* Q2 EBIT I down 94.5 pct at 18.1 mln eur
* Says sees sharp decline in profits in 2009
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FRANKFURT, Aug 13 (Reuters) - German salt miner K+S SDFG.DE said on Thursday its full-year earnings would drop sharply after second-quarter operating profit plummeted as demand for its main product potash remained sluggish.
The world’s fourth-biggest potash maker said that demand from farmers in Europe, which accounts for almost two-thirds of the company’s fertiliser sales, were still restrained.
“There is no sign yet of the normalisation of demand,” Chief Executive Officer Norbert Steiner said, adding that the long-term trends underpinning fertiliser demand remained intact.
K+S, which traces its roots to a late-19th-century salt mine, said it still expected a significant decline in sales and now saw a sharp decline in earnings this year.
Its quarterly operating profit excluding currency hedging instruments slumped to 18.1 million euros ($25.6 million), down from 326.4 million euros a year earlier, below the average estimate of 33 million in a Reuters poll of 13 analysts.
Quarterly sales dropped 37.6 percent to 738.7 million euros, slightly worse than the 747 million expected.
Fertiliser peers including Potash Corp POT.TO POT.N, the world’s largest, Mosaic Co (MOS.N) and nitrogen specialist Yara (YAR.OL) also recently reported sharp declines in second-quarter profit. [ID:nBNG368711] [ID:nN22333827] [ID:nLF256714]
Demand for potash — a key nutrient in synthetic fertilisers alongside nitrogen and phosphorus — has been buffeted by the boom and bust of financial markets over the last two years as investors rushed into and later abandoned agricultural commodities.
Global potash suppliers, dominated by Canadian and Russian miners, have reined in production but prices have still started to crumble in recent months. The industry is eagerly awaiting the outcome of price negotiations with China’s import monopoly, the world’s largest potash user.
K+S shares change hands for 13 times estimated earnings for the coming 12 months, according to Thomson Reuters StarMine, which weights estimates according to analysts’ track record.
That is roughly in line with multiples for Potash Corp of Saskatchewan and Mosaic.
Reporting by Ludwig Burger