with for the upper end, a moderately higher price compared to the February level. So at the spring season that we see a moderately higher prices and that will be reflected or spill over to other regions and other products. And this moderately higher prices will also last for the second half of the year. That's very important. Then we are able to reach the upper end. And yes, with the higher freight costs, I expect that should be finally reflected because our competitors will be affected, too. So that will be compensated at higher costs and maybe other price [ locations ].

So in the outlook, we have basically based the outlook on the fact that we have normal shipping rates, then the prices need to go up moderately, yes. If you have not normal shipping rates for the upper end, they would probably need to go up a few euros more. It's not much, yes, for the full year and for the ASP to be able to get that.

Excellent. Second question is in regards to your competitors from Israel. Obviously, the route to Europe for them is getting more attractive than the route towards the south. Hence, are we likely to see more competition in the European market from those suppliers?

Yes, you are talking about ICL and the Arabian potash company from Jordan. Israel can use the ports in Haifa, but also go through the Gulf of Aqaba and Suez Canal. But at the end, the ships avoid to go to the East along Yemen also before the Iranian situation. I think that wouldn't change the situation. That's a competition like before.

Okay. Last question is on the, let's say, the impairment in summer and the reversal now in Q4. Obviously, that has very much to do with are those prices that -- or perhaps the prices you take into account for potash on a longer-term basis. Just to get, let's say, a feeling for the sensitivity of your model that you use to calculate the value of your assets. Can you just give us a feeling what you changed in your internal calculations to come up with, let's say, this chunk we saw now in Q4 that's basically written back. I mean we are talking about substantial numbers here. So what did basically trigger that reversal?

Yes. So we have different factors, and we name them all in our annual report through the years. And this time, we had a change in the WACC. So it decreased from 8.7% to 8.2%. And this has an effect of roughly EUR 500 million. That was the write-back we saw in the second half or in the fourth quarter. No changes with regard to the potash assumptions, they stayed the same. No changes there.

[Operator Instructions] And team, it appears as we have no further questions at this point. So I'll hand over the call back to you for any final remarks.

Yes. Thanks to all of you for your questions. And I wish you a real great springtime and a good Easter and see you soon.

Bye.

Bye-bye.

Bye.

Thank you, team. As a reminder, this call was recorded and a recording will be made available shortly after today's conference. Thank you all for your participation, and have a great day.

Welcome to the K&S Second Quarter 2025 Earnings Call. I will now hand over to Julia from K&S for some technical notes.

Ladies and gentlemen, also from my side, welcome to our call. We hope you've had the chance to review our posted slides as well as our Q3 documents available on our website. After the opening remarks by Christian, we will jump directly into the Q&A session.

Some technical notes as always. Please refer to our disclaimer on Page 2 of the presentation. And then a note on data privacy. Please be aware that the Teams session will be recorded, webcasted and available as an audio replay on our home page afterwards. People who ask a question in the Teams session should be clear that they are switching on their camera and microphone, they agree to the recording and replay of video and audio sequences.

Now I'd like to hand over to Christian, our CEO, for the opening remarks.

Thank you, Julia, and welcome from my side as well. Starting with the quarter. Third quarter EBITDA was above the prior year quarter. Firstly, this was due to better prices in both customer segments. Last year's EBITDA was affected by a drawdown in inventories, which did not occur this year. This resulted in a positive EBITDA effect.

Thirdly, our hedging brought us to a total positive FX effect, which was better than last year. Q3 free cash flow could also be increased from EUR 24 million to EUR 37 million. Regarding our full year guidance, we confirm the midpoint of our previous guidance range and now expect EBITDA to be between EUR 570 million and EUR 630 million. The expectation of a slightly positive free cash flow is confirmed as well.

For the midpoint of the EBITDA guidance, we assume that the average price level currently achieved in all regions and for all product groups remains stable during the rest of the year. This would result in a full year ASP of EUR 330. Although we are highly committed regarding our potash deliveries until the end of the year, we still have some flexibility regarding the exact product mix.

Furthermore, we assume normal winter weather, normal production as well as a U.S. dollar-euro exchange rate of $1.18 and a gas price at EUR 36 for 30% open position in Q4. We would reach the upper or lower end if these factors in combination develop in our favor or against us.

I'm looking forward to answering your questions together with my colleagues, Jens and Julia. And I will now hand over to the operator to start the Q&A session.

[Operator Instructions] And this brings to our first question from Christian.

