Earnings Call: Q3 2018

Nov 15, 2018

Welcome to the K Plus F Conference Call regarding the publication of the Financial Report Q3 2018. Hosted by Doctor. Bert Hart Law, CEO. For the duration of the call, you'll be on listen only. However, at the end of the call, you'll have the opportunity to ask questions. Please note on page 2 of the presentation, you'll find the disclaimer. I am now handing the call over to Doctor. Berthard Law to begin. Please go ahead. Thank you, operator. Ladies and gentlemen, welcome to our third quarter conference call. Q3 was a challenging quarter for us. Although the market environment remains supportive and our production in Bethune is nicely improving, We were hit by the extreme drought. Nevertheless, the performance in Germany we discussed last time is shown first signs of improvement. Let's have a closer look on this and the implications for the remaining months in 2018. After a brief presentation, the team here in Qatar we'll be happy to take your questions. Let's start with the highlights of the third quarter on Slide 3. And let me start with some positive highlights. Our revenues rose again year over year and quarter over quarter. In potash, this was due to higher pricing, mainly in overseas MOP markets and a further increase of our Canadian production. The ramp up of fulfillment is making good progress and quality as well as quantity have again improved. In Soles, the North American de icing business benefited from a strong pre stocking. Compared to last year, we increased the volume of de icing salt by more than 500,000 tons. However, this overall positive development was overshadowed by the severe and ongoing drought in Germany. We stopped production of 2 of our 3 veracytes, which resulted in more than 50 outage days. Moreover, we were forced to And the unusual low water level increased freight rates substantially. All in all, the potash division had to absorb a weather related burden of about 1000000. Furthermore, solid earnings show a EUR 15,000,000 freight cost headwind As a result, group EBITDA decreased to 1,000,000. Nevertheless, on the back of significantly lower CapEx, our adjusted free cash flow showed encouraging improvement. Let us have a closer look at the market conditions in our potash and salt businesses on Slide 4. Overall, the potash market remains supportive. Demand is solid and many producers are already fully committed into 2019, which is also reflected in current pricing. This is especially relevant for our overseas MOP market. But please remember, twothree of our revenues were generated in Europe and with specialty products. Here prices are more stable and letting behind. The positive price momentum in overseas MLP market In salt, we do see a mixed picture, even though positive in total. After the bidding season in the de icing business has come to an end, demand seems to be strong in the U. S. Midwest region, demand in Europe and Canada looks slightly improved ahead of the upcoming winter. However, after Miles winter, and the U. S. East Coast, pre stocking in this region is shy and competition remains tough. Overall, market conditions for our non de icing businesses are intact. Bottom line after the 1st 9 months potash prices have moved into the right direction. But overall, rising cost inflation meet our intention. For example, freight costs increased price related by more than expect an increasing trend for the quarters to come. Let's move to Slide 5 to give you an update on our production performance. In our last call, we provided you with a lot of insight into the German production. As expected, the performance at our Veramind has started to improve, in the last quarter. The lack of employees and our illness rate improved and our machinery and equipment was partially replaced. At our Knollhof plan, the loss of production was similar to the 2nd quarter. Nevertheless, the issue issues are under control now as we have enforced most of the new production technologies by the end of Q3 2018. Looking at the soon, we are able to increase production quarter over quarter. And this positive trend continued in the 4th quarter as we reached in October a new production record. On top of that, the seasonally lower temperatures helped to cool down our products easier. In addition, in Q4, we are going to install a temporary grinder pump, both effects should further increase our output. All in all, we took very high efforts to tackle our production issues. On Slide 6, We'd like to talk about the very unusual leisure situation here in Germany. Due to the severe drought in Germany, we had to stop our BARRA production at Wintershall and Hart Off in September. To improve the situation, we have further expanded our basin capacities by more than 10% to about 600,000 cubic meters and also stretch our logistics for off-site disposal to a new limit. Therefore, we are able to restart the production by the end of September. Just as a reminder, without the additional measures, we have implemented already last year, we