Yara International signalled an appetite for fertilizer deals, particularly in higher-value products such as NPK, as it flagged the role of China, for now, in determining prices of commodity nitrogen nutrient markets.
Juergen Ole Haslestad, the Yara chief executive, said that the nitrogen giant’s balance sheet “has never been stronger”, reflecting “a deliberate effect to build financial flexibility for growth execution”.
The Norwegian group’s net debts, as a proportion of equity, had fallen to levels below 0.1, from a figure of 0.75 early in 2009.
Yara will exploit its low borrowing levels “to realise well-timed profitable growth”, potentially including acquisitions, besides raising its dividends, which Torgeir Kvidal, the Yara finance director, acknowledged had fallen behind a policy of 40-45% payouts.
‘More deal activity’
While making strides in commodity products towards increasing group sales of 32.5m tonnes in 2016, up from 24.5m tones in 2010, Yara had lagged in boosting volumes of value-added fertilizers, such as NPK, which had proved a key support to group profits, Mr Haslestad said.
Indeed, a 6.2% rise in volumes of nitrate and NPK products outside Europe in 2011-12 had “compensated” for a 6.1% drop in sales within the continent, Yara’s core market,
Realising the group’s 2016 ambitions was likely to mean “more merger and acquisition activity” with the value-added sector, an area in which Yara had “high potential” for reaping deal benefits, such as cost cuts, from takeovers.
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