* Late spring in EU and North America delays limit sales
* EBIT jumps 94 pct as fertiliser prices rise, tops view
* Production up to full capacity in Q1, eyes summer stops
* Repeats eyes M&A after losing battle for Terra
* Shares down 2.7 pct on rising Oslo market
(Adds further details)
By Wojciech Moskwa and Richard Solem
OSLO, April 23 Norway's Yara International ASA
(YAR.OL), one of the world's biggest makers of fertiliser, said
a late spring is delaying and curbing sales, sending its shares
down even after high prices boosted its first quarter.
Yara said fertiliser markets have improved substantially
from the downturn witnessed in late 2008 and 2009, but the
outlook is clouded by weaker grain prices following a strong
harvest last year and higher energy costs.
Yara said a late spring "in key regions of Europe and North
America" has delayed first application of fertiliser by up to a
month and "risk-averse distributors are delaying purchases until
they see farmers ordering for the second application".
"A late spring will mainly imply a delay of fertiliser sales
from first to second quarter, but can also reduce overall demand
for the season as the growing phase is shortened," Yara said.
Chief Executive Joergen Ole Haslestad told a news conference
that he believes that global grain prices have hit bottom and
strong consumption would boost demand for fertilisers.
"We are balancing on a really sharp edge," Haslestad said,
as the impact of lower grain prices is balanced by strong
expected growth in global grain demand which would require
additional use of fertilisers to boost productivity.
Earnings before interest and tax rose to 2.32 billion
Norwegian crowns ($391 million) in January-March from 1.19
billion a year earlier, topping an average forecast for 1.88
billion from a Reuters poll of 16 analysts.
"Yara has increased production to full capacity again in the
first quarter and prices have continued to increase," Haslestad
said, adding that the company was "prepared for volatile markets
going forward" and may again curb production over the summer.
Yara said curtailments may be needed because NPK (nitrogen,
phosphorous and potassium) deliveries may not fully recover this
season due to the late spring, weaker grain prices and a weaker
The global nitrogen-based fertiliser market may also remain
weak due to allocation of more natural gas for fertilizer
production in India, domestic gas subsidies for Ukrainian
producers and higher urea export from China, Yara said.
"Going forward, in coming quarters we do not see much upside
on our estimates despite the better than expected first
quarter," Handelsbanken analyst Anne Gjoeen said in a note to
Last month Yara lost a takeover battle for U.S. peer Terra
Industries to CF Industries (CF.N), scuppering its U.S.
expansion plans. [ID:nLDE6211HM]
Haslestad said the decision to walk away from the bidding
war underlined Yara's "strict focus on financial discipline".
Yara also pocketed 666 million crowns pre-tax profit in the
quarter as a break-up fee from Terra, which initaly agreed to
merge with the Norwegian group before CF made a higher bid.
He reiterated that Yara would continue to look for mergers
and acquisitions in the highly fragmented fertiliser world.
"It's a pity that we could not buy Terra, but we are not
getting desperate," Haslestad said. "There are lots of
opportunities out there... the market is very fragmented still
and needs consolidation."
(Editing by Mike Nesbit)
($1=5.922 Norwegian crowns)