* Says had focused too much on div being even, predictable
* Sees tight grain market driving strong demand in 2013
* More pessimistic on price outlook than a year ago
* Earnings scenarios show 2013 EPS in NOK 20-57 range
* Shares up 0.1 percent
(Recasts with dividend comments, adds CEO, CFO, detail, shares,
By Victoria Klesty and Henrik Stolen
OSLO, Dec 4 Fertiliser maker Yara International
ASA is shifting to a more generous dividend policy on
the back of strong global demand and its nearly debt-free
The Norwegian group, which ranks as the world's largest
nitrogen-based fertiliser maker, said it had in the past been
too determined to maintain stable dividends and avoid a cut and
had therefore fallen short of its target to pay out between 40
and 45 percent of net income.
"We have perhaps focused too much on that dividends should
be even and predictable, and to avoid a decrease," Chief
Financial Officer Torgeir Kvidal told Reuters. "But we should
stay closer to our 40 to 45 percent ... target, which would then
lead to a higher dividend."
Yara, which last year paid out 7 crowns per share, has
minimal borrowings but is sitting on cash it previously raised
for acquisitions. In 2010 it failed to buy Terra Industries Inc,
which was eventually bought by CF Industries for nearly
In a statement ahead of a presentation to investors on
Tuesday, Yara said it expected a tight grain market to drive
strong demand for fertilisers next year.
The group, which had sales volumes of almost 20 million
tonnes last year, is benefiting from rising fertiliser demand as
farmers worldwide look to boost output to feed growing
populations, but its earnings are still highly dependent on
prices set by China.
With Chinese coal prices having declined significantly in
over the last year, fertiliser production has become cheaper in
the world's dominant fertiliser country and its export tax
regime less restrictive.
Yara said it had become more pessimistic on the price
outlook than a year ago, partly due the impact on prices from
Yara has already been hit by lower global nitrogen
fertiliser prices this year as Chinese export prices have
declined due to lower export taxes than in 2011.
"Global nitrogen fertilizer prices will in 2013 most likely
be set by the balance between Chinese urea (fertilizer) export
pricing and farmers' strong incentives to increase planting and
application of fertilizer," it said in the statement.
Capacity growth outside China is likely to be below
consumption growth next year and China is likely to keep a
"swing role" on the fertiliser market during the second half of
2013, it said.
Yara's outlook included a set of scenarios for potential
earnings per share in the range of 20 to 57 crowns in 2013,
compared with a 2011 total of 41.99 crowns and a 2012 range of
28 to 55 in last year's outlook.
Yara said it saw next year's prices for urea in the Black
Sea port of Yuzhny at around $325 per tonne under a pessimistic
scenario, in which China exports nitrates at zero margins. Under
Yara's more optimistic demand-driven scenario, prices could
reach $515 per tonne.
The price of urea at Yuzhny, the benchmark for urea in
Europe, stands around $385 million per tonne after peaking at
around $540 per tonne in late April and early May.
Yara aims to increase own-product and joint venture product
sales by 8 million tonnes by 2016 from the 2010 level, and has
so far come roughly half the way to reach that target.
"We have only three years to go ... and three years to build
a greenfield project is out of question. Here we're talking
about mergers and acquisitions," Chief Executive Joergen
He added that he saw most potential to find targets in
eastern Europe and Latin America, while there was little
potential in North America.
"We shall focus on upgrades of brownfield (sites) and small
to mid-sized regional acquisitions," Chief Financial Officer
Torgeir Kvidal said.
Cheap North American shale gas has induced fertiliser makers
to invest heavily in new capacity in the region, with many new
projects due to be completed in 2015 and beyond.
Yara shares, which spiked to a six-week high of 285.1 crowns
last Friday, were up 0.1 percent at 278.6 crowns by 1045 GMT.
(Editing by Jane Merriman and David Holmes)