Results for 2000 show big rise in fertiliser income
Results for 2000 show big rise in fertiliser income
By Robert Harris
FERTILISER companies have reported a sharp upswing in fortunes for 2000 after big cuts in output and above-forecast returns from the market.
Hydro Agri announced this week that operating income hit 1.3bn Norwegian krone, (£101m) during the year, compared with a deficit of £132m in the previous 12 months.
Hydro took out about 1.3m tonnes of production capacity in 2000, close to a third of the total European cutbacks.
This included mothballing its Immingham, North Lincs, plant, which bore the brunt of the firms 2500 job losses caused by the restructuring to date. The figure is expected to top 3000 within 12 months.
Thorleif Enger, senior executive vice-president, said the turnaround had been achieved with a "vigour and speed" that surpassed expectations. "We have done the heavy work, but I have to point out that this is an ongoing process."
He also said that developments in the fertiliser market were better than forecast. "We had expected energy prices to eat up much of the gain from higher fertiliser prices."
But the rise in gas prices hit the US particularly hard, and many producers shut down ammonia production. This resulted in a flood of imports, raising the world price by up to 50%. Hydro, as a big ammonia producer, benefited from this.
Although it is impossible to tease out individual results from these global figures, observers suspect that large costs associated with the closure of Immingham mean Hydros UK arm will have made only a modest profit, if any, even though fertiliser prices here have risen sharply in the past 12 months.
Nitrogen, typically costing £132/t delivered this month, is £38-£40/t more expensive than in Feb 2000, and compounds have risen by about £20/t over the same period.
Kemira also reported much-improved results during 2000, though, being more dependent on the EU market, gains were less spectacular. Operating income hit k23m (£14.6m), compared with an operating loss of k39m (£25m) the previous year.
The company also played a big part in cutting output, removing about 1.5m tonnes by shutting two plants on the Continent. Nitrogen fertiliser prices rose by 40-90% in different markets, and compound fertilisers by 25-30% in the EU, though higher gas prices swallowed some of that, says the company.
Kemira has split its Agro operations into two. It will retain its specialities division, but intends to spin off its nitrogen arm soon. *