K+S AG

Burkhard Lohr - Chief Executive Officer Thorsten Boeckers - Chief Financial Officer

Michael Schäfer - Commerzbank Corporates & Markets Christian Faitz - Kepler Cheuvreux Joel Jackson - BMO Capital Markets Neil Tyler - Redburn Partners LLP Andrew Benson - Citigroup Inc. Markus Mayer - Baader Helvea Equity Research Knud Hinkel - equinet Bank AG Thomas Swoboda - Société Générale Stephanie Bothwell - Bank of America Merrill Lynch Andreas Heine - MainFirst Bank AG Markus Schmitt - Oddo Securities

Thank you very much. Ladies and gentlemen, a warm welcome to our Q3 Conference Call.

With me here is Thorsten Boeckers, our CFO; Jörg Bettenhausen, Head of Finance; and Lutz Grüten, Head of Investor Relations. After a brief presentation, we'll be happy to take all your questions.

Now, let's start with the highlights on the third quarter on Slide 3. Overall, we reported a very nice improvement on last year.

In the third quarter, we had no production outages at our Werra plant, mainly as a result of our countermeasures, which we implemented at the beginning of the year. This led to significantly higher sales volumes and improvements, improved product mix and therefore better earnings.

EBITDA rose by almost 40% compared to Q3 2016. After completion of our Bethune mine in Canada, CapEx came down substantially, and our free cash flow therefore improved nicely from last year's depressed level.

Furthermore, we benefited from rising MOP prices. However, please keep in mind that our specialty fertilizers reflect MOP price increases with a time lag.

However, this also implies that products like Korn-Kali and industrial potash have further upward potential from here. Bethune is a multibillion-dollar investment and it shouldn't be a surprise that ramping up goes along with some hiccups.

We have adjusted, as you already know our production plans. As a result, we had lower than previously guided production and D&A in the third quarter.

Nevertheless, we have commenced selling our Canadian products beginning of Q4. We can also confirm our previous guidance for the coming years.

The operation will be EBITDA positive in 2018 and EBIT breakeven in 2019. Let's go a bit more into detail concerning the potash market and the trading update on Slide 4.

In Q3, demand in MOP was improving across all important regions and prices pick up further. As a result, our average selling price increased compared to Q3 2016.

Furthermore, higher product availability at our Werra mine fueled an improved product mix. However, the additional supply of specialty fertilizers, namely SOP, was not fully absorbed by demand beginning of Q3.

Nevertheless, prices have started stabilizing on the back of more robust demand towards the end of the quarter. All in all, we still expect our average selling price to move up slightly based on last year.

On Slide 5, we will give you an update on regulatory and environmental affairs. We have already spent a lot of time and efforts to improve our environmental standards, and we have achieved a lot.

After we had received our permit for deep-well injection at the end of 2016, we immediately started to implement additional measures to limit our outage days. Instead of the 55 days expected at the beginning of 2017, we are now optimistic to have no additional outage days in addition to the 25 reported in Q1.

With the ramp-up of our KCF in 2018, we will further reduce the saline wastewater by 1.5 million cubic meters or 20%. We have commissioned an external adviser to carry out a concept for extracting additional products from saline wastewater.

And last but not least we have just recently, more precisely last Thursday, been granted the approval for early commencement for the needed expansion of our tailings pile in Hattorf. This project remains on schedule.

This is an important milestone for us. Finally, and I had the chance to discuss this already with many of you on our last road show, I have amended the way to handle our pending approval procedures and ongoing disputes.

It's my aim to settle the most important topics on that list sooner than later. And as you might have already seen in the last news flow, we are on the right track to get it done.

That is very important to secure our license to operate and to avoid further shortfalls as in 2016 and Q1 of this year. Moreover, we are on track to settle our long-lasting discussions with the German environmental organization BUND; and Gerstungen, the township in Thuringia, about our deep-well injection practice.

And now let's move on to Slide 6 with an update on the Salt business. With Salt, we saw some impacts with respect to Hurricane Irma in the quarter under review.

It caused shortages on freight capacities as well as severe damages and some production losses at our mine in the Bahamas. The negative EBIT impact in 2017 is expected to be around €10 million.

