Welcome to Yara's first quarter results presentation. The presentation today will be held by Yara CEO Svein Tore Holsether and Yara CFO Magnus Krogh Ankarstrand.

I would like to mention that we have a change in how we do our Q&A session today. Once the presentation is done, we will move straight into the Q&A session.

For those of you that want to listen to both, you can remain in the webcast window after the presentation is done. I will come back with instructions on how to ask questions in the Q&A.

First, let's start the presentation. It is my pleasure to hand over to our CEO, Svein Tore Holsether.

Thank you, Maria. Good morning, good afternoon, good evening depending on where you're dialing in from, and thank you for joining our first-quarter presentation.

As always, I'm starting with our safety performance. Our license to operate is creating a safe working environment for all our employees and contractors.

We have a lot to be proud of our performance in the first quarter, but safety is not one of them. We continue to see an increase in accidents, and this has also been the case in April, which means that we will likely see a further deterioration as we get into the second quarter.

There is only one responsible for this, and that is me. I take that responsibility very seriously.

I'm now in my 30th year in industry, and what I've learned on safety is that you cannot dictate your way to safety, and also that campaigns, they only have a short-term impact. It is what we do every day, every week, and every year that matters, and we know what to do.

We will continue to work according to our safe by choice approach that has now been in place for 12 years. This is our joint commitment to safety throughout the whole organization because at the end of the day, 1.2 TRI, that's a ratio.

Behind that, there are 59 accidents, 59 colleagues, someone's mother, father, brother, sister, friend that got injured at work during the last 12 months. We can and we will bring that to zero, but for now we need to turn the negative trend.

On Tuesday next week, we will have our annual safety day, and that is another opportunity for us to spend time together and get this right. That was the lowlight.

Now let's take a look at some of the key highlights for the first quarter. Yara delivered a strong quarter with an EBITDA excluding special items of $896 million.

This is an increase of 40% compared to last year, and that's reflecting higher nitrogen operating margins in a tight market in the start of 2026. In addition, Yara has increased deliveries to customers in the quarter, reflecting a strong commercial execution.

This also enables us to maximize production volumes and consequently also capital efficiency. First quarter results mostly reflect pre-war markets, but the Middle East conflict has disrupted global fertilizer markets since the end of February.

The blockage of the Strait of Hormuz disrupts around 1/3 of global traded urea, but also has other key raw materials for fertilizer production such as gas, it's ammonia, it's phosphates, and sulfur. This supply shock has led to significant increase in global fertilizer prices.

That coupled with weak crop prices and high regulatory burdens, farmer affordability has increasingly come under pressure. The high prices are increasing volatility and also risk premiums across the fertilizer value chain, and eventually into the food markets as well.

As we said at our Capital Markets Day in January, Yara is a battle-proven organization due to our global diversification, our energy flexibility in Europe, and also our highly competent workforce. Now that is being put to a test again, and we are demonstrating the strength of our business model where our global system enables us to uphold production and to ensure the continuity of supply.

This means that we are uniquely positioned in the current situation with strong commercial and operational execution in a disrupted nitrogen market. I want to thank all my colleagues in Yara for their strong performance this quarter.

Looking then at EBITDA variance for the quarter, the increase of 40% since last year mainly reflects the increased nitrogen spreads. Nitrogen prices have seen a significant increase since first quarter 2025, and gas price changes are typically reflected after 2 months in our earnings.

This quarter EBITDA is largely based on pre-war market dynamics. Volumes are also up, reflecting strong commercial execution in the season to date.

Keep in mind here that we also had a strong fourth quarter on volumes. We continue to see a positive impact on EBITDA from our fixed-cost reduction program and a further $18 million down from last year.

Return on invested capital has doubled from 6% last year to 12.2% on a rolling 12-month basis, and that's above our through-the-cycle target of 10%. Global fertilizer markets are currently heavily affected by the ongoing conflict in the Middle East.

Around 1/3 of globally traded urea is exported through the Strait of Hormuz, but also a quarter of the world's ammonia, as well as 50% of sulfur, which is significantly impacting the availability of phosphate fertilizer. Furthermore, 20% of global LNG trade is disrupted, and that's leading to urea production curtailments as well, such as in India.

The disruption to urea availability has led to significant price increase, so far 47% since February, and urea FOB Egypt is up even more at 77%. TTF gas prices have also increased, however less so than urea and phosphate prices.

Farmers' situation was challenging before the war driven by weak crop prices and cost inflation across many input factors, as well as regulatory burdens and global market volatility, which all add to this pressure. This is concerning.

Those that will be hit the hardest are smallholder farmers in the poorest parts of the world because of lower ability to pay. It's actually a double hit because it's likely also impacting the farmers where the yield curves are the steepest, meaning that marginally lower fertilizer application will have a higher yield impact.

