K+S AG

Thorsten Boeckers - IR Burkhard Lohr - CFO

Fiona White - HSBC Stephanie Bothwell - Bank of America Merrill Lynch Michael Schäfer - Commerzbank Andrew Benson - Citigroup Oliver Schwarz - Warburg Research Markus Mayer - Baader Bank Martin Evans - JP Morgan Jeremy Redenius - Bernstein

Thank you. Ladies and gentlemen welcome to our Q3 conference call.

Thorsten Boeckers and I will answer your questions after brief presentation. Now let’s start with highlights of another challenging quarter on Slide 2.

It has been a long time since K&S showed a quarterly loss. MOP prices continue to stabilize in the quarter.

However in a year-on-year comparison lower prices have left their mark. On top of this, the limited deep-well injection permit caused further production standstill at our Werra plant.

We’ve made progress on the legacy side. Repair work has started in connection with this recent crystallizer incident.

Production of the first tonne is expected in the second quarter of next year. Our Salt business is preparing for the upcoming winter season.

[Indiscernible] are mostly concluded with mixed results. All in all we expect in EBIT1 for the full year of 2016 in the range of €200 million to €260 million.

Now let’s go into detail on all of this starting on Slide 3. I mentioned the two main reasons for the negative quarterly EBIT already.

We’d have shown a positive result even in this tough market environment if our potash unit could have fully produced. The limited permit for our Werra plants has resulted in more than 70 days of partial production standstill with an EBIT impact of about €70 million in the third quarter.

This also had an adverse effect on our product mix as our specialities are mainly produced at the Werra site. Subsequently the average selling price of our business unit potash and magnesium product declined year-on-year and quarter-over-quarter.

Please turn to Slide 4. Our business unit salt, faced lowered the icing volumes in the quarter at lower average prices.

High inventories resulting from a mild previous winter had an impact on big prices and pre-season volumes in almost all regions. The biggest impact are felt in Europe and the US Midwest which has both faced several mild winters in a row.

Nevertheless our balance to regional presence makes us more robust and our competitors. It puts us into a great position for the upcoming season and K&S is ready to deliver.

And speaking of the great position our non de-icing business continues to make progress with strong brands helping us maintaining growth in very attractive segment. The salt business is also making good progress by executing the Salt 2020 Strategy.

Now let’s turn to our potash business on Slide 5. The conclusion of contract in India and China has stimulated global market demand.

The only market in which customers are still a bit relaxed in, it’s Europe. But we expect it to change soon.

We mentioned in the Q2 call that we believe MOP prices will stabilize in the third quarter as confirmed debt. Our main issue at K&S is that we cannot fully participate in this positive development.

The missing volumes from our Werra plant are resulting in lower sales volumes and average pricing because of the product mix effect, SOP prices at high level despite the decline in the quarter. Slide 6 please.

Legacy remains our flagship project. Despite the incident in July, we’re continuing to commission perhaps as we’re not affected.

We have one of the biggest available cranes in Canada on-site and have started with the removal of damaged equipment. We expect production to start in the second quarter of next year.

This would give us the ability to produce up to 700,000 tonne of MOP next year and we will reach as a 2 million tons capacity by the end of 2017 as planned. Looking at the CapEx budget in 2013 we projected CAD4.1 billion and we were on track to achieve that.

Now due to the incident we will face a moderate increase. But when we look at the amount in Euro terms the budget is unchanged where the further strengthen 2013 [ph] due to favorable currency development.

And now please move to Slide 7. We have already highlighted the limited deep-well injection permit as it has left a severe mark on our numbers.

What we can say from today’s point of view is that the revenue process is ongoing. Production remains challenging as we are dependent on the weather to a large extent.

We’re still confident that we will still find a solution in the near future. But from today’s point of view we can neither predict the outcome nor the timing.

Permit procedures have always been part of our business and will continue to be in the future. All of these procedures are complex and occasionally need adjustments or take longer than previously expected.

Our roadmap shows what is on the horizon in the coming years. For example, the application to extend tailings pile capacity in Hattorf, also part of the Werra plant, is already underway.

Also the construction of the KCF facility is making progress. This will help us to reduce sold water revenues by around 20% from 2018 on.

Now please to move to our guidance on Slide 8. We have narrowed our EBIT1 range by reducing the upper end.

We now expect €200 million and €260 million for 2016. The salt business is expected to favor decline after the mild last winter.

