Earnings call transcript: Yara International Q3 2025 sees strong EBITDA growth

Yara International reported a robust financial performance in Q3 2025, with EBITDA reaching $804 million, a 38% increase year-on-year. Adjusted earnings per share rose significantly to $3.25, compared to $1.37 in the previous year. The company maintained a positive outlook, targeting double-digit returns on future investments. Currently trading at $13.70, InvestingPro analysis suggests the stock is undervalued, offering an attractive 6.73% dividend yield. The stock’s relatively low beta of 0.82 indicates lower volatility compared to the broader market.

Key Takeaways

• EBITDA increased by 38% year-over-year to $804 million.
• Adjusted earnings per share surged to $3.25 from $1.37.
• Yara International continues to focus on cost reduction, targeting $180 million by Q4 2025.
• Strong nitrogen market fundamentals and demand-driven urea market.
• Capital Markets Day scheduled for January 9, 2026, to discuss future strategies.

Company Performance

Yara International demonstrated strong performance in Q3 2025, driven by a significant increase in EBITDA and adjusted earnings per share. The company achieved a return on invested capital of 12.6%, exceeding its through-the-cycle target of 10%. This performance underscores Yara’s effective cost management and strategic focus on operational efficiency. InvestingPro data reveals the company maintains a FAIR financial health score of 2.25, with particularly strong metrics in relative value and cash flow management. Discover 12 additional exclusive ProTips and comprehensive analysis with an InvestingPro subscription.

Financial Highlights

• Revenue: Not specified in the available data
• EBITDA: $804 million (+38% YoY)
• Adjusted earnings per share: $3.25 (up from $1.37 YoY)
• Cash flow from operations: Increased by $32 million
• Return on Invested Capital (ROIC): 12.6%

Outlook & Guidance

Yara International remains optimistic about its future, with plans to invest in U.S. ammonia production in the first half of 2026. The company aims to maintain double-digit returns on new investments and continues to prioritize resource efficiency and margin expansion. With total revenue of $2.62 billion in the last twelve months, investors should note the next earnings announcement is scheduled for November 6, 2025. The upcoming Capital Markets Day in January 2026 will provide further insights into Yara’s strategic initiatives. Access detailed financial forecasts and expert analysis through InvestingPro’s comprehensive research reports, available for over 1,400 top stocks.

Executive Commentary

CEO Svein-Tore Holsether emphasized the importance of safety and asset productivity, stating, "Safety requires continuous focus, and we will improve our performance." He highlighted Yara’s commitment to margin expansion, saying, "We continue to take steps to expand margins by diversifying energy cost and leveraging scale and operational efficiencies across our global network."

Risks and Challenges

• Potential impact of softer crop prices on farmer profitability.
• Medium-term constraints in urea capacity could affect supply.
• Macroeconomic pressures and market volatility.
• Ongoing need for investment in decarbonization efforts.
• Workforce reductions and asset mothballing may impact operations.

The earnings call did not provide specific Q&A details, but Yara International’s strategic focus on innovation and efficiency positions it well for future growth. As the company continues to navigate market challenges, its commitment to sustainability and operational excellence remains a key driver of its success.

Full transcript - Yara International ASA S (YAR) Q3 2025:

Maria, Moderator/Presenter, Yara International: Welcome to Yara International’s third quarter results presentation. The presentation today will be held by our CEO, Svein-Tore Holsether, and our CFO, Magnus Krogh Ankarstrand. At 1:00 P.M. after the presentation, there will be a conference call where you can dial in and ask questions to management. You can find login details under yara.com and investors. With that, it’s my pleasure to hand over to our CEO, Svein-Tore Holsether.

Svein-Tore Holsether, CEO, Yara International: Thank you, Maria. Good morning, good afternoon, and good evening, depending on where you’re dialing in from. Thank you for joining our third quarter results presentation. As always, we start by looking at our safety performance. Yara must be a safe place to work for our colleagues and contractors. This is, has been, and will continue to be our main priority. However, our safety performance so far in 2025 has not continued the positive trend we’ve seen in the last years. In August, we experienced a tragic loss of a colleague following a serious accident at the Rio Grande plant in Brazil. This accident is unacceptable, and we express our deepest condolences to the family, to friends, and to all colleagues. In Yara, we have our Safe by Choice way of working, and we have golden rules for safety behavior to protect us.

