Yara’s own-produced, joint-venture sales to rise 40% over 5 years

06 December 2011 13:06  [Source: ICIS news]

Yara ammonia plant in TrinidadLONDON (ICIS)--Yara expects sales of its own-produced and joint-venture products to rise by 40% over the next five years, the Norway-based fertilizer major said on Tuesday.

The company said at its capital markets day that current agricultural prices provide healthy farm economics, with good incentives for continued strong fertilizer demand. Yara added that it was well positioned to deliver continued strong results and profitable growth in 2012.

Yara believes an 8m tonne increase in own-produced and joint-venture product sales from 2010 to 2016 is realistic,” said president and CEO Jorgen Ole Haslestad.

Two million of these tonnes have already been executed through expansions at Yara’s plants in Porsgrunn, Norway, and Sluiskil, in the Netherlands, as well as by its joint-venture Qatar Fertiliser Company (QAFCO).

“From 2006 to 2010, we achieved almost 3.5m tonnes [of] growth with a significantly lower cash flow and financial capacity,” he added.

Haslestad said that farmer margins have expanded significantly over recent years, and fertilizer demand is strong in all regions where application is ongoing.

“Global grain consumption continues to grow steadily, while production of grains is struggling to keep up with consumption, even when price incentives are at record levels. The global grain stocks-to-use ratio has declined significantly over the past decade, pointing to a strong need to increase agricultural productivity,” he added.

The company also presented a stronger set of future earnings scenarios based on fertilizer and energy prices. Yara said that a supply-driven market where China is the highest-cost exporter translates into estimated earnings per share (EPS) of Norwegian kroner (NKr) 28 ($4.84, €3.62).

“Continued growth in food demand and the need for improved agricultural productivity increase the probability of a continued tight fertilizer market,” Yara said.

A demand-driven scenario with $150/tonne urea margins yields an estimated EPS of NKr55, the company added.

($1 = NKr5.78, €1 = NKr7.73)

For more on Yara visit ICIS company intelligence

By: Franco Capaldo
+44 (0)20 8652 3214

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