Christian Faitz here at Kepler Cheuvreux. Christian, Jens and Julia and team, congrats on the results in a difficult time, low season period. A couple of questions, please. So my first question would be your D&A in Q3 was significantly lower than in previous quarters. I assume this is in context of the impairment you took for Q2, correct? And which D&A level should we model in going forward?

Yes. Christian, you're absolutely right. The lower D&A is based on the impairment that we had in Q2. So the base level now is much lower. So the current level that you could calculate for the other quarters.

Okay. Great. And my second question is, any news regarding the progression in talks about the tailing pile coverings.

So we postponed the roundtable discussions and now went further in the smaller group with the local municipality and the citizens initiative. And the aim now is to focus on reliable measures which we can implement and also put in our procedural applications. And yes, now the discussions are ongoing, and we are still confident that we will find a solution.

This is for Neuhof, I assume.

It is for Neuhof, yes.

Okay. And last question, what is the current run rate of annual production in Bethune? And where do you see Bethune gearing up to by the end of '26 in terms of production?

So in the current level, we expect a little bit more than 2.2 million. And in the next year, we have a big maintenance, and that's why we have a little bit more than this year, but not much more in the next year. But that's based on the long maintenance period. That's every 3 years.

And you know that we always ramp by 100,000 to 150,000 tonnes and next year will probably rather be a 100,000 tonnes year.

Our next question comes from Sebastian.

Sebastian Bray from Berenberg Bank. I have two questions, please. The first is on the volume outlook for the group as a whole for '26. Q3, it looks as if the group quite wisely cut some of the more commoditized volumes and went more for specialty. But I'm thinking about implications for next year. We have, as you had mentioned earlier to Christian, a little bit of maintenance at Bethune. Is 7.4 million tonnes a reasonable baseline? Or are there any one-off effects?

And how do you think of that is for agriculture? And how do you think about volume growth, if any, moving into '26? Because if we have some maintenance at Bethune, additional ramp-up of specialties at the MOP market, let's say, remains a bit more challenging, is there any volume growth at the group level in the year?

Yes, Sebastian, what's very important is the final volume finally depends on the product mix. If we have some more specialties compared to MOP, than the volumes are a little bit lower. But from today's perspective, we expect a little bit more volumes for the next year. So growth of at least around about 100,000 tonnes.

That's helpful. And can I ask about the salt business. The pricing has been very helpful over the last few years I think it is safe to say. Are there any signs that the pricing for de-icing salt or salt-like products more broadly is starting to flatten out or in some places, decline or that's not the case?

From today's perspective, not really. That finally depends on the weather conditions in the winter. If it's a pretty warm winter then it could be that's a little bit lower. But you should keep in mind that we are selling de-icing volumes over the whole year. So more than 1 million tonne is already sold. And so the rest finally depends on the weather conditions. If it's pretty cold, then the prices are better; if it's warm, then a little bit lower. But the general price level should be the same.

Our next question comes from the line of Michael.

This is Mike Schaefer speaking from ODDO BHF. Two questions from my side. The first one is more on the general market conditions in the potash market. Initially, into '25, we discussed a lot about production curtailments in Russia and Belorussia. So obviously helping to bring potash prices up. But if we look into rail shipment statistics year-to-date October, we see that basically volumes are up 10%.

So my question is, how do you see, let's say, the supply side from Russia? And how we should think about let's say, going into '26 from this source and what this is doing to the potash market environment in general in '26 from your perspective? This is my first question.

Yes, with Belarus and Russia, they are back on the pre-war levels and increased their volumes a little bit. But the main or the most important answer is that there's the demand. And that regardless of these additional volumes, we saw increasing prices, for example, also for the cross-border deliveries to China.

But also if you have a look to Brazil over the last 12 months, we have a much higher level in Brazil. And for the next year, we will see in the spring season when the demand comes from every region globally that we will see how tight the market is. So we expect still a good demand for next year. And if the supply -- we will see if the supply is able to fulfill this demand in the spring season.

Okay. Second question is more related to K&S specifically on the major building blocks for your cost items, major cost items in '26. So can you just remind us on how you -- you mentioned the EUR 36 price assumption for natural gas in the fourth quarter. So -- but how in general should we think about those energy costs and personnel, what to expect in '26 compared to '25?

Yes. In total, we expect that the cost level will be more or less stable. With regard to the personnel cost, you should keep in mind that the bargaining agreement was in place since the second quarter of this year.

