K+S AG

Thank you, operator. Ladies and gentlemen, welcome to our Full Year 2018 Conference Call.

Let me start with some general thoughts on last year's performance. 2018 was a demanding year for us.

We had to face extraordinary factors, like the extreme drought in Germany. As a result, we were forced to temporarily stop production at our Werra potash plant in September, and again, at the end of the year.

Just a few years ago, these interruptions would have caused earnings to slump dramatically. Today, however, K+S is stable enough that despite all the headwinds, a slightly improved EBITDA can be reported.

We made progress with our German production and met our Bethune-related profitability targets. We added additional buffer capacities at our Werra sites.

And without our improved water management, we would have had to report shutdowns in June already instead of September. However, we are making - working hard in becoming even more robust against weather-related disruptions and to deliver on our Shaping 2030 related promises.

We are making progress and are on a very good track to achieving our targets. And now please open slide number one.

We have increased our group revenues by 11% and our EBITDA by 5%. A positive pricing environment, mainly in potash, but also increased volumes across all segments were quite supportive.

In salt, we shipped more than 3 million additional tonnes as a result of the harsh winter at the start of 2018. Furthermore, we increased our Canadian potash production and achieved 1.4 million tonnes, which is almost half of the total capacity.

Due to the drought, we had to stop production at our three Werra sites, which resulted in 64 outage days. Moreover, we were focused and forced to use additional shipment of saline wastewater for off-site disposal.

On top of this, the unusual low water levels had a negative impact on trade rates, which increased substantially. Keeping in mind that already back in 2017, the potash division had to carry a weather-related EBITDA impact of about €40 million, the burden year-on-year was, therefore additional €70 million.

In absolute terms, the effect amounted to €110 million in '18. Due to the significantly lower CapEx, our adjusted free cash flow improved by almost 50%.

Adjusted for our outage days, net debt-to-EBITDA would have resulted in a multiple of 6.2. Our dividend proposal of €0.25 per share implies a payout ratio of 56%, which is slightly ahead of our guided range, but also reflect our optimism for 2019.

Let us have a closer look at the market conditions in our potash business on slide four. Overall, last year's potash market was quite supportive.

Global demand increased to a good 71 million tonnes from under 70 million tonnes in 2017. At year's end, most producers were sold out into Q1 '19, which also led to robust MOP pricing, especially in our overseas business.

Please keep in mind that more than half of our revenues were generated in Europe and with specialty products having a more resilient price development and have recently also started to pick up. Our average selling price for our potash and magnesium product portfolio of €264 per tonne is therefore still lagging behind the described market environment.

So let's move to slide five to give you an update on our potash production. In 2018, we worked very hard to tackle our production challenges.

However, adjusted for outage days in December, we missed our target by almost 100,000 tonnes in Q4. In total, we achieved an annual production of 7.5 million tonnes.

At our Werra mines, we had addressed all issues which caused last year's headwinds. And overall, product availability has already improved.

Unfortunately, at our Neuhof plant, the low-roof stability reoccurred despite countermeasures installed in Q3. For safety reasons, we stopped mining in that sector, which is one of the three fields we are active.

We are working on solutions to continue in that area. In the meantime, our production is moved to the other mining sectors, which takes time and effort.

As a result, last year's production fell short of our initial planning by the above mentioned 100,000 tonnes and will also be burdened by additional 100,000 tonnes in 2019 year-on-year. Looking at Bethune, production is continuously increasing.

To further increase product quality, we are going to install a grinder pump in the first half of 2019 and some cooling equipment in the second half of the year, as discussed. On slide six, we would like to talk about the weather impact.

I've already mentioned our outage days with a negative EBITDA effect of €110 million. To improve the situation, we expanded our basin capacities by more than 10% to about 600,000 cubic meters last year already and also expanded our logistics for off-site disposal.

In early summer 2019, we intend to further expand our capacities to store saline wastewater underground on site by up to 400,000 cubic meters. This will make us even more robust this year.

The good message is, there is a high probability to have no weather-related standstills in 2019. Let me give you an update on our potash production target for 2019 on slide seven.

This slide is already quite familiar to you. You can see, we will get back to volumes lost from the weather-related outage days and from our production issues at the Werra site, which are now resolved.