would have to head stop production back in June. And very important is to look into 2019. In 2019, we will further significantly expand our capacity to store saline wastewater on-site, and that will make us even more robust next summer. Nevertheless, water levels in Germany remain a ordinary low. The rainfall has been seen so far in the final quarters is clearly below the 5 year average. Due to all our countermeasures, we have now secured production to the beginning of December. Nevertheless, we cannot exclude additional outage days until the end of 2018. In any case, we do expect further extensive shipments of saline wastewater for off-site disposal in Q4. On top of that, inland shipping is increasingly impacted by low water levels and causing overall higher logistic costs across the group. And what does that all mean to our full year 2018 guidance? And therefore, please turn to Slide 7. Overall demand in potash remains robust and we expect a positive impact on pricing on our full year EBITDA. Increasing profitability of our Bethune mine and tangibly higher salt volumes will also help the situation. However, the production issues at our German mines FX development and shaping 2030 related costs will negatively affect our full year results. The outage date in Q3 extensive off-site disposal on the back of the ongoing draught and inflated logistics costs will reduce this year's EBITDA. We expect additional wastewater volumes and related freight rates having an impact of up to 1000000 in Q4. Bottom line, we are reducing our EBITDA guidance to 1000000 to 1000000. This year's cash unit costs in potash is now to be around EUR 215 per ton. Excluding the weather related outages in Q3, we would have been well in line with our previously guided range of EUR 205 to EUR 210 per ton. Potential additional outage days in December are not part of our full year EBITDA guidance. The upper and lower end of our guided EBITDA range is mainly determined by the weather situation in Q4. Both for the de icing business as well as for river water levels and the implied logistics costs. The adjusted free cash flow should improve significantly compared to 2017, mainly on the back of lower CapEx. Finally, let me give you a first rough idea about 2019 and therefore, please move to Slide 8. We have done our homework with respect to our several production issues From next year on, our operations excellence program will further increase our productivity to stop impact of declining Q2A content in Germany beyond 2019. As soon we are making good progress to meet our 2019 guidance of 1,700,000 to 1,900,000 tons, an increase of 300,000 to 500,000 tons. Altogether, 2019 should show a much better operational performance. Nevertheless, this year's outage days had a negative impact on our vera volume as about of about 200,000 tons. Including the operational improvement, we expect an increase of our Werra and Noyof production, by more than 500,000 tons in 20.19. The closure of Ligmundshall will reduce our next year's production in Germany by 600,000 tons, which, however, will have a positive impact on our profit. Cost of production should come down tangibly. Still, cash unit costs will stay above due to overall cost inflation. And all in all, we confirm our target being free cash flow positive in 2019 on the back of improving operations, CapEx discipline and our working capital management. Ladies and gentlemen, thank you very much for your attention. We are now happy to answer your question. Thank you. And the first question comes from the line of Michael Schafer from Commerzbank. For taking my two questions. First one is on logistics costs. You talked a lot about this one also in the second quarter. So also with the outlook, provider for the fourth quarter, I wonder whether you can provide us some qualification on the overall logistics bill increase you are facing in 2018 and maybe a bit of split into PNM and sold? This would be my first question. Thank you, Mr. Jeff, for that question. Yes, I think I mentioned that we had additional costs in Q3 alone of 1,000,000. And the year started with higher logistics costs in the U. S. In the ice and in the salt business. And I remember that we were talking about 15.4% compared to previous year. I think that was the number in Q4. That has also slightly increased further in the following quarters in the second and third quarter. And now we have this extraordinary situation here in Germany as you are located in Germany as well. You should be well aware about that. So the ships can only load a quarter of the normal load. That means freight costs concerning the river transportation, partially is four times the bill it was in the past. That is not, remaining in the not sustainable. I think once we have normal river levels, again, that should come back. But, we have taken into account that our guidance a significant higher freight cost number in Q4 than we what we have seen in the year before. And this is then basically evenly split between P and M and Salt or how