Earnings Call: Q4 2019

Mar 12, 2020

Welcome to the conference call of CECOSF. Regarding the publication of the annual report 2019 hosted by CEO, Doctor. Bogart Law, Thorsenberger CFO and, Jup Neiman, Head of Investor Relations. During this call, you will be on listen only, but you have the opportunity to certain questions on the webcast system at any time. We answered at the end of the presentation. Please note on Page 24 of the presentation you will find for disclaimer. I'm now handing over to To begin, Analyst Conference in Frankfurt and on play it during the financial crisis. But it keeps us 1,000,000,000, we see that in the key development and all of you on the market and Let's begin on slide number 2. Beginning of December, cited on our package of measures to reduce debt. Under the prevailing market conditions, it became increasingly clear. I'll be able to reduce this significantly. Solid, solid financial basis, companies facing and hoping for better conditions, have an option for us. Package of measures include both operating units and of course, Further increases in productivity, but just as much As the implementation of future oriented solutions, environmental areas, We begin examining the measures option available to us. As you can see from yesterday at Haagenon, aim to completely sell our operating units They will be accompanied by a comprehensive data restructuring as well as a new dimensioning functions, the aim of a strong reduction of costs. Will further advance our efforts to increase efficiency and productivity in our plans to reduce costs even further. Also, we are working intensively on intelligent, future oriented solutions to fulfill our environmental obligations with lower costs. In this way, we will ensure that all types achieved a sustainable positive free cash flow. How will the new K Plus F look like? The lean and performance oriented supplier of fertilizers and high earning specialties with a solid financial base. Now let's turn to Slide 3 and take a look at our operating unit in America. Strong cash flows, characterized this unit, by close to our customers in North America and low cost productions in South America. The strong brand with high emotional consumer loyalty. The umbrella girl of Morton Salt, in particular, has been a trademarked 1,000,000 of American households for more than a century. The brand, Fintur, and Canada, as well as Salobo and few Southern South America also process with strong brand value in the corresponding regions. Based and gentlemen, this HealthPlus platform is unique worldwide. All operations have been assessed and a full divestment of All options have been assessed. And the full divest, the first divestment of the operating unit in America has been identified as the most value generating option at all. We have already started the sales process and has many methods in different banks to assist. The range of interested parties is already extensive, following initial discussions with potential buyer, we are confident that we will be able to reach the signings before the end of this calendar year. Now we come to our operating units, Europe plus Ladies and gentlemen, our new Bethune plant in Canada is one of the most modern potash production facilities in the world. It's a very valuable asset as an integral part of the future of Catalysis. According to our rescue, the sake of share is not planned. And the focus is even more strongly on our core business, the operating unit Europe plus reduce the complexity of our group and sales noncore activities. As announced, we have implemented the 1st measures direct. For examples of this are the sale of the Baltic Train the logistics sector and the waste management subsidiary in Switzerland at the end of 2019. Aimed to generate sustained positive free cash flows at all times. For the Bharat side, we will realize the environmental goals agreed with the FGT visa more cost efficiently by means of more intelligent solutions. For example, we want to achieve optimized product mix to improve the way we operate, resulting in less liquid residues. Another example, we are working together with external partners on various concepts for converting hollards, covering our tailings files. The aim is to achieve a faster reduction with water while the tailings files significantly lower costs. Over the last eight years, we have had to shoulder a total amount around 1,000,000,000 in investments are a mental measures at our German significant reduction. Please turn to slide 5. Based on the numerous measures, just described, we intend to reduce our debt by well over 1,000,000,000 by the end of 2021. In terms of rating, we want to use this app to create the conditions for achieving a stable crossover rate. Crossover refers to the area marginally below investment grade, the solid financial position. With this new lean and performance oriented company, we'll become a premium provider in the fertilizer business We'll mainly also focus on the range of high earning specialties that will continue to grow in this area. As a result of the reorganization orientation, we have a solid financial base will become less dependent on pricing and in future with increasing share of facilities also on the MLP. The recent path confirms that this is the right path to take. We'll now hand over to my colleague on the Board of Executive Director, Thorsten Burgers, who will present further details on the