Okay. Good morning, and welcome to the presentation of Iara's 3rd Quarter Results. Our presentation today is by our CEO, Svein Tore Holsetter CFO, Lars and EVP, Sales and Marketing, Erik Knutsen. And we'll have a Q and A after the presentation. And I'll then hand over to Svein Tore Holsete.
Thank you very much, Tore, and good morning to all of you. Before we go into the presentation, I want to give my overall reflection on the quarter, which is that Yara is delivering on its targets operationally with higher production, reliability and also Energy Efficiency. Commercially, with strong premium product sales and realized prices, and This is improving sales and marketing's EBITDA per ton. And as a result of this, results continue to improve. So now I'll go straight to the results.
And as always, we start with safety. Very pleased to have established an industry leading TRI rate in the last year. We have now reached a level where we have to accept that we cannot improve further each and every month. I am pleased to see that the severity level of the injuries we've had this year are at a lower level than last Yes. We believe that we can ultimately get to our 0 target on injuries, and we will continue to push towards this goal, and we do this through our case by choice way of working.
Now let's take a look at our financial results. EBITDA, excluding special items and IFRS 16, is up 49% year over year. This reflects lower energy costs, strong premium deliveries and higher production in the port. We also saw a strong earnings improvement in the new business area. Our earnings are on an improving trend.
And as you can see on the on your left hand side, so are our capital returns. But further improvement is needed in order to generate satisfactory returns and achieving this is top priority at Jare. Volume wise, our total third quarter deliveries were down 5 to 9,800,000 tonnes. However, we saw a positive mix effect on EBITDA as deliveries were up for NPKs and other high Margin Products. The lower deliveries were mainly within commodity products, where margins are lower.
We saw strong nitrate deliveries, still somewhat lower compared with a record high 3rd quarter, please start. Before we go further into the results, let me provide some comments on market developments this quarter, starting with production costs. Gas prices in Europe We're down 55% compared to the year earlier, and U. S. Gas prices were down 23%.
Nitrogen prices were stable, and it's fundamentally positive that prices in most locations have moved to a level where Chinese exports are increasingly in demand globally. Yara's Realized nitrate and NPK prices were also higher, both in absolute terms and in terms of premiums compared with urea and other commodity fertilizers. The publication prices on the chart that you see here are lagged by 1 month to better reflect that Yes, the P and L where deliveries are that are made today typically are made roughly 1 month early. Even if we have not yet reached a satisfactory return level, we are pleased to see an Improving, correct. This is our highest third quarter result in 5 years, and our Return on invested capital has improved for the last 5 quarters.
I'd now like to hand over to our CFO, who will take you through our financial performance in more detail. And after this, the EBITD sales and marketing, and Harry Kutsen will provide an update on our commercial activities. So over to you,
Thank you, Svein Tore. Good morning, all. Let me start by looking a bit at the key numbers. EBITDA, excluding Special items was at €630,000,000 representing an improvement of roughly 50% when we also adjust for IFRS. The underlying EPS improved significantly in the quarter, but the reported EPS was down in the quarter.
That was driven by 2 main effects compared to the underlying. Number 1 is special items, where we have a potential misinterpretation of an energy tax in one of our larger sites, which we have made a provision for referring back to the past 5 years of a total of between of $35,000,000 In addition, we have a negative effect on our USD loans, which are consolidated into a NOK entity when the dollar strengthens. The EBITDA growth was also the main driver behind the increased cash flow from operations, landing at EUR 285,000,000, which is significantly higher than a year ago and also positive net of investments. As communicated, We have a significantly reduced investment activity as our focus is on ramping up current investments, And CapEx at the end of the year was at $750,000,000 The increase in earnings and in capital return is positive. However, we are still well below our mid cycle target of above 10% return on invested capital.
The Rolling 12 month return is at a little bit north of 6%, while the return in the quarter is North of 8%, supporting the path towards that mid cycle target. If we look at the bridge, Lower energy cost was a significant driver for the EBITDA improvement compared to a year earlier and an improved mix in line with Our strategy, prioritizing value over volume, provided a positive volumemix effect and better margins then also contributed to the net increase in EBITDA. The energy cost decrease was in line with the Q2 guiding, driven by lower energy prices in Europe compared to last year. The other includes the IFRS 16 effect of $29,000,000 as well as certain negative portfolio effects from operations that had a contribution which was positive last year. And then we should remind ourselves that the The value transaction was closed in the Q3 on the 10th July.
