Yara International ASA reported a 46% decline in adjusted EBITDA for the fourth quarter ended Dec. 31, 2023, to $576 million from $1.07 billion a year earlier, beating the average analyst estimate of $373.8 million (Bloomberg Consensus). Yara shares jumped as much as 7.9%, their largest intraday rise since 2020.
Net income attributable to shareholders of the parent was $244 million for the quarter, a 68% drop on the year-ago $769 million. Adjusted earnings per share were $0.88 against $2.46 per share a year ago. Fourth-quarter revenue was down 34% year-over-year, to $3.58 billion from $5.46 billion.
Yara said its results were impacted by significantly lower market prices and one-off position effects. To protect its margins amid subdued demand, the company curtailed some of its European production in the fourth quarter, equating to 11% of both finished fertilizers and ammonia capacity.
Many fertilizer plants were forced to shut or curtail production in 2022 as costs surged for natural gas. While prices have since retreated, the profitability of European producers is still under pressure. Yara pointed to the improving trend since the second quarter, however, and a positive market trend going into 2024.
“So far this season, nitrogen supply is lower than normal both in Europe and the US, indicating a tighter global balance for the first half of 2024,” said Yara International President and CEO Svein Tore Holsether in a company’s Feb. 9 earnings release.
“Fertilizer affordability has improved during the quarter, and optimal application rates for wheat in Europe are currently around 6% higher than a year ago,” Holsether continued. “The start of 2024 has seen increased buying activity and higher prices, signalling a potential volume catch-up into the main application season in the Northern hemisphere.”
Based on current forward markets for natural gas as of Jan. 31, 2024, and assuming stable gas purchase volumes, the company sees its gas cost for the first and second quarters of 2024 at an estimated $320 million and $100 million lower, respectively, than a year earlier.
Yara’s fourth-quarter ammonia production was 19% higher year-over-year, at 1.87 million mt versus 1.57 million mt. Production of finished fertilizer and industrial products, excluding bulk blends, was up 12% at 4.93 million mt versus the year-ago 4.40 million mt.
Crop nutrition deliveries in the fourth quarter were 4% higher than the prior year at 5.32 million mt versus 5.11 million mt. Crop nutrition deliveries increased for all regions except in Brazil and other Latin America and in Africa.
Deliveries increased by 6% in Europe, to 1.76 million mt versus 1.66 million mt in fourth-quarter 2022, which was impacted by a high-price environment and production curtailments. Overall Americas deliveries were down 1% year-over-year, to 2.38 million mt. Brazil deliveries were off 2%, at 1.38 million mt, due to reduced fertilizer demand in the second corn season, partly offset by increased commodity sales.
Industrial product deliveries were 8% lower than in fourth-quarter 2022, to 1.51 million mt from 1.65 million mt. The downturn was mainly in the chemical applications Europe and mining applications. Clean ammonia deliveries were down 10% from the prior year, with Yara citing a “distinct lack of downstream industrial and fertilizer demand.”
For the full-year 2023, Yara posted a 65% decline in adjusted EBITDA, to $1.71 billion from the prior year’s $4.89 billion. Revenue was down 35% year-over-year, to $15.55 billion from $24.05 billion. Full-year net income attributable to shareholders of the parent was $48 million against a net income of $2.78 billion for FY2022. Adjusted earnings per share were $1.11 versus $10.98 for full-year 2022.
Yara declared a dividend of NOK5 per share for 2023. This compares to a dividend of NOK55 for 2022.
Norne analyst Tomas Skeivys, as cited by Bloomberg, noted Yara’s positive outlook comments, adding that he is looking to “slightly raise” his EBITDA and revenue estimates. He sees volumes as likely picking up in the first half of 2024 and gas costs continuing to decline. However, Skeivys flagged Yara’s “rather weak” revenue and cash flow.
Yara Production and Deliveries
| ‘000 mt | 4Q-2023 | 4Q-2022 | FY2023 | FY2022 |
| Production1 | ||||
| Ammonia | 1,871 | 1,568 | 6,391 | 6,510 |
| Finished Fertilizer and Industrial Products (excluding bulk blends)1 | 4,933 | 4,403 | 18,437 | 18,332 |
| Yara Deliveries | ||||
| Ammonia Trade | 422 | 467 | 1,475 | 1,771 |
| Fertilizer | 5,315 | 5,114 | 22,283 | 22,687 |
| Industrial Product | 1,514 | 1,645 | 6,350 | 7,159 |
| Total Deliveries | 7,251 | 7,226 | 30,109 | 31,616 |
1 Including Yara share of production in equity-accounted investees, excluding Yara-produced blends
Yara Deliveries
| ‘000 mt | 4Q-2023 | 4Q-2022 | FY2023 | FY2022 |
| Crop Nutrition Deliveries | ||||
| Urea | 1,141 | 995 | 4,690 | 4,700 |
| Nitrate | 1,069 | 1,027 | 4,462 | 4,442 |
| NPK | 2,025 | 2,131 | 8,355 | 8,498 |
| CN | 329 | 323 | 1,478 | 1,500 |
| UAN | 212 | 140 | 1,047 | 998 |
| DAP/MAP/SSP | 118 | 109 | 560 | 559 |
| MOP/SOP | 176 | 149 | 709 | 921 |
| Other products | 246 | 240 | 982 | 1,069 |
| Total Crop Nutrition Deliveries | 5,315 | 5,114 | 22,283 | 22,687 |
| Europe Deliveries | 1,760 | 1,661 | 7,705 | 7,455 |
| Americas Deliveries | 2,382 | 2,414 | 10,073 | 10,943 |
| North America | 646 | 641 | 2,811 | 2,814 |
| Brazil | 1,377 | 1,406 | 5,619 | 6,450 |
| Latin America excluding Brazil | 359 | 367 | 1,642 | 1,679 |
| Africa & Asia Deliveries1 | 1,174 | 1,039 | 4,506 | 4,289 |
| Asia | 876 | 721 | 3,373 | 3,271 |
| Africa | 298 | 318 | 1,133 | 1,018 |
| Industrial Solutions Deliveries | 1,514 | 1,645 | 6,350 | 7,159 |
1 The Africa and Asia business also includes Oceania