So the next year, we have, in the first quarter, a higher level compared to this year, but the bargaining agreement will run until the end of the next year. So there will be no additional increases. And with gas, we already hedged around about 70% for our gas consumption, and that's a little bit below EUR 40 of the hedging position.

Our next question comes from the line of Tristan.

Tristan Lamotte, Deutsche Bank. I'm just wondering about Q4 and your ASP assumptions. I think you said EUR 330 for the full year, which implies quite a drop-off in Q4 versus Q3 even if you consider FX. So I was wondering if you could maybe talk through that.

Yes. So what's very important, I mentioned that we expect stable market prices from the perspective of today. We are at a peak, for example, with the Brazilian prices. That's also a little bit weaker currently. And you should keep in mind that the FX effects compared to H1 will also be -- is included in our calculation. And the third thing that we have some seasonality with regard to the product mix. So mathematically, that results finally in this EUR 330 a tonne.

And maybe second, I was wondering if you could maybe comment on where you think inventory levels are at the moment in potash in the different regions.

Yes. In the different regions, we see more or less normal levels if you have a look to Europe, U.S. and Brazil. If we have a look to China, there, we see that the prices for cross-border deliveries increased and that the port stocks are below the strategic levels of 3 million. They are around about 2 million. And so at the end, there are normal levels in total, maybe in total, a little bit lower than the normal levels if you see the global market.

[Operator Instructions] This brings us to the next question of Angelina.

I will have two. The first one is specifically on Brazil and the current market environment. Could you give us a bit more color as to what you're seeing on that market?

Because we know that potash is relatively more affordable compared to other micronutrients right now and demand has generally been good from Brazil, but still the farmers have seen some challenges from the economic side, and their availability to credit has become more difficult.

So have you seen any impact on your operations from that? And how are you expecting the situation to develop in terms of demand in Brazil due to this?

Yes. Yes, you're absolutely right. The general conditions for the farmers are still good. And from our perspective, we optimize our regional mix. So we have some better netbacks in some other regions currently. So we don't bring too much volume to Brazil. But the volumes that we are finally export to Brazil, there, we look pretty close on the payments and that we secure or ensure our receivables.

So from our perspective, we don't see a risk for us. And the general farmer conditions are pretty good. So at the end, that's more, yes, depending on different customers that we have a closer look, but in total, we don't see a risk for us.

Understood. And my second question is a bit of a follow-up to Sebastian's questions regarding volumes. So one of the things that we've seen, I think, over the course of the past few quarters, but particularly in Q3, is you're shifting to more higher margin product mix.

And I just wanted to understand to what extent do you have further potential to ship your product mix that way? Is it mostly down? Or you still think that there is some addition you can make in terms of SOP or maybe more broadly in terms of premium products?

Currently, we are very happy with the product mix, but there's not much room for more specialties currently.

Our next question comes from the line of Lisa.

This is Lisa De Neve from Morgan Stanley. I have one question. Against your expectation for rising potash demand in 2026, as you just stated, and your comment that Chinese potash inventory is maybe slightly below their normal strategic levels and their domestic production in China being quite restricted. I mean what are your qualitative expectations for the timing of the Chinese potash contract negotiations? And to which extent do you see potential for the price to be settled higher year-on-year?

What's very important to keep in mind the point I already addressed and you just also addressed, we are not part of the negotiations. That's very important to understand. For this year, everybody expect that it won't take too long that we see a Chinese contract compared to this year. So I can't imagine that we will see that in the summer or in the late spring, it should be earlier, but the rumor is in the market, but we are not at the table.

And if there are no more questions, we will conclude the call.

Okay. Yes. Thanks for your questions, and hope to see you on the road in the next weeks, and have a good day.

Thank you. Bye-bye.

Bye.

Thank you. Bye-bye.

This concludes today's call. Thank you, and have a great day.

In the third quarter, we increased our revenues and operating earnings. Additionally, I have been in close contact with many of our stakeholders, especially politicians over the past few months.

Overall, the third quarter was a typical maintenance quarter for us. In the agriculture customer segment, we achieved higher average prices compared to the previous quarter in both Europe and overseas markets. Adjusted free cash flow reached nearly EUR 62 million in the first 9 months of the year.

We expect capacity utilization in the global potash market to remain high for the remainder of the year. As the financial year has progressed, we can now narrow our outlook. We expect EBITDA to range between EUR 570 million and EUR 630 million. The midpoint of the range remains unchanged. We have assumed stable price development in the agricultural business compared to current levels. We have slightly lowered our sales volumes forecast for the agriculture customer segment. This is due to reduced production and our deliberate optimization of our product mix, among other factors.

