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UPDATE 1-Fertiliser maker Yara's earnings top forecast, shares jump
April 30, 2014 / 7:36 AM / 3 years ago

UPDATE 1-Fertiliser maker Yara's earnings top forecast, shares jump

* Q1 adjusted EBITDA 3.83 bln NOK vs forecast 3.22 bln

* Shares rise 6 percent (Adds detail, analyst, stock)

OSLO, April 30 (Reuters) - Fertiliser maker Yara reported better-than-expected first-quarter earnings on Wednesday and said its outlook had improved on better profit margins for the global farming sector, sending its shares more than 6 percent higher.

The world’s biggest nitrogen-based fertiliser maker said both current and forward food prices had increased, fertiliser application was strong and global grain stocks were at their second lowest level since 2008, helping its business.

The Norwegian company added its energy costs, the biggest factor impacting its margins, were expected to fall sharply in both the second and third quarter, helping its figures.

Still, it warned that global prices of urea - a key fertiliser ingredient - declined from mid-February on strong supply growth in China, a big risk factor for the industry.

Investors cheered the company’s figures and at 0716 GMT, the stock was up 6 percent, well ahead of the broader Norwegian market’s 0.4 percent rise.

“Following the report, our estimates will be lifted, which should also lead to a higher target price,” Norne Securities said in a note to clients. “Margins were very strong and this led to EBITDA and EPS significantly above projections. Adjusted figures showed an even stronger deviation on the positive side.”

Yara said its first-quarter earnings before interest, taxes, depreciation and amortisation (EBITDA) excluding one-off items fell 8 percent to 3.83 billion Norwegian crowns ($640 million), beating expectations for 3.22 billion crowns.

The firm also said China and Ukraine continued to keep the market uncertain. In China, lower coal prices were a risk for global commodity nitrogen prices, while the impact of sharply higher gas prices in Ukraine remained unclear. (Reporting by Balazs Koranyi; Editing by Gwladys Fouche and Mark Potter)

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