February 8, 2018 / 5:25 AM / 13 days ago

UPDATE 2-Norway's Yara Q4 lags forecast, proposes dividend cut

* Profits rose less than expected despite rising prices

* Dividend cut to NOK 6.50/shr vs forecast NOK 8.53

* EBITDA ex. one-offs NOK 2.85 bln vs forecast NOK 3.24 bln

* Shares seen falling (Adds analysts, quote, bullet points, background)

By Ole Petter Skonnord

OSLO, Feb 8 (Reuters) - Norwegian fertiliser maker Yara International missed fourth-quarter earnings expectations on Thursday and proposed a lower full-year dividend as cost cuts and rising prices gave a smaller than expected boost to profits.

The company said in an earnings and strategy update its programme to improve profitability was ahead of schedule, but overall product deliveries fell slightly compared with the final quarter of 2016.

“The current profitability is negatively impacted by the supply-driven commodity fertiliser markets and Yara’s high ongoing investment activity in growth projects, where most will start to generate earnings during 2018,” the company said.

Quarterly earnings before interest, tax, depreciation and amortisation rose 15 percent to 2.85 billion Norwegian crowns ($360 million) before non-recurring items, while analysts in a Reuters poll had predicted a result of 3.24 billion crowns.

The board proposed a dividend of 6.50 crowns per share, down from 10 crowns paid for 2016 and lagging a forecast of 8.53 crowns in the Reuters poll.

“Overall a weak fourth-quarter report with weaker than expected numbers,” SEB analyst Jo Erlend Korsvold said.

“The share should trade down,” he added.

Patrick Lambert of Raymond James also said the earnings were weaker than expected, as Yara failed to benefit from higher prices.

Yara’s improvement programme, which aims to boost annual profits by at least $500 million by 2020, has so far resulted in gains of $240 million, up from $210 million at the end of the third quarter, the company said.

Oslo-listed Yara’s share price is up 12 percent in the last six months, largely thanks to a rise in the price of nitrogen fertiliser during the autumn, although the shares are down five percent year-to-date.

“Estimates are likely to go down,” Norne analyst Tomas Skeivys said of Yara’s earnings outlook.

$1 = 7.9229 Norwegian crowns Writing by Terje Solsvik; Editing by Mark Potter

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