We continue to expect slightly positive adjusted free cash flow in 2025. However, we still have the capital-intensive fourth quarter ahead of us. As a company, we are working hard to optimize our costs, structures and processes to strengthen K+S.

I was on the road quite a bit in the third quarter meeting with our national and international stakeholders. This included customers, investors and politicians in particular. When it comes to politics, it is important to me to emphasize repeatedly that the extraction of raw materials in Germany needs much more support. Securing the supply of domestic raw materials is crucial, not only for agricultural production, but also for most industrial value chains. For instance, the German and European chemical industries depend on a reliable supply of our products. I'm committed to finally making serious progress in reducing excessive bureaucracy.

The requirements that German companies must meet are stifling the economy, preventing investment and hindering efficient working practices. It is unacceptable that our company, a raw materials extraction firm based in Germany, often must wait years for crucial permits. This process must be faster, and it can be faster. Other countries such as Canada, where we also have production facilities are showing us how it's done.

I'm committed to reducing energy costs. Both the German economy and K+S are suffering from high energy prices. The situation is so dramatic that the future of industry in our country is literally at stake. Without relief from gas, electricity and CO2 costs, the German economy will no longer be competitive. Politicians must understand this and remedy the situation immediately.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good day, everyone, and welcome to the K&S Second Quarter 2025 Earnings Call. My name is Lucy and I will be your call webinar host. [Operator Instructions] I will now hand over to Julia from K&S for some technical highlights.

Ladies and gentlemen, also from my side, welcome to our call. We hope you've had a chance to review our posted slides as well as our Q2 documents available on the website. After the opening remarks by Christian Meyer, we will jump directly into the Q&A session. On technical note, as always, please refer to our disclaimer on Page 2 of the presentation. A note on data privacy, please be aware that the Teams session will be recorded, webcasted and available as an audio replay on our [indiscernible]. People who ask a question in the Teams session should be clear that by switching on their camera [indiscernible] they agree to the recording and replay of video and audio [indiscernible].

Now I'd like to hand over to Christian Meyer, our CEO, for the opening remarks.

Thank you, Julia and welcome from my side as well. I would like to start with some explanations about our 2 ad hocs in context with our Q2 earnings release. Starting with the first ad hoc. On July 14, we had to publish an ad hoc on an impairment of assets. This impairment negatively impacted our Q2 group earnings and ROCE. According to IFRS, we must compare our book value, which is the CapEx spend on assets minus regular depreciation to our DCF value. If the DCF value is above the book value, our maximum asset value is the book value. This leaves room to cope with changing estimates in prices, exchange rate [indiscernible]. If the DCF value falls below the book value due to an estimate change, our asset value will be regulated by the DCF value, which likely fluctuate every quarter. Therefore, our annual reports always include sensitivities for the impact of changes in the different estimates.

The last time our DCF value temporarily fell below the book value was in Q3 2020. At that time, we had to write off EUR 2 billion. Already 9 months later, the DCF value exceeded the book value. This required us to write back our assets to the book value. Our competitors' reporting is very different. According to U.S. GAAP, our competitors must write off assets but not write back. So these fluctuations won't be visible in their financial reports once they've been written off. Our impairment was mainly caused by the weaker U.S. dollar with the biggest impact on the DCF value now falling below the book value. We now use the rate of USD 1.20 per euro in our [ 150-year ] DCF model, up from USD 1.10 per euro.

The future reaction of potash producers and customers to the weak U.S. dollar against most currencies remains to be seen. These effects were not yet reflected in the external potash price studies by Argus used for the impairment charges. Additionally, BHP's announcement of their delayed production start came after [indiscernible] and this, therefore, not reflected in Argus price curves. Once you have decided on the long-term exchange rate, applying it to a DCF is faster than analyzing quarter and updating the forecast. The good news is that this impairment on group level will not have a significant impact on K+S [indiscernible] individual financial statements according to HGB as of December 31, 2025. Therefore, from today's perspective, our ability to pay dividends is not at risk.

Now some details on the second quarter. On July 29, we published an ad hoc with details on Q2, full year EBITDA and free cash flow. Despite [ wins ] in Q2 and having a weaker U.S. dollar-euro estimate than analysts assumed, we could confirm our full year outlook. Second quarter EBITDA was below the prior year and your expectations. This was driven by the one-off related to long-term mining provisions, lower sales volumes due to postponed shipments and the planned earlier start of the [indiscernible] maintenance and the U.S. dollar-euro exchange rate impacting earnings despite hedging, especially due to receivables needing to be evaluated with the spot rate on the reporting date.

