Improved risk/reward, up to Buy
We have raised our Q1/20 estimates marginally in this preview, while our FY/20 and FY/21 estimates are up by ~ 11% as lower gas prices and favourable FX assumptions more than offset lower price assumptions. Although uncertainty is high, we believe the Qafco divestment increases the likelihood for the proposed dividend payment this spring. We upgrade the stock to Buy (Hold) while reiterate our NOK 400 target price.
22 Mar 20
Yara’s management seems to have implemented the right measures and (financial) metrics move in the right directions. Near-term future looks like a dream come true. Gas prices had a strong positive impact in 2019 and are expected to have one in (early) 2020. This made management confident and prepared to make shareholders happy with the ‘usual’ gimmick: higher dividend (+131%) and a (small) share buyback. Reported figures were above our expectations (especially EBITDA), whereas the consensus was not met at the top-line.
07 Feb 20
Yara’s Q3 figures were again positively impacted by lower energy prices, whereas deliveries were down, especially in Europe and Brazil, and there were lower sales prices for some key products. Contrary to this, the higher-margin product mix gave an additional profitability push. The company announced a kind of moderate share buy-back for an expected total volume of NOK800m (c.USD87m). The Q3 figures confirmed our view on the company and broadly met consensus.
18 Oct 19
Lower energy costs for gas in Europe were a significant help to Yara’s margins and the higher output from own production (and finally the delivery) gave an additional push. Due to the business model, gas prices remain an issue, but 2019 is expected to benefit from lower spot gas prices also in Q3 and Q4. The reported figures confirmed our positive view on the company and consensus was beaten.
16 Jul 19
Yara reported a strong set of operating figures, which were above our expectations and above consensus, which is based on some company-related definitions. However, sales prices and moderately rising energy prices were dampeners. The financial result’s performance was poor, generating a large loss. The company implemented a new reporting structure as of 1 January 2019 but also provided the previous year’s figures.
26 Apr 19
Good performance in Q4
Yara faced a more than nice Q4 push with higher sales and EBIT, which were not enough to push the FY EBIT over the finishing line of our FY expectations. However, the company’s strategy to focus on higher-margin premium products turned out to lift profitability, accompanied by the positive effects of the cost-cutting measures.
08 Feb 19
Energy prices become a more demanding issue
Higher energy prices (primarily all types of gas) have partly eaten the positive effect of higher selling prices. What is also remarkable is the USD710m swing in NWC flows qoq (Q2: USD383m; USD-327m). Despite the higher production volumes and higher market prices, profitability was hit more strongly than expected, but Yara’s Q3 figures continue to fit into our broad picture. Consensus was missed at all profitability levels.
18 Oct 18
Stronger NWC inflow
We are a bit puzzled about Production’s strong decline in profitability, which doesn’t appear to be explained well to us. We assume unfavourable FX developments and higher energy costs (gas) in Europe had burdened the division’s earnings. Therefore Yara’s Q2 figures clearly did not meet our expectations, but matched or beat at some levels.
18 Jul 18
No good into 2018
Yara reported +5% higher sales to USD2,838m, but the ‘gross profit’ margin declined from 26.4% to 25.8%, due to higher energy costs. EBITDA (-4% to USD366m) benefited from higher D/A as EBIT dropped. Net profit attributable to shareholders dropped 42% to €113m. By contrast, operating CF doubled (€234m after €114m), driven by higher D/A (€210m after €170m) and significant lower tax payments as NWC outflows (€-164m after €-138m) dampened the performance. Investing CF spurted from €-303m to €-736m, primarily fuelled by the acquisition of Tata Chemicals’ urea business in India for €-412m. Financing CF went up strongly (€456m after €72m), propelled by the higher net cross debt proceeds. Management did not provide FY guidance, but did shade some light on various business aspects.
20 Apr 18
FY17: slightly improved prices vs higher energy costs
The FY results are not particularly exciting, with all the benefits of stabilising or even somewhat higher prices towards the end of the year eaten up by increasing energy costs. We see no fundamental change to the evolution of the group’s end markets in the foreseeable future, which explains why our numbers are unlikely to change dramatically.
