Fertilizer Markets and Finance

Yara International ASA (YAR), the largest publicly traded nitrogen-fertilizer maker, will raise sales 40 percent to 8 million metric tons in five years with expansion expected in Latin America, sub-saharan Africa and Australia.

“Latin America is a high-growth agricultural region where Yara can leverage an already significant presence,” the Oslo- based company said in a capital markets day presentation. Yara will increase sales from its own output and joint ventures.

The company in October posted an 85 percent jump in third- quarter profit in October and 19 percent gain in sales to 19.7 billion kroner ($3.4 billion) on Latin America and Asia demand. Africa offers low-cost gas for production and longer-term market potential, while the right to take over the Burrup ammonia plant in Australia offers the chance of expansion, it said today.

Yara said it expects to return 40 percent to 45 percent of net income, averaged over the business cycle, to shareholders through dividends and buybacks. The company’s policy is to pay out a minimum 30 percent of net income as dividends on average.

The fertilizer producer rose 7.7 percent to 247.60 kroner, the biggest gain since March 12, 2010, by 11:18 a.m. in Oslo.

“The outlook for 2012 is encouraging,” Samir Bendriss, an analyst at Pareto Securities ASA, wrote in an e-mailed note.

Rising food demand and the need to improve the productivity of farms increases the chance of a tight fertilizer supply, Yara said, adding it will seek to expand sites it already holds.

“Productivity improvements and brownfield expansions can be at least as profitable as acquisitions or greenfield projects,” the company said in the presentation. Yara is studying “several” potential brownfield expansions, it said.

To contact the reporter on this story: Stephen Treloar at streloar1@bloomberg.net Meera Bhatia at mbhatia2@bloomberg.net

To contact the editor responsible for this story: Christian Wienberg at acullen8@bloomberg.net