Welcome to the K+S conference call regarding the publication of the financial report FY 2017, hosted by Dr. Burkhard 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. If at any time you need assistance, please press star zero on your telephone keypad, and you will be connected to an operator. Please note, on page two of the presentation, you will find the disclaimer. I'm now handing the call over to Dr. Burkhard Lohr to begin. Please go ahead.
Thank you. Ladies and gentlemen, a very warm welcome to our full year 2017 conference call. Like always, with me here on the call is Thorsten Boeckers, our CFO, Jörg Bettenhausen, Head of Corporate Finance and Accounting, and Lutz Grüten, 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 profits, EBITDA and EBIT1, were up 11% and 18% on last year's achievements. They only came out of the lower end of the guided range due to the EUR 43 million negative impact caused by the Sigmundshall closure.
Adjusted for this burden, operating profits would have been above the midpoint of our guidance. Furthermore, we improved the adjusted free cash flow as a result of our operational performance and a disciplined CapEx spending. Our dividend proposal of EUR 0.35 per share is in line with our policy to cash out 40%-50% of the adjusted net income. The proposed increase of EUR 0.05 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 25 outage days. This was not only a huge improvement on 2016, 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 a 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 Sigmundshall by the end of 2018 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 million tons. Overall prices came down as expected on the back of the inventory situation at the end of last year's winter season. We remain on a very good track to deliver on our Salt 2020 target of a normalized EBITDA of at least EUR 400 million. 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 2030, 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 are the 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. Translated into EUR, as shown in the chart, the softening U.S. dollar had an adverse effect.
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 2018 remains fairly good, and the outlook remains promising. Prices in specialty fertilizers have bottomed out in Q3 2017 and are now showing an upward trend. Our portfolio price reported in EUR should improve slightly, and we expect that our reported cash cost per ton should have peaked in 2017. 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. The average selling price of EUR 110 per ton 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 a 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. 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 EBIT1 due to higher D&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 of potash and magnesium products remain supportive, and even reported in euro terms, should be up slightly on last year's achievements.
The decision to shut down Sigmundshall caused an impact on our earnings, which will not occur again in 2018. Our reported production costs in potash and magnesium products have peaked in 2017, and the salt division is on track to deliver on our Salt 2020 strategy. Based on the current euro-US 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 target to becoming free cash flow positive in 2019. I am 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+S.
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 a synergy validation and can confirm our target to achieve a net figure of at least EUR 150 million by the end of 2020. 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 save-the-date in January. We know Bethune is not a regular station on one of your frequent business trips to North America. However, we, the entire board of K+S, would be happy to host you for 24 hours at our Capital Markets Day on September 5th. Now I would like to thank you for your attention, and as always, we are happy to answer your questions.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. If you change your mind and wish to withdraw your question, please press star two. If you would like to ask more than one question, please submit one question at a time. Once answered, we will move to your next question. You will be advised when to ask your question. The first question comes from the line of Michael Schaefer from Commerzbank. Please go ahead.
Yeah, thanks for taking my questions. I start with the first one. On the P&M business segment, looking into the fourth quarter cash unit costs and stripping out the EUR 43 million provision, I calculate cash unit costs of production of something like EUR 190 per ton in the fourth quarter. I wonder whether you can shed some light on how do you see this item basically developing into 2018? Also maybe an update on where Bethune sales volume has been in the fourth quarter would be my first question.
Yeah, Michael, it's Thorsten. Morning. When we look out into 2018 in order to clarify the metric, revenues minus EBITDA, all in, we expect unit cost per ton in potash of a little bit below EUR 200.
Mm-hmm. Bethune sales volumes?
Yeah, you know that we had almost 500,000 tons of production, we're not gonna 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 one-third year-over-year. With the indication you provided on the first quarter, with a promising start you mentioned, compared to last year, 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?
Yeah, 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. We have seen several nice events. It started very early this year with a nice snow storm at the East Coast. Then all over 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. That could help us in the next season. Europe is doing well. All together, this is much better than it was in the first quarter of 2017.
