Yara International (YAR) Q4 2018 earnings summary

Executive summary

• Revenue and other income reached USD 13.054 billion in 2018; EBITDA rose 13% to USD 1.523 billion, while net income after non-controlling interests fell to USD 159 million from USD 477 million.

• Higher commodity margins and acquired-business earnings supported EBITDA; currency translation losses and higher depreciation weighed on net income. Capital returns were considered unsatisfactory, making improved returns and disciplined investment priorities for 2019.

• Fourth-quarter earnings excluding special items were the strongest in four years, with EPS up 22% YoY.

Financial highlights

• Revenue from contracts with customers was USD 12.928 billion, up from USD 11.358 billion in 2017; revenue and other income totaled USD 13.054 billion versus USD 11.400 billion.

• Operating income was USD 402 million versus USD 457 million; EBITDA was USD 1.523 billion versus USD 1.348 billion, and EBITDA excluding special items was USD 1.525 billion versus USD 1.430 billion.

• Net income after non-controlling interests was USD 159 million versus USD 477 million; basic EPS was USD 0.58 versus USD 1.75.

• Excluding currency and special items, EPS was USD 1.68 versus USD 1.83; excluding currency alone, EPS was USD 1.31 versus USD 1.45.

• Net cash from operating activities was USD 756 million versus USD 791 million; investing cash outflow was USD 2.000 billion, reflecting maintenance, productivity projects, growth investments and acquisitions.

Outlook and guidance

• 2019 investment was expected to be USD 1.3 billion, with committed investments of USD 1.3 billion for 2019 and USD 1.0 billion for 2020; capital expenditure had peaked at USD 2.2 billion in 2018.

• The 2019 investment plan included USD 600 million of committed growth and improvement investments, mainly for Salitre and Rio Grande in Brazil; annual maintenance needs were estimated at USD 700–800 million.

• The improvement program target is at least USD 500 million of annual EBITDA improvement by 2020, measured against 2015; USD 355 million of annual benefits had been realized by year-end 2018, ahead of the USD 350 million target.

• Future growth initiatives are to be assessed with strict capital discipline; the near-term focus is completing ongoing growth projects and improving operations and returns.

• Numeric financial-result guidance is not issued; market-price and currency sensitivities are provided instead.