Major diversified minerals company, K+S Group, has announced a new strategic growth strategy, to refocus its operations and realise more than €150million in synergies.
K+S Group, one of the world’s largest, customer-focused, independent minerals companies in agriculture, industry, communities and consumers, revealed its “Ambitious Growth Strategy 2030” which will refocus the company’s entire way of working.
“Shaping 2030” will put K+S Group on an ambitious, robust and sustainable course of growth which will see the company build on its strengths in mining and processioning minerals.
At its core, this strategy goes to reposition a manufacturing-driven company as a market-focused, customer-focused enterprise. The alignment on four Product Market Segments demands the systematic integration of the Potash and Magnesium Products and the Salt business units and enables to realize synergies.
Dr. Burkhard Lohr, Chairman of the K+S Board of Executive Directors, notes: "We have reached an important milestone with the opening of the Bethune mine in Canada. It was the right time to develop a clear picture of how K+S is to be structured in 2030. To this end, we examined all growth options with a no-holds-barred mindset. Geared for the long-term, “Shaping 2030” offers maximum value creation potential paired with great robustness."
Transformation through 2020
The alignment on four Product Market Segments – Agriculture, Industry, Consumers and Communities – will help K+S to better address and connect with customers. The product portfolio can be broadened with a focus on high-margin products. The integration of the business units Potash and Magnesium Products and Salt is a key prerequisite for reinforcing customer orientation. It also goes to tap synergies with a focus on operations, digitization, administration, procurement and logistics. K+S expects an annual positive earnings effect of at least € 150 million p.a. by the end of 2020. The company will return to become Free Cash Flow positive by 2019. The indebtedness (Net debt/EBITDA) is to be halved by 2020. The company wants to regain an investment grade rating in 2023.
Commenting on this, Dr. Burkhard Lohr explains, "The persistent focus on our customers and our enterprise's development towards ‘One Company’ marks an important change for K+S. This also constitutes a change in culture, for the way we see our business and the way we work together will be transformed."
Growth phase 2020 to 2030
The company has drafted a strategic roadmap setting out development goals and strong growth options for the growth phase up to 2030. It aims to increase the operating earnings and reduce the business's dependence on external factors such as weather and the global market price for potassium chloride (MOP). To realize these growth options, the company will expand the specialty business and related areas such as fertigation. K+S also intends to step up its business in high-growth regions such as Asia and Africa. This clearly defined path towards growth will open up new development and job opportunities for employees.
Ambition: €3 billion EBITDA in 2030
Looking to the future, K+S has a very demanding ambition for 2030: € 3 billion EBITDA with at least 15% Return on Capital Employed (ROCE). K+S will achieve about two thirds of the growth towards this goal by driving the development of its existing business and optimizing its organization and processes.
Dr. Burkhard Lohr adds, "We have deliberately decided to publish our EBITDA ambition. That is our way of making it clear that K+S has long-term value prospects if we continue to persistently develop the organization and our business. In a first step, this means tapping at least € 150 million in synergies, halving the leverage, and laying a solid foundation for future growth. One of our strategy's strengths is that none of the growth options is so dominant that ´Shaping 2030`'s success depends on it."