Let's turn to the full year outlook. We are very happy that since the previous forecast was published, potash prices have continued to rise moderately. Therefore, we confirmed our previous expectations for the full year despite a weaker U.S. dollar for the remaining months compared to our previous outlook and your expectations. We still expect EBITDA to range between EUR 560 million and EUR 640 million with a slightly positive free cash flow. For the midpoint of the EBITDA guidance, we assume that the average price level achieved in all regions and for all product groups remains stable during the second half of the year. For the upper end of the range, prices would need to increase further.

Just to give you a sense of the phasing of figures for the rest of the year. Keep in mind that Q1 and Q4 are our strongest quarters due to seasonality in both business segments. As a maintenance quarter, Q3 typically has the weakest EBITDA contribution. Last year, it contributed EUR 65 million. We will see positive price effect in Q3 year-on-year but we will also see higher personnel costs due to the collective bargaining agreement as well as higher energy costs and negative FX effect.

I'm looking forward to answering your questions together with my colleagues, Jens and Julia. And I will now hand over to the operator to start the Q&A session.

[Operator Instructions]

This brings us to the first question of Christian [indiscernible].

So 2 questions. First, I noticed that in Q2, sales in Latin America were some minus 10% down year-on-year. How much of that is FX and how much of that is lower volumes? And in that context, how are volumes at this point developing into -- in Latin America heading into the key application season?

With Latin America, we had some lower volumes, mainly based to optimize our regional mix. That's very important to understand. And with regard to the FX effect on a cash flow basis, we are nearly hedged. But from the perspective of receivables, there we finally realized some effects and that's very important to keep in mind.

And on current trading/demand out of Latin America, how is that developing?

Yes. The current demand, especially from Latin America, we are currently at quite season. We are in between the seasons but we expect a strong demand also from -- for the second half of the year. And that's very positive. We are in between the seasons but we still see stable prices.

Okay. Perfect. My second question would be on the -- your smaller business. The refill business for the icing was pretty slow in Q2, obviously, on the back of a past mild winter. Would you see this coming back in Q3? Or would this rather be a Q4 event with possibly some more winter events kicking in against a low comparison base?

This -- the icing business, we expect a normal year for this year. As you already mentioned, due to the warm winter last year, the early procurement was a little bit lower. But for the rest of the year, we expect a normal [indiscernible] sales.

[indiscernible] come back in Q4.

Yes, absolutely. Q4 is the biggest one due to the upcoming winter.

Our next question comes from Michael.

Michael Schaefer from ODDO BHF. Well, the first -- my first question is rather on the supply side looking into '26 and what you see also currently for the rest of the year. I mean we started the year first half discussing on Russian and Belarusian supply curtailments. If my statistics are right, I'm looking at here, we are rather talking 12% up, the rail shipments year-to-date July. So I wonder whether you can shed some more light how you see the Russian and Belarusian supply evolving second half and also looking into '26? And maybe also related to that, what are you making out of the, let's say, in the meantime, approved import tariffs on Russian [ NTK ], how this is affecting your European business looking into also next year? And maybe also related to that on the supply side, the news from BHP, you mentioned this already deferring commissioning to mid-'27. So in general, the picture for '26 on the supply side.

Yes. Maybe starting with the second half of 2025, we still see a strong demand and we see high volumes from the supply side. But if there are some challenges from the supply side, then we won't see the -- the business won't be able to deliver all volumes that are finally from the demand side. With regard to 2026, we will see what happens in 2026 but we expect, especially from Russia and Belarus that they are very stable compared to the 2024 level. We will see some more volumes from Laos. We won't see any volumes from BHP, as you already mentioned. So additional volumes coming to the market, small volumes finally will be eaten up by the increasing of demand. So the market in 2026, we also expect that this will be -- the supply and demand will be in balance, some risk like in the current year from the supply side.

The second one is on your cost base. Also looking maybe into next year and the second half, you highlighted rather high energy costs. And hence, I think you also reported a significant decline -- increase in energy costs. I think, roughly 36% first half, EUR 60 million up compared to the first half last year. So now looking into current spot rates, which were -- came down significantly over the recent months in [ TTF ] and also what we have learned from the German government when it comes to gas storage levy, which I think will be abandoned starting 2026. Some more color on how you see your cost base, your energy cost base but maybe also other costs evolving looking into next year?