Fertilizers are essential for food production, and stable access is really critical for farmers to produce the food that the world needs. Yara's role is to remain robust and to ensure the continuity of our production and also the deliveries to the farmers.

Building on long-term operational improvements, our production system has seen a steady increase in output, and this is also our core focus in the current situation. As you see here, deliveries to customers are also up in the same period.

Volumes on this slide are not adjusted for turnarounds, but is reflecting actual production and actual deliveries. Ensuring a high uptime of our assets is really a key objective, and it improves our capital utilization and also our energy efficiency.

In addition, our energy flexibility enables us to import ammonia, if needed, in order to keep finished goods production running. This has enabled Yara to be a reliable source of fertilizer in this critical period as well, alleviating some of the pressure on markets and serving farmers around the world.

Yara's position is unique globally, and the flexibility in our system continues to limit cyclical downsides as well as maximizing output in the current situation. With that, I'll now hand over to our CFO, Magnus Krogh Ankarstrand.

Thank you, Svein Tore. As mentioned, EBITDA is up more than 40% on a strong first quarter 2025, predominantly driven by increased nitrogen upgrading margins before the effects of this ongoing conflict in the Middle East.

This translated into a 60% increase in earnings per share as depreciations, interest, and tax remained stable. Return on invested capital increased to 12.2% on a 12-month rolling basis, reflecting both increased earnings as well as portfolio adjustments.

The quarter saw $75 million increase in operating capital driven by an increased price environment. However, this was more than offset by an increase in cash from operations, resulting in a significant increase in free cash flow of $196 million as net investments were flat.

This increase in cash returns is attributable both to the improvements undertaken as well as a constructive nitrogen market in the first quarter. Turning to deliveries, we see an increase of 3% in crop nutrition deliveries compared to first quarter last year.

This was primarily driven by increases in the Americas, but worth noting that stable deliveries in Europe comes on top of a strong first quarter last year that saw a 15% increase over the year before, and a 6% increase in volumes in Q4 2025. That means that season-to-date deliveries in Europe are up 2.5% and are among the highest in the last 5 years.

In Africa and Asia, we saw a reduction of commodity volumes, however an increase in deliveries of our premium products. Deliveries in industrial solutions are down 5% for the quarter following plant closures in Brazil.

However, these portfolio changes have a positive impact on our cash flow. Yara has focused through the last months to ensure both production and supply chains flow in the extreme situation to safeguard deliveries to our customers worldwide, and we have not experienced major disruptions to our production or supplies.

This then increases our cash earnings further and strengthens our balance sheet, putting Yara in a robust position in the ongoing market volatility. Cash earnings are partly offset by increase in net operating capital, which, despite the seasonal release of inventory, is up due to the increased values driven by prices.

We are currently experiencing a strong market for all nutrients, especially nitrogen and phosphate. This increases Yara's nitrogen and phosphate upgrading margins and increases the bar for our premiums, which we measure above commodity value for the nutrients.

That, combined with lower crop prices in general, exercise some pressure on our premiums in certain markets. For the fourth quarter, strong demand and pre-buying in Europe supported European nitrate premiums ahead of the year-end, and premiums in the first quarter 2026 were comparable to the fourth quarter, but lower than first quarter last year given the higher nitrogen prices in general.

NPK premiums are somewhat pressured and primarily driven by Asia where we see a contraction towards more normalized premium levels at a very high commodity price base. Yara has a robust commercial organization and is on a day-to-day assessing the market environment on how to optimize volumes and margins globally.

This also underlines flexibility of our business model and the ability to create value both on the upstream margin as well as the premiums, which also limits the commodity downside through the cycle. Building on that, there is no doubt that the current global situation puts significant stress on supply chains, and this is particularly visible in the fertilizer space.

Yara's global reach and flexibility is uniquely positioned to navigate this. The current price environment coupled with weak crop prices is already leading to a substantial difference in buying appetite in prompt markets versus off-season markets.

Despite moving into the end of the season in the Northern Hemisphere, the significant loss of nitrogen and phosphates as described by Svein Tore means a supply and demand shortage in several Southern Hemisphere market as well, in addition to India being a main driver for demand in the period to come. Due to Yara's global reach, we are able to optimize global deliveries and ensure we can keep our production system running at full speed, also by changing from locally produced to imported ammonia, if necessary, due to gas prices in Europe.

This is vital to keep serving a market in severe shortage of nutrients in our core markets such as Latin America. Ensuring our assets run uninterrupted is a core part of operational excellence.

However, we have had an unfortunate outage in Pilbara since mid-March, expecting to come back on stream in May. That is our ammonia plant that was stopped.

In addition, we will execute a long-planned major turnaround in Belle Plaine after the season is over in June. This will lead to a reduction of approximately 150,000 tonnes of urea in Belle Plaine compared to a full year of production, and a loss of 140,000 tonnes of ammonia in Pilbara due to the outage.