However, our non de-icing business achieved a very nice volume development quarter-over-quarter and has almost reached the size we reported a year ago. Most of that growth came from low-price chemical salt products.

And the average selling price came down to €108 per tonne. Looking at the pre-buying for the upcoming winter season, we saw weak de-icing business in North America, which was partially offset by higher demand in Europe.

Furthermore, the FX development also caused some headwinds in the third quarter. Having said this, I want to point out that the underlying trend in salt is still very promising.

Our earnings have improved compared to the previous year, with similar winter conditions. We are continuing to reduce costs and focus on high-margin businesses.

And what does this all mean for the full year 2017? Please turn to Slide 7.

The most important message on this slide is that we confirm our full-year guidance. EBIT I will be in the range of €260 million to €360 million, which implies a tangible increase over last year.

What are the building blocks to bridge the EBIT I from 2016 to 2017? Additional volume and positive product mix effect in potash, as just discussed are expected to have a positive contribution.

On the other hand, the EBIT I contribution of Bethune is unchanged, expected to be more negative than in 2016. Lower prices in our Salt division could not fully be compensated by positive price effects in our Potash and Magnesium division.

Cost savings, currencies, wages and freight rates will have an overall positive impact on our full-year EBIT I. Our guidance is based on a normal winter and no additional outage days for the remainder of the year.

The potentially positive impact from having only had 25 outage days furthers our previous guidance of up to 55 days will be compensated by lower volumes mainly from Bethune. 500,000 tonnes will be the production at the end of this year instead of the earlier guided annual production of 600,000 to 700,000 tonnes.

For the entire division, we now expect 6.8 million to 7.0 million tonnes of sales in 2017. While the upper-end of our range reflects a harsh winter, the lower-end is reflecting the financial implication of a mild winter and making a decision about the closure of our Sigmundshall firm already this year.

This decision would cause a midsized double-digit million euro amount as one-off costs, but would not trigger any cash out in 2017. However, the decision is still pending.

In other words, even with a decision to close Sigmundshall this year and the mild winter, we would stay in the range. Having said that, let's move on to Slide 8 and an update on Shaping 2030.

At the beginning of October, we published our new Shaping 2030 strategies. Let's recap the most important points.

We remain convinced, especially after intense discussions with our shareholders and sell-side analysts that our One-Company approach is the best way to generate long-term value for all stakeholders. We see significant upside potential in our earnings and profitability when thinking and acting as one company.

Currently, the focus of our daily work is dedicated to Phase 1 of realizing synergies of at least €150 million by 2020 and reducing our indebtedness. By 2023, we aim to achieve an investment grade rating again.

It is of utmost importance to regain financial strength in Phase 1, before we are able to start Phase 2. Let me give you an update on our current shaping-related projects and what we have done so far, on Slide 9.

So, what is on our current to-do list? We have set up a project management team, which is steering Phase 1 processes, tearing down silos.

And making sure that we become a more customer-centric organization also needs to be reflected in our organization. The implementation will be finished by the end of 2018.

In parallel, we have now started the bottom-up validation of our synergies, and this should be done by the end of Q1 2018. Last but not least, we have changed the long-term incentives for our senior management.

The LTI program will be partially indexed to the relative share price performance of our share versus the index. Beating the index, with its wide range of first-class listed companies is an ambitious target.

At the end, K+S management is stepping into the shoes of our investors. As said earlier, we will keep you posted on the filings and give you an update in the first half of 2018.

With this, I would like to open our Q&A session and hand over the conference call to the operator. But please limit the number of questions to two, and one at a time.

Thank you very much.

Yeah, thanks for taking my two questions. The first question is on your outlook you provided for the volume heading into the fourth quarter.

So, you lowered the upper end of your P&M sales volume guidance to 7 million, so this implies basically 2 million to 2.2 million tonnes for the fourth quarter. So, I wonder, given the deferrals we have seen in Bethune basically, how the visibility is for you in order to make this number at the upper end.

So how can you make sure basically that you deliver basically on those numbers you are now projecting for the fourth quarter? And what kind of recovery is included also from the German production will be my first question.

Yes, thank you very much for your question. We are now 6 weeks before the yearend.

Of course, we have quite good visibility concerning our production. We are - we will not see further production standstills at the Werra.