If we then move on to look at the different segments, there was a Profit growth, as expected, in production, driven by European upgrading margins with improved reliability as well as a positive contribution from growth projects compared to last year. The sales and marketing segment, which is less cyclical, What's up compared to last year, and Terje will shortly provide more comments related to sales and marketing. We saw a broad based improvement across all business lines in new business with Volume increase for AdBlue in both Europe and North America as well as higher margins, mainly within mining applications, And Maritime contributed a significant share to the result improvement in the quarter. The evaluation of an IPO In June, underlying production performance increased 470,000 tonnes versus 2018, driven by increased finished product output and improved reliability relative to 2018. Of course, with current upgrading margins, improved reliability being a key factor.
As we can see from the past, output will vary on a quarterly basis around the positive long term improvement trend. Our main focus is on turnaround performance, further reliability improvements and Growth Project Execution. The ammonia energy efficiency saw a positive development during The quarter and this, of course, supports our strategic targets on reduced greenhouse gas emission. The fixed cost trend remains flat, in line with the announced target of beating inflation by around $300,000,000 by 2023. And the overall payroll cost was at around $280,000,000 in the quarter, which is actually the lowest level since the Q4 of 2017.
Working capital increased in the quarter on a rolling basis, both seasonally and in this quarter, in particular driven by deliberate commercial management of inventory levels relative to pricing in an environment with favorable upgrading margins. In the quarter in isolation, the increase in working capital is driven by seasonal patterns in Brazil, which is in line with the development last year and also timing of gas subsidy payments in India. Our committed CapEx levels are unchanged, in line with the communication at the Capital Markets Day. But although capital expenditures as of the Q3 is at SEK 750,000,000, We maintain the commitment estimate of SEK 1,300,000,000 for the year as CapEx is normally significantly higher in the 4th quarter than in the average quarter. As you can see and as we've discussed before, our investment spend is significantly reduced in 2019 2020 as our growth projects reach completion and strict capital allocation rules are enforced for any new Proposals.
Currently, we have 3 major growth projects still under execution, which is Sloyskiel in the Netherlands with completion in The second half of twenty nineteen, Salitro with completion of the first phase in the first half of twenty twenty and Via Grande with completion by the end of 2020 as previously communicated. Cash earnings In the quarter, funded both investments and the increased operating capital, leaving net debt slightly down from the 2nd quarter and below 4,000,000,000 dollars. The net debt EBITDA ended at 1.9 at the end of the 3rd quarter, down from 2.5 at the end of 2018 and 2.2 by the end of the second quarter. As such, Q3 is the Q1 where Yara is within its targeted range of 1.5% to 2%. And reminding then from the Capital Markets Day, our revised capital structure target is a mid- to long term net debt EBITDA range of 1.5 to 2 and the net debt equity ratio below 0.6.
As you may have seen from our separate stock exchange release this morning, In line with this new policy, we are also announcing a share buyback program for the Q4, targeting to buy back approximately 0.8% of outstanding shares, including the redemption from the Norwegian States. Adjusting for this buyback, net debt EBITDA at the end of Q3 would be close-up to 2x. As previously announced, the current improving market fundamentals, combined with Yara's extended improvement program and increased hurdle rate for new investments, may lead to increased dividend capacity beyond the ordinary payout ratio going forward. And with that, I hand over to
Thank you, Lars, and Good morning to all of you. Our sales and marketing deliveries decreased 7%, mainly due to reduced sales of commodities in Brazil and also some lower deliveries of industrial urea in Europe. Premium Products Deliveries were in line with last year as growth in Brazil offset lower deliveries in Europe and Asia. Overall, we consider the premium deliveries strong mainly due to the NPK deliveries. And although nitrate deliveries were somewhat lower, This is compared with a record high delivery last year.
Despite lower deliveries, EBITDA increased with 33% from Q3 2018, reflecting lower fixed costs and margin improvements, which more than offset the lower deliveries. And as you saw earlier in the presentation, prices were up both for NPKs and nitrates. And in premium terms, the performance is even stronger since comparable commodity reference prices are lower compared to a year earlier. Let me then quickly go through some of the regional Developments. The season in Europe started really well, but not unexpectedly.
Demand slowed towards the end of the quarter following the negative price trend in global commodity nitrogen markets. But that is at the time where fertilizer application still is 6 to 9 months away. And despite that Slow market in September, Yara's nitrate and NPK deliveries for the quarter were roughly in line with a year ago, while nitrogen deliveries in Europe for the industry as a whole was down 8%. Growth for our premium products continue in Brazil, while the development in several other key premium Product markets in Asia and Latin America has been somewhat muted in the quarter compared to a year ago. And that is due to a combination of challenging ag fundamentals and also unfavorable climate conditions typically related to water availability, and that has had a short term impact on deliveries in several markets.
