Earnings Call: Q4 2017

Mar 15, 2018

Welcome to the K plus S Conference Call regarding the publication of the financial report FY 2017 hosted by Doctor. Burkhart Lohr, CEO. For the duration of the call, you will be on listen only. However, at the end of the call, you will have the opportunity to ask questions. Please note on Page two of the presentation, you will find a disclaimer. I'm now handing the call over to Doctor. Burkhard Lohr to begin. Please go ahead. Thank you. Ladies and gentlemen, a very warm welcome to our full year twenty seventeen conference call. Like always, with me here on the call is Thorsten Burkos, our CFO Jorg Bettenhausen, Head of Corporate Finance and Accounting and Lutz Grutten, our Head of Investor Relations. After a brief presentation, we'll be happy to take all your questions. Now let's get started with a comparison of our financial targets and our achievements on Slide three. This slide compares our actual results with our financial targets. Despite the fact that 2017 was a transitional year, we achieved our financial targets and can present results, which are in line with latest market expectations. Operating profit, EBITDA and EBIT one were up eleven percent and eighteen percent on last year's achievements. They only came out of the lower end of the guided range due to the €43,000,000 negative impact caused by the Siegmunds Hall closure. Adjusted for this burden, operating profits would have been above the midpoint of our guidance. Furthermore, we improved adjusted free cash flow as a result of our operational performance and a disciplined CapEx spending. Our dividend proposal of EUR0.35 per share is in line with our policy to cash out 40% of the adjusted net income. The proposed increase of €05 also reflects our optimism for 2018. Now let's have a closer look at the most important topics on Slide four. Let's start with potash. Due to our improved wastewater management in the Werra region, we reported only twenty five outage days. This was not only a huge improvement on twenty sixteen, but also better than previously guided. The product mix in potash nicely improved. However, we are still facing some challenges at our Werra plant after the turbulent times and the trouble we had with our wastewater back in 2016. As a result, the motivation of our workforce was low and illness is still high. In addition, it hasn't been easy to fill vacancies. This has left the mark and we've lost some production in addition to the outage days. It is our focus to fix our environmental challenges and improve the motivation of our people. On top of this, we have implemented a new management team at the Werra, and we are once again hiring people to strengthen our workforce. At the same time, the decision to close down Diegmans Hall by the end of twenty eighteen was not easy for us, but diminishing volumes and vanishing profitability triggered this step. Last but not least, we have taken a first important ramp up step at Bethune. Let's move to the Salt division. Volumes were up by 1,000,000 tons. However, overall prices came down as expected on the back of the inventory situation at the end of last year's winter season. Nevertheless, we remain on a very good track to deliver on our solid 2020 target of a normalized EBITDA of at least EUR 400,000,000. Back to the group level, there's also an important message we want to mention. Our leverage peaked in 2017 and has started to move down to meet our target in 2020 as our strategy, Shaping 02/1930, is on schedule. We have initiated the bottom up synergy validation, and I will give you further details on that at the end of my presentation. Let's move to Slide five to talk about the environmental and regulatory topics. As you already know, our environmental challenges and easing environmental tensions are quite close to my heart, and I'm personally deeply involved in these matters. What have we achieved so far and what is yet to come? We have improved our wastewater management and reduced the outage days in 2017 to a level below even our previous guidance. With the KCF commissioning, which reduces our wastewater by another 20%, we are pretty optimistic that there's only a very limited risk of further outage days in the Werra region. We are currently working on the tailings pile extension, and I'm happy to again confirm that this project remains on time. We have now received the permission to prepare the ground. Of equal importance, other settlements we have reached with Gerstungen and the BUND, long lasting disputes have finally come to an end. What's next? Our teams have already started working on measures on how to deal with the situation after 2021 as we have decided not to apply for an extension of our deep well injection. Now let's move to operations and start with the potash trading update on Slide six. Starting with the well known chart on the left, you can see that our average selling price has nicely outperformed the MOP price in Brazil and the prices reported by our closest peers for quite some time. This can be explained by our specialty fertilizers, which trade at a premium to standard products and contribute about 50% to our product portfolio. In local currencies, our last year's average was slightly up to the back of the MOP price recovery and positive mix effects. However, translated into euro as shown in the chart, the softening U. S. Dollar had an adverse effect. Overall, markets had a robust start into the year, which