Yara launches share buy-backs after third-quarter earnings in line

FILE PHOTO: A general view of the Yara ammonia plant in Porsgrunn, Norway August 9, 2017. REUTERS/Lefteris Karagiannopoulos/File Photo

OSLO (Reuters) - Norway's Yara YAR.OL said on Friday it was starting a share buy-back program after reporting quarterly earnings that were broadly in line with forecasts, and said the supply-demand balance for urea fertilizer looks set to tighten further.

The company, one of the world’s largest fertilizer-makers, said it saw an improving trend for its products in spite of cereal prices being below the 10-year average, with a tightening global grain balance and receding urea supply pressure.

“Fertilizer demand growth is likely to pick up as increased grain production is needed to keep pace with consumption growth, and global grain stocks are relatively low, particularly in China,” it added.

Yara’s second-quarter profit before interest, tax, depreciation and amortization (EBITDA) rose 49% to $630 million before non-recurring items and IFRS 16 accounting effects, while analysts in a Refinitiv poll on average had expected $623 million.

The company plans to buy back 0.8% of its shares by the end of 2019, including some of the shares held by the Norwegian government, for an overall amount of around 800 million Norwegian crowns ($87.10 million) at today’s share price.

Yara said it expects spot prices for natural gas, its main cost, to be $160 million lower than a year earlier in the fourth and, and $50 million lower in the first quarter of next year compared to a year earlier.

It added it expects to decide whether to go ahead with a previously announced initial public offering (IPO) of its industrial nitrogen business in early 2020.

Reporting by Victoria Klesty, editing by Terje Solsvik