K+S Boosts Dividend On Strong Q4 Earnings
German fertilizer supplier K+S proposed a higher-than-expected dividend, banking on a marked profit increase as farmers' demand gets a boost from strong grain and crop prices.
The world's fourth-largest potash miner reiterated that 2011 operating earnings adjusted for effects from currency hedging instruments would be significantly higher than last year.
"The sharp increase in cereal prices that started in the second half of (2010) and the resulting improved income situation of farmers further boosted the demand for fertilizers," Chief Executive Norbert Steiner said in a statement.
K+S proposed a dividend of €1, up from €0.20 last year and above a forecast for €0.88. The shares were 0.7% higher in pre-market trades, in line with indications for the broader German market. Key agricultural commodities such as corn and soy are trading near 2-1/2 year highs on strong demand for biofuels and after extreme weather weighed on output last year.
K+S's largest rival Potash Corp, having escaped BHP Billiton's hostile takeover approach, said in January that world food prices would rise further in years to come, bolstering fertilizer demand.
The German group's fourth-quarter earnings before interest and tax, adjusted for effects from currency hedging (EBIT I), rose to €195 million ($271 million), more than the €154 million predicted by analysts.
The German potash miner also said it plans to replace its bearer shares with registered shares, a move that would hamper sneak takeover approaches.
Speculation about a consolidation in the potash sector revived after Cargill unveiled plans to spin off its $24 billion majority stake in Mosaic, potentially exposing the world's second-largest fertilizer producer to takeover approaches.
K+S - facing up to exhausting its domestic potash reserves in about four decades - in November bought the Canadian holder of mining licenses Potash One and plans to invest about $2.5 billion in developing its projects.