Now I would say finally, after a couple of years, we have seen a normal first quarter again.
Okay, thank you.
You're welcome.
The next question comes from the line of Christian Faitz from Kepler Cheuvreux. Please go ahead.
Yes, good morning, gentlemen. Two questions, please. I'll start with the first one. On Bethune, basically back to back with Michael's question. Can you discuss current operating rates in Bethune?
Maybe I should start with one general remark. Last year was the last year where Bethune was split in a production phase and in a ramp-up phase. From this year on, Bethune is a mine, a site like Zielitz, like Werra, like Neuhof, and we are not going to report production numbers, D&A, whatever we have reported in the past to better understand the production phase. I can confirm that we are happy with the ramp-up, 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 break even on the EBIT1 level in 2019.
Okay, great. Second question, and then I'll go back in line. Can you please comment on the roundabout 10% price decline in industrial and consumer sales? What causes those rather wide swings we have seen over the past few quarters? I reckon, and I do realize it's up sequentially, the price, but why the 10% decline Q4 over Q4 last 2016?
Christian, there is, from an underlying market trends point of view, nothing to worry about. You remember that we had this disastrous Hurricane Irma last year, and this affected especially also these segments. In this area, which was widely affected, people do no longer buy pool salt or water softening products. This was a volume effect and on the other hand, because of the emergency agency, FEMA, 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 non-standard sourcing costs.
Why the 10% price decline? I asked for price.
There is also an FX effect in.
It is mostly FX in there.
Yeah.
Thank you.
The next question comes from the line of Paul Walsh from Morgan Stanley. Please go ahead.
Yeah, 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 de-lever this year with the step up in EBITDA? Is it possible we get to a situation where you are de-leveraging organically at a net level? Thank you.
Yeah, Paul, when you see that we made already significant progress from 2016 to 2017, we see another significant improvement on the free cash flow level, also in 2018. We do our utmost in order to become more efficient and to preserve cash. We also will see a significantly reduced CapEx again over 2017.
Yeah.
Burkhard confirmed that Bethune is turning positively on an EBITDA level. Our guidance remains that we see a positive free cash flow in 2019. This means, from a net debt point of view, the de-leveraging will start in 2019. However, we expect a significant increase in the EBITDA for 2018, having a positive impact on de-leverage.
That's very clear. Just maybe a second quick one. In terms of the EBITDA guidance for 2018, looking at that bridge, we're coming to somewhere above EUR 800 million. Is that a reasonable assessment?
Yeah, I know that I have answered that question already last year. Understand that it's the mid of March now.
Understood.
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 see significant improvements again, 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. Can you 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 2018 or 2019? That's the first question.
Yeah. Let's do one by one, please.
Yep
Mr. Tyler. Yeah. I think we have indicated in the past that, of course, the reason for closing Sigmundshall 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 2017, I'm talking about slightly, and that will be the case in the course of this year as well. As you know, we close by the end of this year, so there will be no impact any longer in 2019.
Secondly, whether you can talk a little bit about the impact on your overseas realized price in 2018 of the Bethune product. Whether you can help us understand whether there will be a noticeable impact on the realized price. That's the next one, then I've got 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?
Yeah. As we are talking about MOP standard for China or for Asia with the first volume from Bethune and granular pink into Brazil, there's, as you know, no specialties. On average, it has a negative impact on our average selling price.
Okay. You still expect the average selling price year-on-year to improve in EUR terms despite that negative impact?
Yes.
Okay. The third question, you talk about the tailings pile management in Germany. Should we anticipate anything meaningful in terms of either CapEx or OpEx in 2018, 2019 versus the 2017 baseline?
Yeah. That is all already incorporated in our CapEx guidance or in our CapEx expectations or forecasts. I think the rule of thumb, one could say the next three years, we are going to have roughly EUR 100 million CapEx, for these kind of developments. It's not only the heap extension in Hattorf, it's Wintershall the following year and Zielitz the following year. It is by chance that we have to enlarge all these in such a short period of time. The burden is roughly EUR 100 million for the next three years. That's incorporate for our expectation when I talk about 2018 now, in the EUR 600 million expectation for 2018.