However, the performance of our Neuhof site also has an impact on this year's production. Nevertheless, we will regain about 500,000 tonnes of production in total.

At Bethune, we are making good progress to meet our 2019 guidance of 1.7 million to 1.9 million tonnes as described, an increase of 300,000 to 500,000 tonnes. The closure of Sigmundshall will reduce our production in Germany by 600,000 tonnes, which, however, will have a small positive impact on our profits.

All in all, we expect 7.7 million to 7.9 million tonnes of production in 2019. Costs of production should come down tangibly as we replaced high cost production by more profitable volumes from Bethune.

Cash unit costs will stay above €200 due to overall cost inflation, as already indicated last year. So let's move to the salt trading update on slide eight.

In salt, we saw a mixed picture. In the fourth quarter, the strong pre-stocking in North America continued in October.

The de-icing business in November was a normal level - was at normal level, but December was below average. Demand for de-icing salt in Europe was a bit low in the fourth quarter.

In total, we saw a slightly increased - increase in de-icing salt volumes year-on-year. Prices in the current season for de-icing salt were up in Canada and the U.S.

Midwest, as well as in Europe. We continued to see a highly competitive environment at the U.S.

East Coast. While in Europe, the wintry weather conditions at the beginning of 2019 caused a slightly above-average demand for de-icing salt, the business in North America was still a bit below our expectations, but catch up in the last weeks.

However, in total, we are on schedule so far this year. Demand for our non-de-icing products is solid, with increasing sales volumes.

Now let's come to our outlook for 2019 based on our new external reporting structure on slide nine. Based on what we have discussed when introducing our group Shaping 2030 strategy, we are working hard to break down silos and build One Company.

The implementation of our Shaping 2030 strategy is advancing with visible results. In 2018, we started to make our administrative functions more efficient and focused on delivering customer value.

Initial synergy effects have already been achieved in procurement, production, as well as sales and marketing. The reorganization is progressing well.

From Q1 onwards, this improvement will also be reflected in our external reporting. With our four customer segments: agriculture, consumer, industries and communities, we will provide further more customer-oriented information.

The two new operating units, Europe+ and Americas are our reporting segment under IFRS. Let's discuss our outlook for 2019 on the following slide.

We want to give you a better guidance already at this stage of the year. Therefore, we provide you with a range for our EBITDA today and not only in August like we did in the past.

EBITDA is expected to improve significantly to between €700 million and €850 million. This forecast is based on an average euro-U.S.

dollar spot rate of $1.20. We see a good market environment for fertilizers.

After the robust demand we experienced in 2018, we expect global potash demand to remain at least stable. The positive environment of 2018 should, therefore, also favorably reached into 2019.

We see a further increase of our Canadian production, and there is a high probability to have no weather-related standstills in 2019. Rising cost inflation is likely to soften some positive effects from potash pricing.

The adjusted free cash flow will improve significantly and turn positive in this year. This is the most important target for all of us in the quarters to come.

I'm fully convinced that we have every reason to be optimistic about our future. The management is keen to show our shareholders the huge potential we have here at K+S.

Ladies and gentlemen, thank you very much for your attention. We are now happy to answer your questions.

And like always please, one at a time.

Good morning, gentlemen. Thanks for taking my two questions, I'll start with the first one.

Coming back to your outlook statement for 2019, a rather broad range. Maybe you can walk us through the sensitivity on the U.S.

dollar side, I mean, $1.20, if you would put this into mark-to-market. And related to this one, maybe also some hints what you have baked in, in the lower end and the upper end of your guidance range?

Will be my first question.

Yes, Michael, it's Thorsten. Good morning.

We have - against this expectation, the FX at - when you take the FX at - FX rate at $1.15, this could mean a variance - a positive variance of about €40 million, 4-0. Then we have baked in, in the midpoint, the expectation of what we call a normalized winter.

So if we see in the pre-demand and also in pricing here stronger or weaker numbers, which we cannot forecast yet for the first quarter, this would be one variance, yeah. And I mean, we don't know yet the start of the fertilizer season, neither in Europe nor in Brazil.

It hasn't started yet really. And what we also have baked in, and this is what you've seen in one of the charts Burkhard presented, a range for production we are expecting.

