Russian fertilizer group Phosagro predicted high grain prices would continue to drive to demand as it reported a 29% year-on-year rise in first-quarter net income.

Net profit at the world's second-largest phosphate producer after Minnesota-based Mosaic rose to $266 million in January-March, the company said on Monday.

Sales climbed to $856 million, while adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) edged up to $313 million.

The fertilizr industry has been a hot sector for investors over the last year, as the world's rising population and unpredictable weather patterns have piled pressure on food supplies.

Phosagro, which raised $538 million in a London IPO in 2011, plans to increase fertilizer production and sales in 2012 and said it believes the market will remain stable.

During the first quarter Russia, Europe, the United States and Brazil showed very strong demand, while the Indian market was challenging, Phosagro said.

Indian demand is recovering, however, and Phosagro does not expect any serious slowdowns this year, while record planting acreage and historically high prices for key grains will drive demand for fertilizers, the company added.