Yes, sure. So maybe for this year, we are hedged at 50% for Q3 and about 70% for Q4 at a price of EUR 40 per megawatt hour. So at the moment, we are profiting from a lower spot price but you also have to keep in mind the spot price you see have to be added by a surcharge of EUR 2 to EUR 3. So this is actually the price we have to pay. And with regard to next year, of course, we have already hedged a portion of 50% at a price slightly below EUR 40 per megawatt hour. And we would profit from the initiatives of the new government with regards to the gas levy. So this is a positive effect but we will remain at a relatively high energy cost level. So some at least but not that big.

Okay. And other cost items? So personnel, I think we should have seen -- I mean, starting April, we have seen the new collective bargain agreement hitting your P&L. So next year, probably not the same kind of order of magnitude of increase, right?

So the bargaining agreement is for 2 years. We have a increase of personnel costs, which is roughly about -- around EUR 10 million per quarter. So this is the effect we have already reflected for next year. And so we will have an increase in energy and slight decrease for next year in energy cost but stable personnel costs and all other factors remain the same -- at the level of this year.

And our next question comes from the line of Angelina.

This is Angelina from JPMorgan. I will have 2 questions, please. And the first one is a follow-up on the previous question around the market outlook for 2026. So you have commented on your expectations with regards to supply. And I want to understand a bit more on demand because it seems that based on what we've seen year-to-date, demand has been quite strong and the market has been able to absorb all the extra volumes that came out of Russia and Belarus from the year-on-year perspective. And also, we heard from your peers in North America recently upgrading their guidance expectations for demand globally this year. So with that in mind, how should we think about demand growth next year? Should it be slower demand growth compared to this year? Or do you think it could be in line with this year? Just to put it in context to the best of the supply picture you have described.

And with regard to -- you're absolutely right. We see a increase in supply but also on the demand side, we see the application of the additional volumes and that's very important. And with regard to the next year, we also expect that the additional supply will be finally eaten up by the additional demand. So we expect also for the next year an increase of the demand of around about 2% that would require round about 1.6 million tonnes in addition from the supply side. So for this year and also for next year, as I already mentioned, we see -- we expect that the supply and demand will be absolutely in balance with more risk on the supply side.

Understood. And the second question is more around the financials. So could you maybe give us a bit more context about how you think on the dividend right now? Of course, we have the dividend policy that it's a free cash flow-based payout and we have your adjusted free cash flow guidance for the year, which is slightly positive. But for example, given that you are in quite a significant CapEx cycle, free cash flow numbers can vary quite a bit because it's just slightly above 0. So with that in mind, how are you going to think about the dividend payout? For example, given that the market environment is quite good, would you consider maintaining the dividend in absolute terms somewhere close to the last year's level? Or in general, if you could explain how you think around that, it would help.

Okay. Yes, we have a clear dividend policy that we pay a dividend in the range of 30% to 50% of the free cash flow. And if you have a look to the consensus free cash flow currently, then you will end up at a dividend between EUR 0.06 and EUR 0.10 per share. The final decision we will make in March next year about the dividend. But you should keep in mind that we have announced that we have a high CapEx program with the Werra 2060 project for the next -- at least until the end of 2027 and that in total will finally be included in our decision.

And our next question comes from Oliver.

A couple of them remain. Can you elaborate about the price of salt -- of rock salt, given that demand is rather sluggish but still prices seem to hold up rather well. Is that something structural? Is that something that may pass? That would be my first question. Any thoughts on development and future development of the salt price would be helpful.

We are very happy with our small but very nice salt business. And we have finally higher prices compared to previous years and also better netbacks in total. And that we expect with the discussions we have in the market also for the next year.

Okay. Second question is about your long-term mining obligations. They have increased, I guess, using different interest rates could be the thing that was behind that. They seem to have -- also seem to have not only a balance sheet but also P&L impact. You said it was round about EUR 10 million. How does that work? I thought the P&L impact would be like the service costs. Is that still true? Or is the EUR 10 million somewhere, let's say, a residual of what happened in the balance sheet?

So the effect is twofold with regards to the effects in the EBITDA, this is at our inactive sites and that's not on the operating earnings or the operating expenses, so to say. And so we had different measures actually for monitoring and [ reconfiguration ]. So this was the smaller part of it with an effect on the EBITDA. And from the long-term perspective, we have a very long-lasting time period we are looking at. So this is also with regard to the DCF model. And if you change -- and you have a lot of assumptions in that model. And if you change any of this assumption, that could have an effect. And so it was, yes, so to say, an effect of different assumptions that have changed and that led to the changes in our balance sheet.

