Okay. Good morning, and welcome to the presentation of Yara's Second Quarter Results. Our presentation today will be by our CEO, Sorenzo Roaldsette our CFO, Lars and our EVP, Sales and Marketing, Terje Eknitsen. With that, it's my pleasure to introduce Svein Tore, Ulcerpitz.
Thank you very much, Thore, and good morning to all of you. We will start, as always, with safety and where we show total recordable rate at SEK1.5 billion, which is slightly higher than SEK1.4 billion where we were a year ago. Our Performance has improved significantly over time, but we have reached a level now where We have to accept that we cannot improve at the same rate each and every month. And it is just as important to focus and to work on preventing accidents with high severity potential. I am pleased to see that the severity level of the accidents that we've had so far this year is lower than the same period last year.
Still, we have had 53 accidents year to date, And we definitely do believe that it is possible to get to 0, and we will continue to push towards that. Now let's take a look at our 2nd quarter results. EBITDA, excluding Special items and IFRS 16 is up 62% year on year. Delivers were up, especially for Yara produced products and energy costs We're lower, improving our margins. Our premium product deliveries were 7 Percent higher, which is in line with our strategy.
Our earnings continue on an improving trend as you can see on the right hand or on the left hand side and so are our capital returns. But further improvement is needed in order to generate satisfactory returns and achieving this is a top priority for Yara. Yara produced deliveries increased across all main product groups as you can see here. Our growth projects generate increased volumes and revenues. This has a significant positive mix effect on our Earnings as average margins for our own produced production is higher than in the rest of the portfolio.
And definitely achieving this in a situation where margins Our improving is, of course, even better. Before we go into the results, let me Provide some comments on market developments this quarter. Starting with our production cost, The gas prices in Europe are down 37% compared to a year earlier, and U. S. Gas prices were down 4 percent in the same period.
In total, our earnings improved by $103,000,000 in the quarter as a result of this. Nitrogen price developments were positive as prices in most Locations moved up to a level where Chinese exports were again pulled into the global market. Yara's realized nitrate and NPK prices were also higher. The publication prices on the chart here are lagged by 1 month to better reflect the Adas P and L where deliveries today typically are contracted 1 month earlier. Following a year of higher investments in 2018, our investment level is reduced in 2019 2020 as our growth projects reach completion and strict The capital allocation rules are enforced for any new proposals.
We maintain our SEK 1,300,000,000 Guiding on currently committed CapEx for 2019. We have 3 Major projects still under execution, Zweigschel in Netherlands with completion in second half of this year. Salitre in Brazil with completion in first half of twenty twenty and Rio Grande also in Brazil with completion end of 2020. Going forward, our priority is to deliver existing investment commitments, and We have a high bar for initiating new investments and have preference for smaller, high return, short payback projects. I should also note that for 2021, our committed CapEx It's in line with what we communicated at the Capital Markets Day.
Even if we have not yet reached satisfactory return level, we are pleased to see that we are on an improving trend. This is our highest second quarter EBITDA for 4 years and our Return on invested capital has improved for the last four quarters. I would now like to hand over to our CFO, Lars Rastrich, who will dive deeper into our financial performance. And after this, our EVP, Sales and Marketing, Terje Knutsen, will provide an update on our commercial activities. Over to you, Lars.
Good morning, everybody. Let me start by the EBITDA, excluding special items, which landed at $546,000,000 representing an improvement of 62% when adjusting for also IFRS 16. The EBITDA growth is also the key driver for the increase in EPS and also for the increase in cash flow from operations, the latter which landed at EUR 680,000,000, a 30% increase from 1 year ago. As communicated, reduced investment activity is currently our focus and ramping up the committed investments. And CapEx at the end of the first half was consequently 4.90 $1,000,000 and the committed CapEx is unchanged at $1,300,000,000 for the year as a total.
The increase we have in earnings and in capital returns is positive, and we have return on invested capital of 5% on a rolling 12 month basis. The return in the quarter in isolation was just above 7%, which is positive. However, these returns are still at unsatisfactory levels, and it indicates our path towards our target of a return through the cycle of above 10%. The improvements in the quarter were mainly driven by lower energy cost and increased deliveries of own produced products. We also had a positive effect from a stronger U.
S. Dollar, which is, of course, positive on our cost base, with the dollar strengthening 9% against the reals and 6% against the euro. Total Deliveries, when excluding portfolio effects from Cubatao, was flat year on year. The volume improvement was mainly explained by a 9% increase in Yara delivered products with higher margins than 3rd party products, as Sven Tore also mentioned. The price margin improvement is also reflecting the increasing Underlying urea prices in the quarter compared to falling underlying urea prices in the same quarter last year.
