Yara International ASA recently reported strong financial results for fourth quarter 2007 due to improved fertilizer prices, strong volume growth for both fertilizer and industrial products, and a gain on the establishment of the Yara Praxair joint venture.
With the integration of Kemira GrowHow firmly on track, Yara reports fourth-quarter net income after minority interest of NOK2.044mm, compared with NOK891m last year. Fourth-quarter operating income stood at NOK1.494m compared with NOK521m last year, while EBITDA for the quarter was NOK2.531m compared with NOK1.351m in the same period of the previous year.
“We continue to deliver strong financial performance with further margin improvements and volume growth. The global fertilizer market is tight with growing demand and limited new capacity, resulting in substantial fertilizer price increases to balance the market. The price increases have more than compensated for higher energy costs,” noted Thorleif Enger, President and CEO of Yara International ASA.
Enger continued, “The integration of Kemira GrowHow into Yara's operations is progressing well, with additional synergies of approximately NOK140m (Yara share) now identified for the UK joint venture. The prospects for the acquired activity have improved significantly with the tightening of the phosphate market, and we are enthusiastic about opportunities to expand phosphate rock production in Finland.”
Fourth-quarter fertilizer sales excluding Kemira GrowHow were up 10% from last year, primarily reflecting a strong market in Europe. All regions saw substantial fertilizer margin improvements, reflecting a demand-driven market and strong focus on price management. The industrial segment continues to grow rapidly, while sales of environmental products for NOx abatement increased 48% from the year prior, driven by stricter legislation and technical ammonium nitrate sales increasing 18% amid booming mining activity.
Global fertilizer demand continues to be supported by tight food markets and falling grain stocks, driving grain prices to historical highs. The supply-demand balance is strengthened by further delays to new fertilizer production capacity. Yara's first-half 2008 European energy cost is expected to be substantially higher than last year, but current fertilizer price levels would be expected to more than compensate for these higher costs.