is also reflected by latest price developments. Despite the strong market in 2017, we still have a positive view on volumes in 2018. The total market should be stable and there is a good chance that overall volumes might be up even further. The visibility of MOP prices into the first half of twenty eighteen remains fairly good and the outlook remains promising. Furthermore, prices in specialty fertilizers have bottomed out in Q3 'seventeen and are now showing an upward trend. Overall, our portfolio price reported in euro should improve slightly, and we expect that our reported cash cost per tonne should have peaked in 2017. So what happened in salt? Please turn to Slide seven. Let's start with an update on our non de icing activities. Volumes in the final quarter were up on last year's achievements, driven by good demand from chemical customers in Europe as well as higher industrial salt volumes in Latin America. However, the average selling price of EUR110 per tonne in Q4 was below last year's level due to adverse currency effects, but also on the back of further improved copper leaching activities, the profit contribution of copper leaching is remarkable, but low pricing has a softening impact on our average portfolio price. Our de icing business reported tangible volume increase in Q4. Overall, the mild weather in North America was more than compensated by Europe. Again, a nice proof of our regional hedge. Prices in de icing were down as expected. This was mainly due to the inventory situation in North America at the end of last year's winter season. So let's move to our guidance for 2018 on Slide eight. What are our first thoughts for 2018 and what are the most important moving parts? As of 2018, the focus of our guidance is becoming EBITDA as this is closer to cash and also more comparable with our historic numbers than EBIT one due to higher D and A at Bethune. First of all, we had a reasonably good start into the year. Bethune is running and we do not expect any further outage days in our German production. On top, the de icing business had a better start into the year compared to 2017. Therefore, volumes in potash and magnesium products on the one hand, but also in salt on the other hand, should be significantly, respectively, tangibly higher compared to 2017. Furthermore, prices in potash and magnesium products remain supportive and even reported in euro terms should be up slightly on last year's achievement. The decision to shut down Diegmaltzl caused an impact on our earnings, which will not occur again in 2018. Our reported production costs in Polish and Magnesium products have peaked in 2017, and the Salt division is on track to deliver on our Salt 2020 strategy. However, based on the current euro U. S. Dollar exchange rate, we expect a negative currency impact on our 2018 group EBITDA. Bottom line, we expect this year's EBITDA to be significantly above last year's achievement based on realistic price assumptions. Furthermore, the adjusted free cash flow should improve further, and we are making good progress to deliver on our targets to becoming free cash flow positive in 2019. I'm fully convinced that we have every reason to be very optimistic about the future. The management is keen to show our shareholders the huge potential we have here at K plus F. Shaping 2030 and the transformation towards one company will trigger a new era within the organization. Let's move to Slide nine and an update on our new strategy. What have we achieved so far and what are the next steps? As of 2018, the Board and our top management have a new incentive scheme and besides operational targets, the relative performance of our share price versus the MDAX has also become an important part of our long term incentive program. We are currently in the bottom up phase of synergy validation and can confirm our target to achieve a net figure of at least EUR 150,000,000 by the end of twenty twenty. We are well on track with the different projects and the final concept about our future organization, including amended KPIs. We will be happy to offer you more details on our Capital Markets Day at the latest, and you should have already received our safety date in January. We know Bethune is not a regular station on one of our frequent of your frequent business trips to North America. However, we, the entire Board of K plus S, would be happy to host you for twenty four hours at our Capital Markets Day on September 5. Now I would like to thank you for your attention. And as always, we are happy to answer your questions. Thank you. You. The first question comes from the line of Michael Schafer from Commerzbank. I'll start with the first one. On the P and M business segment, looking into the fourth quarter cash unit costs and stripping out the €43,000,000 provision, I calculate cash unit cost of production of something like €190 per tonne in the fourth quarter. I wonder whether you can shed some light on how do you see this item basically developing into 2018? And also maybe an update on where Bassoon sales volume has been in the fourth quarter, which would be my first question. Michael, it's Dawson. When we look out into 2018 and in order to clarify the metrics, so revenues minus EBITDA and all in, we expect unit cost per tonne in potash of a little bit below €200 this is in sales volumes? In Q4? Yes. We had a you know that we had almost 500,000 production, and we're not going to release quarterly sales