Welcome to Yara's Fourth Quarter results presentation. Today's presentation will be held by our CEO, Svein Tore Holsether, and our CFO, Magnus Krogh Ankarstrand. After the presentation at 1:00 P.M. Oslo time, there'll be a conference call where you can dial in and ask questions. You can find logon details on our web page under Investors. With that, it's my pleasure to hand over to our CEO, Svein Tore Holsether.
Thank you, Maria. Good morning, good afternoon, and good evening, and thank you for joining our Fourth Quarter's earnings presentation. As always, I'm starting with our safety performance. Our license to operate is based on us creating a safe working environment for all our employees and contractors. Our 2025 performance has not been at the level that we want to be at. Our TRI rate increased from 0.9 at the end of fourth quarter 2024 to 1.2 at the end of 2025. As I talked about in our third quarter presentation and at our Capital Markets Day, we experienced a tragic accident in Rio Grande leading to the death of one of our employees, Amaral, and this happened in August of last year. We're doing our utmost to prevent this or any serious accident from happening again.
A few plants represent a large share of the accidents, meaning that a large share of our plants are still delivering strong performances on safety. We're strengthening our safety program in order to get back on track as we're not satisfied with our current performance. Last week, we conducted a safety stand-down at all our plants worldwide as we've seen concerning development in accidents also continuing into January of this year. It is my responsibility to ensure that we offer a safe place to work. Any accident, big or small, is avoidable and our long-term ambition remains zero accidents. Looking at the key highlights for the fourth quarter, Yara delivered an EBITDA excluding special items of $709 million, representing an increase of 37% compared to last year. This increase was driven by higher nitrogen upgrading margins, lower fixed cost, and strong volumes.
In connection with our Second Quarter 2024 presentation in July of 2024, we launched a target to reduce our fixed cost by $150 million by the end of 2025. Given our strong progress during 2025, this target was later updated to $180 million, and I'm very pleased to announce that we have more than delivered on this, achieving over $200 million in fixed cost reduction. W hile cutting costs, we have also improved our operational performance, delivering strong premiums and also increased deliveries and historically high production volumes in 2025. Our entire organization has demonstrated strong performance in 2025. We are proposing an annual dividend of NOK 22/ share to the annual general meeting. Going forward, Yara is set to further increase cash flow driven by EBITDA expansion initiatives launched at the Capital Markets Day, and this is also supported by constructive market fundamentals.
Taking then a closer look at the EBITDA variance for the quarter, we saw higher deliveries this quarter, particularly in Europe where there has been a strong start to the season ahead of the implementation of CBAM on January 1st. Nitrogen prices remained at high levels in this quarter and above the year before. In addition, we saw lower gas prices in the quarter in Europe, which is also then improving nitrogen upgrading margins. Price margin is impacted somewhat by slightly lower premiums on NPK, mainly in Asia, which is also normal with the development in the underlying commodity price components that we have seen over the last months. Fixed costs are $31 million lower than a year earlier, reflecting a strong conclusion of the cost program. Other is mainly impacted by currency impact of -$42 million as Yara's main currencies strengthened against the US dollar.
The remaining $20 million of negative impact in other primarily reflects an insurance compensation that we received in the fourth quarter of 2024. Quarterly return on invested capital is at 11.4%, and for the year in total, we delivered a return on invested capital of 10.7%, both of which are above our through-the-cycle target of 10%. Yara's capital allocation policy remains firm. During 2025, we've delivered strong financial results, and the earnings per share excluding currency for 2025 is $4.25 per share compared to $0.93 per share in 2024, reflecting strong underlying performance and our commitment to improve underlying cash flow. Furthermore, we ended the year with a net debt/ EBITDA of 1.17, which is below our target range of 1.5-2 times. On this basis, Yara proposes an annual dividend of NOK 22 per share for 2025.
This is in line with our dividend policy and reflects stronger market conditions and significant improvements internally and also a strong balance sheet. Going forward, the improvement program will be a key driver to increase cash flow. This again sets the basis for profitable growth investments as well as distribution to our shareholders. Yara will maintain a strict capital discipline and sets the bar for growth investments high with improved ammonia position as a key strategic objective. At the same time, we aim to maintain our dividend policy, and depending on market conditions, Yara will consider further distributions in line with our capital allocation policy. I will then hand over to our CFO, Magnus Krogh Ankarstrand.
Thank you, Svein Tore. As explained earlier, EBITDA excluding special items is up $190 million compared to last year, driven by higher operating margins, increased deliveries, and strong performance on improvement initiatives and cost reductions. Including special items, EBITDA for the quarter is up from $360 million for quarter last year to $773 million this year, reflecting a significant positive variance on special items year-over-year. This translates into higher earnings per share. Excluding currency and special items, EPS stands at $1.17 for the quarter versus $0.36 for the quarter last year. Return on invested capital for the quarter increased to 10.7% on a 12-month rolling basis, above our target of 10% ROIC over the cycle. Looking towards the cash flow, cash from operations increased by $248 million compared to a year earlier, mainly reflecting higher operating income. This was partly offset by an increase in operating capital.