To be clear, the EUR 10 million, is that cash relevant in the P&L? Or is that a noncash item?

That's a noncash item.

Okay. And lastly, about -- obviously, the elephant in the room was the EUR 2 billion impairment charge. And that was according to you, triggered by the changes -- mainly in the changes of FX rates that you used. What specific -- I know about the [ 1.20 ], that's because you stated that but what's the source of that? Because you use that obviously for, let's say, your [ 150-year ] DCF. So what kind of FX rate -- it's not the spot rate, obviously. So what kind of assumptions goes into that [ 1.20 ]? And obviously, how fast can that change and what would trigger a change there?

Yes, that could change, as we have seen, for example, in 2020 and 2021, that was more price related but also there we saw some FX effects there in 2020, we also had 1.20 in the calculation. Where is the 1.20 coming from? We look at the spot rates but mainly on the futures for the U.S. dollar. And then you have to make a decision where the U.S. dollar will end up over the next years, up to the [ 120 ] years, that's a rough calculation. It's a clear calculation within our model. So we are absolutely in line with the previous calculations. And if you, for example, read the [ 100 plus ] from yesterday or today, there was a big discussion between the different FX experts. They see the U.S. dollar between 1.13 and 1.25. So with our 1.18, 1.20, we are absolutely in the range of the expectations of the capital markets. So we -- finally, we have to -- it's not the spot rate. It's more what happens within the next year, what are the expectations. And there, we are more or less in the midpoint.

And our next question comes from Tristan.

Just one. I just wanted to understand better your guidance for EBITDA for 2025. I think you said EUR 330 is your midpoint ASP assumption. But in Q2, I think we're already at EUR 336 and we had price rises in the second quarter, which I imagine will hit your P&L with a lag in Q3 and Q4. So I just wanted to understand whether you're assuming price decreases in Q3 and Q4 to come to that EUR 330 average that you're talking about? Or maybe there's something I'm missing.

Yes. Thanks for this question. What we expect finally for the midpoint is that the price level that we currently achieved will be stable for the second half of the year, as you already mentioned. What's very important, EUR 330 that we expect for the whole year is the basis that we see increasing prices, U.S. dollar prices, round about 50% of our volumes are exported to the U.S. dollar market. So the increasing prices will be eaten up by the FX expectations, U.S. dollar FX expectations. And the ASP doesn't include finally the hedging position that will compensate some of these volumes.

We'll now take the next question, which comes from Aron.

I have 3 questions, please. First, could you provide an update on the current situation at Bethune and explain perhaps if the logistic issues are behind us now?

Bethune, sorry? With regard to Bethune, we are in budget and in time from our current perspective. We are very happy with the additional investments we are now planning that as we explained, the ramp-up that we want the site to be ramped up to 4 million tonnes by the end of the 30s. And with 2030, we expect to be able to ramp up until 3 million tonnes. And there's nothing new. We are absolutely...

But you were referring to the ship that was postponed from the end of Q2 into Q3 probably and the logistics there. That is -- I mean, that is nothing special. We always have that ships can leave 1 day later. Yes. And we also were saying that we have logistical challenges in the second quarter but these were mainly in Germany with regards to low water levels. You know that we are not transporting that much via barges. It's a low percentage point. But if in Germany, there are low water levels, you have a higher pressure on the Deutsche Bahn system and we just felt that but it was not a big thing in Q2.

I believe in the ad hoc, you mentioned a longer-than-expected break at Bethune. That's what I was referring.

No.

No, no. That was just -- we started earlier with the maintenance. So we saw it already in June and not in July. That depends on the summer holiday season in Canada and then we optimize just the time when we are making maintenance. That's regular. You won't see any impact on the annual basis.

So we always have 3 weeks maintenance in the June. And this year, we did 1 week in June and 2 weeks in July. And last year, we did 3 weeks in July, yes and that makes the difference.

So that should provide a benefit to Q3 EBITDA in fact?

You still have 2 weeks in Q3, yes. So still a maintenance quarter but a little bit of benefit [indiscernible]

My second question is on volumes because your Q2 volumes were 100,000 tonnes lower on a year-over-year basis but you kept the guidance range of 7.5 to 7.7 million tonnes. So what factors should enable you to perhaps reach the upper end? We talk about stronger demand. So that could perhaps be a benefit. But -- or should we think about more on the mid- to lower end of the guidance today after what happened in Q2?

