Yara International ASA reported first-quarter net income of $16 million on revenue of $3.31 billion, down from the year-ago $105 million and $4.16 billion, respectively. Yara did not come close to analyst projections (Bloomberg Consensus) of $162.5 million in net income and $3.76 billion in revenue.
First-quarter EBITDA was $435 million, down from the year-ago $489 million. Analysts had projected $508 million.
Yara shares dropped 6.4% after the news, the lowest intraday decline since May 2020, according to Bloomberg. Morgan Stanley said the miss, coupled with soft free cash flow and net working capital, implies consensus downgrades in 2024. Yara, however, said its financial situation is robust, with a clear capital allocation policy and overall objective to remain a mid-investment grade credit rating.
“This quarter’s results are down from same quarter last year as increased deliveries are offset by lower prices,” said Svein Tore Holsether, President and CEO. “Meanwhile, I am pleased to see that our effort to decarbonize is yielding results. This is crucial to future-proof our business and be able to meet growing demand for low-carbon solutions.”
Total deliveries were up 12%, to 7.27 million mt from the year-ago 6.55 million mt. The uptick was mainly driven by an increases in Europe, which were up 37%, and in Asia, partly offset by a decrease in Latin America, particularly Brazil.
Yara said that despite strong urea supply in 2023, prices are generally demand-driven with positive production margins for even swing producers. With farmer incentives at normal levels and 10-year consumption growth trending at 1.9% per year, it said demand fundamentals are supportive for upcoming seasons.
Yara said the peak of new urea capacity additions is over and supply is currently strong, primarily due to increased production in India and China. It added that industry consultant projections show significantly lower supply growth from 2024 onwards. Combined with strong demand fundamentals, it said this indicates a tightening supply-demand balance longer term.
“Total nitrogen imports to Europe are declining as European production is ramping up,” Holsether added. “However, Russian urea imports to Europe reached an all-time high last season and currently account for almost one third of total urea imports to the EU. While raw material sanctions and price pressure is taking a double toll on European industry, Russia is gaining market influence. That not only endangers European industry and the green transition, but it also makes European food production more vulnerable.”
| Yara Production and Deliveries 000 mt | 1Q-24 | 1Q-23 |
| Production | ||
| Ammonia | 1,741 | 1,380 |
| Finished Fertilizers and Industrial | 4,611 | 4,043 |
| Yara Deliveries | ||
| Ammonia Trade | 433 | 401 |
| Fertilizer | 5,253 | 4,643 |
| Industrial | 1,582 | 1,500 |
| Total Deliveries | 7,268 | 6,554 |
| Crop Nutrition Deliveries | ||
| Urea | 1,430 | 1,048 |
| Nitrate | 1,103 | 966 |
| NPK | 1,721 | 1,757 |
| CN | 370 | 324 |
| UAN | 261 | 185 |
| DAP/MAP/SSP | 86 | 66 |
| MOP/SOP | 82 | 70 |
| Other Products | 199 | 235 |
| Total Crop Nutrition Deliveries | 5,253 | 4,653 |
| Europe Deliveries | 2,291 | 1,670 |
| Americas Deliveries | 1,815 | 2,007 |
| North America | 746 | 726 |
| Brazil | 732 | 926 |
| Latin America excluding Brazil | 338 | 356 |
| Africa & Asia Deliveries | 1,146 | 976 |
| Asia | 996 | 718 |
| Africa | 150 | 258 |
| Industrial Deliveries | 1,582 | 1,500 |