Q3: EBITDA beat, FCF weak Yara reported Q3 adj EBITDA of USD765m, 4% ahead of consensus. Underlying dynamics did not surprise with pricing offsetting natural gas headwinds. Volumes were a small headwind with management indicating that farmers are hesitant to make purchases this early on in the season. Despite the outperformance on earnings, FCF slipped below expectations. This was driven by a sizeable working capital outflow with inventories in particular coming in higher than expected. It''s all about ammonia Unsurprisingly a lot of the focus on the call centred upon Yara''s curtailed ammonia capacity in light of the European gas crisis. As things stand it looks like Yara is procuring enough ammonia to maintain downstream production while management does not envisage any bottlenecks. However, with the ammonia market becoming increasingly tight, we still see potential risks to finished product production. Net pricing for Q4 looking incrementally better Yara''s guidance for a USD850m natural gas headwind for Q4 was below our estimate of USD1bn. We note that the company''s guidance was based on production from Q420. When adjusting for lower gas purchases and factoring in the cost of purchasing ammonia externally, we come to a total headwind (i.e energy and purchased ammonia) close to our original estimate. Expect continued weakness in FCF during Q4 We expect another quarter of negative FCF during Q4. Yara''s new capex guidance (USD1.1bn), implies a significant sequential step up in expenditure, while inventory investment will see little reversal due to higher gas and product prices. Hence, we see little scope for incremental earnings upgrades being converted in to FCF. Our EBITDA forecasts increase by c3% for FY21/22, relating mainly to the Q3 beat. We maintain our Underperform rating at a price target of NOK380.