Yara, the world’s biggest nitrogen fertiliser maker by sales volume, said strong demand from farmers for its premium crop nutrients helped offset pressure on prices from Chinese competitors.
The Norwegian firm said deliveries rose 21 percent to a record-high level in the second quarter as cheaper fertilizer and higher food prices encouraged farmers to buy.
That helped the company, which has about 10 percent of the global nitrogen fertilizer market, post a smaller-than-expected drop in core earnings. Its shares were 2.7 percent higher at 1230 GMT.
Yara’s average selling price for urea, a basic fertiliser, was 27 percent lower in the quarter compared with a year ago as Chinese exports dictated market prices.
A cut in export tax from China, the world’s biggest fertilizer producer, from July 1 threatens to flood the global market further and put more downward pressure on prices.
Yara said it benefited from strong demand for its blended NPK product that sells at a relatively stable premium over the ingredients – urea, potassium and phosphates – for which market prices have fallen and dented earnings for rivals such as U.S. rival Mosaic.
Rising food prices and cheaper fertiliser are encouraging farmers to use high-quality products to boost crops, Yara’s Chief Executive Jorge Halstead said.
Food prices rose 3.5 percent in April-June compared to a year earlier, according to the Food and Agriculture Organisation of the United Nations (FARO) food price index.
Yara said it had gained market share in Europe – its biggest market – where spring deliveries were delayed after a cold March, without giving figures.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), excluding one-off items, fell to 4.07 billion crowns ($679.03 million) from 5.19 billion in the year-ago period but beat analyst expectations for 3.67 billion.
Revenues increased 8 percent to 23.2 billion crowns, compared with a forecast 8 percent decline.
Yara, which last month postponed a planned expansion at its Canadian plant fearing oversupply, said other companies outside China were doing the same, without citing examples.
Cheap North American shale gas has prompted fertiliser makers to invest heavily in new capacity in the region, with many new projects due to be completed in 2015 and beyond. Some of these have now been put on hold, Yara said.