That is for sure. Yes, we have reduced our expectation for the full year with the Bethune production.

That is now fully reflected in the current guidance, and there is no significant risk that we could not achieve that. Together with our German production, we have cut the expectation or reduced the expectation against our summer expectation, but that was mostly Bethune.

And now we have high visibility that we can achieve that.

So, Bethune is basically performing according to plan now?

Now it's performing according to plan. And I think not only production is running well.

As you have heard, we have sent a ship to China. It has arrived China.

And our clients are very happy with the product quality. So, we are in the market with our Canadian products.

Okay. Thanks.

Second question would be on cash unit costs volume. So, I am looking at the EBITDA-to-sales in terms of tonnage.

You reported something like €206 per tonne, €206 per tonne in the third quarter, up from €189 in the second quarter, probably partly due to significantly lower sales volume. So, I wonder whether you could provide us some indication heading into the fourth quarter, when you're obviously expecting a significantly higher sales volume.

Yes. Michael, it's Thorsten here.

I mean the third quarter is always, also because of overall sales volumes, a little bit above the other quarters when you look at cost per tonne. And, I mean, this will change again with the higher volumes in the fourth quarter.

And we believe that we - when we look at cost per tonne on the EBITDA basis, we will stay excluding Bethune at about €220 per tonne on a full-year basis.

And, if you include Bethune?

This was excluding Bethune.

If you - okay, thanks.

Yeah, thanks, good morning, gentlemen. Thanks for introducing the many more quality on question asking.

So, one question, what is your definition of above-average winter conditions as provided in your outlook, in terms of obviously for the de-icing salt business? Thank you.

Roughly 3 million tonnes in the fourth quarter should be a normal winter development. And we have seen the first-half of November.

Here we are quite in line with our expectations. But decisive is December, of course, because in November volumes are not that high.

But in total, roughly 3 million tonnes should be a normal Q4.

Okay. And maybe as a short add-on, is it true that in Q4 you've already seen some decent volumes, especially in the U.S.

after a slow Q3?

No, it's as I've said, we are on budget, but November is not the decisive month. It's December.

Okay. Thank you.

You're welcome. Second question?

Oh.

That was my one question.

Okay. Sorry, thank you very much for your question.

Thank you.

Thank you. Good morning.

You talk about the decision for Sigmundshall, whether to close early. Can you elaborate more on the puts-and-takes on what would make that decision to close the mine about a year early?

And a lot of your peers are believing that potash demand will grow again 2% or 3% next year after a good up year, this year. If that demand is there, you would think there is room for Sigmundshall to stay?

Or is this a decision that would assume ramping, and maybe now stabilizing and ramping on schedule that you have to shut down Canabal [ph] - shut down Sigmundshall to make room for Bethune?

Yes, thank you for that question. So, to start with the last, it's not linked at all to Bethune.

We are producing 600,000 tonnes here, a whole range of products, specialties, industrial products, and only a slight portion of MOP, that is purely linked to the status of production in Sigmundshall. This is the lowest surface - the deepest, sorry, the deepest mine in the world, which is still active as a potash mine, 1,500 meters, 60 degrees Celsius.

I've been there a couple of times. It's really very difficult to work there.

And the efficiency is low. And it has reached, as we have indicated for years that the point is it's closed, that it's reached its economic mine life.

And now, it's a matter of negotiations with work councils and unions, because we are talking about 780 employees. And the question is will we have an alignment on how deal with this matter by the end of the year or will we need a couple of weeks more?

And if we should take the decision this year, it would mean we close the mine by the end of 2018. Of course, it takes a while to get all the permissions that we need to not produce any longer but go into the after-usage phase.

And that's the driver for that decision.

Okay, so maybe - go ahead.

And actually, I could add that's why we are not that - why we cannot quote precisely the costs which are linked to that. It's not the mining obligations, because we have - there are provisions for that already, as you know.

But we talk about redundancy costs. And you can only build provisions for redundancy costs if you have an agreement with the unions and work councils.

And it's not that sure whether we have to build that for the entire team or we can convince a couple of people to stay in other mines and that is moving part here still.

Okay. So, I may have missed that nuance that if you make a decision to close in the next couple of months, it's to close by the end of 2018, which is sort of in line with your prior guidance, correct?