08 Feb 18
Q3 17: nice volumes, prices “only” stabilising
Yara released Q3 17 numbers. Revenues reached NOK23,769m (-0.5%), EBITDA NOK2,386m (-21%) EBIT NOK694m (-48%) and net income NOK709m (-13.5%). Net debt at the end of Q3 17 was NOK16,476m vs NOK16,831m in H1, NOK14,454m in Q1, NOK12,802m at the end of FY16.
19 Oct 17
Weak Q1 17 numbers on low prices again
Revenues in Q1 17 reached NOK22,835m (-8.8%), EBITDA NOK3,216m (-36.4%) EBIT NOK1,524m (-55.2%) and net income NOK1,692m (-39.9%). Net debt at the end of Q1 17 was NOK14,454m (NOK12,802m at the end of FY16 and NOK8,465m a year ago).
26 Apr 17
FY16 weak; more cost-cutting ahead
FY16 results. Revenues reached NOK97,170m (-13.2%), EBITDA NOK15,563m (-27.1%) EBIT NOK9,149m (-36.5%) and net income NOK6,380m (-21%). Net debt at the end of FY16 was NOK12,802m vs NOK11,868m a year ago. A dividend of NOK10 will be proposed.
09 Feb 17
Prices still weighing: our valuation has to go down
Yara released its H1 16 results. Sales were down 8.6% to NOK50,919m, EBITDA up 5.7% to NOK10,544m (and down 16.6% excluding special items, mainly the gain on the disposal of the CO2 business), operating income down 8.4% to NOK6,915m and net up 61% to NOK5,972m. Net debt amounted to NOK9,698m at the end of H1 vs NOK11,868m at year-end 2015 and NOK8,465m in Q1.
21 Jul 16
Q1 16: unchanged story
Sales reached NOK25,053m (-9.8%), EBITDA NOK5,055m (+5.4%), EBITDA excluding special items NOK5,050m (-12%), operating income NOK3,403m (-14.7%) and net income NOK2,800m (vs NOK729m). Note special items at the EBITDA level included last year the write-down of assets (Lifeco). The strong increase in net results is due to the sharp forex loss booked in Q1 15 (NOK1.8bn). Net debt at the end of Q1 16 reached NOK8,465m (vs NOK11.8bn at the end of FY15).
21 Apr 16
FY15 results confirm the difficult price situation
Yara reported FY15 results. Revenues reached NOK111,897m (+17.3%), EBITDA NOK21,361m (+30% and +14.3% excluding special items), operating income NOK14,104m(+368%) and net income NOK8,083m (+6%). Net debt at year-end 2015 reached NOK11,868m after the acquisition of the Pilbara minority interests. The dividend proposed will be NOK15 (vs NOK13). The group did not make a real outlook public, only stating that energy savings should amount to NOK900m and NOK1,050m in Q1 and Q2 16 respectively.
11 Feb 16
9m figures in line; pressure still on prices
Yara's 9m figures show sales up 24.7% to NOK86,176m, EBITDA up 51% to NOK17,857m, operating income up 76% to NOK13,149m and, finally, net income up 33% to NOK 7,649m. Net debt at the end of Q3 stood at NOK4,401m vs NOK10,471m in Q2, including the GrowHow disposal (net positive impact of NOK4,794m).
21 Oct 15
H1 15: nice results, only due to forex and energy, though
Yara released H1 15 results showing a +23.7% increase in sales to NOK55,697m, a +27.6% and +47.4% increase in EBITDA and operating income respectively (NOK9,973m and NOK7,546m) while net profit was actually down 11.2% to NOK3,646m after non-controlling interests. Net debt at the end of H1 15 stood at NOK10,471m (NOK8,985m last year).
21 Jul 15
Yara to sell its 50% interest in GrowHow UK
Yara has agreed with CF Industries (US) to sell its stake in GrowHow UK Group Limited ("GrowHow") for a total EV (50% basis) of US$648m, of which US$68m relates to an unfunded pension liability (or c. NOK5.2bn for the total transaction). For te sake of clarity, this implies US$1,296m or 100% of GrowHow UK. Remember Yara owned 50% of GrowHow UK, together with....CF Industries.
01 Jul 15