Yara International ASA reported third-quarter net income after minority interest of US$619.9 million (NOK 3,360 million) and earnings per share of $2.13 (NOK 11.55 per share), compared with $257.3 million (NOK 1,487 million) and $.88 per share (NOK 5.10 per share) last year. EBITDA for the quarter was $1.17 billion (NOK 6,345 million) compared with the year-ago $328.9 million (NOK 1,901 million). Third-quarter sales were $4.6 billion (NOK 25,000 million), versus the year-ago $2.2 billion (NOK 12,828 million).
“Yara delivered strong earnings in the third quarter, as higher fertilizer prices more than offset increased raw material costs,” says Jørgen Ole Haslestad, Yara president and CEO.
Yara cited a good start to the European season, and lower nitrate stocks. Downstream segment sales were in line with last year. Excluding the effect of the Kemira GrowHow acquisition, underlying sales volumes declined due to lower sales in Brazil and Southeast Asia. Fertilizer margins continued to expand as prices more than doubled for Yara’s main fertilizer products. Underlying earnings in the industrial segment were in line with last year as continued growth in technical ammonium nitrate for the mining industry and environmental products more than offset increased sourcing costs due to higher global nitrogen prices. The upstream segment benefited from increased fertilizer prices, more than compensating for energy costs, which increased less than previously guided due to a drop in spot natural gas prices.
Fertilizer tons sold were off slightly in the third quarter, to 4.74 million mt from the year-ago 4.76 million. Industrial tonnage of 1 million, up from 817,000 mt, helped boost overall company sales tonnage to 5.76 million mt, up from the year-ago 5.58 million mt. Fert tonnage was still up for the nine-month period at 17 million mt versus 15.2 million. Total nine-month tonnage was 20 million mt versus 17.5 million mt.
Yara said the long-term fundamentals for fertilizer demand remain strong, with grain inventories still at historical low levels. New fertilizer capacity continues to be delayed, and Yara’s energy costs will benefit from lower global energy prices. Going forward, Yara will benefit from the takeover of Saskferco effective Oct. 1.
“No industry can expect to be unaffected by the ongoing financial turmoil, and we are currently seeing a slow-down in some of our fertilizer deliveries following the credit crunch. However, since food demand is relatively inelastic to lower economic growth, fertilizer demand needs to rebound to avoid insufficient food supply. Yara’s business model, combining a unique distribution system and own production with third-party purchasing, gives us flexibility to handle demand volatility better than most,” said Haslestad.
Nine-month net income after minority interest was $1.95 billion (NOK 10,584 million), with EPS at $6.70 (NOK 36.32) on sales of $12.9 billion (NOK 69,818 million), versus the year-ago $690.8 million (NOK 3,993 million), EPS of $2.35 (NOK 13.60), and sales of $6.94 billion (NOK 40,097 million). Nine-month EBITDA was $3.1 billion (NOK 16,633 million), up from the year-ago $1.02 billion (NOK 5,910 million).