Reuters: Hot Stocks: UPDATE 1-Fertiliser maker Yara sees more costs and competition

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UPDATE 1-Fertiliser maker Yara sees more costs and competition Apr 22nd 2013, 08:20 Mon Apr 22, 2013 4:20am EDT (Adds quotes by analysts, share, detail) * EBITDA excl one-offs NOK 4.09 bln vs NOK 4.17 bln fcast * Sees Q2 energy costs NOK 300 mln higher than last year * Previous forecast was for NOK 150 mln increase * Sees risk of higher Chinese exports of urea in H2 * Shares in Yara down 2.5 pct OSLO, April 22 (Reuters) - Fertiliser maker Yara International is expecting tougher conditions ahead, with increased Chinese competition and higher energy costs, as it posted first-quarter core earnings below expectations that sent its shares sliding. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), excluding one-off items, rose to 4.09 billion crowns ($703.7 million) from 3.94 billion in the year-ago period, while analysts had on average expected 4.17 billion. The Norwegian group, which ranks as the world's largest nitrogen-based fertiliser maker, said China's production of urea, a fertiliser, had increased so far in 2013. "A continuation of this trend would increase the probability of significant second-half urea export volumes from China," the firm said in a statement on Monday. China is a major fertiliser producer and signs of increased exports in the commodity have an impact on other fertiliser makers. One analyst said higher Chinese exports were a concern for urea supply and demand this year but that the impact on Yara's future results would be limited as the majority of its portfolio lay in the production of fertilisers other than urea. "50 percent of Yara's portfolio is value-added NPK and nitrates where margins are more resilient and structural growth is higher," Liberium Capital wrote in a note to clients. Adding to its woes, Yara expects the rise in its energy costs in the second quarter to be 300 million crowns higher than last year - twice as high as previously anticipated. Yara consumes large amounts of gas, and some oil, and so the firm is sensitive to energy prices. "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. Shares in Yara were down 2.5 percent at 0810 GMT, while the Oslo benchmark index was up 0.1 percent. ($1 = 5.8122 Norwegian kroner) (Reporting by Gwladys Fouche and Joachim Dagenborg; Writing by Gwladys Fouche; Editing by Mark Potter) Link this Share this Digg this Email Reprints

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