(Repeats to add UPDATE 3 in headline)
* Q4 EBIT I 36.5 million euros, vs forecast 31 million
* Says sees significant gain in 2010 EBIT I
* To cut dividend to 0.20 euro, vs forecast 0.33 euro
* Outlook on global potash demand below that of key rivals
* Shares down 2.5 pct
(Adds analyst comment)
By Ludwig Burger
FRANKFURT, March 11 (Reuters) - German salt miner K+S SDFG.DE predicted 2010 operating earnings would rebound from a massive slump last year, although uncertainty over its key potash business weighed on shares.
"There are growing signs that fertiliser demand is normalising," said Chief Executive Norbert Steiner.
He did not specify the expected gain in earnings, while his 2010 outlook on global potash markets remained more cautious than that of key competitors in Canada.
"Operating earnings should rise significantly (in 2010). This above all relates to the first-time inclusion of Morton Salt for the entire year as well as to the indications of a turnaround in earnings in the Nitrogen Fertilisers Business Segment," the company said.
The outlook was expected, but it raised questions about the group's potash business, said Equinet analyst Michael Schaefer.
"Why isn't projected 'significant' earnings growth primarily driven by potash, too?" he asked in a note to clients.
Production costs at the potash products unit may turn out to be higher than expected, he added.
K+S shares dropped 2.5 percent to 45.75 euros, while Gemany's benchmark .GDAXI was down 0.3 percent.
Analysts polled by Reuters expect operating profit to more than double to 576 million euros ($781.6 million) this year from the reported 238 million in 2009.
K+S's fourth-quarter operating profit excluding currency hedges (EBIT I) slumped to 36.5 million euros from 288 million last year, but exceeded the average estimate of 31 million euros in a Reuters poll. [ID:nLDE62727E]
K+S, the world's fourth-largest potash supplier, has steered clear of a takeover battle that has gripped the industry.
U.S. fertiliser producer Terra Industries TRA.N said on Wednesday it plans to accept a $4.68 billion takeover bid from national rival CF Industries (CF.N) unless Norwegian nitrogen specialist Yara (YAR.OL) boosts its competing offer. [ID:nN10205262]
K+S would not be an easy takeover target because long-term shareholders BASF and Russian investor Andrei Melnichenko hold more than a quarter of K+S's shares between them.
K+S itself has said it would focus on finding a partner to set up new potash mines oversees to secure long-term growth.
The group's sales volume of potash products should rise to just under 6 million tonnes in 2010 from 4.3 million tonnes in 2009, but at significantly lower average prices, it added.
K+S also proposed a lower-than-forecast dividend of 0.20 euros per share for 2009, down from 2.40 euros for 2008, when spiralling crop prices boosted demand for synthetic fertiliser.
Analysts on average had expected 0.33 euros per share.
Demand for potash has been hit hard by the economic downturn as investors rushed into, and later abandoned, agricultural commodities. Potash lasts longer in the soil than fertilisers like nitrogen, giving farmers leeway to delay its use when they foresee falling prices, which has aggravated swings in demand.
K+S, which traces its roots to a late 19th-century salt mine, also remained more cautious than some of its main rivals in its outlook on global fertiliser demand this year, repeating it expected global potash shipments of 45 million tonnes, up from 30 million in 2009.
Potash Corp (POT.TO), the world's largest fertiliser producer, said in January it expected global potash shipments of about 50 million tonnes in 2010, but cautioned that this rebound was contingent on strong grain prices. [ID:nN28196679]
Rival Mosaic Co (MOS.N) in February forecast that global potash shipments would reach 47 million-50 million tonnes this year.[ID:nWNAB5394]
K+S added, however, that demand for the mineral should almost reach pre-crisis levels by 2011, when it estimated sales volumes of about 55 million tonnes.
K+S bought Morton Salt from Dow Chemical (DOW.N) for $1.675 billion including debt, making the German mine operator the world's largest salt supplier and reducing its dependence on fickle potash markets. (Editing by Rupert Winchester)