A buildup is common in Q4, and with the continued increase in fertilizer prices, we see an increase also in operating capital. The major difference toward last year is lower prepayments in Brazil Q4 this year compared to unusually high prepayments in the fourth quarter last year. Yara's investing cash outflow decreased by $25 million compared to last year, reflecting some phasing in cash impact into 2026. Cost reduction was the first phase of our improvement program and has delivered ahead of plan. Since the launch of the program in second quarter 2024, fixed costs have reduced by more than $200 million in nominal terms. Factoring in the underlying inflation in that period, the actual reduction of the fixed cost base is well above $300 million.
The run rate, factoring in the full-year effect of savings and adjusting for seasonality, stands at $2.3 billion, or $46 million better than the updated target of $180 million in savings. This reflects a reduction of more than 10% of the global workforce, as well as a significant reduction to external spend. Looking at CapEx, the strict capital discipline continues, reflected in the CapEx this year, with 2025 CapEx ended at $0.95 billion, $400 million lower than the original guidance back from 2024. Maintenance CapEx for 2025 is below earlier guiding, reflecting some phasing into 2026. However, the CapEx guiding for 2026 remains unchanged. This reflects a higher turnaround activity level for the year. This will vary from year- to- year depending on which plants go through turnaround in which year. Yara remains restrictive on committing to further growth CapEx until an FID for the U.S. project has been concluded.
Total deliveries for the quarter are 3% higher than the year before, supported by the gains made in our production system. Deliveries were mainly driven by higher AMIDAS and NPK sales in Europe, with a strong start to the season and increased prebuying ahead of CBAM implementation. We also saw higher deliveries in Africa and Asia, mainly related to third-party product sales. Ammonia sales are higher following increased external sales in the Americas, where we have optimized volume flows by replacing them with third-party products in Europe. We are currently experiencing a strong market for all nutrients, especially nitrogen and phosphate. This increases Yara's upstream nitrogen margin and phosphate upgrading margins and increases the bar for our premiums, which we measure above the commodity value for those nutrients. That, combined with lower crop prices in general, exerts some pressure on our premiums in certain markets.
For the fourth quarter, strong demand and prebuying in Europe supported European nitrate premiums ahead of the year-end, and CBAM implementation contributed as well. NPK premiums are somewhat pressured, and primarily driven by Asia. We see a contraction towards more normalized premium levels. 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 the flexibility of our business model and the ability to create value both from the upstream margin as well as the premium side, also limiting the commodity downsides for Yara through the cycle. The strong cash earnings contribute to a reduction in net debt in a season where we typically see an increase due to the buildup of working capital.
Investments are in line with plans, with CCS project in Sluiskil and a new YaraVita plant making up the lion's share of the growth investments and maintenance investments according to our plant prioritization framework. Yara's balance sheet remains strong as presented in our Capital Markets Day. Looking briefly at the income statement for the full year, we find the major variance in revenues and cost of goods sold, with a solid increase in the resulting margins. Lower payroll costs reflect the impact from our cost program, however also impacted by one-off severance costs in both periods. The currency gain is opposite of last year's loss and mainly reflects unrealized gain on U.S. dollar-denominated debt positions and gain on internal positions in other currencies than U.S. dollars. The effective tax rate for 2025 is 22.8%.
Finally, the significant increase in net income is also impacted by the fact that 2024 net income included several non-cash special items and currency translation losses, totaling to approximately $565 million in difference. Higher non-current assets mainly reflect currency translations gain, as most functional currencies in Yara have appreciated against the U.S. dollar. Current assets reflect higher inventory value and trade receivables due to increased prices, in addition to higher cash and cash equivalents. Increased equity in 2025 reflects positive net income and the currency translation gain. Looking to the market, we see that global nitrogen markets remain tight going into 2026 due to a combination of strong seasonal demand as we approach the northern hemisphere spring, strong sales in India triggering demand for more imports, and lack of Chinese exports due to restrictions in their season.
In India, urea sales were record high in December, adding to the import need. Around 5 million tons of urea were exported from China in 2025, which were clearly needed to cover the global deficit. The export window is again closed for the Chinese season. Both E.U. and the U.S. off-season imports are slightly ahead of last year, but more nitrogen is still needed for the upcoming season. Looking to the supply side, we see that the peak of capacity additions excluding China has passed, with modest capacity growth in 2025 and capacity additions below historic demand growth for the balance of this decade. Combined with supported demand fundamentals, this indicates a continued tight global supply and demand balance in the coming years, excluding China, and improved European production margins with forward gas prices lower than current levels.
Agriculture, fertilizers, and the raw material market that feed them are inherently impacted by global markets and consequently geopolitics. Yara's competitive edges create a unique business model that is positioned to handle changes, create value through the cycle, and limit the downside risk of global volatility. First and foremost, we will continue to build shareholder value through our improvement program announced at our Capital Markets Day, expanding on the cost reductions achieved so far. This will strengthen returns as well as our balance sheet. Yara has demonstrated a strong capital discipline for several years and will continue to do so while prioritizing the most value-creative opportunities, reducing exposure to European gas costs being a key priority. For this, we have several pathways to follow, as illustrated at our Capital Markets Day. Finally, our business model contains significant flexibility, both on the energy side and with regards to regulation.