should I think about this one? Yes, Michael, you have on the one hand the brine transportation in Germany, which may mostly affect potash, the lower river levels when we want to bring the salt product to the customers, plus we have still the issue with the truck drivers shortage in the U. S. So my gut feeling is the fifty-fifty split of the higher logistics costs. Okay. Thanks. My second question is somewhat related to this one. You talked about 2019 that you significantly have increased your on-site storage capacity. So I wonder from this logistics build you're facing in 2018 with all the outages, etcetera. So what should we think about the release potential from having all those measures on the kind of normal precipitation and water flow levels at Vera. So stripping out all those outage related, so costs which part basically is recoverable from this from this perspective heading into 2019? No, I talked about a significant increase of storage capacity for saline wastewater in the Werra area. The 600,000 cubic meters I mentioned for the basin capacity we have in hand already. Although it's quite full. But, we will have additional 400,000 cubic meters temporary storage capacities in an old mine in the Barra area. And that means that we, in total, have 1,000,000 cubic meters. So assuming that we get these basins and empty again. We have 1 millimeter cubic meter and that should be good for a very, very dry summer. And so we are a little bit more relaxed for the future concerning the risk having, stenciled and the impact, you know, so when we come up with the guidance for 2019, We rather have no, not the assumption that we have further stem fields, but transportation costs for waters. Is that what you were asking for? Yes, it sounds like at least that's a fair assumption that those kind of transportation costs to get rid of the wastewater that these these type of costs are gone basically by 2019? No, not totally because there is some obligation for us to bring waters to the, to the offshore mines like back month being Google and most probably next year as well as additional for water. Which are available for us in this, in this extraordinary situation. And we cannot just not bring any water into this mine, but we don't need it. So there will be some transportation costs. But of course, on very much lower level than we have seen in 2018. The next question comes from the line of Jogo Silva from Atrio. Please go ahead. Your line is now open please go ahead with your question. Could you please check if your line is Okay. So we've got no response from geogasil. Thanks so much for taking the time to answer my questions. I guess, I have 3 main ones, but let's do them one by one. The first one is more related with the current situation of your potash production in Germany. You had mentioned when you reopened the site in Wera that that you didn't expect any more production outages in 2018 and now in this presentation because the water volumes remain very low, you have kind of opened the possibility that there may be more production outages. And I, you know, whether even though I understand it's completely non controllable factor, I would just welcome a bit more transparency, which in terms of If kind of the, if kind of the precipitation level remains at the current volume, my understanding is you're not able to put enough water into the river comparing with what you produce. And so how much longer will it take or how long can you withstand without having a production outage? That's just basically my first question. First of all, I think I hope that everybody understands that, weather to predict weather effects on our production is a very, very difficult thing. So we always have to work with assumptions. And, as I mentioned earlier, we have now 600,000 cubic meters of storage pond capacity available. And as we had no heavy rainfall and the barra is showing roughly 6, 7 cubic meters a second river flow but we need 30 for a normal situation. That means that we have, bring a lot of our production saline waters into this pond. And once the ponds are full and the river has still a low level, we have to shut down production. So assuming that we have no change in the current situation, we are able to continue with our current available, volumes until the beginning of December. And then it depends on will it rain in December? Will we have a only a couple of days, then still or a longer period. I easily cannot tell you. That's why we have to exclude that from our guidance. No, I appreciate that, but that's exactly the kind of information that I see. I was looking for. The second question I have is just kind of a more long term view on this mind. And again, just kind of for me to understand a bit better how the thinking about it. My understanding is that from 2021, so I mean, roughly every year now you're having smaller or bigger problems. And so I just feels to me that there's not a lot of I understand that the weather conditions were dramatic, but there's not a lot of buffer. And