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OSLO, April 23 (Reuters) - Norwegian fertiliser maker Yara has called off plans to spin off its industrial nitrogens business due to the COVID-19 outbreak, the company said on Thursday while reporting stronger than expected first-quarter core profits.
Yara last year announced plans for an initial public offering of the non-fertiliser business, which generates 10%-15% of annual profits, in a bid to reduce the sprawl in its product range and boost growth prospects.
While the unit could have prospered as a stand-alone company, the outbreak of the novel coronavirus had made the situation more uncertain, the company said in its earnings report.
“Yara has decided to develop its industrial nitrogen businesses in an Industrial Holding structure within Yara with separate governance and increased autonomy,” it added.
Yara’s Jan-March profit before interest, tax, depreciation and amortisation (EBITDA), rose 9% to $504 million before non-recurring items, while analyst on average had forecasts $445 million according to Refinitiv.
It posted a net loss of $117 million however, hit by negative currency effects due to its U.S. dollar-denominated debt positions being affected by a significant appreciation of the dollar against other main currencies.
The cost of natural gas, a key component in the production of nitrogen fertilisers, is expected to be $100 million lower in the second quarter and $50 million lower in the third quarter compared to a year earlier, while nitrogen fertiliser markets have so far been fairly strong this year, Yara said.
“However, the global situation is dynamic and visibility going forward is lower than normal,” the firm said. (Reporting by Victoria Klesty, editing by Terje Solsvik)
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