And here, we said, especially for Bethune, we could see 1.7 million to 1.9 million, and the one determines - or is part of the determination of the lower end of the range and the other one of the upper, obviously.

My second question would be on your free cash flow. You are targeting positive free cash flows or a turnaround there.

I still see something like €600 million CapEx as an outlook for 2019 compared to something like in north of €500 million. I recall also, last year, you started with €600 million into 2018, basically, with kind of guidance.

So maybe some - the changing moving bits and pieces here for the free cash flow turnaround and how conservative is your CapEx outlook?

Yes. I mean, I would, first of all, call our expectation of the CapEx of €600 million realistic because this is what we expect from our bottom-up planning.

We have, this year, tailing piles expansions in Hattorf going on and also in Zielitz starting, in Wintershall as well. So this is where the improvement comes from.

And then, I mean, what we have shown last year, where we also expected €600 million of CapEx, we have shown that, if necessary, we can reduce the CapEx. This is, of course, nothing you would do from the beginning on because you want to invest in order to maintain either your site or expand them.

But there is certainly some flexibility. And what we should keep in mind is we always look at the CapEx on the balance sheet.

When you look into the cash CapEx, the cash CapEx was above €500 million, I think €513 million or so. So the difference is not that big when you just look into the cash flow statement.

Okay. Thank you.

Thank you, Mr. Schafer.

Yes. Good morning, gentlemen.

A couple of questions. So first question, surrounding your ongoing production issues.

Can you put a bit meat to the bone on what's going on in Neuhof? And also, the lower K2O content in Unterbreizbach?

And related to that, potash wise, why do you still have caking issues in Bethune?

Okay. Let's start with the German sites that we are running through an area with a lower K2O content, as previously expected, that we have reported Unterbreizbach that we have reported last year, and we have already indicated that we will see effects of that in 2019 as well.

We should be through that area, and we know that we get a higher content in - K2O content after we are done. And so in '20, we are hopeful to see a positive turnaround of the situation.

The last remaining bigger issue is at the Neuhof plant where we have still not fixed the situation with our roof stability. We thought we could fix it with another anchor situation, stronger, longer, but that didn't work.

We have really an extraordinary geology here in this area. And now we believe the solution will be to narrow the space between the piles [ph] the pillars, and that requires a lot of pre-work and adjustments.

And that's why we believe we will be able to do so and go back into that area, which, by the way, has a higher K2O content, that's why we want desperately find a solution for it. But that will be most probably not done before the end of this year.

That's why we have decided to take out the additional 200,000 tonnes. So if you take '18 and '19, we lose 200,000 tonnes compared to our original plans for Neuhof.

But it is all baked in into our guidance.

By - on that, if I may. Just quickly on that one.

More narrow mining also means higher costs, correct, going forward.

Once we are - we have prepared that, the cost is not significantly higher. But we will take out less out of this area.

That is the most, let's say, higher consequence. That means we cannot mine all the volumes that we would have liked to mine in this area, but that has no effect, immediate effect, and the higher costs is not meaningful.

Coming back to Bethune, that was your last part of the first question. There's no surprise.

We indicated to have the perfect quality we need to install this grinder pump, that will happen pretty soon. And at the end of the day, we need to have these cooling facilities, and that will be installed by the end of the year.

And we see now in the cold period, it works better. But there will be summer, of course, to come without this cooling facility.

And that's why we have modeled these effects that we most probably will see into the volume expectation for 2019.

Okay. Thank you.

Then a second question. Thorsten mentioned it's too early to charge fertilizer demand in Europe.

I mean, walking the talk, I saw with my own eyes fertilizer being nicely applied in Europe already in the region here. So I mean, what are the early indications of demand in Europe?

Do you have any feedback from your salespeople?

The same that you have seen, obviously. Europe is picking up nicely.

Earlier than last year, you might remember, we had a very long winter last year and we made our de-icing volumes in March in last year. So no reason to be concerned.

But of course, Thorsten is right, we need to see the development of the whole year and, of course, in all areas. That's why - yes, it's only March, and that's why we have a range of €50 million.

We have so many moving parts, but we are quite confident to stay in this range for the remainder of the year.

Okay. Thank you very much.

Welcome.

Thank you. Pardon, sorry.