Our projection is always based on a normalized season. However in the end a lot depends on Q4 winter weather which may even surprise us positively.

The main reason for the cut is our potash business. The previous upper end of €300 million for the Group missing deep-well injection permit in Q4, which we don’t have yet.

Countermeasures are making good progress. However the missing permit is expected to cost us around €200 million, this year.

Now please moved to Slide 9. And let me conclude my presentation with our 2020 goal.

Our Salt 2020 strategy is well on track to delivering an EBITDA of more than €400 million by then. Also Legacy will contribute positively.

Today’s potash prices makes a target very ambitious, however we still believe this low pricing environment is not sustainable. On top of that, our business units are working on strategic initiatives that will support our goal of €1.6 billion EBITDA by 2020.

Everybody within the K&S Group is very committed to delivering, irrespective of the challenges we’re facing right now. Ladies and gentlemen, thank you for your attention and we will take all your questions now.

The first topic I would like to ask about related question to, your production abilities or capabilities assuming that the current conditions that exist now or unchanged for the fourth quarter and for the full year 2017 and also assuming that you implement tracking rail, tracking rail of some Saline Water that you disclosed yesterday. How much potash production do you expect in fourth quarter and in full year 2017?

Please.

Yes. Thank you for the question.

When we have put together our guidance for this year, the whole number 6.1 million tons. We’ve already assumed that we would be able to use some measures to dispose our waste water and we’re happy that, we could announce yesterday that we can use the inactive mine fragmenting Bergmannssegen-Hugo it was an important step because it’s a big measure so that was already built in our number.

So we should end up somewhere around 6.1 million tons for this year. Yes and to give you flavorful what one could expect in 2017, of course there are a lot of unknown around us, still unfortunately.

[Indiscernible] received our deep-well injection soon, we should be able to fully produce and come back to our 7 million plus volume but even without deep-well injection for the whole year 2017 that is not what I expect, but just to give you difficult scenarios. We would be able to produce more than what we have done in 2016 due to the measures that we are able to use.

Unfortunately due to effect that are so many unknowns and you know even the weather is important for us, that scenario we’re not able to give you a precise number now but we hope to be able to give so, when we regularly give the guidance for the following year that we should be more precise in March.

Okay, in terms of trucking rail, the plant you used trucking rail to dispose or store some of the waste water. Could you explain how this will progress when the trucking starts, when the rail starts?

And approximately either on a quarterly basis or an annual basis, how much extra cost that will add to production in 2017?

We’ll start with the trucking immediately and we will build loading facility to be able to start railing the waters to Bergmannssegen-Hugo that should be done somewhere in spring next year and we expect that the total waste water that we can bring into Bergmannssegen-Hugo will be roughly on the level of the intermediate deep-well injection that we have received for 2016, which was 725 million cubic meters. The additional costs are more or less transportation cost only and we expect year number between €20 million and €30 million.

But again that is all assuming that there is no deep-well injection for the entire year 2017, that is not what we expect but just to give your number for this scenario.

Right and €20 million to €30 million is for the entire year at an annual basis.

Yes.

On the scenario.

Yes.

Okay and I guess my last question, would be regarding your debts rating which I understand was recently downgraded to junk and I’m wondering if this impact, your €1 billion facility, if the availability of cash or the rates won’t have to pay for it.

As you mentioned by yourself, we have this facility which is only with a small amount used so far, due to the change in the rates in we have slight higher cost in that but we target about I think open 5%, still a very cheap or very cheap money if you risk and we still have the full ability to use the entire €1 billion, not impacted all in by the way, there is no impact in all the other debt facilities because they have fixed conditions and the change, the rating did not have any impact and finally, we have financial covenants at all. So the impact on us is very limited.

Great, thank you very much for your answer.

You’re welcome.

I have one question with regards to your comments earlier on pricing and a second one on CapEx. So you said in your introductory comments that European buyers are still pretty reluctant to except higher prices on the MOP side.

Some of the industry reports that we’re reading are actually already talking about price increases of €5 to €10 a tonne. So I want to get a sense of whether or not you have seen any indication of that in your order book, thus far in Q4.

And related to that, with regards to the deterioration in SOP pricing quarter-on-quarter, can you give us an indication of whether or not those prices have now stabilized in Q4. And the second question on CapEx, so the CapEx for Legacy is expected to remain broadly in line with the previous guidance in Euro terms.

