Yara tops forecast as high fertiliser prices offset gas costs

By Victoria Klesty

OSLO (Reuters) -Norway's Yara, one of the world's largest fertiliser makers, beat quarterly earnings and annual dividend forecasts on Wednesday as higher fertiliser prices helped to offset a surge in gas prices that led it to curb output last year.

The price of natural gas in Europe, a key feed stock in the production of ammonia-based fertilisers, has fallen sharply in recent months, but is still around three times the levels in 2020 and Yara has not yet restored curtailed output.

Last year's high fertiliser prices meant farmers in some regions delayed purchases, resulting in low market activity towards the end of 2022, Yara said.

Fertiliser prices have come off since, tracking lower energy costs, and the Norwegian company said it expected demand for fertilisers to pick up again.

Yara said October-December earnings before interest, tax, depreciation and amortisation (EBITDA), excluding one-off items, rose to $1.07 billion from $765 million a year earlier. Analysts in a company-provided poll had expected a profit of $988 million.

Yara's shares were up almost 5% at 0900 GMT.

The company said it expected its gas costs would be $320 million lower in the first quarter than a year earlier.

It proposed an ordinary dividend of 55 crowns per share for 2022, up from 30 crowns for 2021. Analysts on average had expected a dividend of 47.14 crowns.

The company had already paid an additional dividend of 10 crowns per share in the fourth quarter.

The increased dividend reflected strong returns from Yara’s business model, and the board will consider further cash distributions in the coming quarters, Yara said.

"Yara has demonstrated its resilience in a challenging situation," Chief Executive Svein Tore Holsether said in a statement.

Yara said that, as of the end of January, it had cut 1.7 million tonnes, or 35%, of its European ammonia production capacity, unchanged from October.

(Reporting by Victoria Klesty Editing by Terje Solsvik and Mark Potter)