so minus thing as well is that from 2021, you have stop doing the DIPO injection. And that also from 2021, your current agreement with the government, with the regional government is that you have to drop the selling into content of the water by about 33%. And so in my numbers, which may be wrong, this is about, you basically can put 50% less wastewater through both ways combined. And so my question here is what is the solution? And I've heard you guys talking in the past of the, of a pipeline, but you've always admitted that that's quite a hard political solution to implement. You've been talking in the past as well of using your processes, but it just feels very non concrete and 2021 is fast approaching. And my understanding as well is that you will have to, at some point, do $1,000,000 less DeepO injection over the next 3 years because of the settlement you've done. And so it just feels like the time is kind of running short and and there's not a very concrete solution. I just wanted to know if there's any update on this. You have mentioned a lot of aspects of environmental strategy, for the Vera area, but the short message is we are getting more and more robust. More and more logos. First of all, in the short term, and maybe may I also add This situation is so outstanding that not only K plus assets problem, much bigger companies which are dependent on the river, Ryan and other rivers, are facing the same situation. And I also mentioned in my, in my speech that we have already prepared a lot of measures. Otherwise, we would have had 10 skills of a larger, a larger amount Next year, we will be more robust with this, with this 400,000 cubic meters additional storage capacity. But you're right, our people injection permit runs off in 2021. And by the way, out of the 100 of out of the 1,000,000 that we promised not to use to the BUND that you mentioned already half is done. It has been done this year. Okay. We are currently negotiating with the authorities, the solution, the most probably outcome will be that we, discharge our waters not only temporary, but sustainably in the old mine areas at Severa. And that means no transportation costs. That means it's up to us how much we get discharged daily And currently, we have a daily limit of 5000 cubic meters for the deep well injection, and that is a problem. And once we do this discharge in the era in the old mines, we are talking about huge volumes and possibility to run the mines until the end of the lifetime in the 60s and still get charges there, then we are almost totally independent from situation that we have been facing this Got it. That's very clear. And regarding the am I correct? I mean, I just read this on the plan that you had done with the authorities Is it correct that the selling content of the, of what you're putting into the river also drops a lot in 2021 or not? As what I just explained to you, this is a completely new concept. And therefore, we do but not need a pipeline anymore. We also talk about this threshold, but it's too early to give any results. Understood. And my last question, if I may, which is a bit shorter is just in terms of the logistic costs. If I understood correctly what said before, you said that about the impact on Q3 alone was about 1,000,000, and that was roughly even between potash and salt. Could you give us a sense on the potash side? How much of it is due to the wastewater, which, you know, it should be nonrecurring elements and how much of it is due just to higher shipping costs worldwide that are just the reality. And that's the first part and the second part is, can you give us a sense of how much of these two things you're passing to consumers or not? Yeah. I'm not sure if I can tell you, give you, by heart, all the numbers you're asking for, but the 15,000,000 I mentioned, 15 that is only solar. And that was, has nothing to do with, with our saline water water transport. Another number I can give you, the selling water transports. And with all the freight cost increased effects, that we have on that transport as well will be roughly $20,000,000 in Q4. And that is all incorporated in our guidance. Got it. And so the $15,000,000 of transport costs is only on the salt business. Do you also have increased logistic costs on the potash business. I mean, shipping rates have been going higher and you also have to in Germany. And so do you also have a higher number on there, or there's no problem? Yes. Yes. And if I remember correctly, it's close to 1,000,000. Understood. So it's 25 total, both businesses combined. Is that correct? Yes. The next question comes from the line of Christian Faitz from Kepler Cheuvreux. First question would be, your cutting CapEx spend by a good 1,000,000 compared to your last guidance, which projects, so late in the year has been kept. Can you elucidate this a bit? Question. We have not started in this quarter to be very, very strict with all cost items. We knew that we are running into a difficult year. It started with operational