Yara 2Q 2011 Net Profit Falls 40% On Year, Below Estimates

Dow Jones

Norwegian chemical company Yara International ASA (YAR.OS) Tuesday reported a marked increase in sales for the second quarter of 2011, but said its net profit fell 40% on the year, mainly as a result of higher energy prices; the published results came in below analysts estimates.

MAIN FACTS:

- Yara International, which specializes in nitrogen-based mineral fertilizers and industrial products, said its second-quarter net profit after non-controlling interests fell to NOK2.23 billion, from NOK3.72 billion a year earlier. An average of 11 analysts polled by Dow Jones/Factset had estimated the net profit at NOK2.47 billion.

- Second-quarter earnings before interest and tax, or EBIT, rose to NOK2.22 billion, from NOK1.89 billion.

- Yara's second-quarter sales rose xx% to NOK18.63 billion, from NOK15.68 billion in the year-earlier quarter, but also fell short of the analysts' estimate. Analysts had pegged sales at NOK19.39 billion.

- "As expected, drought in Europe held back deliveries in April and May. However, short term weather-related setbacks increase the need for fertilizer going forward. The global grain supply-demand balance is expected to tighten further, and there is a need to continue increasing agricultural productivity," said Yara Chief Executive Jørgen Ole Haslestad.

- Yara fertilizer deliveries were up 4% on the year-earlier second quarter, with stronger urea sales in particular. Margins improved for all main product groups, with the strongest increase for NPK and nitrates, Yara said.

- Industrial volumes increased 12%, primarily reflecting growth in environmental products globally and N-chemical sales in Europe. Yara's plants produced around 600 kilotons less in the second quarter compared with full run rate, mainly reflecting a higher than normal concentration of plant turnarounds, in addition to the Lifeco outage.

- Yara said that going forward, a tightening grain supply-demand balance points to continued strength in crop prices and a strong need to increase agricultural productivity.

- Yara's third-quarter ammonia production rates are expected to be in line with second quarter due to production outages in units Lifeco, Hull, Burrup and Billingham, while finished fertilizer is expected to run at full capacity excluding Lifeco.

- The new nitrate season in Europe is progressing well and nitrate stocks are low, Yara said.

 
-By Flemming Emil Hansen, Dow Jones Newswires; [phone]; [e-mail]