And couple from me, please. I'd like to touch again on the potash production in Germany.

The 200,000 tonnes that you have effectively removed from the 2019 guidance, is it sensible to assume that, that recovery - volume recovery should materialize in full in 2020 or sort of phased up to 2021? Really, I'd like your thoughts on the longer-term volume outlook for Germany.

Is 6 million tonnes the right number to think about long term? Or do you see that on an either increasing or declining trajectory?

Yes. First of all, yes, if everything works out fine, we should see additional 200,000 tonnes in 2020 already.

But I have to remark, caveat [ph] maybe it's only 150,000, 120,000 or whatever, because there is still a plan to tackle the problems in Neuhof and we - it remains to be seen whether we are able to do it, but we are quite hopeful. And there is another project running which will have a positive impact.

That is our Operational Excellence project. We - that's one of our synergy projects.

You know that we indicated we want to improve our EBITDA by at least €150 million by the end of 2020. And the biggest portion comes from Operational Excellence.

We have around 1,000 measures to improve our work on sites. And some of them are cost-cutting measures and some of them are some meaningful are measures to increase the throughput.

So we might see that - it's too early to raise numbers, but we might see an impact, a positive impact, on the German production out of Operational Excellence. But we will report more on that in the course of this year.

Okay. Thank you.

Secondly, a second question on CapEx again. The two investments that you mentioned in Bethune, can you perhaps offer a bit of some scope for magnitude of those?

And am I just interpreting the message from Thorsten there on CapEx that at the low end of the EBITDA guidance range, you'd probably crank back the CapEx in order to be able to hit the free cash flow target? Is that the way to sort of think about the various moving parts?

No. First of all, we have the measures that we take in Bethune fully baked in into the €600 million.

And we are not talking about meaningful volumes, a midsized double-digit Canadian dollar amount for both together. And some of that is compensated by the budget Bethune has any way for their CapEx requirements.

Second part of your question, we have shown some flexibility without having negative impact. That is important on our running business to steer our CapEx.

And if needed, we would also do that for - in 2019. But our guidance, we will have a positive - slight positive free cash flow.

Even at the lower end, it's assuming €600 million CapEx.

Okay. That's clear.

Thank you.

You're welcome.

Good morning and thank you for taking my questions. The first one would be on Bethune and the secondary mining that should start at one point during 2019.

You said in the past that you'd expect something between 100,000 and 200,000 tonnes to be added in 2019. Is that still a valid guidance?

And can you already say when exactly the start-up will be?

Yes. Thanks for that question.

We have started last year already. No big volumes, but we have started the process and we have seen it works.

And that's why we are very sure to be able to deliver the 100,000 to 200,000 tonnes secondary mining. And as you know, that is very low cost production and we are very happy to see that ramping up now.

And following up on this. Your cash unit cost guidance for over €200 due to cost inflation, could that change if the secondary mining comes in at the upper end, so at 200,000 tonnes?

Or is that independent of this?

First of all, I would like to use the opportunity to indicate that Bethune, with only 50% of the capacity, has a cost per tonne number which is below our German numbers. So it has already a positive impact.

So it indicates what is ahead of us in the future. But the 100,000 - if we talk about the upper end of 100,000 tonne secondary mining at the upper end is not big enough to really turn the needle.

Okay, okay. Thanks.

And then another question on the salt business, and I realize it's very early days and March is still in full swing, but do you have already any view on how channel inventories might evolve into the next contract season later this year?

Yeah. Here, we always have to differentiate between the different areas.

And we talk about Canada, Midwest, East Coast and Europe. And in total, we can say already that we will be very close to our expectations for the first quarter and then in total.

Canadian business is always stable, and that was stable this year as well. And we go out of the season with normal to low inventories.

So we are quite positive for the next bidding season. East Coast was above our expectations.

So here, we will see competition in the next bidding season, but Midwest has changed significantly. We have sold our entire stocks.

So we are out of inventories, and we believe that will be the same for the rest of our competitors and for our customers. So that should show a nice development in the bidding season.

And Europe was on average. So here, in total, we are happy with the first quarter and we are positive for the bidding season to come.

Okay, thanks. Thanks, Burkhard.

Then one last question on your new reporting structure with Europe+. Will you still be showing potash numbers separately within that segment?