Diving deeper into this market situation, it is clear that the ongoing crisis in the Middle East has an unprecedented impact on global supply. Not only urea and phosphates, but also other raw materials essential for fertilizer production such as sulfur are stranded and limiting fertilizer supply globally.

With as much as 1/3 of urea supply impacted and further supply reductions from Russian plants as well as reduced production in India due to LNG shortages, global availability is severely reduced. In an already tight urea market without spare capacity, significant demand reduction is required to balance the lack of supply.

Naturally, market prices go up to balance the market and ration demand. This has been exacerbated by the ongoing season in Europe and the US, and is obviously an extraordinary situation given the crisis in the Middle East.

Market development going forward will depend a lot on the duration of a blocked Strait of Hormuz, the level of damage to infrastructure, and the ramp-up time required to get back on stream. Demand reduction is a balancing factor, as is potential exports out of China.

In the medium term, as previously illustrated at our Capital Markets Day, there's a limited number of supply additions from ongoing urea projects, and this already seemed to increase market tightness versus historic demand growth. Recent announcements suggests that several of these projects that were announced to be commissioned in 2027 will be further delayed driven by both the Middle East situation and other factors.

Capacity and export out of China is likely to remain the balancing factor in the medium term. For Yara, this medium-term constructive nitrogen outlook is set to drive further value creation.

However, our strategic priorities are designed to increase shareholder value irrespective of market developments. As presented at our Capital Markets Day, our strategic priorities rest on two pillars: driving performance and competitiveness, and growing from our core.

The former is operationalization of our improvement program: focus on asset utilization, logistical optimization, capital reallocation, and commercial excellence, all aimed at increasing our EBITDA and cash flow. Our medium-term goal of diversifying our energy position further remains a core part of that agenda.

Meanwhile, growing from our core is key to increase value creation, scale, and return to our shareholders. This includes healthy organic growth from recent and future production increases, up to 1 million tonnes on premium products as we announced in January.

In addition, this includes realization of recent growth projects such as the NPK expansion in Cartagena, our YaraVita plant in the UK, and the CCS project in Sluiskil, all to be completed this year. In addition, Yara will explore further growth opportunities linked to our core, all within our commitment to a strict capital discipline and focus on cash returns.

As mentioned on the previous slide, energy diversification is core for Yara, and the collaboration with Air Products is a strong strategic fit to deliver this. The combination of Yara's significant ammonia system, including import infrastructure in Europe, and Air Products' advanced projects in the ammonia space is a strong strategic fit for both parties.

For Yara, the drivers are threefold: access to low-cost gas, asset competitiveness, and renewal through scale and the ability to harness carbon premiums. Predominantly through CBAM and with our collaboration with Air Products, we get all of these three.

At the same time, Yara is able to place volumes from Air Products more cheaply and efficiently into the core markets without the significant infrastructure investments otherwise needed. Commercial negotiations are proceeding according to plan with a priority on the Neon project that is due to commission in 2027, and the US projects is progressing according to the previously announced timeline.

Yara is fully underway to materialize the improvement program announced in January. Summarizing the first part, our cost program that we launched almost 2 years ago, we already have a head start on that.

Excluding currency changes, our fixed-cost level on a 12-month basis is at $2.3 billion, down approximately $230 million from the second quarter 2024. This incorporates the underlying inflation in those 2 years as well.

Going forward, we will include this into our improvement program, which expands the value levers into a range of other areas as well. Having achieved a strong cost control environment upfront provides us with a very solid starting point.

The improvement program remains a core focus going forward, aiming at more than $200 million EBITDA improvement by the end of 2027 and $350 million by the end of 2030. This includes our 10% ROIC target through the cycle, and we are starting to see strong financial metrics through a combination of market developments and improvements.

It is, however, important that our aim of improvements irrespective of market developments. Looking at the last 12 months, we see a significantly increased EBITDA, about $3 billion, an accumulated cash flow close to $1.2 billion, and perhaps most importantly, a return on invested capital firmly above 12%.

With that, I'll give the word back to Svein Tore.

Thank you, Magnus. The current situation is really unprecedented for the global markets, and the fertilizer industry is no exception to that.

Together with the Ukraine war, the current conflict in the Middle East adds to the geopolitical volatility. Yara's business model is well adapted to navigate such volatility.

As we said at our Capital Markets Day, we have improved our resilience, building on our experience over the recent years, and our competitive edges are really key in achieving this. The bedrock of this is our scale and global optimization, which is even more vital in the current situation.

Operational excellence combined with flexible energy sourcing helps us to uphold finished fertilizer production, and our premium and diversified product portfolio provides a strong foundation helping to mitigate earnings volatility when commodity prices fluctuate. Finally, a disciplined and flexible investment approach, clearly anchored in our strategic priorities, will continue to strengthen our long-term competitiveness.