Can you just tell us what you have actually spend already on Legacy and what is still to go in Q4 and 2017 in Euro terms and following on from that. I think previously you talked about €500 million being the average maintenance level of CapEx for the Group, so aside from any incremental CapEx on Legacy, should we be factoring any other additional CapEx over and above around that €500 million in 2017.

Thank you.

To answer your first question. The reluctance of European customers we were talking about is mainly related to demand right now.

So we see strong demand from Asia, we also see a strong demand from Brazil. But with regards to Europe customers are right now waiting a little bit before they start buying, we don’t expect this to last for long because usually customers start to buy at the end of November and December.

And with regard to pricing yes we indeed see a bit positive development there, but with low demands you don’t have really much of evidence there. When I look at our own pricing, we don’t expect any further decline we’re even expecting an increase in MOP price is also in Europe.

Can you repeat the second part of the second please?

Yes, sure. So it was on the SOP side, you comment in the slide that there was a deterioration in price quarter-on-quarter, I wanted to understand if that price development has now stabilized?

We expect that we count the bottom in SOP pricing as well and we should see a better market price in the fourth quarter that usually takes a little bit time until it’s materializes in our every selling price. But from a market point of view yes, we have seen a stabilization also there.

And then CapEx question.

Yes, many parts of this of CapEx concerning Legacy first and that gives me the opportunity to again highlight that yes, we had this incident in Canada, yes in terms of Canadian Dollars that lean means we have a moderate increase of our budget. But we always finance that project in Europe and as we have a Euro balance, Euro view on the project with more important or just important view on it and due to the favorable currency development and some lucky hedged decision, we’re able to keep the €3.1 billion budget even taking to account the whole impact from the crystallizer incident.

We will have roughly another €100 million to spend in this year in Q4 for Legacy and then the final amount roughly €200 million in2017 and after we have finished Legacy, our run rates, CapEx number which is a bit lower than the €500 million what you have mentioned is only impacted by further investment in our environment especially in Werra area what we have called four phase plan that will start in 2018 with numbers of roughly €80 million to €100 million annually until 2021. I hope that answers your questions.

Very helpful. Thank you very much.

First one is on your outlook for the sales volume of 6.1 million tons of given that you’ve reported 4.4 million tons of sales in the nine months, this would imply something like 1.7 million for the fourth quarter, which would be close to kind of record level of these significantly above the five years average you recorded over the past years. So wonder where this comfort comes from that you can still this amount and where the product comes from basically in the fourth quarter will be my first question.

Second one, is one the OpEx for Legacy in the third quarter you’ve booked in there and maybe also what you expect there in the fourth quarter and then finally, just a clarification on Bergmannssegen seeing flooding exercise, have you got it right that basically the amount you can flood their on the annual basis is equivalent to basically the temporary injection permit which you have received and where would this bring you to, I mean are we talking on an without any kind of permanent permits would you look rather 6.5 million tonne of run rate of production in 2017.

I forgot to ask you to ask one question by the other. But I have taken all the three, but I would appreciate if the other questionnaires would be one-by-one.

First of all, yes 1.7 million sales in the fourth quarter is a high number but we are sure that we will be able, if we have the production and after we have approval for Bergmannssegen-Hugo and we should be able to produce the volume, the demand is strong, we could have done more in the first three quarters of this year, if only we would have the capacity available. Yes and that’s why we believe the 1.7 million tons in the fourth quarter is doable.

So the CapEx number in the third quarter we had €170 million and I mentioned earlier that there will be another €100 million in Q4.

Sorry, I was referring to the OpEx related to Legacy booked, €22 million in the second quarters, haven’t found any number here in the report, just to update us.

I give you the expected annual number and then you can do the math by yourself. It’s a bit lower than we have expected previously due to the incident we have shifted some work from 2016 into 2017 and we will have roughly €110 million OpEx for Legacy, for the whole year.

Bergmannssegen-Hugo I mentioned that we should be able to bring 700,000 to depleted into that old mine, that inactive mine. There is lot of storage capacities that can - would be able to use it for many years.