Or will it all be mixed up with Europe Salt business?

We will show potash - agricultural potash numbers. So it's even more transparent for you because we show which - what is the development of potash which goes into our customer segment - or is sold in our customer segment agriculture, and the rest is industries.

So in the past, we have already - always blended these numbers, although we have completely different customers, and partially, the dynamics are different. That is the good news for you.

Okay. Good news.

Thank you.

Welcome.

Good morning, gentlemen. Thank you very much.

My first question is, you've said that ASPs will be modest - moderately up for 2019 in your guidance. Could you help me understand how you're thinking about the specialty component within those ASPs versus the kind of commodity component outlook that you see for 2019?

Yeah. Usually, the specialties are following with a time lag, and that is the case this time as well.

When we have seen strong increased MOP prices in Brazil, for example, the SOP prices still were flat. But at the end of last year, we have seen some recovery, and we believe this is a sustainable development.

So if I may add something here. We hear a lot about reduced - or reduced to zero China export tax.

I think we should think in this context, this is not going in our core markets. Our core markets are Europe, a little bit of Middle East and America.

And some of these markets, we certainly meet Chinese potash in Zielitz [ph], for example. But we - our sales people don't believe that there are major disruptions on the pricing to expect because the volumes, overall, are not really big at this time.

Thank you, Thorsten. That actually anticipates my second question.

Okay. So just as a follow-up, just a housekeeping one.

Exceptional costs or - that we should be expecting for 2019, can you give any guidance on those?

You mean overall cost per tonne or...

No, no, just exceptional. Kind of in terms of the - obviously, you got the cost saving - the 2030 plan cost savings, you've got maybe other costs that might become exceptional through the course of the year.

Outside, that are not - obviously, weather-related, not about the Werra River. I'm just talking about other exceptional costs that we should be factoring in.

Okay. Yes, of course, together with our Shaping 2030 initiative, I mentioned one positive effect, but there are, of course, extraordinary effects.

We indicated last year already that we will cut our workforce in the administrative areas by 10%, and it will not work without any measures like that in the production area. So we will have some redundancy costs.

But in total, we expect higher savings out of these measures in this year already than costs. It's not a big delta, but it's a positive - a slight positive impact.

Besides that, we have no extraordinary burdens.

Okay. And is that going to be a low double-digit kind of number then for these costs?

Yes - the costs? No, we would rather like to talk about the net effect and that is a low double-digit number, yes.

Okay. Okay, brilliant.

Thank you Burk very much.

Thank you.

Yes. Good morning, gentlemen.

I think I still have three, if I may. Firstly, on free cash flow, you have provided us a quite detailed guidance on EBITDA.

Would you mind providing us a range on free cash flow, if you can? And do you - should we expect a normalized cash flow?

Or do you see any funny - either to the positive or to the negative side in 2019?

Yeah. Thomas, we don't want to give more guidance or more ranges out than that for the EBITDA.

But I mean, we gave you already the hint that even with the EBITDA at around €700 million, we still see a slight positive free cash flow. We're not going to be more precise on this.

With regard to any funnies, in this year's numbers, I wouldn't expect those. I mean, we had last year slightly higher cash taxes.

We had tax audits where we paid taxes afterwards. So we expect cash taxes to go down We see a normal tax rate.

We certainly see slightly higher financial results, but this is all the impact we see. So it's net positive.

So also, the cash flow improves with the EBITDA.

If I may add, maybe one more hint, slightly positive means not much more than a breakeven.

That's fine. Thank you.

The second - my second question is on Bethune. I think in the past, you were saying that Bethune should turn EBIT positive in 2019.

I haven't seen a confirmation of that in your written statements today. Am I mistaken or is there any change to the profitability at Bethune in 2019 versus previous expectations?

None. Then you get the confirmation now, we expect EBIT positive for this year.

It's a change in the set-up because we are behind our original ramp-up curve for the reasons we have discussed. So lower volumes, but higher prices.

And that ends in the same EBIT number, so we are positive.

All right, perfect. And my last question is on the IFRS 16 effect.

Could you give us a hint what is it on EBITDA and on free cash flow for 2019, please?

We see a positive impact on both metrics of a low double-digit number.

