Yara International ASA’s shares fell as much as 7.2% to their lowest intraday since December 2020 on Oct. 20 after the company’s third-quarter adjusted EBITDA dropped to $396 million, a 60% decline on the year-ago $1.001 billion and far short of the analyst average estimate of $600.4 million (Bloomberg Consensus).
Yara posted zero net income for the quarter attributable to shareholders of the parent, versus net income of $400 million the previous year, also missing estimates. Analysts had expected net income would come in at $211.8 million.
Third-quarter adjusted net income was $47 million, a 91% decline on last year’s third quarter and well below the average analyst estimate of $219.2 million. Adjusted earnings per share were $0.19 compared with $2.00 per share a year ago. Revenue fell 38% year-over-year, to $3.86 billion from $6.22 billion, against the analyst average estimate of $4.65 billion.
“Third-quarter 2023 results are impacted by strong price declines compared to last year, as the nitrogen industry continues to operate in a lower margin environment,” said Yara International President and CEO Svein Tore Holsether. He noted that European nitrate prices were negatively impacted by a long order book at the start of the third quarter.
The price decline more than offset lower gas prices and higher deliveries. Yara delivered 6.46 million mt of fertilizer in the third quarter, up from 5.66 million mt last year. “Phasing of deliveries is uncertain, as is normal at this stage of the season, but there is risk of new nitrogen curtailments if slow European demand continues,” the company said.
Yara said its European production curtailments remained at “low levels” during the quarter, with 3%, or 130,000 mt, of finished fertilizers capacity curtailed and 6%, or 80,000 mt, of ammonia capacity curtailed. Yara said it will continue to optimize production in response to market conditions.
Third-quarter ammonia production was 12% higher than a year earlier, at 1.72 million mt versus 1.53 million mt. Production of finished fertilizer and industrial products, excluding bulk blends, was up 10% year-over-year, to 5.06 million mt from 4.6 million mt.
Crop nutrition deliveries increased for all regions compared with last year’s third quarter, and deliveries of both premium and commodity fertilizer products improved compared with significant curtailments a year ago. However, Yara noted clean ammonia deliveries were impacted in the quarter by planned maintenance and reliability issues at production plants.
The company said although the season for the European nitrogen industry is off to a slower start than in previous years, fundamentals for the full season are supportive.
It said agricultural conditions are favorable, with industry consultants forecasting increased cereal production in 2023/24 despite drought in several regions earlier this year. Although fertilizer affordability reduced during the quarter, it is still above historical averages, and optimal application rates are up compared to the 2022/23 season, Yara said.
Yara estimated fourth-quarter gas cost to be $520 million lower than last year based on forward markets for natural gas as of Oct. 12, and assuming stable gas purchase volumes.
Norne Securities analyst Tomas Skeivys, as cited by Bloomberg, said Yara’s results “disappoint for the third quarter in a row” and the company’s outlook comments “do not seem like marking a cycle bottom.” Skeivys also noted Yara’s cash flows were good at $1 billion, primarily due to operating capital release, but called the report “disappointing.”
Citi analysts led by Ranulf Orr said commodity fertilizer prices are likely to recover with new season demand, though at lower levels, and this should add to Yara’s product pricing, Bloomberg reported.
For the nine months to Sept. 30, 2023, Yara posted a 70% decline in adjusted EBITDA, to $1.14 billion from the year-ago $3.82 billion. Nine-month revenue was down 36% year-over-year, to $11.97 billion from $18.59 billion.
The company posted a net loss attributable to shareholders of the parent of $196 million for the first nine months, versus net income of $2.01 billion in the same prior-year period.
Yara Production and Deliveries
| ‘000 mt | 3Q-2023 | 3Q-2022 | 9M-2023 | 9M-2022 |
| Production1 | ||||
| Ammonia | 1,722 | 1,531 | 4,520 | 4,942 |
| Finished fertilizer and industrial products (excluding bulk blends)1 | 5,062 | 4,601 | 13,503 | 13,929 |
| Yara Deliveries | ||||
| Ammonia trade | 288 | 457 | 1,100 | 1,304 |
| Fertilizer | 6,459 | 5,660 | 17,001 | 17,573 |
| Industrial products | 1,692 | 1,851 | 4,835 | 5,514 |
| Total | 8,439 | 7,968 | 22,935 | 24,391 |
1 Including Yara share of production in equity-accounted investees, excluding Yara-produced blends
Yara Deliveries
| ‘000 mt | 3Q-2023 | 3Q-2022 | 9M-2023 | 9M-2022 |
| Crop Nutrition Deliveries | ||||
| Urea | 1,246 | 1,007 | 3,580 | 3,705 |
| Nitrate | 1,257 | 1,183 | 3,394 | 3,415 |
| NPK | 2,524 | 2,234 | 6,331 | 6,366 |
| CN | 376 | 341 | 1,147 | 1,177 |
| UAN | 312 | 242 | 835 | 859 |
| DAP/MAP/SSP | 189 | 157 | 442 | 450 |
| MOP/SOP | 304 | 261 | 537 | 772 |
| Other products | 251 | 236 | 735 | 829 |
| Total | 6,459 | 5,660 | 17,001 | 17,573 |
| Europe Deliveries | 2,202 | 1,979 | 5,946 | 5,793 |
| Americas Deliveries | 3,021 | 2,719 | 7,723 | 8,529 |
| North America | 580 | 436 | 2,198 | 2,173 |
| Brazil | 1,960 | 1,795 | 4,242 | 5,044 |
| Latin America excluding Brazil | 481 | 489 | 1,284 | 1,313 |
| Africa & Asia Deliveries1 | 1,237 | 963 | 3,332 | 3,250 |
| Asia | 943 | 715 | 2,497 | 2,550 |
| Africa | 294 | 248 | 835 | 700 |
| Industrial Solutions Deliveries | 1,692 | 1,851 | 4,835 | 5,514 |
1 The Africa and Asia business also includes Oceania