Key Takeaways
- Yara’s EBITDA for Q3 2023 was $396 million, a 62% decline compared to $1,001 million in Q3 2022.
- The company reported a net income of $2 million, down from $402 million in the same quarter last year.
- Operating cash flow remained strong at $1 billion, primarily due to the release of operating capital.
- A long order book at the start of the quarter negatively impacted European nitrate prices.
- Despite the challenges, Yara remains optimistic about the full season, citing supportive agricultural fundamentals.
Yara International, a global leader in crop nutrition, has reported a significant decline in its EBITDA for the third quarter of 2023. The EBITDA, excluding special items, stood at $396 million, marking a 62% drop from $1,001 million in the same quarter last year. The company’s net income also plummeted to $2 million, compared to $402 million in Q3 2022.
Lower Margins and Volatile Markets
The decline in EBITDA is attributed to reduced margins in the nitrogen industry, which has been operating in a lower-margin environment. “Although agricultural fundamentals are supportive, nitrogen markets remain sensitive to geopolitical and commodity market volatility,” said Svein Tore Holsether, President and CEO of Yara.
European Nitrate Prices
A long order book negatively impacted European nitrate prices at the start of the third quarter. This comes when the nitrogen markets have been experiencing significant volatility, particularly with the onset of the new northern hemisphere season.
Cash Flow Remains Strong
Despite the challenges, Yara managed to maintain a strong operating cash flow of $1 billion, primarily due to the release of operating capital. This could be a silver lining for the company as it navigates the current economic landscape.
Future Outlook
Yara remains optimistic about the entire agricultural season, citing supportive fundamentals. Industry consultants forecast increased cereal production for 2023/24 despite earlier drought conditions in several regions. However, the company also warned of the risk of new nitrogen curtailments if slow European demand continues.
Global Challenges
“War, geopolitical instability, and the climate crisis are majorly impacting food security. It is, therefore, even more important to safeguard Europe’s strategic autonomy within food and fertilizer and to accelerate the green transition of European agriculture and industry,” added Holsether.
Yara is uniquely positioned to drive these transformations with its leading food solutions and ammonia positions. The company aims to enable a hydrogen economy and drive a green transition in various energy-intensive industries.
Image provided by Yara