Low double-digit. Perfect.

Thank you.

And Thomas, if I may add that, we're now talking about it, but we started or Investor Relations started to talk this certainly half a year ago. So I would assume that most people have anticipated this.

No worries. Thanks.

Thank you.

Good morning, gentlemen. Several questions on the balance again [ph] ] and to kind of basically then you set out in best [ph] for 2019.

Firstly, on the turnkey sensitivity...

Markus, Markus, you're very hard to understand.

Is it now better?

If you say something, we can judge.

Yes, okay. Firstly, with…

But we try, we try.

Okay. Okay, I'll try to speak up.

Sorry for the bad line. Firstly, on the turnkey sensitivity, I'm a little bit puzzled on the €40 million impact, the five [ph], you just provided, percent change, because normally, this was higher.

Could you update us on the hedges you have and what would be the sensitivity if the exchange rate would go to $1.25 or down to $1.10? That would be my first question.

Yes, Markus. The sensitivity didn't change much, I would say.

It was higher because, in the past, we were always talking about the difference of $0.10. I think this is maybe what we have in mind.

Secondly, so what we also need to see is we had a time where the dollar was above $1.20, close to $1.25 or even above that. And we have a rolling hedging policy, which means we have also bought at times with a higher U.S.

dollar our hedges, and we have this in the backup of our compendium. You see that the best case for 2019 is $1.16.

So this limits a little bit compared to the un-hedged components. And yes, we have hedged up to 85% of the 2019 exposure.

So this expands it, I guess.

Okay. Second question is on the production stops that occurred at the Werra River.

You had €110 million effect last year. Should we, for this year, expect basically no effect or previously I think you said we should expect a return of roughly €70 million?

What is now a good number to take into account?

Yes. There will definitely be transfers of waters and we said we have costs up to €30 per cubic meter.

And that is the tricky situation every year. Even with low - with empty basins, do we start shipping volumes to make sure - to make very sure that we get along without standstills over the summer, or don't we start?

The solution will maybe be in the middle, to start with low volumes. But make a long story short, we will have transportation costs which could end in the number of last year's number.

That would be the high end, €40 million, so which would then have a net effect of €70 million.

Okay, okay. Good.

Makes sense. Second question on this is then the logistic costs.

So should we assume then, also for the 2018, 2019 freights, additional logistic costs? So maybe we'll see this is a magnitude, i.e.

€18 million higher logistic costs in 2019.

So when we talk about freight costs, we always differentiate it between the special situation in Germany due to the drought that was not only affecting us but other companies with higher freight costs for freight over the rivers due to the low river levels. That is something which most probably will not occur one more time.

But the freight costs in America, and here we are shipping the big volumes, that is the new normal. We should - we cannot even rule out that we will see higher costs than last year in 2019.

Yes. Okay, okay.

Understood. And this one-off effect - did the Werra - can you share a magnitude for this effect you had in 2018?

In terms of freight?

Yes, in terms of freight. Or is this included in this €110 million effect?

That is included in the €110 million. So €110 million is lower production, is transportation and higher freight costs.

Okay. I see, I see.

Okay. And then you had €10 million roughly closure costs for Sigmundshall in 2010 I think there will be not anymore any costs relating to Sigmundshall in 2019.

So I assume that this is - there's a bridge something I can add [ph] (inaudible) basically through 2019. Is this correct?

Yes. We have, of course, bid provisions for everything we have to do now.

And maybe we will find out we have cost overrun of €1 million or whatever, but nothing meaningful.

Okay, okay. And then regarding the net cost savings.

So you have last time a range that's been charged in there, there's the costs versus the efficiency measures. What - is this a low single digit number we should bake in from the net cost savings in 2019?

Or is this already a double-digit number here?

A low double-digit number is the difference between the savings and the costs. So a net is - low double-digit number as a net effect out of these measures.

Okay. And then the last question.

Thank you for this many questions. What is a fair assumption in terms of higher personnel costs?

Should we take then for the group 3% or more in the 5% range?

More in the 3% range.

Okay, perfect. Thank you so much…

Yes, we have very good relationship to our social partners.

Okay. Thank you.

Thank you.

Thank you for taking my question. Coming back to the FX issue.

