Yara International, one of the world’s largest fertilizer producers, saw its shares drop around 6% on Friday after the company reported first-quarter earnings that fell short of analyst forecasts.
Yara’s earnings before interest, tax, depreciation, and amortization (EBITDA), excluding one-off items, declined by about 11% year-over-year to $435 million, lagging the $509 million expected by analysts in a company-provided poll.
Despite a 37% increase in deliveries in Europe compared to the same quarter last year, Yara’s sales in the region remain significantly below pre-Russia-Ukraine conflict levels. CEO Svein Tore Holsether attributed this to the “extremely volatile environment” where farmers are facing difficult decisions amid high inflation, high interest rates, and significant swings in crop prices, leading them to delay fertilizer purchases.
Yara said natural gas, a major cost of production for fertilizer makers, is expected to be $120 million and $5 million cheaper in the second and third quarters, respectively, than at the same time a year ago. However, wet weather in much of continental Europe has also hampered farmers’ ability to apply fertilizers.
Holsether declined to provide a price outlook, and analysts were not encouraged by the company’s comments. Norne Securities analyst Tomas Skeivys said in a note to clients that “Yara’s Q1 report was on the negative side with a rather large miss on figures and not so encouraging outlook comments anymore.”
Yara’s shares closed 6.3% lower at 0725 GMT, underperforming the flat Oslo benchmark index. The stock has fallen by 28% in the last 12 months, while Norwegian stocks on average have risen around 13%.