We are more or less in-line. We always talked about - the closure could be at the end of 2018 or at the end of 2019.

And if we close at the end of 2018, we rather have to decide it very soon.

Okay. Thank you.

So, my second question will be on SOP. You talked about that there was some weakness in SOP, it's now stabilized.

I believe the company has been a little concerned about some new SOP capacity in Egypt. Plus, of course, your tonnes are getting better, because you haven't had any issues at Werra.

Do you think that, if you look into 2018 SOP might get soft again? Are you concerned on that, or do you think you're stable now?

No, we have seen that effect of all the additional capacities and us coming back in the market with normal volumes as we did not have any further standstills at the Werra in the first part of the third quarter, but we have seen at the end of the third quarter already stabilizing in terms of demand and in terms of pricing. And we are hopeful for Q4 and for 2018 that we will see a nice development here.

Are you less worried about the new Egyptian capacity than you were maybe two months ago?

Sorry. I didn't get that question.

Are you less worried about the new Evergrow capacity in Egypt than you were maybe two months ago?

I don't remember that we were very concerned about that two months ago. Maybe in some one-on-ones, we talked - we elaborated on that a little bit more intensively, but we are not concerned.

What I just - the outlook I just gave you takes all capacities into consideration, including Egypt.

Thank you very much.

Thank you.

I've got two really related. And they both are linked to the 2018 free cash flow guidance.

Working back from your guidance of a modest negative free cash flow for 2018, if I think about the run rate of D&A tax interest, suggests to me EBIT close to €400 million. First of all, I suppose that's the first question.

Is that in the right ballpark for the 2018 EBIT figure that I should be thinking about?

Interesting question, because you are talking about the third quarter, and a guidance for 2017. So - and as you know, in March, we will give a qualitative guidance, but with that number you - we have just quoted, I'm - it wouldn't cause significant concern to me.

Okay. In which case, I'm going to sort of stay on this topic and throw a few numbers at you.

So, apologies for that, but if I think about where euro-denominated realized prices are at the moment, some sort of €10 or so above last year and add the improvement in - modest improvements in volumes in Germany, alongside absence of hurricane impacts in Salt and a lower D&A cost, all of that - excluding the improvements and everything in Bethune, all of that gets me to a tailwind - an EBIT tailwind, of about €140 million to €160 million 2018 versus 2017. And then, I think you've said in the past that Bethune EBIT will still be - well, you said recently that - today that EBIT will still be negative, but significantly less so than 2017, so I'm just - I wonder if you could sort of help me understand some of the offsets that will materialize to mean that year-on-year EBIT won't be up anything like as much as the amount that I'm sort of guessing to in that sort of bridge scenario.

Initially, you asked for the cash flow of 2018, and maybe we could narrow this topic from another perspective. And all I'm saying is well known, so far, but we haven't seen that reflected in some expectations published in 2018 - for 2018.

And earlier, we have said, we expect breakeven - free cash flow breakeven in 2018 with a U.S. dollar expectation of $1.10.

Now the dollar is weaker, or the euro is stronger, or it depends on how you look at it, and we have adjusted this. And that is the main reason for us to believe it will not be breakeven any longer, but we expect a more negative free cash flow for the last time.

After, we will - after that, we will have a significant positive free cash flow in 2019.

Okay. Thanks.

I'll probably follow up with your investor relations afterwards. Thank you.

Okay. Thank you.

Yeah, thanks very much. Just on the Sigmundshall mine that you're going to close down.

Can you - so first question, can you indicate the level of your €1 billion of mining provisions that relates to that site and the sort of shape of the cash outflow? And can you give an indication as well as the - of cash charges?

You've talked about redundancies, and I wonder if there were any others. And try and quantify the magnitude of those that would be crystallized by that decision.

And then...

Yeah, I'm happy to do so. Maybe let's start with the redundancies.

And if assuming that we close the site at the end of 2018, the cash impact of the redundancies will start in 2019. And not the whole impact will be in 2019, because we have a lot of work to do after we have closed, we have to flood the mine.

Before that, we have to take out the equipment; we have to handle the tailing piles' waters; we have to cover that tail piles; and we need employees for that. And that means that we have the biggest portion of the redundancy payments in 2019, but it will go until the middle of the 2020s.

