Shares in Yara International plunged, wiping $1bn from its stock market value, after the fertilizer giant unveiled a 97% plunge in profits and warned it was considering plant closures, thanks to low nutrient prices.
The Norwegian-based group, the world's biggest nitrogen fertilizer maker, said that lower nutrient prices – which for urea averaged $314 a tonne during the October-to-December period, down 18.4% year on year – had already seen some its commodity nitrogen plants "come close to curtailment" during the quarter.
While prices have recovered this year, "Yara will continue to evaluate the need for temporary or permanent capacity curtailments on an ongoing basis", said the company, which produced 26.0m tonnes of fertilizers in 2013 at more than 20 sites in Australia, Brazil, Canada, Europe, Libya and Trinidad.
Any closure decisions would be based on "both market price developments and investment decisions", Yara said, highlighting a quest to boost cost efficiency "throughout the business".
The low prices of commodity fertilizers had already prompted capacity shutdowns by rivals in North Africa, Ukraine and China, whose ramp up in imports has been viewed as fuelling the tumble in urea prices from levels of some $500 a tonne two years ago.
China's urea exports soared 20% to 8.3m tonnes last year, despite a sharp reduction in the October-to-December quarter, of 37% to 2.7m tonnes as the price decline prompted by "supply driven" market conditions hit home.
Ukraine exports in October and November plunged 62% to 102,000 tonnes.
"The highest cost producers, like Ukraine and China, needed to curtail production to balance the market," Yara said.
"An average price at $314 per ton fob Black Sea has resulted in significant production curtailments in Eastern Europe, and it also implies an export price level from China unattractive for the highest cost producers there."
Although demand had picked up in Yara's important European market, where deliveries rose 8% year on year in the October-to-December period, US volumes tumbled 13%, amid some doubts over the extent of spring sowings of corn, a particularly nutrient-hungry crop.
"Uncertainty linked to the planted corn acreage for 2014 due to lower corn prices have added to the general risk aversion among buyers," the group said.
Yara's inventories of fertilizers had ended the year at 5.0m tonnes, up roughly 20% year on year, although this reflects too the acquisition of Bunge fertilizers assets in South America.
Its production volumes, at 6.62m tonnes in the fourth quarter, were up 6.2% year on year.
The group's market assessment came as it unveiled earnings of NOK50m for the latest quarter, down from NOK2.15bn a year before, and well below market expectations of a NOK714m result.
Although this result, on revenues down 1.9% at NOK20.57bn, reflected a huge dent from one-off factors - including NOK253m in foreign exchange losses - Yara's operating profit, down 75% at NPK 544m, also fell short of analyst expectations of NOK888m.
Yara shares tumbled 8.8% to NOK244.5m in morning deals in Oslo, before recovering some ground to stand at NOK248.30, down 7.4% on the day.
The comments come at a time when Yara is already under pressure over its handling of corruption, after a bribery scandal landed it with a NOK295m fine and led to the indictment of several former and current staff.
Local government pension fund KLP has urged the Yara chairman, Bernt Reitan, to step down.