Turkey’s Gubretas Plans Africa Deals as Iran Bet Pays Off

Gubre Fabrikalari TAS (GUBRF), the fourth-best performer this year on Istanbul’s benchmark stock index, is hunting investments in North Africa to boost the fertilizer maker following a lucrative venture in Iran.

“We’re focusing on North Africa for a phosphate-based investment, as part of our strategy to be closer to raw-material sources,” Chief Executive Officer Osman Balta said in an e-mailed response to questions yesterday.

Gubretas led a group of companies that paid $681 million to buy Razi Petrochemical Co. from Iran’s asset-sales agency in 2008. The Turkish fertilizer maker said March 5 it will get 213.5 million liras ($95 million) in dividends from its 48.9 percent stake, more than double the Istanbul-based company’s 2013 net income of 94.7 million liras.

Iran and six world powers in November struck an accord to limit Tehran’s nuclear program in exchange for about $7 billion in sanctions relief. The deal came into effect Jan. 1 and eases curbs on various industries, including petrochemicals.

“We target raising sales at Razi by 16 percent this year to 1.07 billion liras,” Balta said. Iran’s improving relations with the West have had “a positive effect” on this target, he said. Razi sells more than 70 percent of its products abroad.

Domestic Market

Gubretas is majority-owned by the Central Union of Turkish Agricultural Credit Cooperatives, which is contractually obliged to buy all the fertilizer it needs from the company. It’s the domestic-market leader with a share of 28 percent, which it expects to raise to 31 percent this year, according to company data.

The fertilizer maker plans to increase sales by 18 percent to 2.49 billion liras while more than doubling net income to 211 million liras this year, according to a company presentation in January.

Gubretas has gained 30 percent this year, and the shares rose 1.7 percent to 3.59 liras at the close in Istanbul today.

“The Razi investment was a step in meeting the need for raw materials of nitrogen-based products,” Balta said. “If we see an opportunity for a phosphate-based investment, we may take that step, too.”

To contact the reporter on this story: Taylan Bilgic in Istanbul at tbilgic2@bloomberg.net

To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net Matthew Brown, Zahra Hankir

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