Great. Nothing material in terms of the operating cost?
No. The operating cost will be reflected in the cost per ton. As we expected, here we have peaked in 2017.
That's very helpful. Thank you.
Welcome.
The next question comes from the line of Stephanie Bothwell 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. 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. Clearly FX is a headwind this year if you take the year to date spot, I think it's around EUR 40 million based on your guidance. Are those sort of the three moving parts, X, 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.
Okay. That's perfect. Thank you very much.
Welcome.
The next question come from the line of Oliver Schwarz from Warburg Research. Please go ahead.
Thank you for taking my questions. Firstly, perhaps back to Sigmundshall. I do understand that the earnings contribution of Sigmundshall to EBIT1 is negligible. 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? Secondly, 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. Thank you. That would be my first question.
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. It's a real hard cut. There will be no impact on the EBITDA in 2019 and onwards because we have covered all works that we have to do with our provisions. Maybe your question was referring to cash flow. That will be small numbers because our obligations are running very long and the annual impact is small.
I was more thinking about in terms of the EBITDA contribution of Sigmundshall. I know that you said that EBIT1 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. 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 Sigmundshall 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 months period in time, to come up to full production level as well?
Yeah, good question. Exactly this we are working on. We want to convince as many people as possible to move from Sigmundshall to the Werra. 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 220 outage days in 2016. We didn't know how the near future would look like. We had some outage days in 2017. Now we have solved all environmental topics, and we can offer them a long-lasting future. I'm convinced that in the course of this year, we will settle all problems at the Werra.
Very clear. Thank you.
Welcome.
The next question come from the line of Thomas Swoboda from Societe Generale. Please go ahead.
Good morning, gentlemen. I still have three questions. The first one is on Sigmundshall and the cash outflow, the EUR 43 million you booked in your P&L last year. How much of this will go out as cash in 2018, please?
Thomas, in 2018, we will not see an outflow at all. The production stops by the end of this year. If we have severance payments, this will happen in 2019. The fraction regarding to an increase of the provisions for tailings piles and whatever, this is a cash outflow which happens over the next decade, actually.
If I may follow up, so what would you expect for 2019 then?
For 2019, we expect that a good part of the provision that we have built will be cash flow, roughly half of that.
Half of it, okay.
Roughly. The rest will, again, as we said, will last over many, many years.
That is perfect.
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. 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 the Q1 call, please.
Okay. I will try a third question, and this is on your 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? 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 a product.
We don't do that.
We feel comfortable with the debt levels. That's pretty clear that we're going to deleverage the group, but it's also clear that when you see the path, there's a lot of work to do, but we are on 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 half a billion. It was always our strategy to see that we get the refinancing done early enough in order not to become under pressure. We certainly also look at things like how can we secure interest rates if we really see a further movement there.
That's perfect. Thank you.
The next question comes from the line of Patrick Rafaisz from UBS. Please go ahead.
Thank you, good morning, everyone. Three questions, please. 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 tons of production, you built up 300,000 of inventories. Do 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 1.7 million-1.8 million tons of production will be pretty much equal to sales volumes as well in 2018?
Yeah. As you know, we have storage facilities in Bethune and in Vancouver. The current inventory is pretty much what a normal fill of these storage facilities will be in the future. Yeah.
There is no further increase and no significant decrease of that volume to be expected.
Okay. Very helpful. Thanks. The second question, also relates to the ramp-up of Bethune. Last year, I believe a 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 Koch Industries for the North American market? Can you shed some light on that, please?
Yeah. In the course of this year, we will cover Asia, South America, we will start, most probably in the second half of this year, the U.S. business, supported by Koch.
Okay. Good. Thanks. The last question on salt. Now with a more normal winter season for de-icing, 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?
Yeah. Of course, inventory levels came down a bit that is always a good implication for the bidding season of the following or the next bidding season. It's by far too early to be more precise on that. The winter is not over yet. There's more snow to come at the East Coast, we are expecting at least a couple of more wintry days here in Europe. Let's wait what the final outcome of this season will be.
