Yara International marred the fertilizer sector revival by warning that its profits would fall short of forecasts, blaming setbacks from a plant shutdown to "financial irregularities" at an Australian joint venture.

Shares in the Norwegian-based group, the world's biggest maker of nitrogen fertilizers, tumbled 5% in early deals, dragging on stock in sector peers such as Germany's K+S and Israel's ICL too.

Yara pegged its earnings before interest, tax, depreciation and amortisation (ebitda) for the last quarter of 2010 at NOK3.0bn a figure which, more than double that a year before, was "below financial market expectations".

Analysts had estimated the group's ebitda for the quarter at NOK3.6bn, excluding one-off effects, according to a Thomson Reuters poll.

Price hikes

The shortfall reflected in part a NOK200m loss in takings down to a decision to delay some sales until this quarter, when they could be sold at higher prices.

"Yara has during January increased nitrate fertilizer prices substantially," the group said.

Sale volumes of Yara's own nitrate production were also affected by a longer-than-expected maintenance stoppage at the Ambes plant in France, at a time when the group had already run down inventories, denting ebitda by NOK250m.

'Financial irregularities'

The group also revealed a charge against its 35% stake in Australia's Burrup Fertilizers, "following findings… of financial irregularities" in the joint venture with Indian entrepreneur Pankaj Oswal.

Australia & New Zealand Bank in December appointed receivers over Mr Oswal's interests, attempting to recover $800m in loans.

The receivers, PPB Advisory, said last month they were pursuing assets from land to "a number of vehicles [and] two luxury motor yachts" over which it is believed Mr Oswal's seized empire has claims.

They are also reported to have received some 20 expressions of interest in buying the Burrup stake, with Australian fertilizer group Incitec Pivot viewed as a leading contender.

The joint venture, which is continuing to operate as normal, has plans for an expansion into the explosives sector, in which Incitec Pivot already operates.

Mr Oswal, who quit Australia for India shortly before the receivers were appointed, has denied any wrongdoings.

Capacity squeeze

Yara's caution follows a series of upbeat statements from fertilizer groups, boosted by growing demand from farmers enriched by soaring crop prices.

The group itself added that the world fertilizer market was "tight, as global agricultural prices are all-time high levels and all fertilizer capacity outside China, which has implemented high export taxes, aim to run at full capacity".

Nonetheless, Yara shares dipped to NOK316.50 in early deals in Oslo before regaining some ground to close at NOK328.00, down 2.4% on the day.

The group will unveil its fourth-quarter results on February 15.