April 23, 2013
Yara braces for more Chinese urea exports
As China increases production of urea, fertiliser maker Yara International is bracing for tougher competition this year and energy costs grow.
Reporting lower than expected first-quarter earnings, the world''s largest nitrogen-based fertiliser maker said urea prices could fall if China continues to increase output and puts more of it on the export market.
"If we get enormous volumes exported from China, then we could see an impact on urea prices," Chief Executive Joergen Ole Haslestad said in an interview.
However, he said he doubted China would flood the market with urea, which is used widely in farming as a source of nitrogen.
Yara shares were down 3.2% at 1320 GMT, while the Oslo benchmark share index was flat. The company expects a rise in energy costs in the second quarter twice as great as previously anticipated. Yara''s factories consume large amounts of gas and some oil.
"The energy cost estimate for the second quarter was quite a large increase and was higher than expected," said Tomas Skeivys, an analyst at Oslo-based Norne Securities.
Yarasaid its adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) excluding one-off items rose to NOK4.09 billion (US$703.7 million) from NOK3.94 billion (US$672 million) in the year-ago period. Analysts had on average expected NOK4.17 billion (US$711 million).