Then to conclude our presentation, it is important to highlight that our ambitions and commitments remain firm despite the current market turmoil. Further maturing our resilient business model and delivering on the improvement program launched at our Capital Markets Day back in January, they remain core focus areas.

Our long-term goals of diversifying our exposure to lower gas cost and enabling low-carbon ammonia opportunities remain key priorities. With a strong balance sheet, capital discipline maintained, and a clear commitment to our credit rating, Yara is well positioned to deliver sustainable long-term value creation.

With that, I'll hand back to Maria.

Thank you, Svein Tore. That concludes today's presentation.

We will now take a short break to set up and get ready for the Q&A session. If you wish to listen only, please remain in the webcast.

If you wish to ask questions, please join the Teams meeting which you can find linked to below the webcast. With that, see you in a short bit.

Thank you. Welcome back to everyone.

We are now ready for the Q&A session. This is Maria speaking.

I'm here joined by today's presenters, our CEO Svein Tore Holsether and our CFO Magnus Krogh Ankarstrand, in addition to our head of market intelligence Dag Tore Mo. For those that only want to listen to the Q&A, you can remain on the webcast window.

If you wish to ask questions, you need to join the Teams meeting by pressing the link underneath the webcast window. Once you are in the Teams meeting, please raise your hand if you wish to ask a question.

If you are joining by phone and wish to ask a question, please press star followed by 5 to raise your hands. When it's your turn, I will introduce you or at least state the name you've registered on Teams, and you will be asked to unmute.

Please state then your name and the company you're calling from. With that, we will start with the first question, which is a phone ringer with number ending by 32.

May you please unmute yourself and ask your question? We will take the next caller.

Christian Faitz, please unmute yourself and ask your question.

Yes, good afternoon, everyone. Two questions if I may.

Can you remind us how you deal with the volatility in gas prices at this point in time, and are you considering hedging at some point, and how are you secured through the rest of the year on the gas side? That's the first question.

Then the second question, obviously yes, thanks for the helpful slides you had in the presentation and in the slide deck, and you did show obviously that large parts of the Northern Hemisphere is actually covered in terms of fertilizer demand. If I was a farmer, I would obviously try to optimize costs and maybe also skip one or the other topping during the season.

Is that what you see, and could that also be an inventory issue at some point heading into the '27 season? Thanks very much.

It's Svein Tore. I can start with the first one and then I'll hand over to my colleagues on the second one.

When it comes to gas prices, we're not hedging that, and that's been our practice over a very long time period because we see a very strong correlation between global energy prices and nitrogen prices that we have that flexibility to move with the market. Then we've built in additional robustness in our system by also being able to switch between producing ammonia and then, I can use Europe as an example, where it's most exposed, we don't have to produce the ammonia in Europe for about 75% of our finished goods.

We can bring ammonia into Europe, and that gives us flexibility to switch if it should not be economical to use gas to produce ammonia in Europe. For the time being, the upgrading margins from gas to ammonia in Europe are also at a level that justifies continued operation and we're running at full blast.

Should that for some reason change, well then we'll do like we did back in 2021 and 2022 to bring ammonia in, and that's part of the strength in our business model where we can utilize the global network that we have on ammonia. We're one of, if not the largest ammonia trader in the world, and we have ships that can transport ammonia across the world and we're utilizing that to maintain finished goods production.

Should we have hedged, then we would have lost some of that flexibility. That's the reason we have that structure in place.

Then I'll hand over to Dag Tore or Magnus on the second question.

When it comes to let's say markets like Europe or North America, in some ways they are kind of well covered when you talk about the import situation and urea in particular. I think I should mention that we are still seeing nitrogen demand.

We are delivering both from Belle Plaine and from our production system in Europe now in the second quarter as well. If you just look at the urea situation, both the US Gulf, which is far away from the application areas in North America at the moment, and in Europe, pricing now is such that they do not match, let's say, the India price or the peak pricing elsewhere.

From that perspective, at the current global urea values, there is very low import demand, and probably not the need for it either if you look at relative pricing between nitrates and urea, for instance, in Europe. In that sense, covered.

On the application, I think that nitrogen application, in most areas that are exposed to the global values today, will see some demand destruction more or less. You have China and India covers almost half of global demand for urea, which are not following the global market and have their own domestic pricing, which is way below.

That leaves kind of half the global market that has to do the demand rationing in a situation where there are significant supply losses. If we again take Europe as an example, just to give some more details, I think that the industry deliveries in Europe are fairly stable season over season, and we see that imports according to Eurostat and the numbers from the European Union so far this season or through March Europe or EU has imported 4.2 million tonnes of urea, which is down from 4.9 million tonnes of urea same period last year.

There has been some declines in other products, although urea is the dominant one. I think that just looking at the apparent supply situation, it's logical to expect let's say a shortfall of demand or a drop in demand of 5% to 10%, something like that in Europe probably.

