Fertiliser company Yara exceeds its quarterly profit forecast on the strength of nitrogen margins
Yara, a Norwegian fertiliser'maker, reported a larger-than-expected % increase in its core earnings for the first quarter on?Friday. They attributed this to higher nitrogen margins and strong deliveries, as well as operational improvements.
The Iran War has tightened the nitrogen market by disrupting shipments across the Strait of Hormuz, shutting Middle East factories and raising urea prices. This has improved the pricing power of producers in spite of rising risks of demand destruction.
Yara's results are similar to those of German potash-and-salt miner K+S. The Hessian firm also reported a core quarterly earnings that was above expectations due to higher agricultural prices.
Svein Tore Hosether, CEO of Yara, said that the?Middle East's development has put pressure on the global system for food. This has had knock-on effects throughout the value chain.
EBITDA, before special items (earnings before tax, depreciation and amortisation), came to $896 million in the March quarter, up from $638 million in the same period a year ago.
This was more than the $825m expected by analysts according to a poll conducted by the company.
The company has made a good start in achieving its targets for 2027, having achieved $180 million of fixed cost?reductions by 2025, and another $46 million this year.
Yara stated that natural gas costs are expected to be $150 and $120 millions?higher, respectively, in the second quarter and third quarter, compared to a year earlier.
Natural gas is a major input for fertiliser production. This means that fluctuations in gas prices have a big impact on the costs of producers and the prices farmers pay.
Fertiliser prices are soaring due to the Iran War and the subsequent closure of Strait of Hormuz. Some farmers have been left scrambling as the spring planting season nears.
Yara also said that it was working on low-carbon 'ammonia projects, with Air Products. The project in Louisiana would produce 2.8 millions tons of ammonia per year.
(source: Reuters)