financials of 2019. Let us continue on Slide 6. We did our homework on important items that kept us busy in 2019. Our Bethune plant, we made significant progress by implementing puddings, training and grinding equipment. Product quality has now reached a high level expected by our customers in wholesale. Bogen and I were able to see the progress we made there with our own eyes a few weeks. We have also managed to get the waste water related issues in Germany under control. Despite another dry summer, we were able to avoid weather related production downtimes. For the first time, we have set up an underground storage facility for saline wastewater at our windowsill site. In addition to our ability to transport brine to off-site locations, has increased our storage capacity to a total of 1,000,000 cubic meters. It enables us to successfully bridge price basis and gives us stability in production. Against this background, we do not expect late quarter related downtimes at our para plant going forward. In my opinion, the biggest success of 2019 was our cash generation. For the first time since 2013, generated a positive free cash flow, 1,000,000 the value was clearly above expectations as we have fulfilled our comps. We also made good progress in lifting synergies, we have already realized more than 100,000,000 in administration procurement, logistics, production, sales and marketing. We are therefore well on track to exceed our synergy goal of $150,000,000 run rate by the end of 2020. This will also help the new cater. Looking back at market developments in 2019 starting on Slide 7. We were happy with the first half of the year and the course of the second half, however, in general conditions for large parts of our business firms south. In H1, some events caused minor disruptions on the potash market, for example, flooding in the United States. However, these events would not have led to a severe instability. The main reason for market weakness from the second half of the year onwards was the import ban on MLP imposed by China. Has resulted in falling prices and lower demand in other important overseas markets too. All producers worldwide have responded to this by cutting back production. The potash industry as a whole, production was reduced by about 4,000,000 tons, We also contributed with production cuts in Canada and Germany of about $600,000. Slide 9,000,000 tons, sales of de icing sold for the year as a whole were in the range of the so called normal winter. By demand was above average in the first quarter 2019, we licked a good winter in Europe in the fourth quarter. This is the reason why we felt 1,000,000 short of our guidance of around 1,000,000 announced are mainly driven by the reduced potash production and the lower sales volumes in de icing compared to Q4 2018. We also suffered from lower prices for MOB. On a full year basis, we achieved slight growth in revenues and earnings, At 1,000,000, our EBITDA was 6% higher than in the previous year and therefore improved for the 3rd year in a row. We will propose a dividend of $0.15 per share to the AGM. This compares with $0.25 a year ago. The payout ratio of 37% would be slightly below our target corridor of 40 to 50s. This reflects our cautious outlook for 2020 and will also contribute to our package of measures. We come back to the cash flow again on Slide 12. We are proud of our pursuing plan. However, investments there, together with the high environmental CapEx in Germany led to negative free cash flows for KPLSS in the years 14 to 18. 2019, this number improved by almost 1,000,000 compared to 2018. Main reasons for this very good development are our strong focus on cash across the group and optimize working capital management. A good cash flow development also had a slightly positive effect on the leverage. We finished the year at 4.9x net debt to EBITDA compared to 5.3 times year over year. Progress was even stronger during the year. However, also stalled by the development on the Polish market. That concludes my look at the financial development. Ladies and gentlemen, we'll now come to our current market assessments and outlook. Some industry observers have assumed that they could see an increase in potash capacity over the creating an excess supply in the market. However, a closer look, this effect makes it clear that there is a large gap between plan and potash projects have been announced worldwide. Thirdly, we see a high probability of just 6 of these projects being implemented by 2025. 2 projects are currently being ramped up One of them is our best bet to plan in Canada. The demand side, and this is confirmed by all market observers. From trends remain intact and it's due and it will increase in global potash demand. Drivers for this continue to be global population growth and the need for an optimal supply of nutrients to oils in order to increase agricultural yield, amount of arable land is declining at the same time. Therefore see a rather balanced relationship between client demand, turn and do not expect an oversupply on the data, we assume global capacity will level off and the long term average over the next few years definitely as capacities the market due to damage your plant closures and uncontrollable water inflows. I'll please turn to The general conditions for the current year 2020 underline a long term assessment of demand. The case of cereals, for example, demand is increasing, prices