Amaral, our colleague who died in the accident, followed all our rules. In fact, he was on his way back to his workstation when he was struck by a roof structure that collapsed. When our colleagues follow the Safe by Choice way of working, accidents should not happen. It is our, it is my responsibility to ensure that we offer a safe place to work. On August 6, for Amaral, we did not do that, and that is my responsibility. A comprehensive investigation is underway, and Yara is fully committed to implementing all necessary measures to prevent such events from happening again. We must never compromise on safety, and targeted initiatives are also underway to strengthen the Safe by Choice program, including enhanced training, deeper learning from accident investigations, and regular safety reviews.

We have addressed this immediately within the organization, and we have taken action to strengthen our focus and execution on Safe by Choice, making sure that the basics and that the routines are in place. Safety requires continuous focus, and we will improve our performance. We remain committed to achieve our ambition of zero accidents. Moving to the key elements of our third quarter, with continued improvements in operational performance, we’re pleased to deliver another strong quarter. Yara delivered an EBITDA, excluding special items, of $804 million, reflecting an increase of 38% compared to the same quarter last year. Margins increased this quarter, driven by supportive market fundamentals, but also strong commercial performance. In addition, we continued to deliver strong progress on our cost reduction program, and we’re already ahead of our original program target, and we’re now targeting $180 million cost reduction to be achieved by fourth quarter 2025.

Underlying production performance is at record levels again this quarter, breaking the previous record which was set just one quarter ago. Increasing asset utilization is the most value-created growth we have and the most effective way to increase capital returns. Adjusted earnings for the first half of 2025 are $3.25 per share compared to $1.37 per share a year ago. This clearly demonstrates our commitment to increase profitability through strong and consistent focus on improving our core operations. Turning now to the EBITDA variance for the quarter, volumes were stable this quarter as slightly higher crop nutrition and ammonia deliveries were offset by lower industrial deliveries. Underlying market fundamentals remain supportive with stable gas prices and increased nitrogen pricing. Our commercial teams have been able to position our portfolio well in the market.

Price margin is impacted somewhat by slightly lower premiums on nitrates and NPK as pressured farmer affordability puts an additional pressure on premiums, especially in the pre-buying season. Fixed costs are $40 million lower than a year earlier, reflecting continued progress on the cost program. We have a larger than normal impact from other this quarter beyond $17 million in currency. This is mainly driven by positive one-offs last year that we did not have this year, such as the divestment of our operations in the Ivory Coast and insurance compensation in Bell Plain. In addition, we had write-downs linked to smaller projects. Quarterly return on invested capital, or ROIC, is at 12.6% and above our through-the-cycle target of 10%. This marks a solid increase from one year ago and is a testament to the work we’re doing to improve underlying returns.

I would like to thank all my colleagues for their strong contributions to make this possible. Let’s then take a closer look at the return on invested capital. Since the launch of the cost and CapEx reduction program, we have seen a steady ROIC improvement driven by structural improvements such as closure of assets that are not yielding sufficient returns. In addition, we have been supported by favorable market conditions. ROIC for the quarter is at 12.6%. Results over the last 12 months have been impacted by a settlement loss on the Dutch pension fund of approximately $100 million in the fourth quarter last year. In addition to restructuring provisions related to our cost program, excluding these special items, the ROIC in the last 12 months is at 10.3%. This is in line with our target of 10% through the cycle.

The cost and the CapEx reductions are having a significant effect, and they represent two percentage points of that increase compared to the second quarter 2024. Going forward, increased capacity utilization, continued strict capital discipline, and portfolio optimization will support further underlying ROIC improvement. We remain committed to deliver a 10% ROIC through the cycle. Nitrogen prices are currently demand-driven and at high levels compared to historical averages. This is driven by a continued tightening of the supply-demand balance, which we expect to continue. The increase in nitrogen pricing is well reflected in our results and drives increased margins despite a compression on premiums. In a higher price environment, the market values the premium attributes of yield, quality, and the supply certainty that Yara provides worldwide. It is typical to see lower premiums in a high-price environment, while overall margins expand.

As such, the regions have delivered a strong commercial performance this quarter while upholding deliveries. We are, however, concerned for farmer profitability going forward with softer crop prices, trade disruptions, and a high regulatory burden on farmers. We continue to deliver a strong production performance, and I’m very pleased to see that yet again we’re setting new records, closing in on the 2025 target that we set back in 2019. Production of finished products has increased by 1.6 million tons since 2019, excluding portfolio effects. This translates into an implied annual EBITDA increase of almost $250 million since 2019, using 2025 margins. The positive EBITDA impact is mainly driven by premium products from our most profitable and future-proofed plants. I note that these volumes reflect underlying production, not necessarily matching actual production, as we adjust for any market-driven curtailments.