So just in order to make clear that I understand it correctly. You already hedged 85% of your U.S.

dollar exposure at $1.20, is that correct?

So our policy is always to have at - in the autumn of the previous year. So in this space, in the autumn of 2018 to be hedged up to 80% of our net U.S.

dollar exposure we are expecting for the following year. This means for the year 2019, yes, we have - and we are talking about potash only here, right?

So we do not hedge our salt business because it's translation only. So from the potash net exposure to the U.S.

dollar, we are hedging 85%. And we do this with in a collar [ph] structure, which limits our best case based on this 85% to $1.16.

Okay. Understood.

Thank you.

Hi. It's Chetan Udeshi actually on the call.

Just to - first question was on clarification. Did you say IFRS 16 will also help the free cash flow, because I thought you would have taken into account the move from cash flow from operations into financing?

So when you say it's slight positive, that includes the IFRS benefit as well. That's the first question.

And the second question is...

Can I answer this question right away? Yes, we said - so the low double-digit million positive effect has also an effect of the cash flow.

Okay, fine. And that's just because some of the cost or cash-out is now probably moved into cash flow from financing line, so that's how the cash will be...

Yes, more or less.

Okay. And the second question was maybe just looking into mid to long term, can you give us some color on how do you think the CapEx requirement for the business looks like?

And the crux of the question, again, to put it simply, is the leverage is still pretty high at this point even if you take your 2019 guidance which assumes no outages. The potash prices have already improved quite materially over the last couple of years.

So the question is, where do you see yourself comfortable in terms of the leverage of the business going forward? And how should we think about the trajectory from, say, hereon assuming no unexpected outages?

Okay. Let's start with the first part of your question.

So the run rate - the normal run rate for the business, CapEx number would be €500 million. But we have now, for a couple of years, additional €100 million for environmental.

Thorsten mentioned already with one of his answers that we have the heap extensions we started last year with Hattorf. Now we are running into Zielitz, into Wintershall.

At [indiscernible] we have three extensions in a row, and they are very expensive. But then we are done for many, many years in terms of heap expansions.

And the second part of your question, we have indicated a leverage we want to be. And we want to half it by 2020, coming from 8.1 times in the mid of '17 when we gave that guidance.

And we want to be back in - back to be an investment-grade rated company by 2023, and that is one of our most important indicators the management is taking into account with all its decisions.

Thank you.

Welcome.

Hi, yes. Thank you for taking my questions.

Just on the first one, and apologies if my phone dropped out for a minute, sorry if I missed it. What was driving the increase in the non-de-icing volumes in Q4?

It seems like a fairly steady business and this quarter was kind of an uptick. So could you give more color on what geography or end market that was coming into?

Yes. And what we have seen was a strong demand in North American markets for - I would almost call it specialty, so it's in the consumer business.

Think about pink Himalayan, think about kosher salt, so that's what our specialties are for us, it's not the commodity like the round can. We have also seen pretty good - we talk about small volumes, but that's driving it and with good margins.

We have also seen, for example, in the copper leaching business, and as we always told, the market's an increasing demand. We are selling salt into copper leaching processes, and this is a business which is growing nicely actually.

Got it. Thank you.

And then just on the caking issues at Bethune. Does this pose a downside risk to volumes?

And in that, I mean, if all goes to well - or if all goes to plan, putting the grinder pump and the cooling equipment in 2019, does that mean that there would be upside to the Bethune volumes or what is the guidance kind of assuming for the caking issues?

The guidance that we will see, including our issues, which will be more intense in summer this year, we expect 1.7 million to 1.9 million tonnes to produce. And that is - everything is modeled in.

And once we are done, and that should be the case by the end of this year, that we'll have, of course, a positive impact on the ramp-up in 2020. But there, we should not expect extra - anything extraordinary which could lead to a higher production than 1.9 million, and we are not expecting to fall short to the 1.7 million.

Okay, got it. And then just a question on the promissory note for 2019.

There are some that are maturing. What's the expectation there?

Will those be refinanced or debt repayment going to be a priority?

Yes. First of all, we're going to pay them back.

And secondly, yes, we're going to refinance those somehow because the free cash flow would not be enough in order to refinance them. So we have also room to maneuver in our credit line.

