* Core Q2 profit up 47 pct at 5.20 bln crowns
* Forecast was 4.7 bln
* Lower costs boost results
(Adds analyst comment, detail)
OSLO, July 18 Norwegian fertiliser firm Yara's
second-quarter core earnings beat expectations on
Wednesday, lifted by tight global grain markets which supported
Grain prices in many regions, including North America, have
risen sharply during the summer on concerns over the expanding
drought threatening crops in the U.S. farm belt, increasing
farmers' incentives to use fertilisers to boost output.
There had also been significant delays in the fertiliser
industry in getting new production capacity online, tightening
the nitrogen market, Yara said.
"Second-quarter nitrogen fertiliser deliveries in Europe
were primarily for immediate consumption, but pre-buying
incentives for the new season are stronger than a year ago,
given the recent strengthening of grain prices," Yara said.
Yara's April-June adjusted earnings before interest, tax,
depreciation and amortisation (EBITDA), excluding one-off items,
rose 47 percent to 5.20 billion crowns ($851 million), compared
with a forecast for 4.47 billion.
The company's shares gained 4.5 percent in early trade.
Yara's energy costs, which fell 7 percent, were seen around
100 million crowns lower in the third quarter compared with
"Yara is showing very strong results indeed," said Eirik
Dahle, analyst at Pareto Securities. "In terms of future growth
I will not speculate, but I think the market is going to stay
"I have to take my hat off to Yara. If you sum it up, the
production volume, sales, and prices are all as expected, so
eliminating these leaves lowered costs as the main reason for
the good results," said another analyst who declined to be
Sales rose 15 percent to 21.4 billion, missing the average
analyst forecast, while industry deliveries in Western Europe -
Yara's core market - were up only 2 percent compared with the
The average realised urea price was up 25 percent compared
with the April-June quarter in 2011, while nitrate and NPK
prices decreased by 5 percent and 4 percent respectively.
Yara said that European nitrate prices had been lower
relative to global urea prices than a year ago as Western
Europe's winter crops had suffered substantial damage.
A late spring negatively affected European fertiliser demand
for the season and significant carry-over stocks at the start of
the season increased available supply.
However, North American demand for nitrogen had outpaced
availability, pushing prices substantially higher than anywhere
else in the world, Yara said.
Also, China - the world's largest fertiliser producer - had
near-zero exports in the quarter.
($1 = 6.1134 Norwegian crowns)
(Reporting by Victoria Klesty; Editing by David Cowell)