volumes for Bethune. Okay. My second question would be on the Salt segment. You've shown a rather strong performance in the fourth quarter with EBITDA up onethree year over year. With the indication you provided on the first quarter with a promising start you mentioned and compared to last year. So is it fair to assume that the growth rate you have shown in EBITDA in the fourth quarter is at least a good indicator for what we should expect also heading into the first quarter year over year? Yes. It's always difficult to predict something which we have seen in one quarter for the future because our salt business is so volatile. I would rather like to elaborate a little bit on how we started into the New Year. And we have seen several nice events. It started very early this year with a nice snowstorm in at the East Coast. Then all over the January was very good in the East Coast. And you know, here, we have the highest prices currently. February and March so far were very good months for Midwest, which was very important after we had a lot of mild winters in the Midwest area, which could help us in the next season. Europe is doing well. So altogether, this is much better than it was in the first quarter of 'seventeen. And now I would say, finally, after a couple of years, we have seen the normal first quarter again. The next question comes from the line of Christian Faitz from Kepler questions, please. I'll start with the first one on Bethune. Basically, to back with Michael's question. Can you discuss current operating rates in Bethune? Yes. Maybe I should start with one general remark. Last year was the last year where Bethune was split in the production phase and in a ramp up phase. From this year on, Bethune is a mine like a site like Zidditsa, like Werra, like Neuhof, and we are not going to report production numbers, DNA, whatever we have reported in the past to better understand the production phase. But I can confirm that we are happy with the ramp up, that we that, of course, the price development also is supportive for what's going on in Bethune and that we still believe that we will have a positive EBITDA contribution in this year and the breakeven on the EBIT one level in 2019. Okay, great. And then second question, and then I'll go back in line. Can you please comment on the roundabout 10% price decline in Industrial and Consumer Salt? What causes those rather wide swings we have seen over the past few quarters? I mean, reckon, and I do realize it's up sequentially, the price, but why the 10% decline Q4 over Q4 last 'sixteen? Yes, Christian, this was there is, from an underlying market trends point of view, nothing to worry about. But you remember that we had this disastrous Hurricane Irma last year, and this affected especially also these segments. We had I mean, in this area, which was widely affected, people do not longer buy pool salt or water softening products. And on the other hand so this was a volume effect. And on the other hand, because of the emergency agency, VMA, taking away most of the trucks we need for logistics in order to deal with the disaster. We had also a shortage in logistics and also rising costs, what we call nonstandard sourcing costs. Yes. But then why the 10% price decline? I asked for price. Yes. There's also an FX effect in it. Okay. So it's mostly FX in Okay. Thank you. The next question comes from the line of Paul Woux from Morgan Stanley. Please go ahead. Yes. Thanks a lot. Morning, guys. One question from me. Can you talk about cash flow moving through 2018 and what it would take for you guys to be able to organically delever this year with the step up in EBITDA. Is it possible we get to a situation where you are deleveraging organically at a net level? Paul. I mean, when you see that we made already significant progress from 'sixteen to 'seventeen, we see another significant improvement on the free cash flow level also in 2018, and we do our utmost in order to become more efficient and to preserve reduced CapEx again over 2017. Burkhart confirmed that Bethune is turning positively on an EBITDA level. But our guidance remains that we see a positive free cash flow in 2019. This means from a net debt point of view, the deleveraging will start in 2019. However, we expect a significant increase in the EBITDA for 2018, having a positive impact on the leverage. That's very clear. And just maybe a second quick one. In terms of the EBITDA guidance for 2018, looking at that bridge, we're coming to somewhere above €800,000,000 Is that a reasonable assessment? Yes, I know that I answered that question already last year. But I understand that it's the March now. There are so many moving parts that have to be taken into account to confirm a number or not confirm a number. We are happy to confirm that we significant improvements again, and we will be more precise in the course of the year. Understood. Thanks very much, guys. The next question comes from the line of Neil Tyler from Redburn. Please go ahead. Good morning. A couple from me as well, please. Sort of minor details really, but can you confirm that reconfirm that the Sigmundshall site really contributed minimal EBIT in 2017 and therefore that the closure during the year will have little EBIT impact outside of the provisions in either 'eighteen or 'nineteen? That's the first question. Yes. Let's do one by one, please, the dialer. Yes, I think we have indicated in the past that, of course, the reason