That was the first part of the answer. The second is we have a mining provision of roughly €100 million linked to the Sigmundshall mine.

And I mentioned what we have to do, so this will take years. And handling of the tailing piles waters is an eternity task.

So, the annual cash impacts are minor. We are talking about single-digit million euros a month.

Okay. And then the K-UTEC consultancy, I mean, you've talked about both the KCF plant and other measures to manage waste better and/or extract value from waste both in terms of the tailings and the water discharge.

Can you give some sort of dimension to what you hope that you can extract from these iflight [ph] wastes, in order to mitigate the costs of the environmental challenges you face?

Yeah, the KCF plant is, I would like to call it, the best of two worlds. First of all, it reduces our salt water residues significantly, 1.5 million cubic meters per annum.

And we gain some specialty products. If it's fully ramped up, it has a capacity of 300,000, 400,000 tonnes annually.

And together with K-UTEC, we're looking for solutions to maybe do more in this, doing something comparable but even more efficient and - but we will not reach the same quantities. The volume of salty water that we take will be lower.

And the additional products will be lower as well because every second - every new step, of course, has - starts from an already optimized status. But I can give you only this qualitative indication.

It's too early to be precise on water and product volumes.

Okay. All right.

So, thank you very much. Thanks.

Thank you.

Yeah, good morning. Firstly, I have a question on the ForEx sensitivity on your chart.

I understand the hedging strategy, but maybe you can give us now a new guidance as there are now more sale volume - more volumes into the U.S. market?

That's my first question.

Markus, it's Thorsten here. What kind of guidance would you have for 2018, right?

Yeah, exactly.

Yeah. So rough numbers, when the dollar would move to $1.30, we would have a minus of about €50 million.

And this goes...

15, one five.

Zero, five zero.

Five zero, okay.

And this goes also into the other direction when the dollar climbs to $1.10.

Okay. So basically, then this is kind of guidance we can take as a run rate going forward.

Or has this - is this - is of course, also including hedge, the hedge positioning...

Yeah, this is what we can - this is what we will see in the P&L. And this is now for 2018.

And it's a little bit difficult to give you guidance for 2019 given that we may have a different starting point, and so we haven't yet started to hedge a significant amount for 2019. So, this is for 2018 versus 2017.

But also, could you also give us a guidance excluding hedge again?

I don't have the number with me, but our dollar exposure and in the Potash business and which is about €1 billion. And you know that most of the Salt business is a natural hedge, because we are also producing in dollar areas.

Okay, okay.

So, it's a significantly bigger impact if the dollar falls to $1.30, if we wouldn't have hedged.

Okay, understood. And then I have another question on the new join in the club, EuroChem.

Can you maybe elaborate how you see their cost curve versus your cost curve? And also, their - I've heard something that they also have to target to enter the SOP market.

Maybe some words from your side?

I have no information about the EuroChem cost curve, only expectations. And I wouldn't like to share that publicly.

And I think they are very far away from doing anything in SOP.

Okay. Thank you.

Thank you.

Yeah, good morning, gentlemen. One question from my side on Potash and Magnesium, while average prices in the division have been up in the last quarter, it seems that prices for MOP have been down quarter-on-quarter.

So, if - according to my calculation it's realized price is €227 versus €230 for last quarter. So, given that the spot prices for MOP have been robust recently, can you explain this development?

Is this due to currencies? Or what is the reason for that?

The good news is that the market prices - it shows a very nice development. If you remember, where we were in the second quarter of 2016 were partially below $200 per tonne in Brazil in MOP gran.

And the drivers really have picked up and sustainably, and we see that development is - has not finished. And we expect that we will see a comparable good development in 2018 as well.

If you look at our average selling prices, we have of course a lot of effects to take into account, the product mix, the U.S. dollar impact et cetera and the regional mix between European business and overseas business.

But very important is the market price development which is nice, and that will roll into our price development in the next couple of quarters.

Okay. Thank you.

Thank you.

Yes, good morning, gentlemen. Two questions from my side, please.

Firstly, on the SOP contract, which you have to renegotiate for next year, the question is have you completed the procedure already? And related to that, is the recent pressure, kind of pressure on the SOP price, changing - because changing the setup here?

