Yara International ASA on April 28 reported a 64% fall in adjusted EBITDA to $487 million for the first quarter ended March 31, down from the previous year’s $1.35 billion, and missed the average analyst estimate of $838.4 million (Bloomberg Consensus).
Revenue was down 30% year-over-year, to $4.16 billion versus the year-ago 5.91 billion, also missing the average analyst estimate of $4.6 billion.
Net income attributable to shareholders of the parent company for the quarter was down 89% year-over-year, to $104 million ($0.41 per share) versus the year-earlier $944 million ($3.71 per share), once again missing the average analyst estimate of $449.3 million.
Adjusted net income was $101 million against the average analyst estimate of $455.5 million, with adjusted earnings per share of $0.40 versus the prior year’s $3.20 per share.
Yara said declining market prices led to lower deliveries and margins in the first quarter, which more than offset lower production costs, triggering inventory write-downs, impacting the results compared to a strong first quarter last year.
The company noted that earnings were impacted by an approximate $370 million negative volume effect and $190 million of inventory write-downs, more than offsetting lower natural gas costs.
Total deliveries fell by 21.5% to 6.57 million mt in the first quarter, down from the year-ago 8.37 million mt, while fertilizer deliveries fell 24% to 4.65 million mt, down from 6.12 million mt.
Total deliveries of fertilizers in Europe were 26% lower year-over-year to 1.67 million mt, down from the previous year’s 2.25 million mt, as customers postponed purchasing in a declining price environment and imports partly replaced curtailed capacity.
“A declining price environment towards the end of 2022 and through the first quarter made farmers and distributors delay purchases, leaving season-to-date European nitrogen industry deliveries an estimated 7% behind a year earlier,” Yara President and CEO Svein Tore Holsether said.
Americas deliveries fell 28%, to 2.0 million mt versus the prior year 2.8 million mt, driven by supply overhangs and customers delaying purchases in a declining price environment.
Deliveries in the Africa and Asia segment (which includes Oceania) were 9% lower year-over-year, down to 976,000 mt versus 1.08 million mt the previous year. Yara cited a planned maintenance stop in the Babrala plant in India, partially offset by higher premium product deliveries in China and Asia.
“However, we see a tighter nitrogen market into the second quarter, with strong European demand at new season nitrate prices and strong farmer affordability metrics indicating higher nitrogen application rates,” said Holsether.
Yara said its production curtailments in the first quarter amounted to 0.6 million mt of ammonia (about 44% of its European capacity) and 1.3 million mt of finished fertilizers (around 30% of its European capacity). As of the end of April 2023, it had curtailed an annual capacity of 2.8 million mt of ammonia (58% of its European capacity) and 3.9 million mt of finished products (23% of its European capacity).
It sees gas cost for the second quarter of the year an estimated $650 million lower than a year earlier, based on current forward markets for natural gas (April 19) and assuming stable gas purchase volumes.
Shares in Yara dropped as much as 6.8% to four-month lows of $418 following the release of the first-quarter results. As of 13.50 CET (GMT + 2 hours), the share price was up at $428.50.
Bloomberg cited Norne analyst Tomas Skeivys, commenting “the results are a clear realization that the ‘super-profit’ era witnessed over the last 12 months are at an end.”
DNB Markets analyst Niclas Gehin, as also cited by Bloomberg, noted the first-quarter EBITDA impact of low volumes and write-down.
“The miss of around $400 million includes negative volume effect, which was around $200 million more than what I had expected, along with a $190 million write-down,” said Gehin. He expects the consensus estimate for 2024-2025 EPS to be cut by 5% after the miss.
Yara Production and Deliveries
| ‘000 mt | 1Q-2023 | 1Q-2022 |
| Production1 | ||
| Ammonia | 1,380 | 1,723 |
| Finished fertilizer and industrial products (excluding bulk blends)1 | 4,043 | 4,863 |
| Yara Deliveries | ||
| Ammonia trade | 417 | 443 |
| Fertilizer | 4,653 | 6,123 |
| Industrial product | 1,499 | 1,801 |
| Total deliveries | 6,568 | 8,367 |
1 Including Yara share of production in equity-accounted investees, excluding Yara-produced blends
Yara Deliveries
| ‘000 mt | 1Q-2023 | 1Q-2022 |
| Crop Nutrition Deliveries | ||
| Urea | 1,049 | 1,379 |
| Nitrate | 966 | 1,361 |
| NPK | 1,754 | 2,081 |
| CN | 325 | 422 |
| UAN | 186 | 303 |
| DAP/MAP/SSP | 66 | 102 |
| MOP/SOP | 71 | 212 |
| Other products | 235 | 263 |
| Total Crop Nutrition Deliveries | 4,653 | 6,123 |
| Europe Deliveries | 1,670 | 2,249 |
| Americas Deliveries | 2,007 | 2,796 |
| North America | 731 | 905 |
| Brazil | 921 | 1,488 |
| Latin America excluding Brazil | 356 | 403 |
| Africa & Asia Deliveries1 | 976 | 1,078 |
| Asia | 718 | 870 |
| Africa | 258 | 208 |
| Industrial Solutions Deliveries | 1,499 | 1,801 |
1 The Africa and Asia business also includes Oceania