Yara raises dividend target, may spin off non-fertiliser business

OSLO, June 26 (Reuters) - Yara International, one of the world’s largest fertiliser makers, raised its profit and dividend targets on Wednesday and said it may spin off its non-fertiliser business next year.

An initial public offering of the so-called industrial nitrogens unit, which generate 10-15% of annual profits, would reduce the sprawl in Yara’s product offering and boost growth prospects, it added.

“Yara is well underway to becoming a focused crop nutrition company, and the evaluation of an IPO is an important step in that direction,” Chief Executive Svein Tore Holsether said in a statement.

Both the fertiliser business and the carved-out industrials unit would benefit from the greater flexibility, and could see significant growth opportunities as a result of a split, he added.

Products made by the industrial nitrogens unit are used as components in a wide range of industries, from explosives and cement makers to fuel additives.

Yara, which last year recorded revenues of $12.9 billion and earnings before interest, tax, depreciation and amortisation of $1.5 billion, had said in April it would present plans by the end of June for how to increase its profits.

In 2016, Yara launched a cost-cutting programme aimed to boost its results by $500 million per year by 2020, and it now plans to raise this target to $850 million by 2023, the company said on Wednesday.

The new dividend target is to pay out 50% of its annual net income, up from a previous target of paying out 40-45% per year, the company said.

The dividend goal is subject to Yara maintaining a “mid-investment grade” credit rating, it added. (Reporting by Terje Solsvik, editing by Gwladys Fouche)