Fertiliser giant Yara has reported strong cashflow and increased returns despite “significant raw material sourcing challenges and volatile market conditions”.
In the fourth quarter (Q4) of 2022, Yara’s earnings before interest, tax, depreciation and amortisation (EBITDA), excluding special items, was $1.067 billion (€993 million), up from $765 million (€712 million) in Q4 2021.
The Norwegian-based company said that fourth-quarter net income for 2022 was $766 million compared with a net loss of $26 million a year earlier.
It explained that this mainly reflected improved margins and currency translation gains in the final quarter of 2022.
Yara has proposed a NOK 55 (€5)/share annual dividend to be paid to shareholders.
Yara
In a financial statement published today (Wednesday, February 8), Yara said that higher prices in 2022 led to farmers and distributors in some regions postponing buying fertiliser.
This has created “supply overhangs” which contributed to price drop and low market activity towards the end of 2022 and into the start of 2023.
“However, the price declines have led to improved farmer affordability and profitability metrics, and catch-up demand potential is seen in most regions,” the company noted.
Due to strong gas price volatility and declining nitrogen prices, Yara said that, by the end of January 2023, it had cut its annual production capacity of ammonia by 1.7 million tonnes (35% of its European capacity) and finished fertiliser by 4.7 million tonnes (28% of its European capacity).
“Yara will, where possible, continue to use its global sourcing and production system to import ammonia to Europe and supply global customers, but will not produce or sell at negative margins,” the financial statement said.
Based on current forward markets, Yara is estimating that its gas costs for the first quarter of 2023 will be $320 million lower than a year earlier.
Lower gas prices in Europe have led to some nitrogen capacity coming back online, with industry consultants now indicating European ammonia production running at 70% of capacity.
Commenting on the results, Svein Tore Holsether, president and chief executive of Yara, said that the company had delivered “solid results throughout a year shaped by war and market volatility”.
“Yara has demonstrated its resilience in a challenging situation, with its global production and distribution footprint, flexible asset base and world-leading capabilities within ammonia transport and storage.
“However, I am concerned about European industry. The US Inflation Reduction Act will create much-needed decarbonisation momentum, and must be matched by swift and bold action by European authorities.
“If Europe does not act, it risks losing both its ability to decarbonise and [an] important existing industry,” Holsether said.
In 2022, Yara reported revenues of $24 billion (€22.35 billion), up from $16.6 billion the previous year.