K+S Cleared by Auditor Deloitte Amid Ongoing Regulatory Probe

(Bloomberg) -- K+S AG’s auditor signed off on the potash miner’s 2020 financial report, a first step toward resolving potential accounting issues being probed by Germany’s main financial regulator.

The company said Tuesday it obtained an unqualified opinion from Deloitte GmbH, meaning the auditor concluded K+S’s financial statements were presented appropriately. Its shares plummeted last month after German financial watchdog BaFin ordered a probe into the accounting of the company’s non-current assets.

In a statement, K+S said that while the BaFin probe hasn’t yet been completed, it “continues to assume that it will be able to invalidate the indications for the examination.” The shares closed up 0.7%, paring an intraday gain of as much as 4.5%.

K+S also said it recorded a 140 million euros lower impairment loss than expected in the Europe+ unit as of Dec. 31, with the total amounting to 1.86 billion euros ($2.2 billion). Deloitte’s audit confirmed that the loss should not have been recognized earlier, it said.

BaFin told the German Audit Office for Accounting -- a separate financial watchdog conducting the probe on its behalf -- last month that it has concrete indications that K+S didn’t recognize an impairment requirement correctly.

K+S Chief Executive Officer Burkhard Lohr has been divesting assets after a Canadian potash project backfired during a global slump in prices for the crop nutrient. This has weighed on earnings and sent the company’s credit rating into junk territory. Last year, K+S agreed to sell its Morton Salt unit to Kissner Group for $3.2 billion to pay down debt.

K+S expects to generate an operating profit of between 440 million euros and 540 million euros this year. The Kassel-based company said the impairment led to an adjusted group loss after tax of 1.8 billion euros in 2020.

The company is scheduled to report more detailed earnings on March 11.

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