Yara upbeat about Q2 fertilizer conditions, lower energy costs
Richard Ewing
24-Apr-2015
(releads and updates throughout)
LONDON (ICIS)–Norwegian fertilizer major Yara International on Friday said the global farm margin outlook and incentives for fertilizer application remain “supportive overall, despite lower soft commodity prices”.
A key figure in global upstream and downstream industries, Yara described its deliveries in Europe as “running well” in April, while in the US season-to-date deliveries are seen “6% higher than the previous season following a strong first quarter”.
“Given the forecasted reduction in corn and wheat acreage, the US market appears well supplied going into second quarter,” the Oslo-headquartered giant stated in its latest market outlook.
“Demand for value-added fertilizers like nitrates and compound NPKs [nitrogen, phosphorus, potash] continue to grow outside Europe illustrated by a strong nitrate premium for AN [ammonium nitrate] in the Black Sea.”
Earlier on Friday, Yara posted a 59% year on year slump in net profit for the January to March period to Norwegian kroner (NKr) 729m ($93.7m) on heavy foreign exchange losses of NKr1.83bn and the write-down on Libyan joint venture Lifeco – which had a negative net income impact of NKr 929m.
The losses offset the 27% year on year hike in sales to NKr27.7bn and the 76% surge in operating profit to NKr3.99bn,
For the 13-week period ended 31 March, Yara reported a 3% year on year rise in global fertilizer deliveries due to the acquisitions of OFD in Latin America and Galvani in Brazil. Excluding OFD and Galvani, deliveries were slightly lower than last year.
In Europe, the Scandinavian group revealed fertilizer deliveries were down 3% year on year, mainly due to a more normal spring this year versus an early spring in 2014.
Fertilizer deliveries outside Europe were up 8% year on year, but flat excluding OFD and Galvani. Meanwhile, industrial sales volumes increased by 11% compared with first-quarter 2014.
“Yara reports strong first-quarter results with higher deliveries and improved margins, reflecting continued lower natural gas cost and a stronger US dollar,” said Torgeir Kvidal, acting president and CEO.
“Ammonia and finished fertilizer production increased significantly in the quarter, benefitting from improved reliability and debottlenecking,” the senior executive added.
Yara said global nitrogen demand remained strong during the first quarter, but “continued high urea exports from China resulted in lower commodity nitrogen prices”.
“Based on current forward markets for oil products and natural gas, Yara’s European energy costs for the next two quarters are expected to be Nkr800m lower than a year earlier.”
($1 = NKr 7.78)
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