Yara Falls as Urea Oversupply Seen Denting Earnings: Oslo Mover

Yara International ASA, the largest publicly traded nitrogen-fertilizer maker, fell to an 11-month low as Pareto Securities AS cut its rating on the stock because an oversupply in urea is set to weigh on profit.

Shares in the Oslo-based company fell as much as 2.6 percent to 242 kroner, the lowest level since June 26, and were down 0.4 percent as of 11:31 a.m. in the Norwegian capital. About 55 percent of the three-month average daily volume traded so far today.

“Yara’s earnings are set to decrease substantially in 2013 through 2015 driven by declining urea prices,” Sigurd-Erik Nissen-Meyer, an analyst at Pareto, said in an emailed note. Earnings will fall to 20 kroner a share in 2014 from 35 kroner a share in 2012, said Nissen-Meyer, who cut his rating on the stock to sell from buy.

Yara, in which the Norwegian government owns a 36 percent stake, is facing lower prices for its nitrogen fertilizer because of pressure from rising Chinese exports of urea. Yara’s so-called upstream operations convert natural gas into ammonia.

Yara’s earnings per share will be boosted to as much as 30 kroner after 2016 by growth projects, acquisitions or share buybacks as urea prices return to a long-term level of $350 a ton from about $320 a metric ton in 2014 and 2015, the analyst said.

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