for closing Diegmunds Hall is that we have reached a point where we are seeing not only the risk of slightly negative earning contributions but also slightly negative cash flow contributions. That was the case in 'seventeen and then will be talking about slightly. And that will be the case in the course of this year as well. And as you know, we close by the end of this year. So there will be no impact any longer in 'nineteen. Great. Secondly, whether you can talk a little bit about the impact on your overseas realized price in 'eighteen of the Bethune product, whether you can help us understand whether there'll be a noticeable impact on realized price? That's the next one, and I have another short one after that. What do you mean with impact? Well, in terms of the relative realized price that you achieve in your overseas product versus the market prices that we see, for instance, in Brazil in the chart that you show, should we anticipate any meaningful change in that relationship? Yes. As we are talking about MOP standard for China or for Asia with the first volume from Bethune and granular pink into Brazil. That, as you know, no specialties. So in average, it has a negative impact on our average selling price. But you still expect the average selling price year on year to improve in euro terms despite that negative impact? Yes. Yes. Okay. And the third question, you talked about the tailings power management in Germany. Should we anticipate anything meaningful in terms of either CapEx or OpEx in 'eighteen, 'nineteen versus the 2017 baseline? Yes, that is already incorporated in our CapEx guidance or in our CapEx expectations or forecast. I think the rule of thumb, one could say, the next three years, we're going to have roughly €100,000,000 CapEx for these kind of developments. It's not only the heap extension in Hattock, it's Wintershall the following year. And Zielitz the following year is by chance that we have to enlarge all these in such a short period of time. So we have to yes, the burden is roughly €100,000,000 for the next three years. That's incorporated for our expectation. When I talk about 'eighteen now, for the 600,000,000 in the €600,000,000 expectation for 2018. Great. And then nothing material in terms of the operating cost? No, that is the operating cost will be reflected in the cost per tonne. And as we expected here, we have peaked in 'nineteen. That's very helpful. Thank you. Welcome. The next question comes from the line of Stephanie Boffler from Bank of America. Please go ahead. Thank you. Thanks very much for taking my one question. Just really a point of clarification on the EBITDA bridge for 2018. I just wanted to confirm that I have all of the moving parts right. So you had the one off this year with regards to Sigmundshall, which we will add back. In addition to that, there was the Werra outage. And then clearly, FX is a headwind this year if you take the year to date spot. I think it's around $40,000,000 based on your guidance. Are those sort of the three moving parts ex the forecast that we take on volumes, pricing and Bethune? Is there anything else with regards to one offs that we need to be aware of in the bridge? I think you have mentioned the most important drivers of our business. So I can confirm that everything is covered. The next question comes from the line of Oliver Schwarz from Warburg Research. Firstly, perhaps back to Sigmanshall. I do understand that the earnings contribution of Sigmanshall to EBIT one is negligible. But as you are increasingly guiding on EBITDA, could you flesh out how much or how severe the impact on EBITDA might be in 2018 and beyond when the mine is shut down? And secondly, how do we can we expect this process to go ahead? Is there, let's say, a cutoff of production by the end of this year and full production until the end of the year? Or is production petering down throughout the year to come to a complete standstill by the end of the year, just for modeling purposes? That would be my first question. Yes, let's start with the second part of your question. There will be full production until the end of the year and no further production after the end of the year. So it's a real hard cut. And there will be no impact on the EBITDA in 2019 and onwards because we have covered all works that we have do with our provisions. Maybe your question was referring to cash flow. That will be small numbers because our obligations are running very, very long, and the annual impact is small. I was more thinking about in terms of the EBITDA contribution of Sigvemensal. I know that you said that EBIT one contribution is close to zero. I just wondered whether EBITDA contribution is close to zero as well or whether it's a tangible number. It's close to zero as well. Okay, cool. And my second question would be the problems you currently have at the Werra site or had at the Werra site in regarding to personnel. Are you able to shift personnel from Zikaunsal to the Werra site to get rid of these problems within 2018? Or is that a problem that is likely to stick with you for, let's say, a quarter or two quarters until you're able to hire experienced personnel or personnel that can gain experience via a three or six month period in time to come up to full production level as well? Yes, good question. Exactly this, we are working on. We want to convince as many people as possible to move from Diegmans Hall to the Werra. And I'm quite hopeful that we