February 11, 2011

Yara projects Q4 2010 EBITDA at US$520.38-million

Yara International ASA estimates an EBITDA of roughly NOK3 billion (US$520.38 million) for Q4 2010, a strong increase from last year's NOK1.39 billion (US$241.11 million) but fell short of market expectations.

Burrup write-downs, delivery delays, phasing of sales within the quarter and higher fixed costs than were the main reasons quoted for the poorer-than-expected performance.

The Q4 results will be charged with an estimated NOK165 million (US$28.61 million) in write-downs related to balance sheet items in Burrup Fertilisers Pty Ltd (BFL) after findings in the ongoing Yara-initiated investigations of financial irregularities in the JV. The remaining asset value for Yara's stake in BFL is approximately NOK1.7 billion (US$294.88 million).

The company's sales of nitrate dropped 240,000 tonnes compared with Q3, due to higher sales from the Q3 inventory and the halting of Ambes plant for maintenance purposes Lower nitrate sales has an EBITDA effect of roughly NOK250 million (US$43.37 million) compared with Q3 2010. Early this year, Yara has substantially raised nitrate fertiliser prices with sales going strong.

Yara has postponed some sales into 2011 to benefit from the positive price trend in view of positive global market outlook. Towards the end of Q4, sales volumes weakened, hence lowering the realised price increases in Europe to below the average list price increase from Q3 to Q4. Meanwhile, costs are usually slightly higher in Q4 than in Q3.

The global fertiliser market is tight as global agricultural prices are at all-time high levels and all fertiliser capacity outside China, which has implemented high export taxes, aim to run at full capacity.

More details of Yara's Q4 financial results will be released on February 15.