Yara International (YAR) Q2 2024 earnings summary

Executive summary

• Q2 2024 EBITDA excluding special items reached $513M, up $260M year-over-year, driven by improved margins, higher deliveries, and lower energy costs; first-half EBITDA excluding special items increased 28% to $948M.

• Net income for Q2 was $3M, a turnaround from a $298M loss in Q2 2023; first-half net income reached $19M versus a $194M loss a year ago.

• Management addressed Q2 results, focusing on operational impacts from Brazil flooding, cost-saving initiatives, and strategic priorities in decarbonization and asset optimization.

• Initiated $150M fixed cost reduction and $150M capex reduction programs to strengthen financial position, with early effects seen in Q2 and main impact expected in 2025.

• Tightening nitrogen supply and cost actions expected to further improve financial performance and enable value-accretive growth.

Significant events and developments

• Flooding in Brazil impacted Q2 logistics and results, with potential insurance recoveries and some effects possibly extending into Q3.

• Sluiskil CCS project is under construction, with Dutch government subsidies confirmed and integration into decarbonized product portfolios for major clients like PepsiCo.

• Acquisition of Agribios organic-based fertilizer business in Italy completed in February 2024, with immaterial financial impact.

• Divestment of non-core assets, including Yara Marine Technologies AS, and strict capex prioritization to strengthen balance sheet.

• New NOK 2,750M green bond issue in June 2024, proceeds to finance eligible green projects.

Financial highlights

• Q2 operating income was $213M, up from a $231M loss in Q2 2023; first-half operating income was $379M, compared to a $9M loss.

• Revenue for Q2 was $3,529M, down 11% year-over-year, reflecting lower selling prices despite higher volumes; first-half revenue was $6,861M, down from $8,146M.

• Cash from operations totaled $822M in Q2, up from $732M in Q2 2023.

• Net interest-bearing debt decreased from $3,953M to $3,587M during the quarter, reflecting strong cash conversion.

• Basic EPS for Q2 was $0.00, up from $(1.18); adjusted EPS (excl. FX and special items) for Q2 was $0.43, up from $(0.36).