So we haven't yet made up our minds how to refinance them, so which instrument, but that's what will happen.

Okay, great. Thank you.

That's all my questions.

Good morning. Could you walk us through what your potential production in 2020?

I understand that 2019 would still be a year of kind of ramp up. I'd I to get a feeling about where you're heading.

So if I understand well, Germany should be back to 6.1 million. And how should we kind of - you mentioned Bethune and especially the ramp-up of the secondary mining in 2020.

And the second question is on...

Sorry, we said one by one. And as we adjust - this is the 2018 full year call, and we give a guidance for 2019.

It's too early to give you more precise guidance on production for 2020. All we can tell you is we will see a higher volume in the German potash production and the ramp-up will continue in Bethune with higher volumes there.

But no numbers, sorry for that.

Okay. Could you maybe remind us what's your expectation of total capacity for Bethune and what's the time frame maybe to reach that?

The total capacity and the time when we want to reach it is unchanged. It's 2.86 million tonnes, and we should achieve that by the end of 2023.

Should we imagine that it could be a linear ramp-up until then? Is it that good assumption?

At least it's not wrong.

Okay. And then just, if you can, I'm a bit confused on the hedging.

You said you're 85% hedged at $1.16. If I assume the kind of spot price for the remaining 15%, you're probably closer to $1.15 for the full year, which means that the €40 million you mentioned as an impact for dollar - potential dollar at $1.15 versus the $1.20 you have here in your guidance, should actually be in the bag.

Am I wrong?

Frankly, I don't know what you mean with being in the bag. But this is - the hedging policy I elaborated on, this is why I made it clear when I answered the Markus question, is valid for our potash business.

So it's about half of our business, right? The €40 million also includes our salt business, which has a translation effect, but which we do not hedge.

I think I got to what you mean with in the bag. And you mean it's a high probability that we can gain the €40 million.

I would agree for the first quarter because it's almost done, but we have seen so many tremendous changes, let's - something be solved with the Brexit or between China and the U.S. that can have a significant impacts in both ways.

That's why we - and when we put the plan together, it was October last year. There, we had the more different environment and we put - we took a number for three years because our midterm planning is '19, '20, '21.

So I think we - it's a good advice for us to stick with the $1.20 for the time being.

All right. I understand.

Okay, we can do all the calculation then.

Yeah. Thank you.

Yes, good morning. Thanks for taking my question.

I have just one. Could you maybe just comment on new volumes coming from competitors in the medium term?

I think you referred already to Chinese competitors. But I think EuroChem was a topic in the last calls, and BHP's comment recently on the Jansen plant and the long-term plans there, so just to mention some names here.

So maybe my question is actually how you assess possible negative price impacts in the next few years from new volumes coming to market.

It's always difficult to comment on the extension plans of competitors. But I would like to give you an indication.

I'm pretty relaxed about this topic. Yes, there are two projects being ramped up from EuroChem.

We have seen the first volumes after many delays. Last year, it was about 400,000 tonnes.

We don't expect that there is very much to come from the one mine. And I always mix up the names, so I only talk about the one and the other mine.

And the other mine will not deliver into the world markets at least this year. Jensen is - yes, it's, if ever, so far away, and we are talking about completely different world demand.

What is important to take into account is we have seen huge increase in demand over the last years. And everybody was arguing, once you come onstream with Bethune, that will nail the prices, exactly the opposite was true.

We started producing and the prices started rocketing. So the market can easily cover, meaning additional volumes, if they are not too big.

And I'm not seeing any high volumes and the new volumes entering the market. And also, you also have to take into account, if you see a list of projects, a lot of them are substitutes for lost capacities.

By the way, this is a case in our case as well. Yes, we have higher volumes with Bethune, but we have closed Sigmundshall, and the net there is only additional - when we have fully ramped it up, additional two point something million from Bethune.

And that was over a time period of 10 years. So all in all, I'm quite relaxed.

Okay. Very clear.

Thank you very much.

Thank you.

Thank you. So I hear that this was the last question now, and I would like to take the opportunity to thank you very much for your interesting questions.

And we are looking very forward to seeing you again. And Thorsten and I will be on the road next couple of days, Frankfurt and London, and maybe we see, one or the other, of you.

Thank you for listening and goodbye.