EBITDA beats consensus on strong pricing Yara reported Q1 2022 EBITDA of USD1.35bn, 19% ahead of consensus expectations. The beat was driven largely by pricing realizations while gas headwinds were largely in line. Volumes were below expectations and down c11% y/y, driven mainly by lower European deliveries. This was attributed to demand destruction with farmers hesitant to make purchases in the current pricing environment. The beat on EPS was much more significant (+32%) owing to USD223m net currency translation gain. FCF conversion under pressure from working capital but leverage remains in check Free cash flows came in at USD135m compared to our forecast of USD267m and USD368m last year. This left FCF conversion at c10%, down from c63% in Q1 2021. As was the case during H2 2021, FCF was pressured by sizeable outflows in working capital due to the steep increase in raw material inflation. We expect FCF to remain under pressure during 2022 despite Yara generating near record levels of EBITDA with capex set to increase during H2. Potash sourcing and demand destruction remain key debates Management was confident that it can navigate any shortages in potash and avoid production cuts in NPKs following its decision to stop sourcing from Russia and Belarus. Demand was also a key point of focus with European deliveries having declined 24% in Q1. Yara were rather upfront in ascribing volume weakness to demand destruction and appears to be the most clear indication to date from the fertiliser names in our coverage that this risk is starting to come to fruition. Estimate changes We increase our EBITDA estimates by c2% on average across FY22/23/24. This partly relates to Yara''s Q1 beat, along with smaller upgrades to H2 2022. Our price target remains unchanged at NOK425 and we retain our Underperform rating on the shares.