Yara International ASA

Yara reported second-quarter EBITDA excluding special items of $906 million, up 39% year over year, and said this was its highest quarterly EBITDA in the last decade except for 2022. The company also booked a $153 million gain from selling surplus EUA quotas as a special item; EPS rose 84% year over year, and ROIC was 14.3% versus 7% last year. Crop nutrition deliveries were 17% below the same quarter last year, and management cited a $240 million negative volume impact plus a $120 million impact from demand deferral. Free cash flow for the quarter was $583 million, net investments were $100 million, and net debt stayed relatively stable. For the third quarter, management said Pilbara will be out for about a month for scheduled maintenance, while demand has started to recover and prices have rebounded; no formal quantitative revenue or EPS guidance was given.

Svein Tore Holsether framed the quarter as evidence of improved competitiveness and disciplined execution, while emphasizing that safety remains a major concern after a rise in accidents. He said Yara is focused on capital discipline, returns-focused allocation, and maintaining a robust balance sheet, and positioned the Gulf Coast Ammonia deal as a strategic step that fits that framework. His tone was confident but cautious, acknowledging demand deferral and market volatility while pointing to improving buying activity and stronger prices late in the quarter.

Magnus Krogh Ankarstrand said the quarter’s earnings improvement came mainly from increased nitrogen upstream margins, with EPS up 84% and ROIC at 14.3%. He noted a $153 million cash effect from divesting 1.7 million EUA allowances, a small buildup in operating capital because of delayed season start and higher prices, and free cash flow of $583 million. He also said fixed cost rose by $8 million quarter over quarter, versus estimated inflation of about $35 million, and that the last 12 months currency effect was roughly $65 million. On the acquisition, he described GCA as highly competitive, energy efficient, and consistent with maintaining a strong balance sheet and attractive shareholder distributions.

Analysts focused on why the margin result was below outside-in estimates, whether Q3 pricing lags should change, the rationale for selling EUAs, and how demand deferral versus destruction should be interpreted. Management said the main reason for the margin shortfall was volume timing and weighting against weekly price references in a very volatile market, and did not recommend changing lag assumptions materially. On EUA sales, they said the decision was mainly financial risk management, not speculation, and that the company’s long EUA position still extends through 2029 assuming current emissions, especially after CCS Sluiskil. They also said Q3 should see Pilbara maintenance, while European and Latin American demand were showing signs of recovery after deferred buying.