Yara International ASA reported second-quarter EBITDA excluding special itemsof $513 million on improved margins, compared with $252 million in second-quarter 2023 and beating the average analyst estimate of $462 million. Net income for the quarter was $3 million on revenues of $3.53 billion, compared with a net loss of $298 million last year.
Yara said the global nitrogen market tightened during second quarter, due to the absence of Chinese exports and supply restrictions in Egypt.
“I’m pleased to see improved results, with higher margins and deliveries in a more stable price environment,” said Svein Tore Holsether, President and CEO. “However, returns are not at satisfactory levels. We have been through turbulent, volatile years which Yara has navigated well, but we now need to adjust our priorities and cost base, to improve Yara’s profitability.”
To that end, Yara said it has initiated a cost and capex reduction program to strengthen its financial performance and improve shareholder returns going forward. The Oslo-based company plans to cut fixed costs and capital expenditure by $150 million each by the end of 2025 by prioritizing high-return core business and scaling down tail-return activities.
Yara said that a final investment decision for its US clean ammonia investments is still planned for the second half of 2025, provided projects “are set for strong double-digit returns.” Sound funding and risk-adjusted project returns above 10% are key requirements for all growth projects, the company noted.
“Yara has unique competitive edges as an integrated nitrogen producer with a global asset footprint and downstream presence,” Holsether said. “This gives us scale, flexibility and optionality in how we optimize our business, including our ammonia production and trade, and it positions Yara well for profitable decarbonization. With a sharpened strategic focus and growing demand for low-carbon crop solutions, Yara is set to increase value creation and shareholder returns going forward.”
Yara shares rose as much as 4.1% after the earnings release, the most since Feb. 9, but have declined about 19% over the past year, with subdued fertilizer demand and uncertainty over how the company will raise funds for its clean ammonia plans weighing on the stock.
“Yara’s $300 million plan to trim costs and reduce capital spending aims to boost return on invested capital metrics by 2%, bringing it closer to its target of 10% in the next 18 months,” said Bloomberg Intelligence Analyst and Green Markets Research Director Alexis Maxwell. “The company sees $150 million in fixed-cost savings and the rest coming from capex, which falls to $1.2 billion in 2024.”