Yara International ASA delivered weaker 3Q results compared with 2015. Underlying EBITDA was 35% lower, as weaker fertilizer prices were only partly offset by higher deliveries of Yara-produced products, lower energy cost and currency translation gains.
"Yara reports a weaker result than a year earlier, reflecting supply-driven prices for fertilizer globally. But although production margins were significantly lower, our Crop Nutrition and Industrial earnings were broadly stable, demonstrating the strength and resilience of Yara's integrated business model," said Svein Tore Holsether, President and Chief Executive Officer of Yara.
"The over-supply situation in our industry is expected to last for some time, underlining the need for the Yara Improvement Programme which we have announced earlier. Parts of the program have entered the implementation phase, and we are confident we will deliver at least US$500 million of annual EBITDA improvement by 2020," said Holsether.
Yara announced 3Q net income after non-controlling interests of NOK 821 million (NOK 3.00 per share). Excluding net foreign exchange loss and special items, the result was NOK 3.46 per share. Third-quarter EBITDA excluding special items was NOK 2968 million.
Global Yara fertilizer deliveries were 4% higher than in 3Q15, with deliveries of Yara-produced products up 10%, driven by continued strong growth in Brazil and higher deliveries of compound NPK in all regions.
In Europe, fertilizer deliveries were 1% higher than a year earlier, with deliveries of Yara-produced nitrates marginally lower than a year ago while compound NPK deliveries were up 16%. Adjusting for the divestment of Yara's CO2 business (effective 1 June) Industrial segment deliveries were up 9%.
Yara's margins declined compared with 3Q15, as sales prices fell more than input costs. Yara's average realised urea and nitrate prices decreased around 25%, while compound NPK premiums increased compared with a year ago as realised NPK prices decreased only 15%. Yara's average global gas costs were 25% lower than 2015.
The global farm margin outlook and incentives for fertilizer application remains supportive overall.
Read the article online at: https://www.worldfertilizer.com/potash/24102016/yara-reports-strong-deliveries-but-lower-margins/