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Yara Falls as Nordea Downgrades to Hold on Urea Drop: Oslo Mover

Oct. 16 (Bloomberg) -- Yara International ASA, the largest publicly traded nitrogen-fertilizer maker, fell in Oslo after Nordea Bank AB cut its rating on the stock to hold on weaker urea prices and amid uncertainty about Chinese export taxes.

The Oslo-based company fell as much as 2.7 percent to 236.1 kroner and traded 2.6 percent lower as of 12:10 p.m. in the Norwegian capital. That makes Yara the biggest decliner on the Oslo stock exchange’s OBX index of 25 most-traded stocks.

“Yara’s third-quarter results will be affected by lower prices and some short-term negative effects following the closure of the Bunge acquisition,” Andre Holoe Adolfsen, an analyst at Nordea, said in a note. Uncertainty related to Chinese export taxes will limit an increase in urea prices from low levels in the third quarter, wrote the analyst, who cut his rating on the stock to hold from buy and reduced his price target to 260 kroner from 300 kroner.

Yara, in which the Norwegian government owns a 36 percent stake, is facing lower prices for its nitrogen fertilizer amid increased urea exports from China. The company’s upstream operations convert natural gas and nitrogen into ammonia, which forms the basis for all nitrogen fertilizer.

“Value-add fertilizer products make up most of Yara’s revenue and we expect these margins to improve and hold off some of the price pressure on urea,” wrote Adolfsen, who estimates Yara will report earnings before interest, tax, depreciation and amortization of about 3.1 billion kroner ($515.2 million) for the quarter. That compares with the 3.2 billion kroner average of 15 estimates compiled by Bloomberg.

Urea prices have fallen about 28 percent to $305 a metric ton since Feb. 4, according to Green Markets prices compiled by Bloomberg.

To contact the reporter on this story: Stephen Treloar in Oslo at streloar1@bloomberg.net

To contact the editor responsible for this story: Christian Wienberg at cwienberg@bloomberg.net

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