Fertiliser manufacturer Yara international has reported a fall in full year 2017 profitability, as sales prices remained stable while production costs rose by 22%. But there was a marked improvement in Q4 profitability.

The Norwegian multinational made a full year net income of NOK3.94 billion on revenues of NOK93.81bn in the year ended December 31st 2017, compared to NOK6.36bn and NOK97.17bn in 2016. At Q4, it made a net income of NOK0.85bn on sales of NOK23.93bn, from the net loss of NOK333m on sales of NOK22.3bn in the final three months of 2016.

The company says its 2017 margins were lower year-on-year as the average cost of its gas raw material increased by 22%, while average product prices were only marginally higher than in 2016. Nitrate prices increased by 3%, NPK compounds were 2% lower and urea prices were in-line with 2016 values.

Yara’s global fertiliser deliveries were 3% lower than in 2016, with lower sales in North America, Brazil and Europe.  Europe’s total deliveries fell by 3% – a 2% rise in NPK deliveries failed to offset lower nitrate and urea deliveries.

In Q4 2017, nitrogen fertiliser deliveries in Western Europe were down by 7% year-on-year, although close to the five year average, while imports were down by 15%.  Yara’s production increased over the latest three months, with ammonia volumes up 5% and finished fertilizer products by 1%. Average nitrate prices increased by 20% from Q4 2016, NPK products by 6% and urea 13%.

In the current period, deliveries are stable, with imports down 1%. Yara says early buying has been relatively strong this season. Europe’s nitrate deliveries are slightly behind those in early 2016.

“Yara reports improved Q4 results with higher production, and the Yara Improvement Program ahead of schedule,” comments Svein Tore Holsether, Yara president and chief executive. “Our financial results are better, mainly due to higher market prices. However, fertilizer markets remain fundamentally supply-driven, and we remain focused on strengthening our own operations.”