Yara International (YAR) Q3 2024 earnings summary

Significant events and developments

• The full conversion of the Porsgrunn green hydrogen project has been shelved due to insufficient renewable energy, grid connectivity, and lack of economic incentives, though the pilot plant is operational and being integrated at Herøya.

• The Sluiskil CCS project in the Netherlands remains on track, on time, and on budget.

• The Tertre transformation project is in early stages, with further details to be provided as the process advances; intention to transform the Tertre site in Belgium may result in closing the ammonia plant and reducing headcount by 115.

• Multiple divestments completed, including Cameroon, West Sacramento terminal, Ivory Coast, and Brazil liquid NPK business.

• Dividend of NOK 5 per share for 2023 paid in Q2 and Q3 2024.

Market and industry conditions

• European and U.S. fertilizer demand remains unpredictable, with buyers optimizing timing and sluggish pre-buying in Q3; catch-up demand may occur in Q4 or spring 2025.

• Brazil's fertilizer market is running smoothly despite some weather issues, with strong potash imports, normal nitrogen, and slightly lagging phosphate.

• Tighter urea market balance due to limited Chinese exports and slow supply growth ex-China.

• Urea and NPK prices remain above historical averages; European energy costs remain volatile.

• Premium generation remains strong, with improved margins in Brazil and Europe.

Segment performance

• Margin improvements in phosphate, potash, and Brazil third-party trading are largely sustainable, with Brazil margins above normal ($42/ton vs. $30 average), though Q3 is the main season and effects may moderate in Q4.

• Industrial Solutions segment has stabilized, driven by strong sales and marketing and high supply security, despite structural headwinds from lower European industrial activity.

• Europe: EBITDA excl. special items fell 12% to $82M, with deliveries down 8% due to higher costs and lower pre-buying.

• Americas: EBITDA excl. special items up 10% to $188M, driven by better margins and currency, despite 7% lower deliveries.

• Africa & Asia: EBITDA excl. special items surged to $88M, up $58M, on higher margins and recovery from prior outages; deliveries down 6%.