Yara International (YAR) Q4 & CMD 2017 earnings summary

Executive summary

• Q4 adjusted EBITDA rose 15% YoY to NOK 2,845m; FY adjusted EBITDA fell 18% to NOK 11,782m as margins weakened.

• The improvement program was ahead of schedule, delivering USD 242m in sustained annual benefits at 2015 margins; its 2020 target remained at least USD 500m.

• Strategy emphasized continuous improvement, premium products, farmer-centric growth and innovation, linking profitable growth with food security and environmental goals.

Financial highlights

• Q4 adjusted EBITDA increased from NOK 2,015m to NOK 2,845m; higher margins more than offset increased energy costs and currency effects.

• Q4 net income attributable to shareholders was NOK 846m versus a NOK 333m loss; FY net income was NOK 3,948m versus NOK 6,360m.

• Reported Q4 EBITDA was NOK 2,526m; negative special items totaled NOK 583m, including NOK 278m in Porsgrunn pilot-plant closure costs.

• FY EPS excluding currency and special items was NOK 14.94 versus NOK 20.44; Q4 EPS on the same basis was NOK 3.88 versus NOK 1.58.

• The proposed dividend was NOK 6.50/share, equal to 45% of net income after non-controlling interests.

Outlook and guidance

• The 2018 improvement-program target was raised by USD 50m after accelerated delivery; the 2020 target remained at least USD 500m versus the 2015 baseline.

• Committed growth and remaining improvement benefits targeted USD 1.1bn of EBITDA improvement by 2020 on a 2015 baseline; growth projects were expected to add USD 600m at 2015 prices.

• Growth investments were projected to add 6.5m tonnes of finished-product capacity and 2.3m tonnes of ammonia capacity by 2020.

• Illustrative EPS was USD 2.7 at current market prices after tax adjustment, versus USD 5.8 at 2015 prices with committed growth and improvement benefits; these were scenarios, not forecasts.

• Digital farming pilots were planned for 2018, with commercial launches in core markets in 2019 and global scale from 2020; staffing had exceeded 100 and was expected to grow toward 200 or more.