The only limiting factor is logistics because if you take 4,000 cubic meters annually by the production days, you would end up with a higher number but there is natural or technical limits due to logistics and I already mentioned the €20 million to €30 million impact on the OpEx and related to that. And I still be reluctant to give you a number what that means really in production because I said earlier there are so many impacts, if we are working with a scenario no further deep-well injection even the weather has an impact, so please allow me just to give you a qualitative answer, it will be more than this year but if we made to be seen how much it will be in 2017.

And at last one on this permitting issue. There will be a high level meeting of politics on the 21 November, is this an event where you expect breakthrough for the whole issue or it’s just kind of informal and there’s nothing major to expect from this one?

Every meeting is important in that sense and this meeting as well. I would give - let too much important if I would say, we expect the breaks through the day so I’m not expecting it.

But yes, we have made progress and believe me, we’re very unhappy not been able to give you more free size view on that. But there’s most probably not the day where will receive the permit.

Thank you.

I’ll just ask one-to-one, one-on-one whatever. In the last slide you defined the current price of potash is not sustainable.

I just wanted to examine your rationale for that comment please?

Yes, that was related to our view on 2020 and that we still believe we put generate €1.6 billion EBITDA of course that is based on set of assumptions and one very important assumption is the potash price. We would meet, I think I have mentioned that earlier and in other calls, we would need potash price slightly higher than $300 per tonne and we’re always talking about the reference meaning MOP gran in Brazil, we know that we’re not there, that was why I mentioned.

I don’t believe that the current level is sustainable but because if that would be the case, there would be get to the €1.6 billion which of course we would try to close with other measures. But as we’ve seen a swing especially in Brazil, especially in Q3 you know that we were trading around $200 and now we’re talking about $240.

So why should the current status remain until 2020 and I believe a price in that range $300 is not out of range.

Okay, thanks for that. On your Slide 8, where you talk about the price and volume and then the missing deep-well injection permit.

Perhaps I’m being bit thick here, I thought the absence of volumes caused by the inability to deep-well inject caused the profit shortfall and you’ve incorporated that into the first bar. So can you just explain how you’re allocating that EBITDA reduction between the price volume and the absence deep-well?

Yes, the first bar is a mix out of the lower prices in the potash business, the effect from the mild winter in the Salt business. Meaning pressure on the prices and lower volume in the Salt business.

The second bar is a pure effect and you’re right that is a volume effect as well, but that is a pure effect from the missing deep-well injection and total expected for this year roughly €200 million.

All right. Okay.

Gas costs have started to creep up in Europe. Is that a fact, does it could be significant to the outlook for your next year?

Are you talking about cost per tonne?

Yes in energy cost, yes that’s right.

Energy cost.

Yes.

Energy cost are still on a very low level. I assume that this will not change entirely so that we still believe that we will save compared to 2015 in double-digit percentage on our energy bill in 2016.

I hope that covers your questions.

Yes, no I understand in 2016, they’re obviously quite a bit lower than 2015, but in 2017 they’re likely to be higher, than 2106. Well it looks like it’s going to be higher so I’m wondering how you’re absorbing that additional potential.

Yes, it will be marginal, marginally because most important portion is gas, natural gas and as you know Legacy will start up the production and hear the gas portion will be significant compared to what we have in Germany because we have the solution mine production in Canada and we have already locked in good part of our requirement for 2017, due with respect to delivery contracts.

Okay and that’s for Europe and Canada, which is to Canada.

It’s Europe and Canada.

Yes, okay. Thanks very much.

Gentlemen, I’ll try to walk you through one-by-one. First one is the given average rate you’re guiding to, the €200 million to €260 million on Page 8 on your slides.

You’re assuming an average winter, you’re assuming total sales volume of 6.1 million tons which leaves to 1.7 million tons in Q4, we talked about that earlier on. So what gives you the €200 million, what gives you the €260 million, given that you don’t expect permits at the 21 November to be granted, so most likely related on that?

So what if the volatility here based upon. Thank you.

[Indiscernible].

France.

France. Sorry.

The biggest swing factor of course is still the permission because Hattorf is still not running. One of our three sites in Werra Valley and then makes a huge difference whether we assume it’s not running for the rest of the year or we get the permission today and we can start running it fully.

Yes, I get that. I guess your guidance is based on the volume number you gave, 6.1 million tons.

So is that 6.1 million tons if you get the permit immediately or if 6.1 million tons, if that permit is granted by the end of this year. Are we to expect higher volumes if the permit is granted perhaps tomorrow?

6.1, I wouldn’t say worst case, but the case without a permit.