The continued strong trend in production performance demonstrates that our sharpened focus on core operations is consistent and sustainable. We continue our progress on reducing our greenhouse gas emission intensity as well, and we are on track to reach the 2025 target. Reduced greenhouse gas intensity is an important driver for sustainable market improvement, as higher efficiency leads to both lower gas costs and lower ETS costs. Combined, this represents an annual EBITDA improvement of over $100 million compared to 2018, our baseline year. Our portfolio of more than 80 executed greenhouse gas emission reduction investments has contributed to profitably decarbonize Yara’s operations. During 2025, the total investments for the combined portfolio were already paid back. Increasing our asset productivity is the most capital-efficient growth for Yara and drives higher returns. I’ll now hand over to our CFO, Magnus Krogh Ankarstrand.

Magnus Krogh Ankarstrand, CFO, Yara International: Thank you, Svein-Tore. As explained earlier, EBITDA, excluding special items, is up $230 million compared to last year, mainly reflecting improved margins and lower fixed costs. Following that strong underlying performance, earnings per share, excluding currency and special items, almost doubled to $1.33 for the quarter. As we have already touched upon, the return on invested capital increased by 1.1 percentage points to 8% on a 12-month rolling basis, whereas the quarter in isolation was at 12.6%. That means that our run rate takes us above our target 10% ROIC over the cycle. However, we remain committed to further improvements to ensure we can sustainably stay at this level. Looking to the cash flow, cash flow operations increased by $32 million compared to a year earlier, as a higher operating income was offset by a buildup of operating capital in the quarter.

Seasonal buildup of operating capital is common in the third quarter and fourth quarter, and the actual net change in operating capital depends on volume, but also price environment. The increase in net operating capital in the third quarter compared to last year partly reflects our improved production levels, but mostly the general increase in nitrogen and phosphate values through the quarter. On the investment side, our cash outflow decreased by $26 million compared to last year, reflecting our strict capital discipline. Turning to the segment results, we saw improved EBITDA and return on invested capital across all segments except for global production, which had a slight decline in ROIC. Rolling 12 months ROIC for global production is impacted by the fourth quarter settlement of a Dutch pension fund, which was a non-cash event last year. Excluding this, the YGP ROIC would have been 7.8% and improved since last year.

Europe saw a strong increase in EBITDA following higher margin on nitrogen and phosphate and lower fixed costs. Returns in Europe the last 12 months are impacted by restructuring costs and environmental provisions. Looking at European ROIC for the last 12 months, excluding special items, we end up at 7.1%, reflecting the effects of the underlying improvements. However, this is still not at a satisfactory level, and core to increase this is to continue improving resource efficiency, optimize the asset portfolio, and seek further margin expansion opportunities. The Americas’ EBITDA increased by 33%, driven by higher margins and increased sales of premium products. The region continues to deliver strong return on capital. Asia & Africa continue to deliver strong results with a 10% increase in EBITDA and a ROIC above 20%, as strong commercial margins more than compensated for lower deliveries.

The strong commercial performance and premiums in Asia continued this quarter and was a key contributor to the results. Please also note that the Pilbara plants no longer are reported as part of Yara Africa & Asia, and Pilbara ammonia is now reported as part of global production, whereas Pilbara nitrates is in the Industrial Solutions P&L. Turning to YGP, we see a significant EBITDA improvement of more than 70%, reflecting record production levels, increased ammonia and urea prices, as well as improved phosphate upgrading margins. Industrial Solutions’ EBITDA increased by 8%, mainly reflecting one-off costs in Brinspyttel last year. Lastly, clean ammonia delivered higher results following increased ammonia prices, higher deliveries, and lower fixed costs. While returns are improving, we maintain our focus on increasing returns further to ensure delivery of our 10% through the cycle target.

Looking at deliveries for the quarter, they are in line with the year before, as slightly higher crop nutrition and ammonia deliveries were offset by lower Industrial Solution deliveries. Deliveries were mainly driven by higher nitrogen deliveries in Europe and higher NPK deliveries in Brazil. Maintaining deliveries during off-season in Europe and a difficult farm economy environment is a significant achievement for this market. Africa & Asia deliveries were down, driven by lower sales of nitrates in Africa and NPK in China, however, maintaining total margin in both markets. The lower industrial deliveries mainly reflect the hibernation of non-profitable assets in Brazil and has limited EBITDA impact. The improvement program continues to deliver ahead of plan, with a further reduction of $38 million in the last 12 months. This means that we are ahead and targeting to deliver a $180 million end-of-year run rate, excluding currency impact.

