Norwegian Yara International makes record sales/profits by selling fertilisers at record prices set by global fertiliser industry cartel
Yara International ASA has just announced the purchase of 25% of Agrico Canada Ltd,a privately owned fertiliser distribution in Canada Agrico which has has 42 full-time employees and annual revenues of approximately C$ 160 Mn. in 2007.
Yara is a global company based in Oslo, Norway and is the wrold's larst company involved in making and supplying agricultural fertilisers and it happily fits in the global cartel of fertiliser producers - the results of which show up in Q1 2008 results published yesterday . They show sales up for the quarter from NOK 13.5 Mn. (Norwegian Kroner) by 54% to NOK 20.8Bn.(US$4 Bn.) resulting in earnings per Share (EPS) rocketing up by an eye watering 260% from NOK 3.7 to NOK 9.63.
Sales by weight in KiloTonnes rose 20 % from 6,016 Kt. to 7,253 Kt. of which 85% was fertilisers which demonstrates how the gross margin has ...er .... expanded.
The company Market capitalization is NOK 112.8 Bn = US$22Bn.The shares have had a stunning run from around NOK 100 in September 2007, quadrupling in 9 months and closed yesterday at NOK 387.
The company produce an Annual Fertiliser Handbook which is worth examining, the last one available is for 2007 here for example is a useful breakdown of cost for growing wheat in the US for 2005.
The three large grain crops, wheat, rice and maize (corn), consume about half of all fertilizer used in agriculture all have which have seen massive price increases in the last 18-24 months.
Measured in terms of production capacity, Yara is the globally the largest in ammonia (1/3rd of market) , nitrates and NPK. Application rates vary with the crop for example Nitrogen fertiliser application rates are typically Corn (US) 150 kg / HA, Soy (US) 30 kg / HA ,Sugar cane (Brazil) 80 kg / HA , Rapeseed (Germany) 170 kg / HA, which helps to explain why m,any US mid west farmers faced with fertiliser costs have converted to soya from corn with much lower cash inputs.
Interestingly the increased cost of fertiliser have helped drive up biofuel crops resulting in making them uncompetitive against mineral oil fuels ..... until oil burst through about US$90 a barrel.
Fertiliser production Europe has declined in the last decade and imports have risen.. The poor grain harvest of 2002/3 , resultant low stocks and high prices led to increased imports which was grew as CAP reform (set aside etc.,) also contributed to somewhat lower domestic resulting in non focused EU chemical companies plants closing capacity.
Now CAP reform has discarded set aside, demand has increased, fed by external supplies at the high prices forced by the industry's global cartelization. This chart may help plus recent posts this week..
It is remarkable how the media have totally failed to identify, refer to, monitor the way the global fertiliser cartel has ramped prices and in the process seen astonishing profit growth.
Samuel Johnson accomanied the widow Thrale to the sale of her husband's brewery and famously said . "You have before you not simple a mess of pots, kettles and pans but the potentiality of growing rich beyond the dreams of avarice." ... ditto fertiliser companies faced with a hungry world.
Don't forget you heard it here first.
Hot News Update 5pm BST Friday 30/5/08 MagIndustries Corporation (TSX:MAA listed 2000) (Toronto, Ontario Mkt Cap C$500MN( has announced their subsidiary company MagMinerals has obtained the right to mine for potash in Kouilou region (slightly bigger than the State of Connecticut population 900K (ish))Republic of Congo for 25 years. MagMinerals will develop a US$723 million 1.2 million ton per year Kouilou Potash mine and processing plant located near the Atlantic port of Pointe Noire, in Southern Congo region where they are also building a magnesium plant. This potash plant will be the biggest planned for the next 5 years.
In the past month MagPotash has raised an initial C$100 million for project development. )Click to enlarge map)