Okay, so that refers to the €200 million then. Basically if you say, we don’t expect the permit anytime soon.

More than only this one impact, this is of course a dominating impact, but there are more impact that could be volatility for the rest of the year. The currency, the prices are not fixed etc.

so don’t try to get in precise EBIT number to the 6.1 million tons.

No, I just wanted to know whether that is more closely tied to the upper end or the lower end of the guidance because as Michael Schäfer said before the 1.7 million tons is something you haven’t achieved very often having a permit in the last couple of years in Q4. So that is a very ambitious number as you said yourself.

And hence I wanted to know what number refers more likely to the 6.1 million tons or 1.7 million tons in Q4, the upper or the lower end of the guidance, that’s basically what would.

If you want to have a qualitative answer, it’s closer to the lower end of the range.

Okay, thank you for that. Second question, waste order.

I guess you love that topic. The provisional permits you have deep-well injection runs out by the end of this year and if it isn’t renewed and if you don’t get permanent permits, I guess that the measures that you unveiled yesterday pumping saline waste water to Bergmannssegen seeing, will just compensate for the amount of waste water you were able to inject this year.

So basically let’s say, if worst case scenario you don’t get a permanent permit and you don’t get a provisional permit. It’s most likely we’ll see a production number in the ballpark of 2016 also in 2017, would that be a fair assumption?

No I mentioned earlier that, we will be - even in this scenario to produce more than in 2016 because Bergmannssegen-Hugo is not the only measure we have and this alone covers the intermediate permit and we have [indiscernible] other inactive mine into [indiscernible] and we are working on additional measures.

Okay.

So we would be even this scenario would be able to produce more than 6.1 million tons.

Oliver, you know that 2016 has been a very dry years, so more dry as we have expected. What we especially experienced in the second quarter and in our expectation we always expect what we call it hydrological normal year.

Right.

Absolutely, thank you for that. And my last question is I think I heard you correctly when you stated that we might see production in Legacy already in 2016 for 700,000 tons, is that correct?

Did I hear that correctly?

If I may correct the year in 2017.

Yes 2017, okay yes my.

700,000 tons is correct.

Yes, so that but that basically implies judging from the 1 million tons we heard before the incident at Legacy and now 700K that basically the ramp up is expected to be a bit faster than it was originally scheduled, if we assume that you can produce from Q2 onwards, would that be a fair assumption?

That is totally correct and that if we look a little bit further down the road, could have a slight impact on 2018. We will have the capacity definitely available of 2 million tons at the end of 2017, but due to this quicker ramp up we might have the more standstills in 2018 than it would have started at the end of this year.

So the production in 2018 might be marginally below the 2 million tons. But that is still future, but your assumption that we have quicker and steeper ramp up curve is correct.

Wonderful, that covers all my questions. Thank you very much.

First question is on the efficiency measures or cost measures. Have you planned any further measures beside the fit for future program that would be my first question?

First of all thank you for your question. I would like to mention that all our fit measures, at the end of this year are sustainable measures, so we have this regain from that positive ideas and implementation of project for the future, but in addition to that we have small double-digit million number that we want additionally new phase in 2017, 2018 and 2019 that is our new mid-term planning horizon.

The small double-digit number is 10 per year, so every year additional small double-digit number.

Yes.

Okay, that was the first question. Second question on Reuters saw the news that the expected decision for this deeper injection permit in the next few weeks and on the Slide 7, I see that you expected prolongation of the Werra injection to 2019, is the difference temporary permission and the other one the long-term permission or how can I read this kind of gap in between?

There was a lot of speculation and we by ourselves have all - off thought now we had done and we will receive the permit that’s why we have stopped giving any indication of course I have hope that it is not too far away, but we cannot predict when and if at all. I cannot say more to this, chapter.

Unfortunately.

And then next question would be on the Forex hedging [ph] for next year. Can you give us an indication on the sensitivity and what will happen if US dollar weaken etc.?

Yes, as usual we have hedged good portions of our US dollar exposure should be in the area of 60%, 70% of our exposure which is usually roughly €1 billion, it will be more sorry, it will be more with Legacy of course but then it’s covered while the 60% to 70% as well. And we would have, if I can answer that by heart, if the dollar would weaken to 120 always compared to 2016.

Yes.

We would lose only roughly €20 million due to hedging. But we would get good gains if we would see parity more than €100 million on that scenario.

