UPDATE: Yara Profit Meets Views But Outlook Hurts Shares
23 Abril 2010 - 8:21AM
Dow Jones News
Norway's Yara International ASA (YAR.OS) met expectations Friday
with a 71% rise in first-quarter net profit, but it gave a cautious
outlook for the year due to weak grain prices and other
factors.
"A late spring will mainly imply a delay of fertilizer sales
from first to second quarter, but can also reduce overall demand
for the season as the growing phase is shortened," it said in a
statement.
Yara, one of the world's largest fertilizer producers, said that
there is a clear risk in Europe that deliveries of nitrogen,
phosphorus and potassium, or NPK, may not fully recover this
season, hampered by high potash prices, the late spring, weaker
grain prices and a weaker euro.
"To avoid inventory buildup, Yara is prepared to extend summer
shutdowns at NPK plants if required," it said.
Yara's shares fell after the report. At 1023 GMT, they traded
down 3.7% at 222.50 Norwegian kroner ($37.55). The stock has risen
44% in value over the past 12 months, compared with a 64% gain in
the broader Oslo market.
"Overall on the outlook side, it was more pessimistic than the
market had expected," said Aleksandr Solovjov, analyst at Terra
Markets. Solovjov, who has a reduce rating with a NOK230 target for
Yara, added that the figures in the report were OK.
Yara's first-quarter net profit rose to NOK1.52 billion from
NOK887 million a year earlier, in line with analysts' expectations
for NOK1.52 billion, following increased nitrate prices and NPK
margins.
Last month, Yara ceded Terra Industries Inc. (TRA) to CF
Industries Holdings Inc. (CF), entitling it to a $123 million break
fee and avoiding a bidding war.
"We did not succeed in acquiring Terra Industries at an
attractive price for Yara, but our growth ambitions remain firm,"
Yara Chief Executive Officer Jorgen Ole Haslestad said in a
statement.
Terra Markets' Solovjov noted that Yara apparently still aims to
be an active player in the ongoing consolidation process in the
crop-nutrient sector.
Revenue in the first quarter fell to NOK14.69 billion from
NOK17.10 billion a year ago due to the postponement of deliveries
as a result of unfavorable weather.
The company reported operating profit rose to NOK2.32 billion
from NOK1.19 billion.
-By Karl Bruze, Dow Jones Newswires; +46-8-5451-3095;
karl.bruze@dowjones.com