Yara Surges Most in Nine Months on Upgrade, Buyback: Oslo Mover

Yara International ASA, the largest publicly traded nitrogen-fertilizer maker, rose the most in nine months in Oslo trading after brokers recommended the stock and the company announced a new share buyback program.

Shares in the Oslo-based company rose as much as 4 percent, the most since July 18, and were up 3.6 percent at 266 kroner as of 1:22 p.m. in the Norwegian capital. About 87 percent of the three-month average daily volume traded so far today.

“Despite weak results, Yara is a strong cash generator,” analysts at FGA/MG Valores wrote in a note to clients. Yara is trading at a discount of about 33 percent relative to its competitors based on 2013 price-to-earnings ratio, the Madrid-based analysts said and initiated coverage at “overweight.”

Yara, in which the Norwegian government owns a 36 percent stake, is earning more from its so-called upstream operations, where it converts natural gas into ammonia, as rising Chinese exports of urea put pressure on nitrogen fertilizer prices.

Yara plans to buy back as much as 5 percent of the company’s shares in the period until next year’s annual general meeting, according to a board proposal released today.

That’s above the trend rate of 2 percent seen in the last few years, Citigroup said in an e-mailed note. “We see this as positive step towards utilizing its strong cash position and solid free cashflow generation.”

Arctic Securities ASA also today upgraded the stock to hold from sell.

“Yara has a rock solid balance sheet,” Thomas Lorck, an analyst at Arctic in Oslo, said in a note.

The company plans to maintain its payout level at about 40 percent to 45 percent of profit, it said Dec. 4. It will also move away from a stable cash dividend to track market cycles, with a minimum of 30 percent of payouts coming in the form of dividends and the rest in share buybacks, it said at the time.

Today’s share rise pares a loss so far this year to 2.9 percent, giving Yara a market capitalization of 75 billion kroner.

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