Yara International misses Q2 profit forecasts on weak sales volumes; shares fall

Yara International misses Q2 profit forecasts on weak sales volumes; shares fall

US stock futures slide further with tech set for more losses; Netflix disappoints Investing.com -- Shares in Yara International fell 4% Friday after the Norwegian fertiliser maker reported second-quarter results well below expectations, with weak crop nutrition volumes and unplanned downtime weighing on earnings. Adjusted EBITDA fell 15% year-on-year to $906 million, missing the $1.13 billion expected by analysts in a company-provided poll, while margins rose 400 basis points to 20.5%. Crop Nutrition volumes fell 17% year-on-year to 5.2 million tonnes, with weakness across all regions: Europe declined 14%, with compound NPKs down 16% and nitrates down 11%; the Americas fell 14%, with compound NPKs down 22% and nitrates down 19%; and Africa and Asia dropped 28%, driven by a 45% decline in urea.

Industrial Solutions volumes were down 3% at 1.5 million tonnes. The miss was driven by lower sales volumes, particularly in compound NPKs and nitrates, along with a $120 million hit from turnaround work at Belle Plaine and downtime at Pilbara. Results also included $153 million in exceptional items from the sale of EU carbon credits.

Adjusted earnings per share fell 26% year-on-year to $1.67, below the $2.27 consensus, which Morgan Stanley analysts said "mainly reflects the EBITDA miss, partially offset by higher interest income." Free cash flow came in at $427 million, down from $689 million a year earlier and below the $472 million consensus, as a smaller working capital inflow and higher capital expenditure weighed on the figure. Net debt was broadly stable at $3,067 million, equivalent to 0.9x net debt/EBITDA.

Morgan Stanley analysts said they "expect the shares to underperform the market today," citing the EBITDA miss, a slow start to the new Northern Hemisphere season that could weigh on third-quarter volumes, and the risk of further full-year EBITDA downgrades given a sequentially lower nitrogen price environment.