Welcome to the K+S first quarter 2026 earnings call. I will now hand over to Julia from K+S for some technical notes.
Ladies and gentlemen, also from my side, welcome to our call. We hope you've had a chance to review our posted slides as well as our Q1 documents available on the website. After the opening remarks by Christian, we will jump directly into the Q&A session. Some technical notes. Please refer to our disclaimer on page two of the presentation. A note on data privacy.
Please be aware that the Teams session will be recorded, webcast, and available as an audio replay on our homepage afterwards. People who ask a question in the Teams session should be clear that by switching on their camera and microphone, they agree to the recording and replay of video and audio sequences. Now, I'd like to hand over to Christian Meyer, our CEO, for the opening remarks.
Thank you, Julia, and welcome from my side as well. We have published the key figures for the quarter and our 2026 outlook already on April 22nd, so I will keep this brief. Starting with the quarter. Q1 EBITDA was almost 40% above the prior year quarter at nearly EUR 280 million. Firstly, this was due to the successful de-icing salt business because of the strong winter weather.
Following the strong start at the beginning of the year, performance continued to exceed expectations in the second half of the quarter. Secondly, in the agriculture customer segment, sales volumes and the average prices exceeded expectations, particularly in March. Free cash flow reached EUR 87 million. Cash CapEx, EUR 126 million. Let's look at our full year guidance.
We raised our 2026 EBITDA forecast to range from EUR 630 million-EUR 730 million from EUR 600 million-EUR 700 million before. This is due to a strong performance in the first quarter and the positive price trend that has continued in the agriculture customer segment over the past few weeks. It is also driven by the revised U.S. dollar exchange rate assumption of $1.17 instead of $1.20 for the remainder of the year.
However, the rising prices of materials, energy, and freight resulting from the conflict in the Middle East since March are having a negative impact compared to the original assumptions. The midpoint. The midpoint of the EBITDA range assumes current market price levels for gas and logistics, stable potash prices in Brazil, persistent positive spillover effects on other sales markets and product groups of K+S. It assumes that the increase in sulfur prices will continue to benefit the price of K+S sulfur specialty products.
The price level achieved for the product portfolio in the agriculture customer segment by mid-year will roughly need to be maintained on average in the second half of the year. The prices continue to rise overseas with corresponding persistent spillover effects, the upper end of the range could be achieved. This could, for example, happen if potassium is given greater weight in compound fertilizers, thereby increasing demand. The lower end of the earnings range could be realized if the conflict in the Middle East persisted for a longer period.
It could either limit the availability of nitrogen and phosphate fertilizers or the earning situations of the farmers and therefore potash application. This could reduce sales prices and volumes over the course of the second half on the year. The effects related to the conflict in the Middle East continue to be of limited predictability. I would like to give you a feeling for the phasing of figures for the rest of the year. Keep in mind that Q1 and Q4 are our strongest quarters due to seasonality in both business segments.
As a maintenance quarter, Q3 typically has the weakest EBITDA contribution. Q2 is normally better than Q3, significantly below Q1 or Q4 levels. Last year, Q2 saw a seasonal drop in EBITDA of EUR 90 million versus Q1. This year, the gap between the first two quarters is expected to even bigger because of the extraordinary de-icing business in Q1 and the higher cost for energy and logistics. After this brief introduction, I'm now looking forward to answering your questions together with my colleagues, Jens and Julia. With this, I now hand over to the operator to start the Q&A session.
Thank you, Christian. At this time, we will conduct the question- and- answer session. If you would like to ask a question, please click on the raise hand icon at the top of your screen to enter the queue. Once selected, please start by stating your full name and company affiliation. K+S would like to answer your questions one by one.
If you have multiple questions, please ask one question at a time, and K+S will answer it first. After that, you will have the opportunity to ask further questions. Again, if you would like to ask a question, please click the raise hand icon at the top of your screen. We will pause here briefly to allow any questions to generate. This brings us to the first question of Christian. You may now proceed.
Yes. Thank you. Good morning, Julia and team, Christian and Jens, Christian. Two questions. I'll ask them one at a time as instructed. First of all, in your specialties in potash, and namely in your sulfur-related products, can you give us an idea of price increases we should expect for Q2, given the strained sulfur supply situation of your SOP peers?
Yeah, absolutely. Hello, Christian. Our SOP products, we see increasing price levels in overseas. That's already the fact. With in Europe, it's a little bit different due to the fact that the Mannheim producers have high stocks of sulfur, and we have a price list until the end of May. In the summertime there, we have a weaker season for SOP. There we will see stable prices, and that's finally a good news based on the fact that this will be a weaker season. A little bit different Europe versus overseas.
Okay. Great. Thank you. Second question and final question for me for now is, we had a strong start to the winter season, we saw this being reflected obviously in this solid Q1 results from de-icing.
Yeah.
Yet the last part of the quarter saw rather moderate winter conditions in Europe. The question if you see any elevated inventory levels at the municipalities, for example, that could mean lower sales volumes, at least in Q3, when pre-order typically starts for the upcoming winter season then.
Yeah. No. That's. We see it a little bit different. Especially in March, we had high demand and due to the weather conditions, and that's already brought to the streets. We have, yeah, a good demand for the next month. We expect that it should be on a normal level. Finally, at the end of the year, it depends on the weather conditions in November and December, but there are no stocks that are built up.
