July 17, 2020 / 7:27 AM / 24 days ago

Yara says fertiliser market robust as quarterly earnings top forecasts

OSLO (Reuters) - Norwegian fertiliser company Yara (YAR.OL) said on Friday its market environment remained robust and reported core second-quarter profits slightly above expectations.

Yara said its Qafco sale was expected to conclude within 2-3 weeks and it was planning to start a buy-back of 5% of its share capital, lifting the stock 2.8% in opening trade.

Yara agreed in March to sell its 25% stake in Qatar Fertiliser Company (Qafco) to Qatar Petroleum for $1 billion (£797 million).

“We expect a significant positive share price reaction today, mainly due to their comment on the Qafco transaction and share buy-back,” analysts at Handelsbanken said in a note ahead of the opening trade.

“Yara’s market environment is in a positive trend overall, with a broadly stable global grain balance and receding urea supply pressure,” the company said.

April-June earnings before interest, tax, depreciation and amortisation (EBITDA) rose 8% to $588 million before non-recurring items, while analysts on average had forecast $561 million according to Refinitiv.

The Oslo-listed company, one of the world’s largest producers of nitrogen fertilisers, said it had seen normal planting and application in the Northern hemisphere and strong demand from Brazil ahead of the Southern hemisphere main season.

However, the COVID-19 pandemic had a negative impact on its non-fertiliser business which saw deliveries drop 34% in the quarter.

“Yara’s industrial business has seen weaker demand in the second quarter, but with improvement towards the end of the quarter,” the firm said.

Reporting by Victoria Klesty; Editing by Edmund Blair and Elaine Hardcastle

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