performance, which has tremendously increased. And then we had the drought situation, and we have been working on, saving CapEx and saving costs, but not in the magnitude that we have, of course, now are in the future a negative impact. And the roughly $100,000,000 is the result of a lot of small items. Some postponements into next year, but that will not drive our CapEx over the guided at 1,000,000 next year because we will continue to be cautious. And so I cannot name 1 or 2 projects, but it's some of a long list of small items And again, a smaller number out of the 100,000,000 is postponed into next year. Okay, great. Thanks. Then second question, you already mentioned the good performance of Bethune already also in October record rates. What is your current annualized run rate for Bastion? Yes, we speak to the number that we gave. First of all, I'm really happy and proud on that development. We were facing the problems that, you know, And we have solved them in a tremendous way. And we know there are 2 more steps we will implement the final grind up time pump. Now we are working with the temporary. And once the cooling facility is installed, we have reached the quality that we are looking for and the production process and the flow that we're looking for currently, we are able to de load the railcars with free flowing material. It's really, really good. And we have 1 week after the other, a new production record. So it took us a little bit time in Q3 to get to that performance that we why we are ending more at the lower end of the guidance that we gave of 1,400,000 to 1,500,000 but we are pretty sure that we will achieve the range 1.7000000to1.9000000 for 2019. Okay, great. You. The next question comes from the line of Thomas Swoboda from Societe Generale. Please go ahead. Yes, yes. Good morning, gentlemen. I will limit myself to two questions. On potash prices in Europe, the gap to the other spot markets, big spot markets is a little bit bigger than usual. I'm just wondering what kind of feedback are you getting from your European customers? Is it a good chance status gap will narrow going into 2019? Or is there any big, bigger than usual resistance to higher prices in Europe? No, Thomas. Demand is strong in Europe. The thing why European prices are recovering a little bit less fast as, for example, Brazil, that is that they haven't fallen that strongly, when we look into the last decline of the prices between, yes, 2016 2017. And so we do see a strong recovery there. We, I mean, it all depends on the, on the demand, free demand for the next spring season. But we haven't heard anything that would hinder us from, see, you could see in there at this point in time. Perfect. Second question is a kind of a follow-up on the cost inflation discussion. I mean, thank you very much for giving giving us indications on the logistic costs, but you probably have already a good ability on wages and energy as well. Would you like to give us some guidance on the cost inflation here going into 2019? Don't want to dig too much into detail there. I mean, to some extent, we are limited to strong increases, for example, in gas prices because we have hedged ourselves, into the beyond 2020, even and the biggest consumer here for gas is certainly the soon. We would still feel, oil price increases via our suppliers for logistics, certainly. When I take everything together, I would say on our cost basis, cost inflation of 3% to 4% is not wouldn't be unusual. That will be including logistics or all in? That's perfect. Thank you very much for this. The next question comes from the line of Andreas Heine from MainFirst. Please go ahead. Yes, two questions from please from my side. The first is on the unit cost guidance you have given for year being above 1,000,000. Can you elucidate a little bit with, how you get to this bridge from this 205 $210,000,000 you would have without the water issues. So looking at that segment's high risk close, which has above average costs and that the increase at the Werra, with things which have not to do with the water flow should have reduced, the cost quite significantly. And in addition, of course, the increase in the production of be tuned if that is running smoothly. So I have expected, I have to say a number slightly below 200. That's my first question. Yes, Andreas, you're right, but we said already in the last call, and as I'm correct, I wasn't, that we expect in the midterm, certainly a number below EUR 200 per tonne, but not for 20 you. We are not yet back where we want to be with our German production book and describe our progress. We are making there. On the other hand, some things like machinery availability and lower K2O content will also follow-up in 2019 and will limit our ability to produce. On the other hand, we see a good contribution from Bethune. So on average, Bethune is already today lowering our average production costs, but we do not see a number below 200 for 2019. Yes. And I also talked about the cost inflation. We're