News Fertilizers
Fertilizer manufacturers are making huge profits
The very high and strongly fluctuating energy costs have not worked out badly for fertilizer producers OCI and Yara. Both companies posted significantly higher profits in the past financial year. While in that period in a special fertilizer market, also as a result of the outbreak of war in Ukraine a year ago, they actually produced less fertilizer.
Today, February 14, OCI announced the results of the last quarter and therefore the financial year 2022. Revenues increased by 2022% to US$54 billion in 9,7. Net profit rose to $1,3 billion, a growth of 84% compared to 2021. And that was not even to the satisfaction of shareholders, who had counted on a higher operating profit (EBITDA) for the fourth quarter. OCI's share price therefore fell to its last point since July 15 of the previous year.
Fertilizer giant Yara announced its annual figures earlier this month. Turnover increased by 45% from € 14,8 billion to € 22,4 billion. Yara, known for its fertilizer factory in Sluiskuil (Zeeuws-Vlaanderen), even saw its profit increase by a factor of 7. In 2021 they made a profit of €350 million, in 2022 they closed with €2,6 billion.
Lower production, more profit
With this, the producers manage to write dark green figures despite the sky-high and fluctuating energy costs. Both companies scaled back production at multiple locations around the world. Sales of fertilizer and ammonia in Europe decreased by 19% according to Yara. In North and South America by a quarter. OCI also sold less product. Fertilizer prices rose due to the scarcity that arose. As a result, the fertilizer manufacturers were able to sell less fertilizer, but still realize a much higher margin for their product.
From € 30 to € 90 per 100 kilos
In the last months of 2021, fertilizer prices already took a step up due to rising costs, in particular due to the more expensive gas. At that time, prices had already risen by a few euros per 100 kilos of fertilizer to €30 to €35 per 100 kilos for KAS. The European farmer, who only buys most of the fertilizer in the spring, was in no hurry to buy at that time. Not even in February when Russia invaded Ukraine and prices rose sharply again after manufacturers cut production due to high energy costs.
The scarcity of fertilizer increased. The farmer who waited the longest paid the top price in the spring, up to €90 per 100 kilos. In the meantime, fertilizer and ammonia production has still not fully resumed, Yara previously indicated. But if you look at the current prices for nitrogen fertilizers, you will see that the prices have already almost halved compared to the beginning of last year.
Jesse Torringa
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