Through rigorous program management, we have streamlined our organizational setup and reduced activities in lower return areas without reducing the top line. In total, we have reduced our workforce with more than 1,650 FTEs compared to when we started the program. As we move into the fourth quarter, we expect additional cost reductions with the full-year effect of implemented measures materializing in addition to remaining measures, which will be partly offset by inflation. We are confident that we will deliver beyond our target. Looking at CapEx, the strict capital discipline continues, and we uphold the 2025 guidance of $1.1 billion. For 2026, we expect a CapEx level of $1.2 billion, in line with previous guidance, of which roughly $200 million is uncommitted and reserved for potential value-creative growth projects. Strict discipline will ensure only projects with core strategic fit and double-digit returns are prioritized.

Other growth for 2026 relates to ongoing high-return projects, mainly SlowSkill CCS, the new YaraVita plant in the UK, and upgrade of sulfuric acid production in Finland. In 2026, we will be at the higher end of our maintenance CapEx range due to major turnarounds in two of our largest ammonia plants, namely Bell Plain and Pilbara. The improvement program remains a top priority for the organization and crucial to improving our EBIT margin and returns going forward. While we have delivered on our original targets, we will continue with strict resource discipline and evaluate further optimization opportunities continuously. Looking at our net debt, we see a stable development as strong cash earnings were offset by seasonal operating capital build, driven mainly by a higher price environment. The other category mainly reflects non-cash items from new leases and currency translations.

Turning then our attention to the markets, we continue to see strong nitrogen fundamentals ahead. The urea market is demand-driven, despite some softening over the last months. Price levels remain firmly above last year, despite an expectation of around 4.2 million tons of Chinese export. As we anticipate the Chinese export window to close as they turn focus to the upcoming domestic season, India’s fresh tender is supportive of global supply and demand balances. With the European season approaching and the trend of modest pre-season imports in the U.S. over the last years, there are signs that Q1 2026 could become significantly tighter than this year. Farmer economy, however, remains a concern, with softening prices on most crops. This is driven by strong crop production and yields, which partially alleviate lower prices for the farmer.

There is, however, a contango in the market with forward prices for one year ahead 10% to 15% above current crop prices, indicating some support for improving farmer economics. On a medium-term basis, we see that new urea capacity coming on stream looks to stay well below historic consumption growth. Given the lead time to get new urea projects to completion, the supply outlook looks increasingly firm towards 2030, suggesting a strong ammonia to urea upgrading margin in the medium term. Adding to the European farmer’s burden is carbon taxation on imports, the so-called Carbon Border Adjustment Mechanism, which will be implemented in 2026. Today, 45% of the EU’s nitrogen consumption is imported, predominantly by urea, which makes up the marginal cost for European nitrogen imports. As a molecule, urea contains CO2.

The carbon footprint is therefore inherent to urea, as opposed to nitrates, which can be decarbonized through low carbon ammonia. The inherent carbon content on imported urea, combined with CBAM, is likely to introduce a further spread on European nitrogen prices above global prices. CBAM mirrors the European trading scheme on carbon and is an inseparable part of this scheme, as it levels the playing field between European producers and producers of imports to Europe, who so far have been able to compete without paying the same carbon cost as domestic production. The exact impact on nitrogen will depend on several factors, such as carbon intensity, ETS prices, and the benchmarks defined by the European Commission. Yara International has prepared for this implementation for several years and made adaptations where it has made financial sense.

As an example, we have made investments to abate N2O emissions from our nitric acid plants and energy efficiency improvements, among others. These have been relatively minor investments where we now see the financial benefits. Being below emission benchmarks has allowed us to build a bank of free allowances valued at around $500 million at current ETS prices. These allowances can be utilized against ETS payments in plants where emissions exceed free allowances for the year or sold in the market, depending on what is more financially attractive. In addition, our CCS investment in SlowSkill will be commissioned in 2026 and reduce our CO2 emissions by up to 800,000 tons annually. These reductions free sub-quotas from the bank that can also be used against emissions elsewhere or sold.