will be able to do so. Of course, in parallel, we have already started hiring people from the markets. I think the most important is you need to understand that we had two twenty outage days in 'sixteen. We didn't know how it would how the near future would like look like. We had some outage days in 'seventeen. Now we have solved all environmental topics, and we can offer them a future, a long lasting future. And I'm convinced that in the course of this year, we will settle all problems at Zubaira. The next question comes from the line of Thomas Voboda from Societe Generale. I still have three questions. The first one is on Sigmancyl and the cash outflow, €43,000,000 you booked in your P and L last year. How much of this will go out as cash in 2018, please? Thomas, in 'eighteen, we will not see an outflow at all. The production stops by the end of this year. And if we have severance payments, this will happen then in 2019. And the fraction regarding to an increase of the provisions for tailings piles I mean, this is a cash outflow, which happens over the next decades, actually. So if I may follow-up, so what would you expect for 2019 then? For 'nineteen, we expect that the good part of the provision that we have built will be cash flow, roughly half of that. Half of it, okay. Roughly, roughly. And the rest will, again, as we said, will last over many, many years. That's perfect. That's But just this effect is already incorporated in our guidance that we will see a positive free cash flow in 2019. Right. My second question is on salt. We haven't seen normalized de icing salt levels for quite some time. So could you remind us what do you think the current normalized Q1 level should be? I'm not asking of what you're seeing in Q1. I'm just asking about normalized level. Can you wait until the Q1 call? You need to leave us some food for this Q1 call, please. Okay. Then I will try a third question and this is on debt profile. The market has started to price in increasing interest rates. The question is how comfortable do you feel with the maturity of your debt? And if there is any safety measures you can take to push out due dates? This is not a pitch by you, right, to help us with the product? We don't do that. No, we feel I mean, do we feel comfortable with the debt levels? I mean, that's pretty clear that we're going to deleverage the group. But it's also clear that when you see the path that we are there's a lot of work to do, but we are in a good way. We also need to refinance ourselves in the next couple of quarters as we see, for example, one bond needed to be paid back in December, which is €05,000,000,000 And it was always our strategy to see that we get the refinancing done early enough in order not to become under pressure. And we certainly also look at things like how can we secure interest rates if we really see a further movement there. The next question comes from the line of Patrick Ralfaes from UBS. Three questions, please. The first actually, the first two are around Bethune volumes. I realize you're not going to give us a guidance per plant, but assuming from the 500,000 tonnes of production, you built up 300,000 of inventories. You think these additional inventories will have to be moved in 2018? Or is that a level of inventories you think you keep going forward so that the 1,700,000 to 1,800,000 tonnes of production will be pretty much equal to sales volumes as well in 2018? Yes. So as you know, we have storage facilities in Bethune and in Vancouver. And the current inventory is pretty much what we are what a normal fill of these storage facilities will be in the future. Yes. So there's no further increase and no significant decrease of that volume to be expected. Okay. Very helpful. And the second question also relates to the ramp of Bethune. Last year, I believe, lot of the volumes were targeted for Southeast Asia. How do you see the additional volumes coming out of Bethune from a geographical mix? How much will go into Brazil? Will you already start up the business with Coke Industries for the North American market? Can you shed some light on that, please? During the course of this year, we will cover Asia, South America, and we will start most probably in the second half of this year The U. S. Business supported by Coke. Okay. Good. Okay. And the last question on Salt. Now with a more normal winter season for deicing, where do you see inventory levels? And can you already make some statements around the price implications for the next season? Are inventory levels low enough that you would expect some positive price actions? Yes. Of course, inventory levels came down a bit. And that is always a good implication for the bidding season of the following or the next bidding season. But it's by far too early to be more precise on that. And the winter is not over yet. There's more snow to come at the East Coast, and we are expecting at least a couple of more wintry days here in Europe. So let's wait what the final outcome of this season will be. The next question comes from the line of Markus Mayer from Baader Healthier. Please go ahead. First question would be on your update on your ForEx hedging. I see that the assumed rate is 120. Maybe you can shed some light on the effect for 2018 if we stay on average on this rate. And then also the effect we might see on 2019 if we basically if the ForEx rate would stay there. Markus, yes, our planning base is 120,000,000 that's