Yara misses estimates as volatile fertiliser prices delay buying

Norwegian 'fertiliser manufacturer Yara reported a second-quarter core earning?below expectations Friday as volatile nitrogen prices?and?market uncertainties prompted customers to delay purchases despite?stronger production and margins.

Early trading saw shares of Yara down 5.7%.

EBITDA, before special items and interest, was $906?million for the June quarter, up from $652?million one year ago.

This was less than the $1.13bn analysts expected in a poll conducted by the company.

Yara stated that uncertainty caused by disruptions to the global energy and fertiliser markets had reduced buying activity. Buyers delayed orders due to sharp swings in nitrogen price.

The company stated that "with?most markets?not facing an immediate need?for?product?, the price volatility?and?market?uncertainty?have led to a sluggish start of the new season?in the Northern Hemisphere."

The war in Iran tightened the nitrogen market by disrupting shipments across the Strait of Hormuz, and reducing output at certain Middle Eastern plants. This has boosted urea and margins of producers like Yara. However, higher prices could also weaken demand.

Yara warned that the re-escalation 'in Iran' raises concerns about supplies for the coming season.

Yara stated that natural gas costs are expected to be $75 million and $115 millions higher than a year ago in the third 'and fourth 'quarters.

Natural gas is an important input in fertiliser production. This means that fluctuations in the price of?gas can have a significant impact on producers' costs and farmers' prices.

(source: Reuters)