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K+S flags €2B writedown

German fertiliser company K+S Group says it expects to book a €2 billion September-quarter impairment on its European business unit after lowering its long-term potash price assumptions.
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K+S Group expects to book a €2 billion impairment charge on its European potash business for the September quarter

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.