Thank you.

Yeah, thank you for that question. It's, of course, difficult to talk about a single contract, but as you have a knowledge about that we - there will be an agreement at the end of this year.

And of course, it will reflect the current market conditions. I cannot tell you more precisely what the conditions of a contract are.

It's impossible. Sorry for that.

But it is not concluded yet. That's the message.

But the year is almost done.

Okay. Second question, on the free cash flow and the net debt guidance you have given with the strategic update.

Do you - have you included the cash outflow for Sigmundshall and the cash outflow for the cost savings program you have announced with the strategic update in those numbers? Or should we be stripping those potential costs from the numbers you have or from the indications you have provided?

Thomas, when we talk about cost savings we are targeting, this is of course in the number. Cash outflows in Sigmundshall, you will not see before 2019.

Right. The question is, is this included in the indications on free cash flow and on net debt you have given.

Yes. Yes, it is.

Yes, it is but not for 2018. So, when you're - saying 2018, you won't see any numbers there, but for the years after it is, of course.

Understood. And does it apply as well to the cost savings program?

You haven't so far shared the costs and the cash costs for this program. Is this included as well, or not?

We have assumptions included, yes.

Okay. Perfectly clear.

Thank you.

Yes, thank you very much. And thanks for the presentation.

Just a couple of small clarification points from me. So firstly, on Bethune, can you just clarify what the ramp-up costs and D&A associated with Bethune were in the course of the third quarter?

In addition to that, previously you guided for a €150 million EBIT loss on Bethune for the full year. Can you update us with your current expectations as of today?

The second question was on SOP...

Sorry. Sorry.

One by one, please.

Sorry. Yes, go ahead.

Yeah. First of all, we are not talking about the project any longer.

Yes, it was a project, and we talked about €3.1 billion investment. Of course, we gave you a lot of information which is far beyond what we do usually for a site.

Now we talk about the sites. And we are not giving single D&A numbers, for example, for Tillit [ph] and Werra, which is bigger than Bethune.

And that's why we just want to turn into the mode of giving earnings guidance. And the earnings guidance is for the full year, a number of the €150 million, which will be most probably a little bit below that; and in 2018, EBITDA positive; and in 2019, EBIT positive.

But for the last time, as we started that in this year, D&A, we always have the run rate as roughly €15 million a month. And as we have started depreciation in the last month of Q3, you have the number, but please accept that we in the future talk more about total earnings impacts than the P&L positions.

Okay, that's helpful. So then when I look forward to 2018, 2019, 2020, can you just confirm it's still reasonable to use the current operating assumptions on cash cost per tonne that you have out there in the markets for a full ramp-up by 2023?

Yeah. We have not adjusted anything besides our expectation for 2017, the 500,000 tonne.

And 2018, it was not really an adjustment. We said always the 1.7 million to 1.8 million tonnes.

Now we are rather - we rather see 1.7 million tonnes, but the full capacity of Phase 1, 2 million tonnes, is available at the end of the year. Of course, we cannot use it in the first year, because it's still ramp-up and we need a little bit more maintenance parts.

And it's still our targets to start with a very profitable secondary mining by 2020, and we will have fully ramped up by 2023.

Okay. I was thinking actually more on the cost side, because obviously energy costs have moved.

FX has moved out since the guidance was originally set. So, I wondered whether or not we should consider any update to your current guidance for Bethune, or whether we should still be running at the old assumptions, which I think were set in sort of 2013, 2014.

Yeah. The biggest cost item is natural gas.

And we have secured deliveries for the next couple of years. And the natural gas costs in Canada are still on a level, which is significantly below our initial expectations.

So, there's no reason for having a more negative view on our next couple of years. And everything we are seeing, of course, is incorporated in our guidance, EBITDA positive in 2018 and EBIT positive in 2019.

Okay. The second question then was on SOP.

In your release you made some comments around the additional supply in the market in Q3 and how that's impacted upon pricing. But then, I thought earlier in your comments you suggested that Q4 should be a little bit stronger on SOP, but perhaps I misheard.

Could you just clarify what you're seeing in the SOP markets, whether or not you would anticipate a further strengthening in spot prices from here or whether or not current levels are a reasonable expectation as we go into 2018? Thank you.

