(Reuters) -Yara, one of the world’s largest producers of fertilisers, on Friday reported quarterly earnings below market expectations and warned gas costs would rise in the remainder of the year.
The Norway-based group expects gas costs for the third and fourth quarter to be $60 million and $10 million higher, respectively, than a year earlier.
Gas prices make up a chunk of fertilizer firms’ raw material costs, as a vast amount of natural gas is needed to produce fertilizers.
On the other hand, it expects other expenses to be lower thanks to its $300 million cost and capital expenditure cutting programme, which it said was so far ahead of schedule.
It expects the plan to result in annual savings of $180 million excluding inflation.
“With the combination of cost reduction, portfolio optimization and a tightening nitrogen markets, Yara’s financial position is set to strengthen with increased free cash flow and sustained profitability,” CEO Svein Tore Holsether said in a statement.
Yara reported adjusted earnings before interest, taxes, depreciation and amortization of $652 billion for the April-June quarter, below analysts’ consensus of $668 billion.
Its shares were down 2.9% in Oslo as of 0917 GMT.
LOOKING INTO U.S. INVESTMENTS
The company said it was considering investments in U.S. ammonia projects as part of a push to improve shareholder returns.
“The U.S. is an attractive place to invest, and that’s where we’re looking into to expand our production of ammonia,” Holsether told Reuters.
Some of the added output would then be exported to Europe to support Yara’s operations there, he added.
The final investment decision is expected to be made in the first half of 2026, Holsether said.
(Reporting by Tristan Veyet in Gdansk, editing by Milla Nissi-Prussak and Matt Scuffham)