On your question of inventories, that is something that kind of concerned us or we have been trying to follow that as well. What we hear from the field, from our commercial units, is that farmers are generally using the fertilizer they have bought, no big carryover risk there into next season, we think, and that distributors and retailers are also back-to-back mostly so that in Europe.

That is normal. People are quite careful about not having too much inventories.

North America, that can be a little bit different because of the longer lead times on the import side that it could end up in a situation where let's say the imports is a little bit more than what is needed. I hope that was—

Yes, thanks, Dag Tore, and Svein Tore. Very helpful.

Thank you, Christian. The next question is then from Magnus Rasmussen.

Please unmute when you're ready to ask your question.

Yes, thank you for taking the questions. Magnus Rasmussen, SEB.

I wanted to touch upon volumes as well and wonder if you can give some comments about what you are thinking for Q2. You stated in the presentation that Europe have among the highest season-to-date levels, but also strong volumes in America in Q1.

I think Dag Tore touched upon it a bit as well, but some further comments sort of for Yara specifically as well would be helpful. Also a question on price realization in Q2.

We see urea prices skyrocketing and nitrate prices not so much, and PhosAgro also reduced their European nitrate prices yesterday. Your sensitivities cover a mix of different product.

Is there anything that we should keep in mind and be aware of in terms of price realization into Q2, and also how do you read the low nitrate prices in Europe relative to urea from call it demand or market perspective in Europe? Thank you.

I can maybe start a bit on the volume side. As normal, we don't give any future guiding on volumes as such.

I think what we can comment, as we also said in our presentation, is that Yara has a global system and of course that's also in normal circumstances obviously benefit given the difference between season in the Northern Hemisphere and the Southern Hemisphere. We think that will be even more so the case this year.

Of course beyond that, our production levels are a question of whether we have sufficient margin to actually produce at different times. In a way looking at market prices and gas prices throughout the quarter that will kind of explain that situation.

Of course in addition to that, important to keep in mind the fact that we also can import ammonia into Europe if gas prices were to go up. Obviously as everyone can see right now, in the current situation, nitrogen prices have increased a lot more than gas prices.

That in terms of what we produce and then ultimately sell, that's really what's determines that, and then of course where we sell it depends a bit on how markets develop. I think on maybe the urea nitrate pricing, I can give to Dag Tore.

I think it's of course a bit more challenging for you and others to monitor this now that prices are so extremely high because it leads to some more fragmentation and regional differentiation than otherwise. When prices are more normal, then you can use fairly straightforward the sensitivities, right, because everything is kind of correlating very strongly.

Some of that is now kind of a little bit distorted. Let's say if you put in spot prices in the Arab Gulf that is basically the netbacks from the India tender, which they paid kind of $950, say.

There are very few regions now in the world that are willing to pay 100 or $950 for urea, as you can observe if you observe carefully in the regional prices that the publications quote. It's nothing secret about that.

You see that US Gulf is discounted, even Europe is somewhat discounted, Brazil is discounted. Just putting in let's say $900 and $10, $20 for Arab Gulf, for instance, is giving a little bit exaggerated picture probably.

That is one thing that of course you have to be a little bit careful about. When it comes to Europe, of course, if you were a farmer now that needs urea for March, would you buy it now?

Question mark. Of course, that is an understandable dynamic, I think, that for a while now, maybe the urea import parity is not really the main driver of nitrogen prices in Europe for a period.

That we see already, as you were hinting at, right. You have, yeah, zero, say, round number zero nitrate premiums right now based on the publication references.

It wouldn't be a surprise if you let's say with a starting price for next season that you will see a negative nitrate premium versus urea, unless urea comes down a bit. I think that we, as Svein Tore was saying, the farmer affordability is so stretched that I think that there will be more regional differentiation based on what farmers need the product right now and those farmers that can defer the purchasing to closer to their application season.

A bit more challenging, I think, to be very precise on price realization than normal.

Just to remind everyone as well, the sensitivities are based on high-level easy assumptions, right, 1-month lag and two or three market prices. In volatile markets and with increased regionalization, like you say, it's natural that they will be less precise than in a more stable market environment.

Yeah. Moving to the next question is from John Campbell.

You can please unmute yourself.

Hi there, everyone. It's John from Bank of America.

I had two quick questions. Maybe if we continue kind of on the NPK and nitrate premium, if I remember properly, I think second quarter '25 a pretty robust reported NPK, I think it was $265 per ton.

I think you've just discontinued the practice of actually quoting that specific figure. Presumably based on what you're kind of saying, kind of gathering the comments you've made on this call, it sounds like that will be down maybe quite steeply into the second quarter.

That was my first question. Second question, just very quickly, any comments or assumptions or expectations for resumption of Chinese exports of urea in 2026?

