Yara’s Q1 2024 earnings missing expectations sent its share price down

Yara International, a leading global fertilizer manufacturer, reported a significant miss in its first-quarter profit forecasts on Friday, with shares falling by approximately 6%. The company experienced a downturn in earnings before interest, tax, depreciation, and amortisation (EBITDA), excluding one-off items, which declined by about 11% year-on-year to $435 million. This figure fell short of the anticipated $509 million projected by analysts in a poll provided by the company.

In Europe, Yara achieved a 37% increase in deliveries compared to the same quarter last year, aided by lower energy prices which enhanced production affordability. This allowed the company to regain market share from imports of fertilizers, according to CEO Svein Tore Holsether in a statement to Reuters. Despite these gains, Yara’s sales levels in Europe remain substantially lower than those seen prior to Russia’s full-scale invasion of Ukraine in 2022.

Holsether highlighted the challenges faced by farmers in the current economic climate, noting the volatility in crop prices and the impact of high inflation and interest rates on purchasing decisions. “Farmers are likely delaying their buying of fertilizers,” he remarked, underlining the uncertain market conditions.

Additionally, Yara reported that natural gas costs, a significant production expense, are projected to be considerably lower in the upcoming quarters compared to the previous year. However, wet weather across much of continental Europe is currently hindering farmers’ ability to deploy tractors and utilize fertilizers effectively.

Despite the positive delivery performance, the company refrained from providing a future price outlook. Tomas Skeivys, an analyst at Norne Securities, described Yara’s Q1 report as disappointing, with a significant shortfall in figures and a less optimistic outlook. At 0725 GMT, Yara’s shares were down 6.3%, underperforming against a stable Oslo benchmark index. Over the past 12 months, Yara’s stock has declined by 28%, while Norwegian stocks overall have seen an average increase of about 13%.