November 10, 2011 / 6:39 AM / in 6 years

UPDATE 2-K+S sees 2012 op profit flat on cautious demand

* Q3 adjusted EBIT 198.5 mln eur vs 190 mln poll avg

* Sees 2011 adjusted EBIT 0.95-1.0 bln eur, lowers upper end of range

* Says sees 2012 sales, EBIT at about same level as 2011

* Shares indicated 4.8 pct lower in premarket trading (Recasts, adds CEO comment, share indication)

By Ludwig Burger

FRANKFURT, Nov 10 (Reuters) - Potash fertiliser maker K+S AG (SDFGn.DE) said operating profit and sales would be flat in 2012, striking a note of caution as distributors of farming supplies reduce inventory levels.

“There is uncertainty in the trade sector, with the 2008-2009 financial crisis still very much in mind,” Chief Executive Norbert Steiner said in a video posted on its Internet site.

But K+S, among the world’s four largest potash miners, is still banking on high crop prices to keep fuelling farmers’ demand for fertilisers, predicting a rise in operating profit of as much as 40 percent this year.

“At attractive cereal prices, the trade sector will try to avoid not having enough (potash) product on hand for the coming season,” the CEO added.

The group said it expected 2011 adjusted EBIT of between 950 million euros ($1.3 billion) and 1.0 billion, up from last year’s 714.5 million.

That was a slightly more subdued view as it had previously seen the upper end of that range at 1.05 billion.

The shares were indicated to fall 3.9 percent in premarket trading, while Germany’s blue chip index was seen down 2.4 percent.

Prices for key crops such as wheat Wc1, soy Sc1 and corn Cc1 dropped by as much as 20 percent in September but are still trading well above year-earlier levels, offering farmers rich returns on fertiliser expenditures.

K+S also said its third-quarter earnings before interest and tax (EBIT), adjusted for some currency hedging effects, jumped 69 percent to 198.5 million euros, slightly above the average analyst estimate of 190 million in the Reuters poll.

Prices for potash, a key mineral in synthetic fertilisers, have so far largely avoided the jitters in global financial markets, having slumped from record highs after the previous financial crisis.

Potash Corp , the world’s largest fertilizer maker, said last month its quarterly profit more than doubled, as strong grain prices boosted demand for its crop nutrients.

Potash Corp and Canadian peer Agrium Inc , however, have warned that some fertiliser dealers may delay purchases for as long as possible to minimise inventory levels given the recent volatility in the global economy. ($1 = 0.736 Euros) (Editing by David Holmes)

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