I think Bloomberg had a comment saying that could be something like 3 million tonnes, which would be down year on year, but anything you've heard would be interesting given, as you say, it's kind of one of the market-balancing areas of supply. Thank you.

Should I take the China question first? Nobody knows, of course.

I think there is discussions ongoing in Beijing as we speak to our understanding. They are debating this right now.

The flow started in July last year, a little bit time left for that. We also see that there are quite a few market players that have already started to move products to ports, effectively removing that product from the domestic market already.

That has caused some reactions both from the government and from the Nitrogen Association, it seems, that are a little bit upset about this development ahead of approvals. There are even some discussions whether that could lead to some delays in the export approvals.

Let's see how that fits. You referred to the 3 million tonnes, I've also seen those referred and to me, I haven't seen anything concrete yet nor from our experts in the market.

I tend to believe that must be some kind of speculation. I also saw 3 million tonnes mentioned.

I would think that would be a first tranche then in that case, and not necessarily the total volume for the year. That's what they also did last year, right.

They first approved 2 million tonnes and then they added to that quota as they saw that the domestic market did not react to the export volume. I wouldn't have concluded that those 3 million tonnes, that's it, but be open that this is a really important factor in the market for the rest of the year.

On NPK premiums and again of course we don't give guiding on exact premium levels as such, but I think it's fair to say that the last couple of years NPK premiums have been very high and higher than maybe average over longer time periods. Obviously now with commodity prices increasing as much as they have and nitrogen, as we talked about, but also phosphates with a significant increase due to the same reasons as for nitrogen in the current crisis, is also natural that puts some pressure on the premium that farmers can pay on top of that, of course also considering the farmer economics.

Even though NPK premiums are somewhat down since last quarter and a year ago, they're still holding up quite well and then we'll see how that plays out, which will depend as well on the commodity developments in the next quarter. Of course for Yara, we of course make money both on the premium as well as the upgrading margin or the commodity margin.

There of course on both end, but also particularly phosphates of course has been a significant increase. I think also worth to mention in our production system roughly only a third of our NPK production depends on sulfur in the production system.

Of course sulfur is right now being a significant cost driver in the phosphate or DAP production and phosphate prices. That's of course an advantage that we have on the margin side.

Thank you very much.

Thank you. I'll just remind everyone listening that if you wish to ask a question, you need to join the Teams meeting and raise your hand in there.

Next question is from David Symonds. Please unmute and ask your question.

Hi, thank you. It's David from BNP.

I have three, I think, please. First one, could you talk about your assessment of damage to Middle Eastern nitrogen and LNG facilities so far?

How much do you think we've lost longer term, and if the war ends this weekend, let's say, what would be the time lag before we get back to a more normal situation in nitrogen? Second, this is more just a modeling question, you very generously gave us the 150,000-tonne number for the Belle Plaine turnaround.

Is there an estimate of how much you might lose from the India and Australia outages and curtailments that you announced in the second quarter? Then thirdly, what could the policy response to this current crisis be?

Is there an increased likelihood of CBAM suspension for fertilizers in the near term? Do you think we might see reopening of plants as we saw Brazil do with Petrobras?

Any thoughts on that would be great. Thank you.

On the Middle East, it's of course hard for us to know. What has been announced is that Qatar has had some damage to their natural gas infrastructure that will take quite some years to repair.

We don't think that the fertilizer plant is damaged, so that should be able to restart very quickly. There've been some damage in Bahrain and some damage in Saudi Arabia also, we hear, a little bit unclear how much and how long it will last.

In Iran, there is quite a lot of damage to the gas infrastructure and there are only a few of the plants in Iran that has been able to start up. To your question about how long time this would take to normalize, I think it's hard for us to speculate around that.

It'll certainly take some time. How much, yeah, it's hard to estimate.

I think I think on your questions on on India and Australia, I mean in on the Indian side the impact to Ammonia Australia's results is is fairly limited from from the the current curtailment there. On the Australian part, or sorry, Australian ammonia plant, and as as said, we assess roughly 140,000 tonnes in total.

I think we also said in the market that we expect start-up sometime first half of of May. Then, I mean from we can sort of do the math on how much that because we you know when when the plant went down, how much of that will be the second quarter versus the first quarter.

On the policy?

On policy, it's Svein Tore here. You mentioned CBAM.

I think the last thing that Europe should do right now is to create any uncertainty around CBAM because that's in place in order to create a level playing field so that imported volume pays the same emission costs as European players do. If there's one region that has felt the consequence of dependency, it's Europe.

Look at what happened in the energy sector on the energy crisis and what that meant for households and the industries and that we're still struggling with in Europe right now. Then to then weaken such a vital industry as fertilizer and farming would further emphasize the challenges in Europe.

