Yara International ASA reported first-quarter 2015 net income after non-controlling interests of NOK 729 million ($92.3 million) on sales of NOK 27,767 million. Net income was down 59 percent from the year ago NOK 1,773 million despite higher year-on-year sales, up from NOK 21,709 million.
Yara said net income was negatively impacted by a NOK 929 million writedown (US$112 million) on Lifeco, which left a remaining book value of $18 million on the joint venture. In addition, Yara had an NOK 1.831 billion foreign exchange loss. However, the company’s margins benefitted from continued lower gas costs and a stronger U.S. dollar in the first quarter.
Global fertilizer deliveries were up 3 percent from a year earlier at 6.566 million mt, due to the acquisitions of OFD Holding Inc. in Latin America and a 60 percent stake in Galvani in Brazil. Excluding their contribution, Yara said deliveries were "slightly" lower than last year.
Yara’s fertilizer deliveries in Europe – at 3.008 million mt – were 3 percent lower in the first quarter compared with a year earlier, due mainly to a more normal spring this year following 2014’s early spring. Fertilizer deliveries outside of Europe were up 8 percent at 3.558 million mt, driven by higher sales to Latin America and trade to Africa. But excluding OFD and Galvani, Yara said fertilizer deliveries outside of Europe were flat on the year-earlier quarter.
As for the Lifeco writedown, Yara cited the worsening security outlook in Libya. The company sees a high likelihood in 2015 of a further deterioration of the operating ability of the Lifeco jv plants. Yara said the jv’s feedstock and financial situation was already challenging. Yara noted that the political and security situation in Libya has worsened rapidly, and may deteriorate further over the next year. In light of this, Yara is evaluating the operation of the plants on an ongoing basis in cooperation with the other partners in order to protect the employees as well as the assets. The company said it will continue participating in the governance of Lifeco, with the aim of resuming full production once real improvements are seen in the security and political situation in Libya, creating a sustainable improved operating outlook for Lifeco.
In the meantime, Lifeco continues to operate, though with reduced capacity due to gas supply constraints. Yara completed the jv with Libyan partners in 2009 (GM Feb. 16, 2009). Capacity is put at 900,000 mt/y for urea and 150,000 mt/y of merchant ammonia. It had only a few years of normal operations until unrest began in 2011, leading to the fall of Prime Minister Muammar Gaddafi and more instability thereafter.