Steph, you're saying, in the second quarter already that we see some demand weakness in the standard industry, in the NPK standard - in the NPK industry demanding standard SOP from us. And we've seen this in the third quarter or in most of the third quarter again.

But we spotted at the end of the third quarter stabilization there in terms of demand, and we picked up confidence that we have also seen a stabilization of pricing again. We still see good demand for granular, but this is a smaller customer group.

So, from here, we would say we see stabilizations in the prices. And we can see what's happening in the fourth quarter.

Okay. That's very helpful.

Thank you very much.

You're welcome.

Thank you. The first question is actually again on Sigmundshall.

So, the mine will be closed by the end of 2018, but you might not produce a lot in 2018. In general, my understanding is that the margin was anyhow thin, but with the procedures you have to do to close it, is that something where we have to be even more cautious on the P&L in 2018?

Or is that not having a great impact?

No. Of course, we knew that there will be a decision that leads to close at the end of 2018 or at the end of 2019.

And we had a precise idea what the impact of Sigmundshall in 2018 would be, and that is unchanged. And it's fully reflected in everything we said about 2018.

But from Sigmundshall running-down production and having all the preparations, it is definitely a negative impact we have to have in mind.

There will be a slight negative impact in 2018, but again that was always expected. And the production will be slightly lower.

That's right, but that is not 600,000 tonnes. We are not talking about half of it or whatever, slight lower production, slight negative earnings impact.

And then closing to zero at the end of 2018, if the decision is to do it by the end of 2018.

Okay. The second question I have is basically on the de-icing price.

You are probably now done with all the negotiation on the prices for the next season. Could you give some more update how that compares now with the prices you have seen for the last season?

Yeah, the weakest area is the Midwest. We have seen significant decreases in prices compared to the earlier season.

And that is, of course, fully reflected in our full year guidance for 2017. A slight dip we have seen at the U.S.

East Coast. And strong development means on-line or even slightly higher in Canada and in Europe.

And if you look on the total global de-icing pricing, is that then - has it improved? Or is it stable, or is it down…

It's not really a global pricing - market price, because we are talking about hundreds of...

Talking about your - for your average price, we see in your de-icing business, [Multiple Speakers] sales, the volume, is that going down or is it stable?

The average of what I said is of course that we have a lower average selling price of all regions. And the volume of course depends on the weather.

It could - earlier all I said, if we have two nice weeks that could be good for the total season to make it an over-average season. So, it really depends when and how strong we will see some weather.

But the November is, so far, promising, and the weather forecast.

Okay. Thank you.

Yes.

Yeah, good morning, just a technical question from my side. I saw that you borrowed about €120 million in the quarter.

And obviously, you booked the quarter in the long-term financial liabilities. I assume you brought down from your RCF facility.

So, is there a reason why you booked it on the long-term side and not on the current liabilities? [Item sets] [ph] the other line.

Yeah, sorry. No, we just - you mean you're looking at the net-debt number or...?

Yes, I mean I look on the balance sheet, on the cash flow statement. And I saw on the cash flow statement that you had borrowed about €122 million.

And I do not see short-term liabilities going up, because I thought due to the bond refinancing or bond issue, you repaid all your drawdowns of the RCF recently. So, this is must be fully available.

But when you drawdown now €120 million in the cash flow statement, I would assume your short-term liabilities should go up by €120 million, or is there an issue on my side I did not fully understand? Kind of…

Yeah, we - I mean you know that we have or we have issued after the bond financing of the first half for the Schuldscheindarlehen. And this amount comes pretty similar to this.

What I suggest is we double check and come back to you. I mean it must be this, but I want to be sure.

But it would mean actually you have still €1 billion of the RCF fully available and undrawn currently, right?

Yes, this is truly undrawn. This is correct.

Okay. But can you elaborate a little bit on the new Schuldschein, because that is - that would be interesting.

I mean maturity and maybe average cost-of-sales instrument.

It's five years duration, and we have the interest - 65 million is the - what is 65 million? Okay.

So, it's a five-year duration and we have interest cost of 1.5% on average on this.

Okay. And then the amount is obviously then €100 million, €122 million or around about €120 million, whatever.