I think what policymakers should consider here is rather use the CBAM revenue and redirect that towards farmers to not put the burden on the shoulders of the farmers. They don't have the margins to support this, but we need food production in Europe, and we need a healthy fertilizer production system in Europe as well.

If we're as a result of this creating an uneven or not a level playing field, that would maybe come at a very short-term relief, maybe, but at a very high cost long-term because then we would even be even more dependent on imports. It's important to keep the long term in mind here as well.

Any uncertainty on CBAM in Europe for the industry right now will have impact on the ability to invest in long-term projects. Of course, as we look globally, and with fertilizer being responsible for half of the world's food production, I understand that this is something that is very high on the agenda for politicians all over right now.

It's important that we balance the short-term need with the long-term implications for that interventions could have. We really do think that CBAM is an important lever and that in combination with the ETS, if we are to reach the Paris Agreement, to reach the emission targets for Europe, that needs to stay here.

That's also important for the long term of actually growing food because we also have to solve the climate challenge here. I would say that one of the occupations hardest hit by climate change is actually farming.

They work out in nature and they work whether it's floods or droughts or record heat or record cold, that's where they have to produce food. It is in our interest that we deal with the climate challenge as well, but it's not something that we could just put on the shoulders of farmers.

Thank you. Let's move to the next question, which is from Tristan Lamotte.

The line is yours.

Hi, Tristan Lamotte, Deutsche Bank. Two questions, please.

The first one is how high is the risk that the CapEx number that you quoted for potential blue ammonia projects has to move up given the developments in the world since you first gave those numbers, and given that the final agreement is yet to be signed? The second question is I just wonder if you could talk about any opportunities for permanent market share gains relating to the conflict.

Thanks.

No, thank you. When it comes to the project with Air Products, as we said when we have the announcement, the time we spend towards mid-year to the next phase of that project including the preparations up to potential FID is a lot around the contract in market and evaluating the technical side of the project together with AP.

I think that work is still ongoing and that there's nothing particular that's happened since then that's sort of changed anything substantial in that regard. It depends on the market, it depends on the bids, and so yeah, there's nothing new as such there and sort of things are proceeding according to the plan that we had.

I think in terms of market share, I would say our primary objective also sort of reflected in our improvement program is to increase organic growth from our production system, up to 1 million tonnes of additional premium products through production improvement and debottlenecking, and in addition we have a few projects coming online now with NPK expansions in Cartagena, as well as YaraVita and biological plants in the UK and so on. Obviously that will go into increasing our market share as we sell what we produce.

In addition to that, and also as a part of the improvement program, we are looking at optimizing our global system, taking more market share in our most profitable markets. I think and as we also communicated there, Europe is one, not the only, but one core market for us, of course.

I think that is also why it is very important for us to keep production running now, as we have, take some risk in doing that. Of course at the current levels so far, we have good production margin on finished products.

We also had good operating margin on ammonia. If gas prices were to go up further, we also have the possibility to import ammonia and keep finished fertilizer production going.

We believe that Yara as such has a quite strong competitive edge also against competition also in Europe in terms of being a very stable, reliable supplier for the European market and gain market share.

To add and you put it very well, Magnus. As we said at our Capital Markets Day back on January 9th as well, we said that we're a battle-proven organization.

We've been tested again now, and I want to thank all our colleagues for an outstanding performance. Our finished goods production is at one of the highest levels we've seen, but it's one thing is to produce, but also to get it out to our customers as well.

It been an outstanding performance on really working hard throughout our whole supply chain in order to get that done. We've used the robustness and the flexibility that we knew that we had in our business model before the energy crisis and before Russia's war on Ukraine.

The learnings that we had from that, we've also built in even more flexibility in our system. That's what we're fully utilizing now to maintain production at high levels, but also moving the product.

Very helpful. Thanks a lot.

Thank you. For those that have dialed in by phone, if you wish to raise your hand, you need to press star followed by 5.

With that, we'll move to the next question, which is from Mazahir Mammadli. Please unmute, the line is yours.

Thank you. Two questions from my side.

Sorry, firstly, as we near the planting season in the Southern Hemisphere and if the situation stays the same, how should we think about the market development, whether it's volumes, demand destructions, acreage decisions, and also perhaps some relief from amsul substitution in Brazil from Chinese imports? My second question is with the free cash flow that you are generating now and perhaps in the next few quarters, what's the plan, first, in the scenario where you decide to go ahead with the Air Products project, and second, in the scenario where you decide not to do that, what would be the capital allocation decision there?

Thank you.

On your first, I think it's hard at least for me here in Oslo now to have a full picture on exactly how the decision-making is going to be on the Southern Hemisphere by the farmers. What we have heard that it's logical that the topic is on the agenda, right.