remain at an attractive level. This is likely to lead to an increase in the acreage under cultivation in North America and Brazil. In addition, the agriculture sector is currently in good financial shape. These are positive factors that should also favor demand for fertilizers. The market weakness of potassium chloride that has been observed since the second half of twenty nineteen is currently being felt primarily on overseas markets. That's so on our home European markets. Is the price level is providing to be significantly more same applies to fertilizer specialties such as potassium sulfate, with more expenses. There would be a significantly more stable price trend compared with MLP overseas. Both our broad regional base and our strong market position in the case of fertilizer specialties are our plus points in the current market situation, which help us to manage this difficult This brings us to our forecast for 2020 on Slide 18. Forecast is complicated because of numerous uncertainties. There's still a lack of orientation on overseas Polish market, especially because the important contract in China. In addition, the effect on the coronavirus cannot be predicted. However, from today's perspective, assume that MOP prices will bottom out with the start of the fertilizer season in the northern hemisphere in spring. This would translate into an average price slightly below the Q4 twenty nineteen level reflected in the midpoint. 2nd half of twenty twenty, we expect prices to stabilize significantly higher levels Upper case, we expect average prices for the customer segment agriculture, level of 2019. 2 of the green winter, we expect that the low average de icing saw business in the first quarter of the both here in Europe and in North America. This will then also be reflected in the low average early field business in the second And Third Quarter. Since this backdrop, we expect our operating earnings to be a for 2020 to be in the range of 500,000,000 to 620,000,000 Nathan red, let me finish and summarize the most important points on Slide 19. Thank you, Geoff. We reduced our debt by well over 1,000,000,000 by the end 2021. This will create a solid financial basis that will secure the future viability of our company. And UK pluses and BLEAN performance oriented by our fertilizers and high earning specialties. This realignment will be debated for global growth. For example, in Africa and China, and for the further expansion of our high earning special needs business. I'm thinking here of the topic of verification, pharma products and industrial applications. Final slide, those tax, the ESG index. We are proud member of this that shows an underpins our inability with all our ambitious scalability targets are paying off Thank you very much for your attention. It's actually because it was more extensive today than usually now looking forward to the questions. Alright. Thank you. Two questions, as a start, please. 1 by 1, please. 1 by. Okay. Thank you very much. Okay. So, can you, kind of bring home to us what led you to the decision not to partially, sell or IPO, the America's unit, a lot of now doing a full sale and Keith Matthew, on a 100% control. I just went through that to change and thank you. Thank you. That's a very good one. We, 1st of all, have a history of huge investments. More or less result of acquisitions in 2000 have any investment in that soon. We also The environment that we have seen in the past couple of years And we have created 1st ideas. Last year, we have further worked on that for us. Yes. Market cuts and assets and we realize that they are cut. Following of the positives, 1st of all, the highest Secondly, it's increased volatility of such a transaction. Thirdly, we'll give us the opportunity to start from scratch and find the company that I've just described Let's add this first. Back into the free cash flow of positive And it gives us the opportunity to speak to Hello. I've been talking about cash flow. Can you talk about the cash flow situation for a married cost? How can we think about cash flow? Can you get back there of about 100,000,000 Thank you for taking my questions one at a time. Can you fill me in about the reduction in the long term mining provisions of about 10% in 2019 versus 2018. That's what I've indicated high speech that we have created a lot of ideas, but with our obligations, What's the reason for this already? Parties, that's legal because we are talking about the huge coverage measure and network models many years. So this concept behind how to cover our but there is more potential to come. And secondly, can you fill me in about your thinking about able to reach a more than 2,000,000,000 reduction and The current market situation and your closest peers, compares now trading well below 10 times EBITDA. And, next to that, how you come up with the crossover rating as a as a, contact lens of this pass behind that would be helpful. Thanks. First of all, and we are talking about records of measures. The biggest measure is And, this tickets will, cancel Yes. And we also current situation will not us into it because we are talking to that this they are that even though it's in the current situation, And it's not only on your Americas. In total, if you take our net financial debt and deduct this, you I deduct, let's say, these EUR 3,100,000,000 by the, let's say, EUR 2,000,000,000 plus I end up with in the range