Yara Sees Gas Costs Rising $450 Million in Fourth Quarter Year on Year
Key Facts
Yara estimated that its gas costs would rise by $450 million in the fourth quarter of 2026 compared with the same period last year, according to its third-quarter results report. The estimate is based on gas futures markets on October 13 and assumes consumption volumes remain unchanged. The company said gas costs in the first quarter of 2027 would also increase by $445 million year on year. The estimates point to expected cost pressure over two consecutive quarters, as Yara said higher European gas costs contributed to weaker third-quarter results. The company’s shares closed at $21.19 on November 10.
Yara outlined two caveats to its estimate: costs could change with future spot-market prices and local purchasing terms, and the guidance, which assumes unchanged volumes, does not include the effect of reduced gas consumption if ammonia production is cut. This means the announced figure compares gas costs between the two periods on the assumption that volumes do not change, and does not incorporate potential savings from lower production. The company said its estimates are based on the market conditions used when they were prepared, including futures prices on October 13. The fourth-quarter estimate therefore remains tied to gas prices and supply terms, while actual consumption may differ from the comparison basis. The same caveat applies to assessing the cost impact if the company adjusts ammonia production.
Energy costs weighed on third-quarter results, with EBITDA excluding special items at $675 million, down 16% from the same period in 2025. By contrast, revenue and other income rose to $4.478 billion from $4.108 billion a year earlier. Net income also fell to $199 million, compared with $320 million in the third quarter of 2025. Yara said higher gas costs in Europe and lower deliveries outweighed the effect of higher prices. The figures show revenue growth alongside lower earnings, with the company citing cost and operational factors that affected quarterly results.
Yara’s weighted average global gas cost rose to $12.9 per million British thermal units in the third quarter, from $9.5 in the same period a year earlier. In Europe, the average was $16.6, compared with $12.7 a year earlier. The increase coincided with a decline in ammonia production to 1.511 million tonnes from 1.870 million tonnes. Total deliveries also fell to 7.839 million tonnes, compared with 8.173 million tonnes a year earlier. The company said it managed its European production footprint in response to higher gas prices by optimizing product flows and adjusting production to market conditions to reduce exposure to elevated energy costs.
Chief Executive Svein Tore Holsether said strong commercial performance helped offset accelerating European gas costs, while plant-specific reliability issues affected production volumes. The company also pointed to slow demand for the 2027 season in key nitrogen markets during the third quarter, with imports and deliveries in Europe, the United States and Latin America lagging year-earlier levels. It saw European buying improve toward the end of the quarter, however. Yara added that a significant share of seasonal purchases is still due ahead of the Northern Hemisphere season, the first full season with lower supplies from the Middle East. The gas-cost estimates therefore come amid results also affected by production, deliveries and the timing of seasonal demand.
Yara expects to complete its acquisition of Gulf Coast Ammonia’s plant in Texas by the end of 2026. The company said the deal would shift its gas exposure from a European concentration to an equal exposure to the Henry Hub benchmark, reducing its exposure to European energy after closing. Completion remains subject to customary closing conditions and relevant regulatory approvals. The move comes as the company expects gas costs to rise year on year in the fourth quarter and the first quarter of 2027. The company continues to expect the acquisition to be completed before year-end.