We hear from Australia, for instance, which has the peak import season for urea now in the second quarter and maybe one of the regions that are hardest hit by the timing of this conflict, there are some talk about reducing wheat acreage, for instance, to go for maybe barley, maybe some canola, find some other crops that are a little bit less nutrient-demanding. I would think that that would be also topic in places like Brazil, Argentina.

We know South Africa is struggling with high prices and low margins. Exactly, very very good questions, but I think it's hard for us to speculate in exactly how that will play out.

Surely there will be efforts to try to find solutions that would maybe require less nutrients.

To the question question on cash flow and capital allocation, I think I mean for us, it always starts with with strong capital discipline and as we outlined in in January. Investing into US projects, as as we said, is a is a core priority for our energy diversification strategy.

We outlined there as well roughly over the period up through 2030 how much money we we sort of or how much CapEx we plan to to spend on that. I I think irrespective of of sort of FID decision there, capital discipline will stay strong.

Potentially, we would do other projects, pursue other similar-type projects for the for the same objective, but but still with with the same discipline. That that's really driven by how much we believe that we can take on at at one point in time, not not only sort of from a balance sheet perspective, but also to make sure we can actually deliver a strong return on on those projects.

That's kind of the guiding star for that. Of course, if our cash flow was to increase significantly in in the period as well, I mean that doesn't change our plans on on the investment side materially necessarily as such.

Of course then we would look at the levers that we have at hand. Of course, as we've said, additional distribution is is also something that we would always always consider, right, in in such a scenario.

I think also on on that note, of course also important to mention that with the current market volatility that we see, we also of course need to keep in mind that there could be changes in the market as well. I think particularly with what we see now, of course maintaining a very strong balance sheet is extremely important for for our flexibility both yeah, to to navigate the market, but also to sort of make share shareholder-friendly decisions.

Sort of regardless, of course our capital discipline remains even though our cash flow would would increase. As said, we are sticking to our capital allocation policy, our dividend policy, and and we will, as a part of that, always consider additional distributions.

Great, thank you.

Thank you. The next question is then from Angelina Glazova.

Please unmute and ask your question.

Hello and thank you for taking my questions. Angelina Glazova from JPMorgan.

I just have one question left actually, and that's on the US blue ammonia project. I am wondering how you think about the timeline for mid-2026 FID that you provided us with.

Do you view it as a hard deadline or do you think that this is a goalpost that can be moved potentially? The reason I'm asking is that we had quite a detailed discussion on policy earlier on the conference call and it is a possibility that we might not get final certainty on CBAM regulation in Europe by mid-2026.

I'm wondering in this case, how would you approach the decision? Would you still make the decision in conditions of uncertainty or would you rather wait till we get this final certainty on regulation?

Thank you for the question. I think when it comes to certainty around political decisions, whether it's CBAM or tax rates for that matter, you never get that, right.

You never get 100% certainty. I think we as such are always have to make decisions knowing that there is that level of uncertainty.

Everything that's politically decided could of course be undecided. That being said, I think sort of the tendencies that we see on CBAM now as well also politically and also the signals that are public out there is that the appetite for changing it seems to meet with resistance in many places and importantly among those European Parliament as an example.

That being said, when we do a project like this, obviously we don't base that solely on subsidies or sort of political incentives like that. As we've said many times before, is basically three main objectives: it's lower gas prices, it's increased scale, and with that comes lower fixed cost and CapEx per ton, and then it's tapping into sort of the carbon margin as well.

All three are important and play a role in the business case. Obviously, if you take one away, then the business case is less strong, but still for us as a big ammonia producer, the two first ones are very important.

When it comes to the timeline, I think that is our plan and we work by the plan, but what's important both for us and for Air Products is to make the right decision. If there's outstanding technical matters or any other good reason that it makes more sense to wait a little bit, that's of course what we do.

We know there's nothing forcing our hand to make a decision on a certain date. We will make the right decision for both companies, and that is one that is value-creating for all our shareholders.

Thank you very much.

Thank you. We only have one more question so far, if anyone else has a burning question, they should raise their hand now.

First, Bengt Jonassen, the line is yours.

Thank you. Bengt Jonassen, ABG.

Just one follow-up question on the comment on the industrial segment. I think you stated in the webcast that there were some curtailments or permanent curtailments of some capacity in the industrials.

Could you confirm that and how much of the capacity was curtailed?

It's on the volume side, we announced last year a few closures or curtailments in Brazil for the industrial site. In addition to that, we had some smaller production issues as well in Cubatão this quarter that also impacted the volumes.

A bit remiss not mentioning that in the presentation as well.

It's the hibernation of the sulfuric acid plant in Paulínia, which we've mentioned last year, if you remember.

Okay.

Smaller plants as such, or smaller volume impact. Okay.

There are no further questions, it seems like. That means that we will end the Q&A session now.

Should you have any need for follow-ups, the IR team remains at your disposal. With that, thank you for joining, and we wish you a pleasant day.

Thank you.