* Says fertiliser demand has picked up strongly this autumn
* Will continue to be patient when it comes to M&A
* Sees potential targets in North America, W. Europe
* Shares up 1.6 percent, hit two-year high
(Recasts, adds CEO on acquisition prospects, analyst, shares)
By Victoria Klesty and Henrik Stolen
OSLO, Dec 7 Norwegian fertiliser group Yara
International (YAR.OL) raised its earnings forecasts on Tuesday
on the back of strong demand for its nitrogen-based soil
nutrients, helping send its shares to a near two-year high.
"Fertiliser prices have increased substantially reflecting
the tight market," Chief Executive Joergen Ole Haslestad said.
"Currently, all available global fertiliser capacity is
utilised," he said, with the exception of some plants in China
whose output has been curtailed due to energy saving and
Shares in Yara were up 1.6 percent at 0858 GMT, outpacing a
0.4 percent rise on Oslo's main index .OSEBX. The stock rose
as high as 331.80 crowns, its highest September 2008.
Yara presented scenarios for future earnings which it said
were not predictions but "what if" examples based on specific
fertiliser and energy prices.
"A supply-driven market where China is the highest-cost
exporter translates into an estimated EPS of 18 Norwegian
crowns, a scenario which is relevant if the fertiliser market
turns over-supplied," said Yara.
It said the global fertiliser market was demand-driven
following a tightening in agricultural markets.
"Continued growth in food demand and the need for improved
agricultural productivity increase the probability of a
continued tight fertiliser market. A demand-driven scenario with
$150 per tonne urea margins yields an estimated EPS of 47
The consensus 2011 EPS view for Yara is 27.8 crowns,
according to ThomsonReuters StarMine SmartEstimate.
"They are raising their (top-end) EPS forecast to 47 from
34, and that is a rather hefty hike. Some analysts will adjust
their estimates after this," said analyst Are Grongstad at
The company also said it remains hungry for acquisitions.
Haslestad said Yara sees potential targets in the mature North
American and western European markets and is preparing for an
expected consolidation in eastern Europe.
On the oversupplied Chinese market, Yara did not envisage
acquisition opportunities for the next three to five years.
The fragmented nitrogen industry is ripe for consolidation
and though Yara believes Russian potash players will consolidate
among themselves, there are still strong opportunities in
"We can promise you that we will take part in that
consolidation and make sure to take part in ammonia when that
happens," Haslestad said.
The company has plans to capture 20 percent of the global
nitrogen-based fertiliser market but its $4.1 billion bid for
U.S. rival Terra Industries was trumped in February by CF
(Additional reporting by Wojciech Moskwa and Terje Solsvik;
Editing by Dan Lalor and David Holmes)