(The following statement was released by the rating agency)
Oct 26 -
Summary analysis -- Yara International ASA ------------------------ 26-Oct-2012
CREDIT RATING: BBB/Stable/A-2 Country: Norway
Primary SIC: Chemical
Mult. CUSIP6: 984851
Credit Rating History:
Local currency Foreign currency
06-Mar-2008 BBB/A-2 BBB/A-2
04-Oct-2007 BBB/A-3 BBB/A-3
The ratings on Norway-based Yara International ASA incorporate Standard & Poor’ Ratings Services’ view of the group’s “satisfactory” business risk and “intermediate” financial risk profiles.
Our assessment of Yara’s business risk profile is supported by the group’s position as the world’s largest distributor of fertilizers and its strong and geographically extended marketing network. It also derives a significant share of profits from premium, higher-margin fertilizers as opposed to the commodity products ammonia and urea. The group’s operational flexibility in terms of sourcing and production capacity increases profits over a cycle. Yara’s production is geographically diverse, and the group directly operates large-scale, efficient plants in Europe and Canada, while its joint ventures also have efficient assets.
The main business risk constraints include the high profit cyclicality of the nitrogen fertilizer industry, capital intensity in the industry--especially for greenfield projects--and the group’s exposure to high, volatile gas prices as Western Europe accounts for the largest share of production.