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Yara International ASA (OSL:YAR) Oslo (2008-10-17): Yara International ASA reports a strong quarter, with higher prices more than compensating for increased raw material cost and lower volumes.
Yara reports third-quarter net income after minority interest of NOK 3,360 million (NOK 11.55 per share), compared with NOK 1,487 million (NOK 5.10 per share) last year. Operating income was NOK 4,607 million compared with NOK 1,101 million in the same quarter last year. EBITDA for the quarter was NOK 6,345 million compared with NOK 1,901 million last year.
"Yara delivered strong earnings in the third quarter, as higher fertilizer prices more than offset increased raw material costs", says Jørgen Ole Haslestad, President and CEO of Yara International ASA.
There has been a good start to the European season, and nitrate stocks are lower than last year. Downstream segment sales were in line with last year. Excluding the effect of the Kemira GrowHow acquisition, underlying sales volumes declined due to lower sales in Brazil and Southeast Asia. Fertilizer margins continued to expand as prices more than doubled for Yara's main fertilizer products. Underlying earnings in the Industrial segment were in line with last year as continued growth in technical ammonium nitrate for the mining industry and environmental products more than offset increased sourcing cost due to higher global nitrogen prices. The Upstream segment benefited from increased fertilizer prices, more than compensating for energy costs, which increased less than previously guided due to a drop in spot natural gas prices.
The long-term fundamentals for fertilizer demand remain strong, with grain inventories still at historical low levels. New fertilizer capacity continues to be delayed and Yara's energy costs will benefit from lower global energy prices. Going forward, Yara will benefit from the take-over of Saskferco effective 1 October.
"No industry can expect to be unaffected by the ongoing financial turmoil, and we are currently seeing a slow-down in some of our fertilizer deliveries following the credit crunch. However, since food demand is relatively inelastic to lower economic growth, fertilizer demand needs to rebound to avoid insufficient food supply. Yara's business model, combining a unique distribution system and own production with third-party purchasing, gives us flexibility to handle demand volatility better than most", says Jørgen Ole Haslestad.
Yara International ASA is a leading chemical company that converts energy, natural minerals and nitrogen from the air into essential products for farmers and industrial customers. As the number one global supplier of mineral fertilizers and agronomic solutions, we help provide food for a growing world population. Our industrial product portfolio includes environmental protection agents that safeguard air and water purity and preserve food quality. Yara's global workforce of more than 8,000 employees represents great diversity and talent enabling Yara to remain a leading performer in its industry. www.yara.com
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