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K+S flags €2B writedown

Scotiabank sees lower mid-cycle prices with commoditisation of potash

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K+S still expects prices to continue to rise in the short and medium-term.

It has guided for third-quarter EBITDA of €480 million.

Scotiabank says the writedown is in line with its recent projections about increased commoditisation of potash leading to lower mid-cycle prices and valuation multiples.

"While an impairment charge of this magnitude is obviously not positive, it's also far from new and unexpected. We expect the market to largely look through this and focus more on the near-term price momentum in potash that will generate K+S solid EBITDA growth over the near-to-mid-term," said analyst Ben Isaacson.

K+S is expected to sell its Americas business unit by year-end, including the sizeable Bethune mine in Saskatchewan, Canada.

 

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