of it will take 1,000,000,000. If I take a cross over rating net debt to EBITDA of perhaps 3.5 times, I'll end up with prospective EBITDA of the ballpark of 300,000,000 lower than I would have expected for 2021. Confirm that that is your thinking, or am I missing something? We didn't say that we would interpret it. So it's strange 300,000,000 for sure to know. Yeah. But taking investment grade ratings, the time I would end up in at roundabout $340,000,000, which is not that far off on the $300,000,000, right? We are now mixing net financial debt and net debt. Okay. Looking into what we have the difference between the two numbers of roughly $900,000,000 of our long term provisions. Net financial debt is a number of So just to clarify, the basis of your calculation is that financial debt plus pension provisions, plus the long term provisions for the mining obligation. Is that correct? It's a definition of net debt. Correct? Yep. 1 or 2. Yeah. Thank you very much. Next question comes from Michael Schafer, Commerzbank. Thanks for taking my questions. First one would be, on the cost cutting side, you elaborated on the give us an idea on, on, let's say, the order of magnitude you are targeting, timing, associated costs and what makes you confident to point to my calculation to bridge to 100,000,000 negative free cash flow, she would end up with So how can you bridge this to skip over the time in order to make it free Fiska Hall, we save significant amount on interest payments. Average secondly, in the position now to give you a precise number about our reorganization, which will more or less take place in the SG and A area. If you have flavor, K plus S without all your Americas here, we are talking about a G and A cost of roughly 1,000,000. We are talking about a significant So there is potential. Maybe on the back of, I mean, you're looking into the CapEx side of things, close to something at 500,000,000 last year CapEx and Since we are ahead of the splitting, we we take advantage of the OU Europe, which was something Last year, but maybe can you paint a picture on how should we think about CapEx evolution or back up on the environmental measures you could still have next 2 or 3 years. So out of CapEx space we So Miguel, let me start with this year. We expect for this year's significant increase in the CapEx year over year. It has to do with the accumulation of detailing site expansions. Then cut out for the next year is about $100,000,000 of CapEx more or less for the OUM. And Bogart described that we are also working on, bringing down CapEx for environmental investments significantly. We will see a significant drop from these levels in CapEx. We always said in the past that we need and sustainable CapEx of about CHF 400,000,000 to CHF 450,000,000. This included the OU Americas It's your ballpark, a ceiling of weather CapEx. And my third and last one would be on the guidance, you assume basically SDIC ASPs recover in half makes you confident in Bank of Chinese contracts, which Alright. And it's not only us for, 1st of all, who's expecting that come in understanding in the market and that has bought the case back in 2016 as well. The way we have faced a very similar situation We all know that we are then went into a rally for 18 months, which bring us to $3.50 in Brazil. We have not assumed such a scenario in our models in our forecast, but it's very, very probable that, once we have the new contract, we will see turnaround situation. And so one thing makes us confident that the parties at least talk. We heard about discussions between canadians and the Chinese. And before that, there were obviously some video conferences, the Belarus and the Canadians. So at least there's some movement does not mean that there will be in a couple of days in your contract, but the process is starting. And we shouldn't forget India. India is in a much more solid situation and they have a need to Next question comes from Thomas Swoboda, Societe Generale. Thank you. One question on the remaining sourcing. What has led you to? What do you have explained? To cough out. Hi. So what have led you? Both business is a local business and the European entities almost have no direct business to 2 Americas and vice versa. That would have been a second transaction First reason. Second reason, we are making money there. Yes, we are looking into the de icing salt in Europe. For sure, we have to look into it critically, of course, that is not the 1st warm winter in Europe. Would assume that this is more or less, the new normal. And might take, actions on that, but we have a whole range of products, high earning, high return products into the chemical industry, into the pharmaceutical industry, we have established we are about to establish nice brand for the Duo. I hope you all have some of that product at home, with, very promising, successes in terms of being a strong competitor too, but Raish and Sahala. So, as this would not have been part of the America's transaction anyway, the look into the European salt business is part of the rest of the measures. And here the focus is de icing. I can follow-up question and I think for the CFO. Question is. So I would like to stress the not only the receivables line, but higher cash focus of just right. So we are talking about timing of cash outflows when it comes to tax payments. So there's really what we have achieved over the last 2 years in the group