More than €100 million. Okay.

And then the last question on this, CAD100 million higher CapEx as far as I understood part of this CapEx is might be in insured, but can you give us any kind of indication what kind of amount this might be or is this too early to say?

I cannot give you precise number, but I can give you a flavor. First if we deep dive at index for example, we need a new crystallizer.

That of course is its insured and that will not be paid by us and that is not part of the overrun and again when we talk about overrun only in Canadian dollars which is in a way statistical currency because it’s Euro finance and we have no overrun in Euro term.

And overrun basically for Q2 other contractors which are on the working grant and currently arriving at the spills and you cannot basically do not take up this kind of services, that is the overrun.

Yes and their performance is lower than expected because we have to change the production pattern etc. that are the indirect cost which are not covered by the insurance.

Of course, we will try to find somebody who takes part of the burden. But for safety reasons we have put that in that model that in our budget and eventually to a moderate overrun in Canadian dollar term.

Okay, great. Thanks.

Just want to go back to your debt position and the five times net debt EBITDA and the fact that you, excuse me said you don’t have any confidence. But can you explain what the limitations on your borrowing facilities are and as much as with EBITDA falling sharply and debt going up theoretically, if trading deteriorates from here and your net debt EBITDA goes up to sort of six times.

I mean not historically dangerous level of borrowing and whereby lenders do get rate history. So what’s your fall-back position in terms of where you can to borrow more money urgently if you need to?

Thanks.

First of all, as I’ve mentioned earlier there’s an instrument in place are not affected. Only margins be the syndicated loans which means 4.5% higher interest rates on that.

And there are a €200 million undrawn in this facility. We will peak that number at the end of this year.

We will have lower CapEx next year and we believe even with such a higher leverage, we would be able, if necessary to enter the debt markets successfully. And yes, as you all have to take into account that the high debt is good portion and major portion is that, our provisions for mining obligations, which will lead to cash outflow in many, many years from now.

So and this number by the way is impacted by the loan discount rate. Yes and if you really take that into account you’ll see that the situation is not nice, but it’s not dramatic.

Okay, so just finally therefore and if you needed to raise sums of say rescue Rights Issue about for the question, you said there are hollow routes, but you wouldn’t need to get sort of the government involved at all, given the number of jobs in the that sort of history of the mining industry, you’re confident you can sell fund without any further external involvement on that front, should things deteriorate quite rapidly?

Yes.

Okay, thanks.

Couple of questions, the first one very simple one on Legacy assuming the 700,000 tons would you say my guess is correct in saying that the EBITDA contribution from Legacy would then still be negative of current spot prices in 2017?

Yes. Short [indiscernible].

Thanks. And then the second question on, you mentioned the additional waste water disposal measures, can you talk a bit more about what exactly that is, you were mentioning in the report this morning that they’re still difficult from a timeline perspective, technical tests, permits that need to be obtained.

Just a bit more and more color on that would be very useful. Thank you.

Yes, two examples we have reported on inactive mine one in [indiscernible] Lower Saxony and there are a lot of these inactive mines in this area close to our Werra area, so that there are many opportunities to find further storage opportunities for our selling waste water and dispose it there and there are not further used gas coverings [ph] for example available, we have ideas to further build our second to [indiscernible] to temporarily store the water that we can then bring into the Werra then when it’s - the water flow in the Werra is higher due to rain. So the whole package of ideas that we need permissions for every single measures, but we’re happy that we have received two permits Bergmannssegen-Hugo is big one in the course of huge volume available for us and for additional measures are on the way.

Okay, I mean you’ve given us quite good details on the Bergmannssegen impacts in terms of what you can dispose there. Can you give us a number for these additional measures, in total how much of that could be realized in a reasonable timeframe?

No, unfortunately because if I’ll be more precise on others who’re not permitted currently. I might be forced to tell you next time that was not able, we’re now facing other alternatives.

So the only information that is really important to note for food production without any impact we need in deep-well injection, but we can do a lot to get more in the normal pattern in 2017, with these kind of measures, but please understand that I don’t want to be precise on things which are not realized so far.

Okay, thank you very much.

I just have two questions. First of all I just want to allude it to Stephanie’s question on SOP prices.