Yes. The -- with our volumes, finally, we see a strong demand. So from the demand side, we don't see any risks. And that's also why we think that we will be able to catch up the logistical challenges or issues that you have just explained over the total year. So we are very -- we think that we are very happy with the outlook for the volumes. It's a realistic outlook, Aron.

And final one, just on the cost. I wanted to follow up what you mentioned before. Am I correct saying so that you expect stable personnel costs in '26? Energy, you are hedged 50%, at 40% but you should be lower on a year-over-year basis if we remain at these levels. But then you mentioned flat energy costs, which were -- was referring to electricity. Is that correct?

So we didn't differentiate between the 2 portions. But I would say that's more or less [indiscernible]. But the effects for next year is very limited.

And team our next question comes from David.

Just a quick one on the mining provisions on the balance sheet. So you mentioned in the release that the interest rates that are used to discount this provision have significantly increased and yet the mining provision itself has also increased. So I'm just curious as to what are the moving parts in there, please?

Yes. As I have already explained, the different assumptions, you are totally right. We, to some extent, benefited from the higher interest rates or the discounts actually. But it refers mainly to the [ reconfiguration ] of our tailings pipes. There you have different assumptions and this reflects to freight rates to material, to the way you cover those tailings piles. And there we had changes. And with regards to the long period we are looking at, they are quite significant as we reflected in our balance sheet and the way that you can see there.

Okay. But there's no -- there's nothing FX related in there. It's [indiscernible]

No. No, [indiscernible].

And team, we have a follow-up from Oliver.

Opening the mic first, I learned. Just another follow-on on -- basically on future potash pricing. When you talked about the impairments, you also reflected on what is happening at your competitors due to the fact that the U.S. dollar is not the currency that's normally used as a cost item in the production of potash because that's located elsewhere. You said the supply will be probably outmatched even by the demand or will be even matched by demand next year. So the path should be clear for people raising prices.

However, I haven't seen any of that neither in, let's say, spot rates nor in the communication of your competitors yet that they are striving for, let's say, a compensation of what they will be losing due to the adverse changes in FX. And I also don't see that obviously reflected in your outlook, which was kept stable. There's no outlook by K+S on 2026 yet and I understand that. But when do you expect those likely price increases that you alluded to when talking about probable reversal of the impairment, probably also only partly. When do you expect them to kick in? That would be my question.

Yes. And what's very important to know that we are currently in between the seasons but you're absolutely right that finally, also our competitors are facing challenges with the weaker U.S. dollar. That for example, Mosaic also explained that their cost position is higher compared to the prior year because every competitor is producing outside of the U.S., U.S. dollar, not in the U.S. And all of them are finally facing challenges with the weaker U.S. dollar. So currently, we don't see it in the spot rates. But on the long run, we expect that there should be a reaction in the prices. When we will see this, you can't calculate directly the switch of the weaker U.S. dollar to the prices. But at the end, if you have to look to the earnings of all the competitors, then there's finally needed to increase the prices due to the weaker U.S. dollar. But I think at least if it will stay at this low level of the U.S. dollar, you should have seen that at least in the spring season.

And we have a question from Axel.

I just have a follow-up to the mining provisions. So these mining provisions have been relatively constant between 2017 and 2023, almost EUR 0.9 billion to EUR 1.1 billion. Since then, they have risen by about 40% to now EUR 1.4 billion. So the question is, what are the reasons behind that? So what is exactly meaning of [indiscernible] or tailings containment? And where is this provision journey going in the next -- in the mid- to long term?

So we're looking at a lot of tailings pipes that have to be covered. And there you have different concepts to cover those tailings pipes. Therefore, you have to conduct application procedures with the authorities and they give feedback on the material you can bring on, on the way you cover actually the [indiscernible], then you have different assumptions because we are looking at a very long period of time. And so we made several assumptions. And this is a process that is almost happening every year. Now the effects were a little bit higher but you cannot deduct from the development you saw now, the future increases in the mining provisions. You can also have the opposite effect. It's just the fluctuation we see almost every year. This year, it was great [indiscernible].

Very important maybe to add that we still expect cash outflows for the next 10 years of round about EUR 250 million. But that's because of the long-term projection we finally have over the [indiscernible] years.

[Operator Instructions] Excellent. Team, it appears there are currently no further questions. This concludes the Q&A and today's call. Thank you all for joining today and have a great day.

Thanks to all of you.

Thank you very much.

Thank you. Bye-bye.