Yara of Norway beats third quarter forecast, maintains cap on ammonia production
OSLO, October 20 (Reuters) – Ffertilizer manufacturer Yara YAR.OL posted higher-than-expected core profits in the third quarter on Wednesday but said high gas costs would continue to reduce the Norwegian the company’s ammonia production.
Earnings before interest, taxes, depreciation and amortization (EBITDA), excluding special items, from July to September reached $ 765 million compared to $ 558 million per year eearlierand exceeded the $ 738 million expected by analysts according to a Refinitiv poll.
Yara said higher prices for her products more than offset lower shipments and rising input costs.
Yara cut European ammonia production by 40% last month, equivalent to 1.9 million tonnes, because soaring gas prices have made European ammonia production unprofitable.
The price of gas in the first month TRNLTTFMc1 at the Dutch hub TTF, a European benchmark, has almost quadrupled this year to record levels, amid strong demand as economies recover from the pandemic and below average levels of gas in storage at the start of the winter heating season.
Natural gas is the most important cost input for chemicals and nitrogen-based fertilizers, including ammonia.
Yara said he expected to pay $ 850 million more for natural gas in the fourth quarter than a year earlier, and $ 950 million more in the first quarter of 2022 compared to the same period of 2021. .
However, since Yara is reducing her ammonia production in Europe, she is buying less gas and therefore the cost impact, Yara said, would depend on the length of the reduced output.
Yesara said it expects an “even tighter market situation” for nitrogen in 2022 due to high demand and reduced production in Europe.
“European nitrogen production is essential for global food security, and we are therefore concerned about the impact that current European natural gas prices will have, in particular for the poorest regions of the world,” said the CEO Svein Tore Holsether in a statement.
Yara has the capacity to produce 8.6 million tonnes of ammonia per year in its factories, more than half of which – 4.8 million tonnes – in Europe.
It has an overall production capacity of just under 23 million tonnes of finished products used to fertilize crops but also as explosives and clean diesel engine exhaust, among other applications.
Almost three quarters of Yara’s finished products are made in Europe, where the company’s two largest factories are located, in Sluiskil in the Netherlands and in Porsgrunn, Norway.
(Reporting by Victoria Klesty and Gwladys Fouché; editing by Nora Buli and Jason Neely)
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