You mentioned you believe they have bottoms, can you just give me some information on what you’re seeing in the market that appears that prices have stabilized us. When I look at, the Street reports I see that prices are still down from fourth quarter relative to the third quarter and on top of that, do you believe that current premiums, MOP sustainable or do you expect the strong recover be in MOP prices, next year.

Thank you.

I mean, we have seen now three quarters in a row decline in the SOP prices and I mean, we’re talking about a broad mix of different market, you talk about US markets, you can talk about the Belize [ph] market, you can talk about Europe then we have to differentiate between granular and standard which goes into the [indiscernible] industry and trade magazines are mostly referring to the top line prices of granular in the US. And there indeed we haven’t seen a stabilization yet, which has also to do with the supplier structure, but when we look at our European markets and what we hear from our customers, it’s from our sales, we don’t believe that prices will go down further in that area.

With regard to the premium, I mean this answers also the question with regard to the premium to MOP. I mean, we don’t like to explain too much into MOP premiums because we are not in Mannheim [ph] to user, so the premium is less important to us.

We look at absolute prices and they’re still on a high level and MOP prices have stabilized as we said as well and this indicate that the premium will be sustainable.

Okay, thank you very much and then just a quick second question. So, on surprising the average operating cost have been quite a bit higher this quarter and my rough calculation points to value of €278 a tonne versus €249 in the same quarter last year.

Obviously this is due to lower production volumes affecting fixed cost spreading out over lower volumes, but I just wanted to understand what the spread or if you could give some split between how much is due to debt and how much is due to higher Legacy start-up cost or any other elements? I’m may be missing out on.

Well the majority comes from the operating leverage and the incremental Legacy costs are €11 million.

Okay, thank you.

And just coming back to the question of the long-term potash price that keeps you envisioned. I guess I think about the long-term potash pricing industry is kind of more determined by the economics of the industry rather than your specific profitability for the 2020 target.

So I would think that, very long run potash prices, MOP prices are determined by the cost you need to incentivize new capacity to market. So first I just want to check that logic with you and then secondly would you have value that, you would put on the price of potash you think that meet for your need in long run attract new capacity.

Thanks.

Yes, of course, they are, a lot of impact on long-term prices. But I believe we are in oligopoly and even if we should have one or two more market entries.

It still ends up in the real oligopoly and in oligopolies comprises do not tend to develop too marginal cost and if you see what happened this year, when products were still get away from marginal cost. Every competitor would be acknowledged to participate in a market where price is more important than volume and capacities were not fully utilized.

And if you in a way expect that this continues to be the case in the market and that what my message earlier, that $300 price should not be completely out of range for the year 2020. I know that is a philosophical question and there are so many opinions on that, but that is my view in brief, very brief speech.

I understand your observations and I would tend to agree, but I guess I’m just looking - how do we know $300 is the right number, is $300 per tonne enough to get companies to reinvest to continue to build so that the market remained supplied long-term.

No.

Or would a number lower than that work.

No, the $300, don’t get me wrong, I did not say that $300 is a price I expect for 2020, but that would be the price that we need to achieve our €1.6 billion EBITDA goal. I’m not giving a guidance but I’m saying $300 is not out of range, but $300 would definitely not be sufficient for additional capacities.

Therefore I can’t believe that any investment case would deliver a positive NPD on assumption that $300 is a long-term price.

And what price do you think it would need to be than if higher than that?

You would need to have price starting with 4.

Okay, great. So because I’ve got somewhere between $250 and $325, but it sounds like you would think higher than that.

Okay, great.

It also depends on the investment. Are we talking about Brownfield or Greenfield etc., but I was more thinking about the Greenfield project and I cannot imagine that this could be economical with price below $400.

Okay, great. Thank you very much.

And my first question would be and I think it has already been asked, but on a - I would like to look on it on a different way. So on a per metric tonne basis, what would be the cost next quarter and for the entire fiscal year 2017, when it comes to all this measures that you’re implementing in relation to the production problems that you have at the Werra plant?

So and let’s - if you don’t mind distinguish in between OpEx per metric tonne and then you can, if you could again, tell us what the CapEx is going to be in relation to for a crystallizer and all its measures.

When we would be able to produce fully and I leave out Legacy right now because we said that Legacy’s contribution next year will still be negative on EBIT level and also EBITDA level. So when you look at Germany and we could produce fully, we wouldn’t need to use our additional measures, so this would avoid this extra cost and thanks to the cost saving measures that we have initiated, we would be at a level which we have previously obviously expected for 2016 which was around between €210 and €220.