is people think of cash flow, whatever they do. Just of revenues and earnings. And this is one effect, for example, there are no one offs to answer this. But we had a strong focus Also, again, in the fourth quarter, get the money in from the customers. So our people, our controllers, our salespeople work together and really reminding people we want to pay you now. We think there is more potential. We haven't touched fee virtually. So from that point of view, I wouldn't say that this will revert in 2020. We see further potential in order to get the optimized working capital. Not only receivables. That's just one thing. We could also be process wise to become better there. But we are also now looking at better inventory management and also at on the DPO side. So our procurement is very, very much focused on right balance between getting discounts, scondor, and the right payment terms. So I think we are not yet at the end. Next question comes from Oliver Schwarz from Marvel Research. Sorry, I have so many questions. So I'll try for another one. Can you, Mr. Pekka, can you please elaborate about the impact of on the factory shut down at your potash, facility is on the working capital progression. How much that was affected by the, not the favorable That would be my first one. I mean, with a look into the balance sheet, I think I can this because when you see, we make progress in the on the receivable side. Where we saw an increase in line was in the inventories. And this was because, produce, we couldn't sell And so inventories increased from 700 Thank you. I'm still I'm sorry for that, but I'm still trying to wrap my head around your your guidance in regards of achieving a stable crossover rating. Using, additional provisions grown about 200,000,000, mining provisions grown about 900,000,000 and prospective net debt of around about 1,000,000,000 I'd come up with a number of people take $2,100,000,000. As I said, BBB raising what's, require you to achieve 700,000,000 in EBITDA based on that numbers, so a bit less for crossover raising, but that's still substantially more than is to be expected, from the operations come this year. As you are guiding, below last year's level so that would imply a steep increase in in earnings of the of the European operations come 2021. Especially as, cash flow might be burned by cash costs for the upcoming restructuring measures which might or might not burden over to 2020 or 2021 cash flow. Could you falsify on my my my thinking or whether that is correct. Try to verify, and there's no need for questions. Let me start with what we said. We you're so focused on the 2,000,000,000. That's significantly more. We have the entire package of matters covers more than 30 single initiatives. We expect to generate cash from. Some of them are also focused like Bogart said, especially the coverage of the tailings files are focused on the application. So you should keep this in to consider And, we have an addressable spend in administrative costs. Loan of $180,000,000. Just to give you a flavor of what is addressable. And when we talk about the solid crossover rating, I mean, depends on the definition, right? When we look at our just the net financial debt numbers, aside all provisioning, achieve a number of about three times in order to. And when you take the S and P definition, this starts already with 4a half times and with the measures. We're pretty sure that we're not going into too much detail there. Good afternoon, everyone. Thank you. You're welcome. 5, it's your turn again. Just one question, please. On Bethune, you said the quality is up to speak now, is that, my it was always the focus on the pudding in the summer, not on human summer, and and of such a lot. So would you believe that, during the summer periods, you will also not have taking issues? Yes. And, we we saw the product, in Brazil, where we have summer now. And not only when it came into Brazil, but when it was sitting for 6 weeks in the warehouses, and it was still perfect. And I saw that face of our customers, they are now happy. That is granular. And the standard product is more or less the main product, which is supported by our PKU and the initiatives for cooling and seeding is finished and it's ramped up and it's on a very good path. So there's a good reason to believe that this is history. And it's not only which we'll think improvements, our customers have given us respective feedback and this will not change over summer in, in Bethune. Okay. There are there is one question from questions from, Microsoft, Commerzbank. K. Thanks for taking my 2 follow ups, basically. First of all, I'm coming back to the TransAl business. You've indicated rather weak 8000000 to 9000000 on the back of the warm and or green And so last season on the back of strong demand, you saw it in some regions. High single digit price increases. So going through the season, I'm now looking into the next season on this that was probably sitting around there. Is there a major risk basically from your perspective that we see a reversion of those prices back to the year last year or beforehand. How does this basically the point of view in the process? First question. Now of course, after such a season, we have, by far more pressures in the bits that will lead to lower prices. We have already in corporate parts of that or in corporate that in our guidance And also, we expect the lower periods for