right. And when we move when the dollar weakens to 130,000,000 this would cost us approximately 40,000,000 profit level. On the other hand, when it strengthens to 110,000,000 we would see an increase, which is a little bit above that number even. And for 2019, I bet for your pardon, but that's a little bit too early to say because we are only we're not even halfway through with hedging the currencies. So it's a little bit too early to give an indication for 'nineteen. Okay, very good. And the second question is then on CapEx. So have I understood rightly that basically the maximum CapEx number for 'eighteen is around about €600,000,000 but most likely, it will be a little less. Already €100,000,000 you said is basically for the tailing piles. Could you split up the remaining CapEx portion? What kind of large projects the CapEx is going to? Now after we have ramped up have some progress a lot of progress in Bethune with the ramp up, the new run rate for the group is closer to €500,000,000 And in addition, we have this €100,000,000 I mentioned earlier. That is what we expect for 2018. The next question comes from the line of Andreas Heine from MainFirst. Basically only two very small one left. And the first is on the sold result in Q4. If you take what you have here as unit costs, which were considerably down on what we have seen before, Is that a good guidance for what we can assume going forward? Or were there some special effect? That's the first question. Yes, Andreas, it's always tough to elaborate on unit cost in Salt, especially when it comes to de icing because you have significant movements there based on the sales volumes. When we break it down, overall, we made good progress. And when I look at the non deicing business, it is certainly rather stable and slightly going down. And structurally, also, the deicing costs, and they are interlinked, as you know, because we have mines where we produce both products, It's also tending south. But I'm a little bit reluctant to say Q4 is a good proxy because they can be very volatile when the volumes move. And then the last, we always refer to the U. S. Dollar euro exchange rate as being very important. All of the bitumen is probably sold under U. S. Dollar prices. How is it with the cost base? How much of the total costs are based in U. S. Dollar and how much in can dollar? 90% can dollar, 10% U. S. Dollar. And the sales, you're right, it's 100 U. S. Dollar based. And do you, in any means, hedge these can U. S. Dollar as well? Or is it still mainly U. S. Dollar, euro you hedge? No, no. We are hedging the can dollar versus the U. S. Dollar because this is the relation we're not hedging translation, we're hedging transaction, and this is why we're hedging U. Dollar versus can dollar. It's not moving that much against the euro and against the U. S. Dollar. But is there any sensitivity you have to aware of? Or is that not that important? The volatility in the past, it went parallel, but the volatility between CAND dollar and the U. S. Dollar has significantly picked up. Currently, it's moving in our favor, a weak Canadian dollar compared to the U. S. Dollar. That's good for us. But we should we will and should have a look on that. Your next question comes from the line of Knud Hinker from Equinet Bank. Three questions actually. Firstly, just to clarify your cost guidance for potash. You said that you expect the cost below €200 per tonne. Does that include lithium? That would be my first question. That's all in, yes. It's all in, Great. Secondly, the quality issues that you had at Petun during the ramp up phase, are these under control in the meantime? Yes. We have solved that problem. And again, we are talking about the huge sites in the ramp up phase. You will never see any sites where from the first day on, everything runs as expected. So even what you are focusing towards, compared to the size of the project, a minor problem. Very clear. And last question. Could you provide a kind of outlook for your for the pricing in for specialty and industrial applications in potash? Do you have already some visibility? You said that the trend was good in Q4. Have you already some visibility for 2018 as well? Henkel, we see basically there in parts a relation So if we have a positive movement in the MOP price, we also see industrial prices going up. This is when you're referring to specialties, this is why I'm currently a bit confused. When you refer to specialties, you mean probably SOP, right? Right. Yes. SOP price is indeed developing better than we have expected last year. So we have pretty good demand dynamics here. And there is no disruption on the supply side. So it's developing better than we have even expected. The next question comes from the line of Chetan Udeshi from JPMorgan. One question was just maybe just clarification. You've said the CapEx for 2017 was $8.11 approximately. But if I look at your cash flow statement, the CapEx there is more like $750,000,000 So why is there a difference between the two? Can you please explain to us? And the second question I had was One by one, please. The cash outflow you see in the cash flow is it's a cash number, obviously, which means you also have some parts from last from the previous year in there, which were in the CapEx for the year 2016, but actual payout was then in 2017. So you never have a one:one coverage of those two numbers. So will you have so the question is other way to ask this is will you