going to see this was depressing from Thomas right before you. Okay. It's good. I'll help you on that. And then maybe still an update on between the target was to achieve to be EBITDA plus this year. Can you confirm that that is the case? Yes, I can confirm, and it will be a midsized double digit amount, the EBIT number. Sorry, EBITDA number, of course, for this year. And I also confirmed that we want to achieve EBIT breakeven next year. That is the moveable with the rate production range that I gave you. Thanks. Welcome. The next question comes from the line of Patrick Rafais from Thanks. Two questions for me as well. The first would be on the bridge into 2019. Is there any reason why we should assume that the $80,000,000 impact you flagged for for the outage days any reason why we should assume that that doesn't reverse 100% next year? No, that is, again, a question taking into account the weather situation. So if we have in the next couple of months of situation with heavy rain and we are able to empty our basin our ponds, again, 600,000 cubic meters. And we get the approval worth of what I expect to to store the 400,000 cubic meters in, in the Vera area temporarily. So we have 1,000,000 cubic meters available storage, then it is very un probable, very un probable. But that's the other 2 requirements. First of all, then we must have a window where we empty this baby. And again, the second step has to be approved by the rigorously, medium, the authority here. I expect they will do it And then we are very, very robust, and then we can skip the $80,000,000 impact. Well, we will not see that again. Okay, thanks. And the second question on Salt, you lowered the guidance a bit here on EBITDA from flat to slightly down. What has changed here in your outlook? I mean, the freight on logistics costs you were already aware of during Q3 and we already talked about that for the second quarter. It was about the similar amount. And so why did you become a bit more cautious here? Yes, Patrick, it's mainly the logistics cost indeed, which are overcompensating the positive benefits from higher volumes and better prices. But the logistics costs are nothing new, right? Or did it get worse? Yes, but they still continue to increase. And, I mean, last time we spoke, We haven't expected that Q4 remains as dry as it does for example in Germany. And we talked about surcharges, freight surcharges because of low water levels and this is something which comes on top to what we have known. To give you one example, when in the past, when we have, shipped our salt. We are talking salt now, to, to France. It was the number slightly below per ton. Now we are talking 40. We could not we could not know this development as we had our last call. The next question comes from the line of Philip Collins from DZ Bank. Please go ahead. Yes, good morning, and thank you for taking my two questions. The first one is on Sigmontell. You expect a negative EBITDA effect of 1,000,000 in 2018. I think as the result of the plant closure at the end of the year and the resulting significantly lower productivity, if this value still valid or have your expectations deteriorated further? The value is still valid. And I really have to say, respect to everybody engaged, they're doing a tremendous job taking into account that they're closing their mine by the end of the year. There's no extraordinary negative the development to see and we are not expecting this until the end of the year. Okay. And the second question you started with the realization of synergies in Q3. I think the synergy target is 150,000,000 by 2020. Is there already a first success and how high is the amount realized? There is a good progress. We have started implementing the measures that we have defined for the admin areas. And we have identified a lot of measures in our operations that is even the bigger lever. We have and that we will implement start implementing them from next year on. We also have started our synergy program in procurement in some other areas. But as we have guided this year, costs for making that happen and the synergies, equal, more or less, the first positive net effect will be in next year. And by the way, I confirm, again, the 150, but that is after 2020. So the 1st year with the next 150 plus x number, will be 2021. That was always the plan. Okay. Thank you. Welcome. The next question comes from the line of Neil Tyler from Redburn. Please go ahead. Hey, good morning. Two questions from me. First of all, to clarify on the water issue, In order to be able to empty the basins, do you require above average river levels or will things returning to a sort of 5 year average rainfall level fill rivers efficiently for you to be able to do that? That's the first question, please. We would need a normal rainfall for this season, a normal rainfall and a normal river level, but on not only for a couple of days, would be, rather a couple of weeks we need. So literally 2 weeks of normal range and you could empty the basins that