Fertiliser giant, Yara, has reported improved returns in the first quarter of this year, despite lower deliveries.
In a report, it revealed that its first-quarter operating income was USD 1,039m. This is compared with USD 322 million in 2021, which equates to a circa three-fold increase.
First-quarter EBITDA excl. special items were USD 1,346 million, compared with USD 585 million in the same period last year.
Furthermore, its net income attributable to shareholders of the parent was USD 944 million (USD 3.71 per share). This compares with USD 13 million (USD 0.05 per share) a year earlier.
In a statement, Svein Tore Holsether, president and CEO of Yara, said:
“Yara’s business model is robust and is performing well also in a volatile situation. I want to give credit to our employees for their hard work to sustain our operations and deliveries amid war, supply disruption and market price volatility.”
“Although Yara’s business is flexible and resilient, the impact of the war on global food security will be dramatic.”
“We repeat our calls for government action to strengthen food supply chains and decrease dependency on Russia,” Holsether added.
Yara said its industry fundamentals are robust, as the twin challenges of resource efficiency and environmental footprint require “significant” transformations within agriculture and the hydrogen economy.
Yara said that its “leading” food solutions and ammonia positions are “well placed” to both address and create business opportunities from these challenges.
The war in Ukraine, it acknowledged, is having “major” impacts on both the food and fertiliser industries.
Russia and Ukraine, it said, are “significant” in the global food value chain, representing a major portion of world’s production and export of grains.
Furthermore, Russia is one of the world’s largest producers and exporters of natural gas and essential crop nutrients.
War and production
Yara confirmed that has stopped all sourcing from suppliers linked to Russian sanctioned entities and persons.
It stated that it is using its global sourcing, production, and distribution capabilities to keep supplying customers and secure continuity in food supply chains.
As a result of the high gas prices, the company curtailed production at several of its European ammonia and urea facilities in early March.
However, it confirmed that it has resumed production as the “margin situation improved”.
Concluding, a spokesperson said:
“While raw material price increases in isolation are negative for Yara, higher-end product prices create offsetting positive effects, as higher grain prices improve farmers’ profitability and demand incentives for agricultural inputs.”