This demonstrates that Yara’s investments in decarbonization have a clear financial return requirement, which now can be monetized, and this policy will continue going forward. With respect to CBAM, Yara’s ammonia import system is set up with high flexibility. As we expect nitrogen prices in Europe to reflect the marginal import cost of urea, Yara will benefit from the adjustments made to our system over years. These benefits include duty suspension or duty-avoiding options for ammonia going into products for re-export via inboarding processing procedures, thus reducing our exposure. In addition, our largest export plant is located in Norway, which will not incur CBAM until this is implemented in 2027 at the earliest. Going beyond next year, Yara’s unrivaled ammonia import infrastructure in Europe positions us well for incorporation of decarbonized ammonia, underlining Yara’s proactive yet cautious and disciplined approach to decarbonization. I give the word back to Svein-Tore.

Svein-Tore Holsether, CEO, Yara International: Thank you, Magnus. Our global ammonia system underlines our flexibility and opportunity space with regards to renewing our ammonia production. Yara has the largest import infrastructure for ammonia in Europe, and out of the 3 million tons that we consume for nitrate and NPK production, 50% is already imported. All of our European nitrate and NPK production capacity is fully flexible on where the ammonia is sourced from. With structurally higher gas costs in Europe and increasing carbon taxation, capitalizing on this operational flexibility is key to unlock value and to increase margins. Taking an equity stake in new U.S. ammonia production is still expected to be highly value-creative, as it enables us to access low-cost gas and production economies of scale, lowering fixed cost and maintenance cost per ton.

This has always been a core part of Yara’s success, with the latest example being our investment in Freeport, Texas, which has generated significant returns for Yara and our shareholders. Any investment in new production capacity must be profitable in itself, meaning that the attractiveness of an investment would be assessed based on the fundamental attractiveness of ammonia production itself. In addition, we expect synergies with our European premium product production assets, first and foremost through increased margins of nitrate-based products. Secondly, it would enable us to reduce our European carbon cost exposure. With Yara being an attractive partner for any ammonia project, our key focus is to mature potential partnerships where we can match Yara’s risk-reward appetite with that of a partner, considering CapEx exposure, price exposure, commercial exposure, and volume offtake.

This means that more importantly than defining whether we pursue one or two projects, it’s maximizing returns through an optimal risk-reward exposure while staying committed to our capital allocation policy. Potential investments in the U.S. remain our key growth priority, and our timelines remain unchanged with our first half 2026 as a decision point. I will also reiterate the message from the second quarter. Yara will size a potential equity investment to our capital allocation policy, aiming at maintaining shareholder returns, also in an investment period where we do not plan for any equity raise as part of a final investment decision. We believe Yara has the value drivers in place to create significant shareholder value from an upstream equity position, but we need to be confident in the robustness of returns.

Stress testing key assumptions is critical in addition to evaluating Yara’s optimal risk-reward profile in such a project, and to match this to a partner’s risk-reward appetite. Double-digit returns remain a requirement for a potential final investment decision, which is planned for the first half of 2026. To wrap up the presentation, I would like to highlight the following points. The key focus of the whole organization is to ensure a safe working place, while at the same time optimizing our core operations, increasing free cash flow, and generating high returns to fund improved shareholder returns and value-creative growth. We continue to deliver increased returns to shareholders with increased resource efficiency through lower fixed cost and CapEx, and also increased asset utilization and progressing on our portfolio optimization.

Through strict prioritization and capital discipline, we have already over-delivered on the fixed cost and CapEx reductions that we targeted in the second quarter of 2024. We’re also progressing on our portfolio optimization and have taken the decision to mothball our ammonia asset in Belgium, strengthening the long-term competitiveness of the premium product production at this plant. Ensuring a future-proof asset base is core to strengthening Yara’s position and increasing our long-term competitiveness. Through strong commercial performance, we continue delivering strong premiums on our nitrate and NPKs in a high-price environment with pressured farmer affordability. Both ammonia and premium product growth are key opportunities where we see potential for high returns and excellent strategic fit. Through disciplined capital allocation and a strong focus on resource efficiency, Yara is enhancing returns.

Going forward, we continue to take steps to expand margins by diversifying energy cost and leveraging scale and operational efficiencies across our global network. This will enable increased returns for shareholders. I’ll now hand back to Maria.

Maria, Moderator/Presenter, Yara International: Thank you, Svein-Tore. I would then like to announce that Yara will host the Capital Markets Day on January 9, 2026. This will be hosted as a hybrid event with the possibility to both participate digitally and physically in Oslo. The CMD agenda will focus on Yara’s strategic priorities and value creation agenda. More information and details will come later, so for now, please save the date. That concludes today’s presentation. The Q&A will start at 1:00 P.M. Oslo time, and login details are found on our website under Investors. Thank you for watching.

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