are filtered currently? Not more than 2 weeks. But normal weather situation for this kind of year, for the next 2, I cannot give you a number precisely, but if we would see from now our normal weather, which we normally see in Germany in December, January, February, March, we should be done with this problem. Okay. Okay. Thank you. So next, no extra ordinary rainfall or floods needed for that. Very good. Thank you. 2nd question on the Salt business. Does your guidance imply any Q4 volume caution brought about by early season demand? I. E. Do you think your perhaps customers have bought early, in the third quarter? And therefore, Q4 demand might not be quite robust? We have seen a good pre stocking in the third quarter, but it was not that way that we say many have bought what they actually would buy in the fourth quarter. So we have incorporated in the fourth quarter more or less normal quarter. And, yeah, I mean, in the end, this depends on if we see code and whether or not, right? This determines in the end of sales volume. Okay, thank you. I might just chance another one very quickly. Bethune, to the ongoing product issues impact the realizable price of the product you are selling, or is it really just a volume issue at the moment? When there is only a volume issue, there is no, we are selling to market prices. The next question comes from the line of Chetan Udessi from JP Morgan. Please go ahead. Yes, hi, thanks. A couple of quick for myself. Number 1 is, do you think or is there a way for you to estimate how much you might have seen benefit in terms of your salt business from outage from one of your competitors in the U. S. In Q3 and even in Q4, if you see that benefit at all? And the second question is Sorry. One by one, please. So, the bids are done. So we know what we have, the orders that we have in hand in terms of volume and price. And if one of our competitors who have won another bid are not able to deliver, then they will ask us for more volume, but it's impossible to predict an impact for us. So you didn't have, you don't think you had any impact in Q3 at least? No, no. Okay. And second question is, given the cost guidance on the potash production for next year, it seems all of the delta maybe compared to the expectation earlier this year to now in terms of cost increase seems more in German plants? Or do you think there has been a change in terms of cost per ton production targets even for your new Canadian mine in between? And can you remind me what is the target cost for Bethune? Thank you. Yes. The inflation and extraordinary inflation items are more a German topic. And you know that we have, the biggest cost item of cost of production in Canada is natural gas. And as Thorsten earlier said, we have hedged this even into 2022, not the whole volume, but a good portion of that. And, so inflation is not a big issue in Bethune. But of course, Bethune has a significant positive impact on our average costs of production, not only due to the fact that the primary mining is cheaper than here in Germany, but the secondary mining that we start next year, that has a huge impact. But all in all, inflation, volumes that we expect, etcetera, we will be slightly above 1,000,000 still in 2019. What is the target cost structure for Bethune? Like do you guys have an aim to get to some specific cost per tonne in Bethune specifically? They always still stick to the indicated number years ago of 90 Canadian dollars fully ramped up pure production costs. So you cannot compare this with the 200 because it's not a set up, but you can't find the entire set on in our compendium as well. The next question comes from the line of Marcus Schmidt from ODDO BHS. Please go ahead. Yes, good morning. I've just one question regarding your bond, which is due in December. Will you use your RCF to redeem the bond or is there a short term issue plan, for instance, a promissory note loan? Because there is sync in the past, you prefer to keep the RCF as a backup line? No, I mean, we have we have, in July, issued a bond of 600,000,000, and this was always the plan to refinance the bond in December with this money. And when you look at our balance sheet, taking cash and short term security or any investments together. We have the money on the balance sheet. And so for that purposes, we have the money We have no further questions coming through. So I will now hand you back to Doctor. Burkhart Law for the conclusion of the call. Please go ahead. Yeah. Thank you all for your attention. Thank you for being interested in news, granted we have a difficult quarter behind us, but I think what we've discussed shows that there's good reason to be optimistic for the short term future of k plus s and especially the long term future. And I'm looking forward in Tarston as well and the k plus s team here in casual to see you to the one or the other occasion. Again, thank you, and have a good good day. Bye bye. That concludes today's conference. Thank you for your participation and have a pleasant