* EBIT I at 27.5 mln eur vs 28.8 mln poll avg
* Sees tangible gain in 2017 revenues, operating profit
* Shares seen down 2.6 pct pre-market (Adds details on outlook, Q4 development)
By Ludwig Burger
FRANKFURT, March 16 (Reuters) - German potash miner K+S's SDFGn.DE quarterly operating profit slumped 84 percent, hurt by lower prices of the crop nutrient and temporary environmental restrictions but the group hopes to overcome both effects this year.
K+S reported on Thursday fourth-quarter earnings before interest and tax (EBIT), adjusted for currency hedging effects, dropped to 27.5 million euros ($29.5 million), compared with 28.8 million euros expected on average by analysts. prices of potash products dropped almost 16 percent in the quarter. A bigger-than-expected loss at its potash unit was partly offset by higher earnings from de-icing salt.
The group said it expected a tangible increase in 2017 revenues and operating earnings, banking on slightly higher potash prices and after a German environmental regulator in December renewed a permit for K+S to discharge waste water.
The regulator at the time imposed some limits but the ruling ended months of uncertainty and staved off major output disruptions that had weighed on 2016 earnings. the miner warned that its ability to fully use its German mines will depend on high water levels of the Werra river, one of the main outlets for the saline waste water from potash fertiliser production.
K+S, which will deplete its German potash sites over the next 35 to 40 years, reiterated it would start production at its newly built Canadian mine known as Legacy in the second quarter and reach output capacity of 2 million tonnes there by year end.
But ramp-up costs and depreciation at the new mine will still make Legacy a burden on group operating profits this year.
($1 = 0.9318 euros)