Mm-hmm. Okay. Thank you very much.
Welcome.
The next question comes from the line of Markus Mayer from Baader Helvea. Please go ahead.
Yeah. Good morning, gentlemen. First question would be on your update on your foreign tax hedging. I see that the assumed rate is 1.20. Maybe you can shed some light on the effects for 2018 if we stay on average on this rate. Also the effects we might see on 2019 if basically the foreign rate would stay there. Thank you.
Hi, Markus. Yeah. Our planning base is 1.20. That's right. When the dollar weakens to 1.30, this would cost us approximately $40 million on an operating profit level. On the other hand, when it strengthens to 1.10, we would see an increase, which is a little bit above that number even. For 2019, I beg for your pardon, that's a little bit too early to say because we're not even halfway through with hedging the currencies. It's a little bit too early to give an indication for 2019.
Okay. Very good. The second question is on CapEx. Have I understood rightly that basically the maximum CapEx number for 2018 is around about EUR 600 million, most likely it will be a little less? Already EUR 100 million you said is basically for the tailing piles. Could you split up the remaining CapEx portion? What kind of large project the CapEx is going to?
Now, after we have some progress, a lot of progress in Bethune with the ramp up, the new run rate for the group is closer to EUR 500 million. In addition, we have this EUR 100 million I mentioned earlier. That is what we expect for 2018.
Okay. Perfect. Thank you.
The next question comes from the line of Andreas Heine from MainFirst. Please go ahead.
Basically only two very small one left. The first is on the salt results in Q4. If you take what you have here as unit costs, which were considerably down from what we have seen before. Is that a good guidance for what we can assume going forward, or were there some special effects in? That's the first question.
Yeah, 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. When I look at the non-de-icing business, it is certainly rather stable and slightly going down. Structurally also, the de-icing 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.
Then the last, we always refer to the U.S. dollar, EUR exchange rate as being very important. All of the Bethune mine 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 Canadian dollar?
90% Canadian dollar, 10% U.S. dollar. The sales, you're right, it's 100% U.S. dollar based.
Do you in any means hedge these Canadian dollar, U.S. dollar as well, or is it still mainly U.S. dollar, EUR you hedge?
No, we are hedging the Candollar versus the U.S. dollar because this is the relation. We are not hedging translation, we are hedging transaction, this is why we are hedging U.S. dollar versus Candollar.
It's not moving that much against the euro and against the US dollar. 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 Canadian dollar and US dollar has significantly picked up.
Currently, it's moving in our favor, a weak Canadian dollar compared to the US dollar. That's good for us. We will and should have a look on that.
Okay. Thanks.
You're welcome.
The next question comes from the line of Knut Henke from equinet Bank. Please go ahead.
Yeah, good morning, gentlemen. Thank you for taking my three questions, actually. Firstly, just to clarify your cost guidance for potash. You said that you expect the cost below EUR 200 per ton. Does it include Bethune? That would be my first question.
It's all in, yes.
It's all in it. Great. Secondly, the quality issues that you had, at Bethune during the ramp-up phase. Are these under control in the meantime?
Yeah, we have solved that problem. Again, we are talking about a huge site in the ramp-up phase. You will never see any site, where from the first day on everything runs as expected. Even what you are focusing to was, compared to the size of the project, a minor problem.
Oh, very clear. Thank you very much. Last question. Could you provide a kind of outlook for the pricing, 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?
Hey, Henke. We see basically there, in parts, a relation to the MOP prices. If we have a positive movement in the MOP price, we also see industrial prices going up. 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. Yeah.
The SOP price is indeed developing better than we have expected last year. We have pretty good demand dynamics here. There's no disruption on the supply side. It's developing better than we have even expected.
Thanks a lot.
The next question comes from the line of Chetan Udeshi from JP Morgan. Please go ahead.