This is roughly it, yes.

Okay, okay, good. Many thanks.

Yes, I have two follow-ups, if I may. First, coming back to Sigmundshall, I apologize for this one.

But looking back in the Q2 call, basically you indicated that Sigmundshall was basically contributing zero to the EBIT line. Given the low efficiency and the overall production environment you face there, I wonder whether you can reconfirm this.

And related to this, heading into 2018 and also looking at the product mix coming from Sigmundshall, are there any kind of compensating factors that you may expand production at other mines, primarily when it comes to specialty products, for instance? It will be my first question.

Yes, it's about zero this year. It's slightly negative next year.

That's, by the way, the reason, and it was always expected, why - and with all the efforts, we cannot bring it back into the positives. That's where we have to find a solution.

And, yeah, we always indicated that we will lose that 600,000 tonnes. And there is no short-term compensation possible from our side.

Okay. And the second would be a quick follow-up basically, coming back to my initial question at the beginning of the call, talking about unit costs of production.

So, I referred at that point in time, to cash unit cost of production on EBITDA. Have you - basically, the answer was - your answer was rather referring to EBIT, i.e.

total unit costs. Am I mistaking or just clarify this, please?

Michael, I'm happy that you asked again. You spotted my mistake.

So, the 220 I guided for full year 2017 was based on EBIT. When you look at EBITDA basis, and this is all-in, you end up with a number slightly higher than €210.

Okay. Thanks for this one.

Thanks, Michael.

Thank you. I have a question on the approvals you received for the tailing piles in Hattorf.

Can you remind us if with this approval now the production is secured, or do you need any further approvals for this site? That's my first question.

Yes, good question, because it's a bit tricky. First of all, we have the approval to start works.

And that means as we still have time with the existing approval until summer, autumn of next year, we can now prepare the extensions. And in parallel, we have to get the final approval, but that's important.

With the approval of starting working, the authorities have given a positive prognosis. And they have to have a positive prognosis.

Otherwise, they wouldn't be able to hand over the approval for the start of the works. And that means that the probability of the final approval is very high.

I wouldn't even say it's more technicality, but it's not in our hands. That's correct.

Okay. But when you have the final approval, then basically you are safe at the site from the authorities side.

Yes, and that I'm not seeing any further - that was very really a breakthrough, because the whole process, how to work, how to do the works and how we make sure that there will be no negative environmental impacts, it's already discussed. It's on their table.

And they have on this basis handed over the approval for the early start. Now we only need the final approval, but we can start preparing and we should not have, with a high probability, any problems in 2018 and of course the years to come.

Okay, very good. And then I have a question on the share-price-based incentivization program for the management.

A, can you elaborate on what kind of management levels this is relevant; and, B, when does it start?

So, it's the level below the Executive Board. The first four levels, if I remember correctly, the levels below that are not having a long-term incentive, but very important, the top management.

And I wouldn't be surprised if the Supervisory Board would indicate that for the Executive Board as well. But that is, of course, not in my hands, as you can assume.

But I am not shy saying that I would appreciate that being in line with the compensation of our top management.

And the starting of this program is then…

For that starts with the beginning of next year.

Beginning of next year. And then for the management then - or top management most likely then, those are expected to start then middle year potentially or is it then more around AGM?

No, the Supervisory Board is able to change that without the AGM.

Okay, okay, very good. Thank you.

Welcome.

Yes, thanks. Sorry, another Sigmundshall question, a technical question.

You mentioned during Andrew's question you were planning to flat the Sigmundshall mine after closing, rather than just simply closing the shaft. Why is that necessary, because my understanding is that, in that geological area you would only flat the mine, if there was brine inflow?

No, no, no. That is a precondition that it has always been a precondition that we have to flood that mine.

It's in Lower Saxony. And it's the standard in or even lower in Lower Saxony to fully flood the mine after they were closed.

Okay. Thanks.

You're welcome.

Operator?

I think that was the last question, if I get the message right. That's why I just would like to thank you for joining the call.

We are very happy that we have solved some problems, including the environmental. And there is good reason to be positive for Q4 and for 2018.

And I hope that you could feel our positive view in general. And again, we will see you soon on the road.

And we thank you very much for joining this call. Bye-bye.