early field activities. But that's the business we have been running through for years, will it be double digit? I don't know. We know that, some areas are more stable Canada was again not as weak as other areas remains to be seen. My second question is on the historical purchase price of data. You're about to sell of areas correct, you let them and American business total purchase price everything around You can remind us what And so the 1.6 only covers one part that is Morton and Windsor. There was another 385 or something 1,000,000. The other time today, k plus s Chile, the, I think, this can be seen in the, in our accounts. We're talking about 23 €0.5 per share book value for the Americas. Is this correct? That is only the book value. And you will understand that we are not giving any indication what we expect as a purchase price. Either way, is it an important and when we talk about significantly more than 1,000,000,000 proceeds that is already net? Office of Texas. There's one more question from. Unfortunately, more than Well, we will the, America Plus business, sorry, the Americas business, will that be recognized as discontinued business, following your statement of, the client sale of of the business. Hence, will we see a restatement of the just published annual report? In the not too distant future. Our Head of Treasury is trying to give me signals. Your queue want to answer the question though. Okay. Secondly, could you confirm that, the restructuring measures won't start in full force until the divestment has been completed because you're likely to need the administrative stuff that currently covers, the needs of the Americas business. Alan, good question. We will start with the design immediately. What do I mean with the designs? The approach will be the following. We look into our remaining tight. We take a cautious assumption about market environment. For example, potash price, and we define what the what how high could SG And A B is what are what is the load that they can cover and carry? And that is how the budget will be the budget for the new CNA dimensioning. It will be very lean. And, with execution, you know, First of all, we have to talk about with our social partners, etcetera. So that will be, in parallel in a way with the execution of sale of all your Americans. Thank you very much. And completely unrelated to this topic. Can you quickly elaborate on, profitability or, let's say, price movements in your workforce. The, last year, the European fall business or high school because, with the very warm winter winter tab. I could assume that prices, especially for the ice installed might be under severe pressure and inventory levels at customers, especially, municipalities in EuroPIP more or less at a record level. Thank you. Like in our potash business, the prices for the icing in Europe are significantly more stable than in the America. So in in good after good winters, we are not gaining double digit amounts, and we are not losing double digit in bad winters. Obviously, the municipalities are giving that product a value and they're going to stop so dependent whether the volumes are big or lower or the inventories are are high or low. And so we have a quite stable situation here. So the factor who drives our earnings is more or less the volume. Thank you very much. K. There are questions now from the webcast system. Note that we will Autobe hires. In terms of your planned sale of the salt activities, Could you please comment on the feasibility to complete the sale by year end 2020 in light of the difficult market and potentially constrained funding access for an acquirer of the salt activities. This belongs to how many potential acquirers are on your shortlist and thus the list includes strategic and financial investors. Hopefully you're understanding that I cannot be too precise here. It's a running, running, transaction, and, it would be to our disadvantage if I would come to precise here. But I can't say so much that, after the press release in December, we have seen significant interest, in number of interested parties, and some are very impressive. And we have not even started with marketing. If we look into the list, there's no question, but they are able to finance such a transaction that makes us so confident that even in times like that, we will be able to Fine, before the end of this year. Mr. Michael Schmidt has, as an key indicated to K plus s, that without the sale of the salt activities, it would be downgraded to D plus aim is the assumed decline of EBITDA in 2020. And this is this eventually the reason for the change of your divestment plan for so is saleable minority shares so far? Basically, no, we are of course in a continuous exchange with SMB. Appreciate that we're doing since our commitments to leveraging, but this was not bigger for our decision. In terms of valuations, I look at Compact Minerals, which trades currently at a forward Eli EBITDA multiple of 7.5. The company has a materially higher profitability than the Ameritas unit. So when a 7.5 from times multiple would be applied to your salt activities. I derived at a cash in of about 1,700,000,000. Where do you take the complex from to collect? I'm not commenting on price discussion of the asset for the reasons I just gave you. Yes. Question comes from Ryals Kuglstadt from RK Research And Consulting could K Plus ST consider the take over targets given its