Despite these short term setbacks in some markets, Total premium product deliveries were for the quarter in line with last year, as already mentioned. And over the last 12 months, we have been able to increase the premium deliveries with almost 500,000 tonnes. And as you can see, we also continue to grow our deliveries of the Yara Vita product range at the high speed. And for those of you that do not follow us that closely, YaraVita is our Micronutrient range for either foliar application or applied as a coating on solid fertilizer, high margin range, knowledge intensive solution. So all in all, we are very confident that our strategic direction is Right.
And also that our medium- to long term targets that we communicated at our Capital Markets Day remain. And as Svein Tore noted at the start of the presentation, we are delivering our targets within sales and marketing with strong premium product sales and realized prices, thereby improving EBITDA for Tom. And then I will hand back to Svein Thore, who will give his closing remarks.
Thank you very much, Thade. Running off them. We continue to consider our prospects attractive. Firstly, the Industry Fundamentals, where a growing population and agriculture's Environmental and Resource Challenges create business opportunities for Yara. Better Crop Nutrition Solutions play a key role in responding to volatile talent.
In addition, the market cycle is improving with supply side pressure easing, while demand Fundamentals are positive due to a tightening situation for Our cash flow is set to improve, both due to the cyclical improvement and that our CapEx is declining significantly, while our improvement program delivers higher volumes and revenues. And finally, we have a strong competitive position with a focused and sustainable long term strategy to deliver As you may have seen, we launched our long term targets to fulfill our strategy this summer. And as mentioned at the start of the presentation, we are delivering on these targets. And I hope you've seen this as well as you now have been through the results of the Q3. Again, I would like to highlight that operational improvement with higher production reliability and energy efficiency, commercial and margin performance with strong premium product sales and realized prices, improving sales and marketing EBITDA And as a result of this, our returns continue.
I want to leave you with some recent examples of food chain initiatives. Improving the environmental footprint of agriculture is a top priority globally, and we are connecting with more and more companies along the whole value chain to achieve this. We are collaborating with NEL to produce hydrogen with renewable energy. And our Cooperation with Swedish Landmann leads the way towards the world's 1st certified Fossil Free FoodCheck. We also have several other multinational food chain projects with some of the biggest players in the industry.
So with these closing remarks, I hand you over to Thore, we will coordinate the queue.
Okay. We are ready then for the Q and A. So if you have a question, Please raise your hand and my colleague Silje will get the microphone to you, sometimes with help from the audience. Is there a first question we can kick off with? Yes, we go to ABB.
Yes. Good morning. Ben Tonhausen from APG. The volume reduction within Otter and Brazil, is that related to the Galvane transaction? And how much is how much volumes All that is related to those deliveries.
If we
look at realized prices for PK, given the significant price fall within phosphates, can you please have a comment on that? And also finally, how does the order book look into Q4?
Yes. If I start briefly on the other, a main effect on the negative there as opposed to the positive On IFRS, it's related then to sales and profit from those assets in the Q3 last Which gives you a delta. In total, when you also look at the notes of our report, you will see that the other items are actually lower than they were Oscar, when it comes more on the market question, I think that's for Thijs.
Yes. I think firstly, it's important that we are with our NPKs primarily in market segments that are less exposed to the pure commodity pricing. So that means that we have more stability in the NPK price than I think many of our competitors. That is also due to the fact that we are much deeper in the market. And typically, you would have less of the Swings when we operate as far out as we do.
However, over time, obviously, we are post the commodity prices. And we would most likely see some more alignment, But I would stress that we are in many market segments that have much less price elasticity than Typical commodity segment. That's why we see the benefit in a phase like now when B and K It's more volatile that we are able to sustain and keep margins. I think that is a reflection of all the work we do in positioning ourselves Yes. And then it was order book.
First, I would say we are very pleased with how the European season started. I think we hit Well, on pricing, we got good traction. It's very natural that we have a falling off A bit now when price commodity prices have been more on the downward trend. There is substantial Market lift in Europe. Eurya has not yet come in with strong volumes.
That means that we foresee that we will have a normal season in Europe, whether that will come exactly in Q4 or early Q1. That still remains to be seen. That's something we play by the week. But we are confident on where we are presently. We have maintained market share in Europe And consider that the season will evolve normal.
More questions? If not, there is another opportunity at 2 p. M. Oslo time today when we have the conference call. With that, thanks for joining today.
Well, that's it really. Thanks for joining the presentation.