Release Date: April 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Yara International ASA (YARIY, Financial) reported strong market share gains in Europe, with deliveries up 15% compared to the industry average of 5%.
- The company achieved a positive contribution from fixed costs, reporting a $34 million improvement, indicating effective cost-saving measures.
- Yara International ASA (YARIY) is on track with its Sluiskil CCS project, aiming to finalize it next year, which will help avoid CO2 taxes and enhance low-carbon fertilizer production.
- The company has maintained strong commercial performance, particularly in the Americas, with a tight US market and high expected corn acreage driving demand.
- Yara International ASA (YARIY) has flexibility in its ammonia sourcing, with 30% of its ammonia consumption sourced from the market, allowing it to optimize costs and production.
Negative Points
- There is uncertainty regarding the potential comeback of Chinese urea exports, which could impact global supply and pricing dynamics.
- The divergence in urea and ammonia prices presents a challenge, as ammonia prices remain weak while urea prices are strong.
- The European nitrogen market remains volatile, with potential impacts from proposed tariffs on Russian fertilizer imports and ongoing geopolitical tensions.
- Yara International ASA (YARIY) faces cost pressures from inflation and currency fluctuations, which could impact its fixed cost targets.
- The company is cautious about the potential impact of increased Chinese grain production on global fertilizer demand and pricing.
Q & A Highlights
Q: Can you update us on the timing of the Sluiskil CCS project and any regulatory updates? Also, is there any interest in consolidating the Western European nitrogen market?
A: The CCS project is expected to be finalized next year with no significant regulatory updates in Europe. The project aims to avoid EPS and CO2 taxes. Regarding consolidation, we are always looking for value-creating growth opportunities globally but have no specific comments on Western Europe.
Q: What is driving Yara's market share gains in Europe, and how sustainable are they? Also, what is the expected run rate for fixed cost savings for the rest of the year?
A: Market share gains are due to strong asset utilization and commercial performance. We believe these gains are sustainable given our competitiveness. For fixed costs, we aim for a run rate of $2.4 billion by year-end, with ongoing reductions and currency adjustments.
Q: Can you comment on the divergence between rising urea and nitrate prices and weak ammonia prices? How does this affect your business?
A: The divergence is due to different supply-demand dynamics. We are optimizing our portfolio to take advantage of low ammonia prices. Our financial exposure is minimal as we are nearly balanced in ammonia production and consumption.
Q: How do you plan to sustain market share in 2025, and what impact could European Commission tariffs on Russian fertilizer imports have?
A: We will leverage our European asset setup and commercial efforts to maintain market share. The proposed tariffs are a step towards a level playing field, potentially supporting our market position if approved.
Q: What are the key steps for the blue ammonia project's FID timeline, and what is included in the uncommitted growth CapEx for this year?
A: Key steps include technical evaluations and market assessments. The uncommitted growth CapEx of $150 million is for potential opportunities with significant returns, but no specific plans are currently in place.
Q: How has the closure of competitor capacities in Europe affected Yara's market share, and is this sustainable long-term?
A: Competitor closures have allowed us to regain market share, primarily against imports. This structural shift in European nitrogen production is likely sustainable, supporting our long-term market position.
Q: What is Yara's strategy for green ammonia demand in Europe by 2030, and how do you plan to meet it?
A: We are exploring green ammonia projects and collaborations globally. Our pilot project in Portkin provides technical and market insights, and we are evaluating offtake opportunities to meet European demand.
Q: How does Yara view the potential impact of Japan's blue ammonia initiatives and the US 45Q tax credits on its business?
A: Japan's commitment to blue ammonia remains strong, with expected subsidy schemes. The US 45Q tax credits have bipartisan support, and we are monitoring any potential changes closely.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