We won’t of course achieve that if the full production is not possible next year.

Got it, but just a quick break so you’re saying that in the penalty of transportation cost going up because of all the selling waste water being taken from one part of Germany to another part of Germany flat all the measures that you had implementing right now, the production cost is going to stay at certain level on a per metric tonne basis.

Yes, I mean including this measures and also assuming that when we have to implement those measures and use those measures we cannot produce fully. Then you will see a number which is of course higher than that and we said earlier that Bergmannssegen alone cost us between €20 million and €30 million next year, if we’re going to use it fully.

So this gives you indication.

And so it is, the former CFO something like a month ago was in London for a management presentation and indicated that Euros per metric tonne, in relation to all those measures.

Former CFO of which company, sorry.

Well the former, CEO. Sorry.

Mr. [indiscernible] he’s still CEO.

Okay, so part of the management team was in London and they had indicated that, so that’s why it was a bit, it couldn’t really reconcile with what you were saying today that production for [indiscernible] staying at the same level, when everything that’s going on at the Werra plant.

I thought just the following, why don’t we go through it again offline?

Sure.

So give us a call, after the call.

And then in relation to CapEx.

Can you repeat that question please?

Sure. The first question was in relation to OpEx, but then when it comes to CapEx for this coming quarter and then next year.

For all this I mean measures that you implement at the Werra plant.

CapEx is only very low number. We’ll have very low double-digit number for all the measures that we can imagine in 2017.

It’s more question of additional OpEx due to transportation.

Got it and then my second question would be around your - second around that it’s finalized your note around the sustainability of current MOP prices. And is this - since to me that given that current inventories at historic levels and then can protect increasing capacity next year.

You’re also increasing capacity next year. So since that - it doesn’t really, it’s not really consistent with data so it’s that precedent or sustainable when you, yourself have been bringing capacity next year, right?

And again for inventory side at historic levels. So I just wanted to get your view kind of like how do you think about the part of capacity again and you’re increasing capacity and still prices will go up.

First of all, we’re expecting it’s not completely ruled out that there will be a demand increase for 2017. We will only have additional 700,000 tons from Legacy in 2017 and again we have seen behaviour of all participants in the market to not fully run the capacity and to improve the price over volumes is the right strategy in the market and by the way, now you could argue but you’re running full capacity which is available.

We always said Legacy with a solution mind concept is so - very levelled and so flexible that if necessary we would participate in such behaviour as well. So we’ve seen historical developments of price and we believe that is not only our view, I think that is a common sense in the market, that the bottom link is behind us and there will be a slow but continuous positive development that is our expectation.

Okay and thanks for that and then my last question and I’ll get back. It goes all over the line, so would you just say that you can potentially think about not producing at full capacity in Legacy, which given your level of leverage it could be a bit dangerous, but I guess based on the a scenario and my question is that, based on a scenario in which there is no permit for the Werra plant costs are higher became of those transportation cost is that when we talked about before, there is no visibility around timing.

Potash markets could have stayed where they are or even SOP premiums come down and then again, that your plans after these and those producing that SOP are running at the higher cost than in the past. The icing salt demand, if they solve this winter because of what we know about the inventory Legacy ramp up takes a bit longer or even if this is, it is as it is.

It’s already delayed. So and just my question is, and the data scenarios are.

I don’t see, I see that actually quite likely, that maybe as a language, it’s not that you may run out of liquidity, but you maybe close given that cash balance for come for today, is 130 basis last quarter, €300 million. So in that scenario, would you tap it, market and would you go for an equity raise or would you continue just raising debt?

I said earlier that first of all, there are €100 million available from our facilities which is in place and in addition to that, Double DD plus rated company is still able to enter the debt markets. And if that would be necessary and you have put together a lot of assumptions I have a more positive view on the future, but nevertheless to talk about that.

If necessary, we would be able to enter the debt market. I’m not seeing any equity measures due to liquidity constrain.

Okay, many thanks.

Thank you very much.

Yes, I would like to thank you all for joining us today. Yes obviously 2016 is a challenging year for us, but I hope we gave you some flavor that we are not too pessimistic for the future and especially Legacy will make a big difference for the company staring second quarter next year and if you have further questions, please call Investor Relations and I’m looking forward to see you soon again.

Bye, bye.