distribution Springs in market share in Europe on the one hand and the medium term option to replace German production with Canadian, Russian or Belarus. You cannot, you can never rule or take over a situation especially not in times like that and especially not with the share price like that. This gives me the opportunity to comment on not every takeover situation. It's a takeover situation where the board would say no. Back in 2015, that was a clear breakup situation. There's no, advancing around that anymore. The former PCS guys And here, we had to say no, but there could be some patients where it is logic. But one part of that question, I have to refer on the there's no possibility to compensate our German production with Canadian production because the Canadian production is purely MLP. The better with production is purely MLP that they have started now with very small amounts to enter into to the specialty business, but and there is no compensation. You would take 100 of 1000 of specialty products out of the market. Ever I don't know. Michael Schafer, do you have another question? You may be a follow-up and you may comment on this. Yes, on the disposal process, for us today, on the virus on from a balance sheet press conference. Good morning, were you elaborating also a industrialize all companies potentially among the interested parties. So what you, I wonder whether you can shed some light on how you would e to the Chicago authorities view things where the industrial players Only thing we said this morning is same that we said earlier here, we are seeing a group of investors and others. All I can see. There's another question from Oliver Schwarz. The fate of, Chinese salt operations and the planned project for Australia. Can you quickly flatten on that? To my understanding, China is part of the Americas, so that should leave. I'm not mistaken, but what about the planned project in Australia. Thank you. Members of our Holger Americas team have different that process so far, but it was still open when it becomes in operations, whether who would lead this project. So, not part of the transaction. We continue to develop that project, and we still have the capacities to do. And we are on a very good path. 1, can I elaborate on the tax rate for the Americas? Oh, and look at our head of, accounting again. Year, 21%, 22%. So basically, the tax rate for the remaining group once the Americas are consolidated or, let's say, shown as So up beyond the 30% that you guidance for the group Sounds lovely, yes. Thank you. We have a question from Joel Jackson, DMO. You assume 700,000 tons of potash at the PD demand growth for K Plus S in a year in which demand is expected to grow 22, 2,2,500,000 tons. Yet, EuroChem has more volume. Euro Carley built 1,000,000 ton of inventory and your global peers also had lower volume in 2019 they want to regain. Why should K PlusF receive 30 percent of incremental 2020 demand? Yeah. We compare 2 years, the way our 1 year is really extraordinary. And we, for the first time, have taken a share in, capacity reduction, which was taking our size into account quite high one. And we believe that the market conditions now in this year, Unfortunately, do not deliver a good price, but it will deliver a higher demand. And we have a clear idea where to place the volumes That's why we are not seeing any reasons to reduce that target. Jen from Joe Jackson, DMO. When will you start to sell products from Bethune into the U S? And how will the product be distributed? How does selling the America's unit impact your east to sell potash in North America? Let's start with the second part of the question. This transaction has no impact at all on how to distribute volumes into the Americas. And now as we are fine with our product quality in Bethune. Shipping to Americas might not be so distant. And how to do that, remains to be seen. Central, Jackson, what are the EBITDA dis synergies? From selling the OU Americas unit so higher cost base for the remaining assets. Terms of administration because unit is relatively in half our ex guys over there. So I would say there are no synergies, sorry, there are no dis synergies we should expect from this and if they are negligible. Angelo Texan, what would agriculture segment cost look like versus 2019. If you hit your midpoint more than 7,000,000 tons volume guidance in the agriculture segment and if you Volumes were flat with 2019. So two scenarios, 1 at more than 7,000,000 tons per ton and 1 at the same level in 2019? Yes, so 2019 costs per ton were of course affected by the Just for this, the level was at about 2 And we are ramping up production. We are ramping our synergy program, so bringing costs down on the other hand, we face general cost inflation. So with the investments in getting sides extensions. We have associated costs with the CapEx. I would say at this point in time, we should see a cost per ton. So revenues minus EBITDA over volumes at the same levels of the adjusted 2019. All to understand you. Next question comes from Stephanie Vincent from JP Morgan. Can you please review your covenant headroom under your €800,000,000 facility? And that's the debt EBITDA covenants step down at any point. Does the covenant apply if there are no drawings under the facility and are there any drawings under the syndicated credit line at year end. The covenants refer to some parts of our Financial Instruments. They're