The energy costs ended $103,000,000 lower, which is in line with our guiding and of course, driven by significantly lower energy prices in Europe. The other item includes the IFRS Steen effect of $27,000,000 $8,000,000 effect from Cubatao and Freeport year 1. There, of course, remembering that Cubatao came into our books in the middle of the second quarter last year. Production saw positive contributions from the growth projects and improved reliability versus the Q1, and the profit growth was driven by increased nitrogen upgrading margins in Europe. The sales and marketing segment, which is less cyclical, was underlying in line with last year, and Tarek Knutsen will give more details on that in his presentation shortly.
New business is positively impacted due to increased activity in the maritime business and the Kubotaowa acquisition. Remaining businesses were in line with last year. Cash earnings and released operating capital funded both investments, Yara dividend payout and a net debt reduction in the quarter. The lower working capital was driven by seasonal increase of prepayments in Brazil, which is special to the 2nd quarter. The net debt to EBITDA was 2.2 at the end of the second quarter, down from 2.5 at the end of 2018.
As presented at our CMD last month, Yara's revised capital structure target is a mid- to long term net debt to EBITDA range of 1.5% to 2% and the net debt equity ratio below 0.6%. Under this revised policy, the improved market fundamentals, combined with our extended improvement program and increased hurdle rate for new investments may lead to increased dividend capacity beyond ordinary payout ratio going forward. Yara also repaid a $500,000,000 bond maturity in June. And as you've seen this morning, We have renewed our RCF incorporating a link to our carbon intensity targets. We announced an extended improvement program at the Capital Markets Day, focusing on key operational metrics reported on a rolling 12 month basis to better reflect the underlying value creation.
What is presented today, hence, contains no new targets compared to what we presented at the Capital Markets Day, but we do report on the progress as such in the second quarter. The underlying production performance increased by 346,000 tonnes versus 2018 on a rolling basis, driven by increased finished products output, while ammonia was slightly down, but with improved reliability compared to the Q1. The output will vary on a quarterly basis, although the overall trend, as you can see, is positive. The main focus for us is on turnaround performance and reliability improvements as also discussed in detail at the Capital Markets Day. We have also, at this slide, indicated the breakdown of the targeted volume improvements on the main product groups, and we've added some supporting material in the appendix in line with what was presented at the Capital Markets Day.
Going forward, we will, as mentioned, only refer to this extended improvement program with the baseline of 2018. Looking at KPIs beyond the production KPIs in the extended improvement program. Energy efficiency has been negatively affected by the recent outages on larger ammonia plants, mainly then in Q1 as previously described. The fixed cost development is improving, and it is worth noting that fixed costs also on a reported basis decreased for the Q2 in a row. Operating capital has increased slightly in the quarter, and it is important to note that When we follow-up on this KPI, we exclude prepayments.
Hence, the prepayments in the Q2 in Brazil is not included in this rolling trend. And by that, I'm pleased to hand over to Thije to shed some more light on the commercial operation.
Thank you, Lars, and a very good morning to all of you. Sales and marketing increased the EBITDA with 12% compared to same quarter last year. Adjusting for the impact of the IFRS 16 and also currency. The results are in line with last year. Total deliveries increased by 2% as a 7% growth in premium products and also some small portfolio effects in Brazil More than offset the lower sales of commodities in Latin America, where we have prioritized value over volume.
Excluding portfolio adjustments, deliveries were slightly down compared to a strong Q2 last year. Realized prices increased for all The main product groups, although less than the commodity nitrogen prices realized in the main export hubs. Our nitrate premiums are therefore lower compared to Q2 last year. On the other hand, our NPK premiums are increasing as phosphate prices have declined. I think it's important in this context to Also underline that as a distributor operating really further down into the value chain, our realized prices We'll typically be less volatile and move slower than the price developments in export hubs.
And this also underlines the resilient sales and marketing earnings. European deliveries were in line with last year, concluding the season 3% below last season. Nitrates in isolation was up 12% versus last year in the core European markets. The 23% growth in Brazil needs to be seen in light of last year's truck driver strike that had a significant impact on 2nd quarter deliveries. And also worth mentioning, the ongoing trade dispute between the U.
S. And China supports market growth in Brazil, which our 2nd quarter deliveries clearly benefited from. Deliveries in Asia were down due to less urea trade volumes, but also some reduction in premium products following a slower demand in China compared to last year. In North America, volumes were in line with a year ago despite challenging weather conditions. Our deliveries in Latin America declined 22%, mainly by We are now seeing lower margin commodity business, but also partly due to lower deliveries of premium NPKs in Colombia, Where deliveries in the quarter were impacted by transport strikes in the country.