have higher cash outflow again in 2018, even though the headline accrued CapEx might be lower? Yes, this is We do look at every year. We do have these differences between cash out and CapEx. And you can expect also to have this effect in 2018 and 2019. The second question I had was just if you had any view on how is the potash inventory in some of the key regions of the world, if you have any view on whether the inventory is at normal level or there could be some sort of a buildup over the last six to nine months when the prices were sort of in a rising mode as such because we've seen more recently some softening in demand in Brazil? Yes. But that was only for quite short period. And you know how strong the demand was in 2017, and there's no reason to believe that there is a real change of that to see in 2018. And due to the strong demand, the inventory level is on a healthy inventories are on a healthy level, healthy meaning not too many inventories available, and that's why we believe we should see demand comparable to what we've seen in 'seventeen, maybe even slightly higher. Understood. And do you have any view on of course, there have been some planned new capacity additions out of Russia. Have you seen them on the market yet, at least in terms of offers or being talked about in the market in terms of availability at all? The only new capacity is which entered the market is Bethune. And we have seen in the period where we have delivered into the market with our new volumes, prices went up. So obviously, the environment is very healthy currently. The next question comes from the line of Joel Jackson from BMO Capital Markets. Could you elaborate a little bit on the guidance that you won't be selling tons to coke from Bethune into the second half of the year? I could be wrong, but I think maybe the prior expectation was you would have been selling some tons around now. Is this about maybe some of the granulation capacity? Or just can you give a bit of an update? Yes. I wouldn't like to elaborate too detailed on that because it touches individual arrangements. But I personally met the guys from Coke only a couple of weeks ago. We are both very happy with the relationship, and we have both agreed on that we will start with meaningful volumes. There were some there are some small shipments, but meaningful volumes into our contractual arrangements in the second half of this year. And until then, we will continue our shipments into when we talk about granular product into Brazil. Okay. And is it reasonable for 2018 that you would sell more than 8,000,000 tonnes in the potash and magnesium segment this year? I would like to answer the question the following. I think we have mentioned in our annual report that our nameplate capacity is 9,000,000 tonnes. Of course, that takes into account that, theoretically, we could do €2,000,000 in Bethune, but we are still in a ramp up. There will be more maintenance breaks than in a normal year. So we are still a couple of years away from having the normal development in Bethune. And incorporated here also are 600,000 tonnes from Ziequencal, which will only be in our nameplate capacity for the rest of this year. Yes. And if you take all these moving parts, you are close to what we are able to do in 2018. Okay. Thank you very much. Welcome. The next question comes from the line of Marc Gabriel from Bank of Lamp. Please go ahead. Yes. Good morning, everybody. Three questions, if I may. First, could you elaborate a little bit on your assumptions for higher average selling prices given your higher share of MOP in 2018? Where should that come from that higher prices also reflecting the weaker euro? That's the first question. Yes. We have seen pricing picking up almost everywhere and almost on all kind of products. Torsten, because already mentioned that we are I think we have to say we're surprised that SOP prices picked up earlier and as expected. And this altogether leads to our expectation that we will see, including the Bethune effect, slightly higher average prices in euro terms in our statistics. Okay. And the total cost of the outage days in fiscal year 2017, what was it finally? That was roughly €40,000,000 And once again on salt, if I quite remember that was in 2013, 2014, the winter was a normal winter, what you would call a normal winter for the de icing salt. Then you had some volumes of 13,100,000 tonnes over the two winter quarters and afterwards prices rose by 20%. Now we haven't seen that strong volume compared to Q4 twenty thirteen, but is that something which you would expect as a normal winter this 30,000,000 tons? I would expect the 13,000,000 tonnes as a normal winter and the most important quarter is the first quarter. And this first quarter was very close to a normal winter. So yes, we're optimistic. Thank you. This was the last question. I will now hand back to Doctor. Burkhard Lohr for the conclusion of the call. Please go ahead. Yes. I would like to thank everybody to join that call and to ask so many good questions. And you see a management team here, which is who is that is optimistic for the future. We are seeing significantly rising earnings, and we would love to welcome you at our Capital Markets Day in September. But in between, we will see you on roadshows and on other calls. Thank you very much, and have a good day. Thank you. That will conclude today's conference call. Thank you for your participation, and have a pleasant day.