using also the paper markets which means we can use this as a good financing instrument. We would not touch the credit line. So and a little bit on the market development also thereby how much this credit line would be drawn by the end of the year. Everything, if we fill our contractual agreements, we have filled our banks. But currently it's totally undrawn. Next question comes from Lisa Deneff from Morgan Stanley. Could you please give us an update on what you are seeing in the potash environment, including spring demand in Europe and North America and what you believe will be the drivers that support price recovery in the second half of twenty twenty. How much of the recovery will be pending on the potential signing of the Chinese contracts? Europe, we have a total normal development, a normal flow, normal volumes. And as I stressed earlier, more stable pricing We are very happy for example about the SOP price. The premium is growing and growing because it's very stable. And maybe the current situation even helps here because we know that China has started exporting SOP last year. Remains to be seen in the current situation, how much really will be able how much they will be able to export. Europe is normal, North America. We are still not, not really active in this area. That's why I'm shy to give here an expert opinion on that. How much of restructuring cost do you expect for 2020 2021 for reorganizing K PlusF? Okay. We have another question in the room. Michael Schafer? Thank you for questions. On particular restructuring, do you also consider to close mines in Germany? You've seen to control closing prematurely, basically. So we can think of Noy Hoef, in potentially the next one. So any any kind of additional cost savings on top of HQ over at function type of cost savings. Thank you for that question because it gives me the opportunity to, just to elaborate a little bit about the situation on our own German mines. I think sometimes if you from outside in is a little bit too negative due to the yes, we have higher costs than in other areas, but we also, as you sitting here, you all know that we have significantly higher earnings as well because good portion a very good portion of our production here is specialty and we have no earnings problems with our mines. It's a problem that we use bigger parts of our earnings for environmental CapEx. There's a peak in 20 20, which will numbers will reduce significantly after that because this extension will be done or less, and that is a big, driver for that. And the that is more or less focused on the barrier. So the other German mines are already quick for positive, even on a stress potash price. It's important to know. Second one would be on your intended sales mix. Last year, I think you shipped to China or the Yes. So maybe you can elaborate on what the planning are for 2020 on the The extra volume is now coming from the soon, at least according to volume uptake, your projects when you present The mix would look, pretty much like last year, especially of course, you have to adjust the stem cells that we had production cuts that we but there's no reason that the mix will look differently. The additional volumes from Bethune go into, Brazil, maybe a small portion into Americas in the U. S, they're also in India, China and Southeast Asia. One question from Alexander Jones from Bank of America. What is the higher CapEx you guided for for 2024? And you spent 1,000,000 less CapEx than you guided for in 2019? Is there a deferral into 2020? So the lower number in 2019 is almost, driven by a cost discipline. Only small portions will run into 20 20. And the driver for the higher number in 2020 is clearly the 3 key expansions at the same time in Phoenix. Wintershall and Hartloff. Okay. So the question is from Oliver Schwarz. Thank you for that. Maybe just one, I promise. As you stated that you want to go more into specialties and with the expansion of the fuel diluting your mix as it is only SOP, would you consider, or are you actively mulling, the introduction of the Manheim process at It's, the fuel to supply, SOP also from a from the Canadian So here, we are not ruling out anything, that is possible But, what is, what are the focus areas? One focus for sure is fertigation. Is an incredibly growing, growing market, especially patients of more seasons with gout, and that gives the farmers multiple opportunities to to save water, to save the input for fertilizer, what we need, which will fully water soluble products. We have already a product range, but that will be enlarged. Again, there are so many possibilities to add business in Bethune. And one of them could be the example you just raised. Great. So I will hand it over to Bogard Lohr to help the conclusion of this conference. Thank you very much for those who are here in the Commerzbank Tower and for those of course who are on the line This is a very special situation for us, but we are the whole board is convinced this supervised report as well that this is the right path for the company and that we, when we meet next year, again, we can also talk about the transaction, which was successfully done. But we will keep you informed and, wish you all the best. Now as we have finished, the sun starts Shining. Hope this is a good sign. Thank you very much. Goodbye. Thank you for joining today's conference. You may now disconnect your lines. Host Please stay connected.