Norway's Yara is double-downgraded to 'Underperform' by analyst

11 September 2013 12:23  [Source: ICIS news]

LONDON (ICIS)--US-based analyst Bernstein Research on Wednesday double-downgraded Yara international's rating to ‘Underperform’ from 'Outperform' on concerns over several “near-term issues” impacting the Norway-based fertilizer producer’s earnings.

Bernstein also reduced its target price for Yara to Norwegian kroner (NKr) 200 ($33.78, €25.45), down from a previous target price of Nkr311.

“We have recently become much more concerned about several near-term issues impacting earnings,” Bernstein said,

“Yara's key product prices have fallen further and faster than we expected in recent months. Moreover, falling crop prices have weighed on volume growth, while nitrogen fertilizer supply has been plentiful.

“We are also more concerned about long term volumes and margins. We see significant overcapacity when we couple our new analysis of demand growth with the wave of new supply and its low operating and capital costs,” it added.

Bernstein cut its estimates for Yara’s adjusted earnings per share for the second half of 2013 and for the full year of 2014 by around 20%.

In July, Yara announced that its second-quarter net income fell by 33.1% year on year to NKr1.87bn partly on foreign exchange losses. Yara incurred a foreign exchange loss this quarter of NKr409m compared with NKr135m in the same quarter of last year, the company said in a statement.

At 10:38 GMT, Yara's share price was trading on the Oslo stock exchange at NKr242.80, down 1.66% from the previous close.

($1 = NKr5.92, €1 = NKr7.86)

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

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