Yeah, hi. Thanks for allowing to ask questions. One question was clarification. You've said the CapEx for 2017 was EUR 811 approximately. If I look at your cash flow statement, the CapEx there is more like EUR 750. Why is there a difference between the two? Can you please explain to us? The second question I had was-
One by one, please.
The cash outflow you see in the cash flow, it's a cash number, obviously, which means you also have some parts from the previous year in there, which were in the CapEx for the year 2016, but actual payout was then in 2017. You never have a one-to-one coverage of those two numbers.
The question is, the other way to ask this is, will you have higher cash outflow again in 2018, even though the headline accrued CapEx might be lower?
Yeah.
Sorry?
If we do look at every year, we do have these differences between cash out and CapEx. You can expect also to have the same effect in 2018 and 2019.
Okay. That's clear. Thank you. 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 build-up 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.
Yeah, that was only for a quite short period. You know how strong the demand was in 2017, there's no reason to believe that there is a real change of that to see in 2018. Due to the strong demand, the inventories are on a healthy level, healthy meaning not too many inventories available, that's why we believe we should see demand comparable to what we've seen in 2017, maybe even slightly higher.
Understood. 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? Thank you.
The only new capacity which entered the market is Bethune. We have seen in the period where we have delivered into the market with our new volumes, the prices went up. Obviously, the environment is very healthy currently.
Thank you.
The next question comes from the line of Joel Jackson from BMO Capital Markets. Please go ahead.
Hi. Good morning. Could you elaborate a little bit on the guidance that you won't be selling tons to Koch from Bethune, into the second half of the year? I could be wrong, but I think maybe the prior expectation was you would've been selling some tons around now. Is this about maybe some of the granulation capacity, or just maybe a bit of an update? Thanks.
Yeah. I wouldn't like to elaborate too detailed on that because it touches individual arrangements. I personally met the guys from Koch only a couple of weeks ago, and we are both very happy with the relationship, and we are both agreed on that we will start with meaningful volumes. There are some small shipments, but meaningful volumes into our contractual arrangement in the second half of this year. Until then, we will continue our shipments into, when we talk about a granular product into Brazil.
Okay. Is it reasonable for 2018 that you would sell more than 8 million tons in the Potash and Magnesium Segment this year?
I would like to answer the question as the following. I think we have mentioned in our annual report that our nameplate capacity is 9 million tons. Of course, that takes into account that theoretically we could do 2 million in Bethune, but we are still in a ramp-up. There will be more maintenance breaks than in a normal year. We are still a couple of years away from having the normal development in Bethune. Incorporated here also are 600,000 tons from Sigmundshall, which will only be in our nameplate capacity for the rest of this year. Yeah, 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 Bankhaus Lampe. Please go ahead.
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 weakener euro? That's the first question.
We have seen pricing picking up almost everywhere and almost on all kind of products. Thorsten Boeckers already mentioned that I think we have to say we're surprised that SOP prices picked up earlier and as expected. This all together leads to our expectation that we will see, including the Bethune effect, slightly higher average prices in euro terms in our statistics.
The total cost of the outage days in fiscal year 2017, what was it finally?
It was roughly 40 million EUR.
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. You had some volumes of 13.1 million tons over the two winter quarters, prices rose by 20%. We haven't seen that strong volume compared to Q4 2013. Is that something which you would expect as a normal winter, this 13 million tons?
I would expect the 13 million tons as a normal winter. The most important quarter is the first quarter. This first quarter was very close to a normal winter. Yeah, we're optimistic.
Okay. Thank you very much.
W.
Just a reminder, if you would like to ask a question, please press star one on your telephone keypad now. Thank you. This was the last question. I will now hand back to Dr. Burkhard Lohr for the conclusion of the call. Please go ahead.
I would like to thank everybody to join that call and to ask so many good questions. You see a management team here that is optimistic for the future. We are seeing significantly rising earnings, we would love to welcome you at our Capital Markets Day in September, in between, we will see you on roadshows and on other calls. Thank you very much, have a good day.
Thank you. That will conclude today's conference call. Thank you for your participation and have a pleasant day.