Lower energy costs have helped to increase global fertiliser manufacturer Yara International’s earnings at Q1, despite lower revenues.
The company made an operating income of $248 million on revenues of $2.85 billion in the three months to the end of March 2020, compared to the $198m and $3.01bn from Q1 2019. But net income was a negative $117m from the positive $96m a year earlier, largely attributed to the effect of the US dollar strengthening through the quarter. Finished fertiliser volumes in the period were 3% lower at 1.92m tonnes (2.17m tonnes in Q1 2019).
The Norwegian multinational reports that revenues fell in line with lower prices for its Nitrogen and Phosphate fertiliser lines, but this was more than offset by a sharp reduction in its natural gas raw material costs.
The spring planting and nutrient application season has led to strong demand for its products in the Northern Hemisphere, with demand for N and NPK products in Europe 3% higher year-on-year. The first quarter saw Nitrogen deliveries alone rise 7% in Western Europe.
The long-term global outlook is for continued growth in the demand for food and consequently fertilisers, notes the company. Food demand is historically unaffected by periods of crisis such as the coronavirus pandemic.
“Yara delivers improved results, with first-quarter EBITDA excluding special items up 9%,” reports Yara president and chief executive Svein Tore Holsether. “Yara’s operations are running close to normal and the results mainly reflect higher deliveries with Northern hemisphere planting and application progressing well.
“Thanks to a strong organizational effort and good collaboration with authorities globally, we have managed to ensure continuity in the supply of agricultural inputs. We are also seeing strong demand growth for our digital offerings, in a situation where physical farmer interactions are reduced.”
• Yara has completed an internal review to explore the possible divestment of its non-core industrial nitrogen businesses. It has decided to retain the activities, but within a new Industrial Holding division within the group having separate governance and increased autonomy. This will comprise the existing New Business segment together with the Brunsbüttel, Le Havre, Köping and Cubatão production plants.