Significant attention has been given to the CBAM in recent months. An unsurprisingly increased cost for carbon increases the cost of products containing carbon, including fertilizers. This must also apply to imported products unless the E.U. intends to suspend its entire decarbonization plans. However, whether CBAM retains or is suspended, Yara will handle both scenarios. We have the flexibility to import all types of ammonia, and the underlying objective of reducing energy costs is valid in all of the scenarios. Even though uncertainty around critical regulations such as CBAM is a clear negative for investments, Yara's business model and scale enables us to diversify our strategy in light of political uncertainty. Work on our project collaboration with Air Products continues, and the two companies have complementary business models, and Yara's unique import capacity into Europe, and not to forget Latin America, is a key competitive edge for the combination.
This is valid for NEOM, where Yara will distribute against the commission, as well as Darrow, where the intention is for Yara to acquire the ammonia part of the project. As previously stated, both companies work on establishing the construction costs and commercial negotiations through the first half of 2026, and the target to make a decision mid-2026 remains. A s mentioned by Svein Tore, we believe that CBAM will remain in force, and we are, of course, evaluating developments closely ahead of a potential FID. With the strong backdrop of delivering on cost reduction and the next phase of our improvement program, Yara will continue to deliver sustainable cash flow expansion. We already have a head start into the $350 million target by delivering close to $30 million over the targeted $180 million cost reduction target on the last 12-month basis.
In addition to cost reductions and EBITDA improvements, we are working diligently to also grow cash flow through strict capital prioritization and optimization. For further information on our improvement program, I refer to our Capital Markets Day presentation, which is available on our webpage, and further updates on progress will be provided through our quarterly reporting. Finally, the outlook of tight nitrogen markets will provide continued strong fundamentals in the coming years. With that, I hand over to Svein Tore.
Thank you, Magnus. I'd like to end the session reflecting on our total 2025 performance. While delivering on our targeted cost and CapEx reductions, we've also delivered a strong operational performance. Deliveries, they have increased with a large share driven by increases in our high-margin premium product output. A s mentioned by Magnus, premiums have remained strong in a high-price environment, which is a testament to the strong commercial performance delivered across all of our regions. Production is at all-time high levels, and it's particularly pleasing to see that our flagship NPK plant in Porsgrunn is leading the way with continuously new production records. This, combined with strong market fundamentals, led to a significant improvement in financial results compared to the year before.
Both EBITDA and net income increased significantly compared to 2024, and earnings per share, excluding currency effect, increased from $0.93 per share last year to $4.25 per share this year. 2025 free cash flow was at $988 million, which is 80% higher than the year before. Yara's cash flow through the cycle demonstrates the resilience of our business model. We deliver a strong cash flow from operations, also in periods with weaker market prices. This is partly due to the inherent nature of the nitrogen industry, but also partly due to the flexibility of Yara's diversified business. There is a limited downside to our cash flow as such, given the combination of ammonia flexibility and product optimization in an industry where both production levels and maintenance investments can be used to optimize in down cycles.
We can therefore conclude that 2025 was a strong year, and I would like to thank our entire organization for their continued dedication to deliver on Yara's strategic priorities. This will be achieved through our strategic priorities, as presented in our Capital Markets Day. Our strategic priorities are designed to address global trends and opportunities while, at the same time, utilizing the strengths of our business model to maximize profitability in our current operations and drive value-creative growth. Through global scale and optimization and operational excellence, we will continue to drive asset utilization and improve core profitability while optimizing logistical costs. This is about focusing on our core operations and maximizing capital productivity through strict resource discipline and reallocating capital to priority plants.
Our flexible nitrate assets enable us to strengthen our nitrate margins by shifting our position downwards on the ammonia cost curve by improving energy exposure as well as also increasing scale. This builds resilience in our earnings and increases our long-term competitiveness. Our growth strategy is focused on expanding on what we know best, our core business. This means monetizing recent growth investments such as CCS at Sluiskil and the new YaraVita plant, while also growing through our differentiated product portfolio and also our knowledge margin. We remain focused on driving long-term shareholder value while staying committed to our capital allocation policy. To conclude, I would like to reiterate some of our messages from the Capital Markets Day. We have a strong business model, which is committed to sustainable value creation. We're working on our EBITDA improvement targets of $200 million and $350 million by 2027 and 2030, respectively.
These targets are substantiated by concrete actions, and I believe we have demonstrated our ability to deliver. We have flexible pathways to energy diversification, and we have the unique infrastructure to make it happen. Importantly, we have a knowledge base, a team, and an approach to provide agriculture with the nutrient use efficiency it will need going forward, irrespective of fluctuations in regulation. We're solid. With a strong balance sheet maintained and a commitment to our credit rating, Yara has the ability to deliver sustainable value creation. I will now hand back to Maria.
Thank you, Svein Tore. As we're moving towards the end of this presentation, I would just like to take the opportunity to once again remind you about the conference call that starts at 1:00 P.M. Oslo time. If you go to yara.com under investors, you will find details about login details. That concludes today's presentation. Thank you for watching.