Okay. Good to hear. Thanks very much, Christian.
Yeah. Thanks, Christian.
Thank you. Our next question comes from the line of Angelina. You may proceed.
Good morning. Thanks very much for taking my questions. I will also have two, please. My first one is a little bit of a follow-up regarding sulfur. You have mentioned that for the midpoint of the guidance, you have assumed the higher sulfur prices will still support the sulfur-based specialties. I'm just wondering what exactly you're assuming with regards to sulfur prices. Do you expect them to increase further from current levels, or are you assuming for the guidance sake that they stay elevated at this level? It would be great to get a bit more color on that.
Yeah. That's what's very important. We have different sulfur products. On the one hand, we have the SOP, but we also have the Kieserit, that's a sulfur and magnesium product. In addition, the so-called Korn-KALI, that's also included sulfur. Our expectations is that there are some spillover effects to these products over the next weeks. That's a little bit behind compared to the MOP developments, but there should be some small increases.
As Christian elaborated, it is also a positive effect that sulfur prices are not seeing the seasonal dip they have seen in earlier years. Yeah. After the price list of prices just remain stable, this is already something positive with regards to our original assumptions.
Great. Thank you very much. My second question will be on demand. Maybe as you go into the second quarter or almost halfway through the second quarter, you could give us a bit more color how you're seeing demand developing by region and maybe as early look into the second half. I'm just trying to understand if you're already seeing any evidence of farmers, maybe in the southern hemisphere, starting to change their plans for application-
Yeah.
-crops in light of the fact that nitrogen fertilizer prices are very high. Are you seeing any influence there?
Yeah. No, we see a real good and strong demand also on our side, it's pretty close to our competitors. We are still able to optimize our netbacks by locking in the different contracts. We see finally is a good application globally. You see the high volumes that are finally imported in Brazil and the additional demand in China, where the other price levels, domestic price levels are pretty high, are still pretty high.
The acceptance of higher prices from China for cross-border deliveries from Russia. Also, we expect some increases in India. These are smaller volumes, but also some increases. What's also very important, we still see a strong demand compared to last year in Southeast Asia, based on the fact of the good palm oil prices. We currently don't see a decrease of demand.
Great. Thank you very much.
Thank you. Our next question comes from David's line. David, you can proceed.
Thank you. It's David Symonds from BNP Paribas. Could I ask about the bridging items quarter-on-quarter between the first quarter and the second quarter? You mentioned you expect a significant step down and possibly a more significant step down than you saw last year. I remember last year there was an overproduction impact in Q1 which then sort of reversed in Q2, and I think you've seen that again this year, but maybe you could help us with the bridge quarter-on-quarter?
Thank you, David, for that question. Last year, you are right, that was a inventory built up in Q1 and inventory drawdown in Q2. When we had the ad hoc release, we also discussed this. One of the positive effects that we saw in this year's Q1 was that we did not have a negative inventory development because we had a good production in Q1 this year again as well. That old drop-down that we have seen from Q1 to Q2 seasonally will also, maybe not exactly in the same magnitude, but ballpark, happen this time because also production in this year's Q1 was good as last year.
Understood. If I do some sort of quick math on where you sit on the guidance, it seems to imply like eight at the midpoint, the second half will be lower year-on-year than it was in 2025. I'm struggling to understand why that would be the case, given that the midpoint assumption is that prices stabilize from mid-year at a higher level than they were last year. I understand there's some freight cost increase, but it seems like the net benefit should be, second half should be higher year-on-year.
First of all, you have the energy cost increase, and you have the logistic cost increase, both low, double-digit EUR 1 million amount, burdens kind of for the year. Then for sure, it depends on the final ASP that we reach until the end of Q2, and which will then on average be stable during H2. Yeah. The I mean, last year the ASPs were quite good in the second half of the year. Yeah.
There's no special effect beyond, ASP and then raw materials and energy, etc . Okay. Cool. Thank you.
Thank you. Ladies and gentlemen, once again, if you'd like to ask a question, please click the raise hand icon at the top of your screen. We have a follow-up question from Christian. You may proceed.
Yes. Thank you. Just a small technical, follow-up. What was the reason for the rather high interest expense in your P&L of what was it? Almost EUR 60 million or so. What should we consider for Q1 going forward? For the remainder of the year going forward, sorry. Yeah.
The rather high interest expense in the P&L should be related. I will check that and maybe come back to you. In the financial result, there are always changes with regards to the exchange rate. As we have seen changing exchange rates, that can be the reason. Within the cash flow statement, the cash interest was actually quite stable.
Yeah. Okay. Thanks very much.
You're welcome.
Thank you. Once more ladies and gentlemen, to ask a question click the raise hand icon at the top of your screen. This concludes the time allotted for Q&A. Handing it back to Christian Meyer of K+S for any final remarks.
Yeah. Thanks a lot for your participation and your questions. As we already published, within our talk, our numbers, that's maybe the reason why a lot of questions are already answered. Yeah, maybe tomorrow we have our AGM, and then we see you for the half year results soon. Thanks a lot, and see you. Bye-bye.
This concludes today's Evercall. Thank you all for joining today, and have a great day.