Yara Quarterly Earnings Beat Estimates as Margins Improve

Yara International ASA, the largest publicly traded nitrogen-fertilizer maker, reported profit that beat estimates and raised its dividend as margins improved and the company booked a gain from the sale of units.

Net income more than doubled to 3.39 billion kroner ($585 million) from 1.56 billion kroner a year earlier, beating the 2.98 billion-krone estimate of 17 analysts surveyed by Bloomberg. Yara declared a dividend of 7 kroner a share, up from 5.5 kroner.

“Margins improved compared with last year, more than offsetting the impact of lower sales volumes,” Chief Executive Officer Joergen Ole Haslestad said in the statement. “Crop prices and farm margins remain healthy, and fertilizer deliveries will need to recover to avoid a decline in global grain stocks.”

Fertilizer prices have gained as rising food consumption spurs farmers to plant more crops. Yara’s sales rose 13 percent to 19.6 billion kroner in the quarter as lower volumes were balanced by higher margins, Yara said.

“Demand has normalized early in the first quarter,” Samir Bendriss, an analyst at Pareto Securities ASA, said in an e-mailed note. “This should alleviate volume concerns for 2012, especially given strong farmer margins.”

Shares Rise

Yara rose as much as 4.6 percent to 269.3 kroner and was up 1.2 percent as of 3:28 p.m. in Oslo. The stock has climbed 8.2 percent this year.

“Northern Hemisphere fertilizer customers have been reluctant to take positions ahead of spring application, resulting in slow fourth-quarter sales overall,” Haslestad said. Global fertilizer deliveries were down 14 percent from a year earlier, Yara said.

Given “the huge cash pile on the company’s balance sheet, both dividends and share repurchase programs could be much better,” Tomas Skeivys, an analyst at Terra Markets AS said in an e-mailed note. “Still this leaves room for extraordinary dividends later, possibly to be considered in spring.”

Yara reported 5.87 billion kroner in cash and cash equivalents as of the end of the fourth quarter.

Yara added 967 million kroner to net income from the sale of part of the company’s stake in an industrial gases venture with Praxair Inc in October. The venture, set up in 2007, comprises Oslo-based Yara’s industrial gas units in Norway, Denmark and Sweden. Yara retains 34 percent.

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