Yara, Europe’s largest fertiliser company, delivered weaker 2017 results compared with a year earlier. Profit (EBITDA) for the year excluding exceptional items was down 18% to NOK11.8bn (€1.2bn) compared with a year earlier.

The Norwegian fertiliser maker reported revenues down 3.5% to NOK93.8bn (€9.6bn), while operating income fell 57% to NOK3.8bn (€391m). Operating margins more than halved from 9% to 4% during the year. Yara blamed increased gas costs (which were up 22%) for the fall in margins, which was not made up for by the increase in fertiliser prices. Nitrate prices increased 3%, compounds were 2% lower while urea prices were in line with 2016.

Missed expectations

While Yara reported improved performance compared with a year earlier in the last quarter of 2017, the company missed fourth-quarter earnings expectations as cost cutting and rising prices gave a smaller than expected boost to profits. Yara's average realised nitrate prices increased 20% in the last quarter compared with a year ago.

“The current profitability is negatively impacted by the supply-driven commodity fertiliser markets and Yara’s high ongoing investment activity in growth projects, where most will start to generate earnings during 2018,” the company said.

While fertiliser volumes held up during the year, deliveries to both Europe and Brazil were down, as deliveries to the rest of South America and Asia increased.

In 2016, Yara set about taking $500m (€400m) of costs out of its business by 2020. It has so far achieved cost savings of $240m (€195m) through greater throughputs, higher volumes, improved energy efficiency and reduced procurement costs.

The Oslo-listed company saw its share price rise 12% in the last six months, mainly due to the rise in the price of nitrogen fertiliser during the autumn. The shares are up marginally (3%) in the last 12 months.

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