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05 Apr 2024
Arctic: Yara - Poor European weather hurting Q1 demand recovery
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Arctic: Yara - Poor European weather hurting Q1 demand recovery
- Published:
05 Apr 2024 -
Author:
Jeppe Baardseth -
Pages:
26
Yara will release its Q1 results on 26th April, and we expect an EBITDA (Yara definition) of USD 478m vs consensus at USD 536m. While we continue to see uncertainty related to volume deliveries, we have witnessed stable to firm urea prices despite lower EU gas prices year-to-date. We expect the lower EU gas prices and declining farmers' affordability to increase pressure on fertilizer prices in H1, offset by improved weather conditions in Europe and a strong market balance in the US. While we expect the pickup in demand to postpone from Q1 to Q2 due to weather challenges in Europe, we continue to expect pent-up demand following low inventory and strong demand heading into the peak planting/seeding season. We continue to expect a tighter market going forward following slower supply growth (excluding China) and limited export volumes from China. We reiterate our Buy recommendation with a TP of NOK 400 (410), implying a 2025 P/E of 11x, in line with the historical average of 11x.