K+S AG (SDF), Europe’s largest potash supplier, unexpectedly raised its full-year profit forecast by 12 percent as prices for the crop nutrient recovered more quickly than previously thought. The shares rose the most in almost a year in Frankfurt trading.
Earnings before interest, tax and some hedging transactions, called EBIT I, may be as much as 640 million euros ($797 million), the Kassel, Germany-based company said today in a statement. Previously K+S predicted as much as 570 million euros and a Bloomberg survey shows analysts had estimated 567 million euros.
Chief Executive Officer Norbert Steiner started a 500 million-euro cost-cutting program to help counter a drop in potash prices, triggered by Russian rival OAO Uralkali bringing extra capacity into the market last year. A “slight upwards trend” in prices is now evident, the company said today.
“All in all 2014 is looking good so far,” Chief Financial Officer Burkhard Lohr said in a video posted on the company’s website. “The long-term perspective of our business is very optimistic. Our positive business trends are holding strong.”
The shares jumped as much as 6.1 percent, the biggest intraday gain since November last year, to 23.65 euros. The stock was trading 5 percent higher at 23.43 euros as of 9:06 a.m. local time. K+S has gained 3.7 percent this year for a market value of 4.5 billion euros.
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Potash is a form of potassium used by farmers to strengthen plant roots and boost resistance to drought.
Full-year sales are now expected to be 3.7 billion euros to 3.9 billion euros, K+S said, raising the range by 50 million euros. Earnings will include an insurance gain of 36 million euros, following a business interruption at the Unterbreizbach site.
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