The increase in Africa reflects, among others, an increased trade business to Ghana. At our Capital Markets Day, we presented our long term targets, which include increasing the deliveries of premium products by more than 3,500,000 tonnes by 2025 and also increasing the Yara Vida deliveries to more than 100,000,000 units also by 2025. And not at least to increase our EBITDA margin. With the performance that we have seen so far In 2019, we feel we are on track and that we can reach our long term targets. Maybe worthwhile mentioning that when it comes to Yara Vita, we expect most of the increase in 2019 to come in the Southern Hemisphere, and that's where we now are entering into season.
So with this, I will hand back to Sven Tore, who will give his closing remarks.
Thank you very much, Thadje. As presented at our Capital Markets Day on the 26th June, our Strategic execution is concentrated on delivering improved returns as a focused company along 3 main lines. Improvement, where we are increasing our improvement targets by 70% Value, where we are increasing our sales and marketing margins by strengthening our crop focused solutions and market positions and growth where we're increasing premium sales and adding Revenue streams by scaling up digital farming services and developing food chain partnerships. And in order to further strengthen our strategic focus on crop nutrition, we are evaluating an IPO of our industrial and nitrogen businesses. We consider our prospects attractive.
First of all, we see strong Industry fundamentals were a growing population as well as resource and environmental challenges create business opportunities for Yara. In addition, the market cycle is improving with the supply side pressure Easing, while demand looks positive with a tightening situation for grains. Our cash flow is set to improve both due to cyclical improvement and that our CapEx is declining significantly while our earnings improvement actions deliver higher volumes and higher revenues. Finally, we have a strong competitive position with a focused and sustainable long term strategy to improve returns through operational improvement, margin improvement and innovative growth. So with these Closing remarks, I'll hand back to you, Thor, to manage the Q and A session.
Thank you.
Okay. We are then assembling for Q and A where all our presenters are available for questions. So if you Have a question or more? Raise your hand and we will get the mic to you. Should we start with Nordea?
Hans Erik Jacobsen, Nordea.
Could you give us some more detail on the sharp increase in sales of all produced products, especially in relation to somewhat lower imports into Europe and whether the increase is sustainable. Well, I think I will start by going back to the earlier part of the season. So it's clear that we have had increased deliveries, particularly of nitrates in Europe. We have also seen that the consequence in Brazil, where we partly also are switching more of the sales Of what we call Yara Basa, which comes from Rio Grande, has had an attractive start. This is very much in line with the priorities we have of growing the premium products.
And we think if you measure this on a seasonal basis. This is sustainable and according to our projected growth.
Thanks.
Okay. DNB next.
Thank you. Good morning. Eivind Nadeing from DNB Markets. Two questions. 1 on premiums.
Can you help me understand why the nitrate premium is contracting year on year? And where the NPK premium seems to increase? And also how does the nitrate market look going into the second half of twenty nineteen? Next question is on plants reliability and downtime. Can you elaborate on plant performance in the second quarter and also going into Q3?
I'll do the second question, and then I'll hand over to Thierry for the premiums. When it comes to Reliability, as we said in Q1, we had a difficult start of the year and part of that also into April with Downtime or significant downtime at Slauskill, Pilbara and Tert. The production performance in 2nd quarter has been much better and we produced more than last year. But Still, we're not at a level at all plants that we'd like to be, but I'd also like to highlight that we set production records in Several of our plants and in particular, I want to mention Belle Plaine, which had record production both in the quarter and for the first half of the year. Going into this Q3, most of our operations are running on target.
But of course, there will be volatility going into the summer months also To higher temperatures that could impact. But at the moment, the plants are running well.
So if we take the premiums, starting with Europe and the Nitrods. I think first, again, to go back this season, we haven't had the season where we had a very much an upswing during the last Part of the season, I think we are quite satisfied with how we have been working up the price. But as you know, there is a time lag in the Price setting, which has a certain effect. What is very important is that the it's not only urea that we need to price It's really the crop prices. And if you take grain, for instance, the grain price is now at 11% below the 10 year average, which means that the farmers are under some financial constraint.
Knowing that the stock of grain is low compared to that same average outside of China, I think very much will depend on the movement of grain prices going forward. When it comes to NPK, we are in much more markets. We are in much more of the high value crop segments where Price typically is much more stable by design. And in those markets, we have seen lately that the DAP and therefore
margin. Okay.
Do we have a next Question? Yes. We will go to ABG.
Yes. Good morning. Bengtsson, ABG. A couple of questions for the CFO. On the operating
capital year over year,
it seems less released than last year. Is it less prepayment in Brazil? And also on the full year capital expenditure guidance of SEK 1,300,000,000 year to date SEK 0.5 billion is the downside in the guidance? And the final question is on the bond announced today. We've seen other sectors producing green elements in the debt financing is facing lower interest costs.
Is the same valid for you compared to the previous