Thank you for standing by, and welcome to Yara's first quarter results 2024. Please note today's call is being recorded. I would like to hand over to Maria Gabrielsen, Head of Investor Relations. Please go ahead.
Thank you, operator, and welcome to everyone to this telecom conference for Yara's first quarter results. I'm here together with some key representatives from Yara management. We have CFO Thor Giæver. We have our head of Market Intelligence, Morten Nøst. And we have also the key Corporate Development, the, as well as others. And we hope you all have seen today's presentation, so we will go straight into questions. And operator, you can please open the first line.
Thank you, and as mentioned, this floor is now open for questions. To ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. And your first question comes from the line of Lisa De Neve with Morgan Stanley. Please go ahead.
Good morning, and thank you for taking my questions. I have two. The first one, during the presentation, you stated that there's still business to be done in Europe. Can you share, I mean, the level of activity you're currently seeing in Europe, and maybe also what you expect, whether you expect activity to improve in Brazil and buying patterns to evolve? And then the second question I have is on blue ammonia. You have a number of greenfield blue ammonia projects that are currently up for FID in the second half of 2025.
I mean, what would be your motivation for building a new plant, which is essentially adding ammonia capacity in the market, versus perhaps also considering either buying a gray plant and adding CCS to it, or buying existing plants that are being built, and are currently under construction, or is this sort of part of the broader decision process? Any thoughts on that, would be welcome. Thank you.
Yeah, hi, Lisa. This is Thor Giæver. I can start on the Europe part. I think I actually had three questions there for the price of two, 'cause the first one was on both Europe and Brazil, but we'll try to answer all of them. I mean, current season is... I mean, relating it a bit to our comments on the season as a whole, we've had a lot of price volatility. Of course, we've had over the past two years, and understandably based on that, there has been more and more just-in-time buying, late buying throughout the season, waiting as long as we can in many cases.
In addition, we've had some weather issues in the first quarter that has held back the physical application. For those reasons combined, we are not surprised to see that there is still quite some activity ongoing into the second quarter. So this message is relevant, for example, if I'm sure at some point in the call, the word new season price may be uttered, either on the question or answering side. Normally, sometime during the second quarter, we will have a price reset, but the way things look right now, that isn't necessary to do earlier than normal, at least.
Linked to those factors earlier in the season, we're still seeing business that's being done for immediate application. Because in other cases, if you've had a very, shall we say, early spring and you've had plenty of pre-buying, by this stage, actually the demand could be more about positions for next season. But what we're seeing now is that there is definitely business for current application. The Brazil one, maybe I'll hand over to you, though, Tore.
Nothing particular. I think you had a mid-off season now in Brazil, and but, there's still demand, and they are supporting by importing our own nutrients, you could say, at the moment. And of course, the barter ratios that are, they are quite preoccupied with the number of bags of fertilizer they have to pay for their grain, right? Or it's improving quite a lot. So I would say that is, at least as far as I can see it, there's quite... There's nothing particular, I think rather positive sentiment in the agriculture in Brazil.
Yeah, and on blue ammonia, I'll hand over to Magnus.
Yeah, no, I think, there's several questions come back there as well. But I think, we do obviously look at all of the aspects that you mentioned. And I think, what we see very clearly is that blue ammon- blue ammonia fits very well into, Yara's portfolio. We're, of course, also looking at supply, demand, and as one of the biggest ammonia producers in the world and the biggest ammonia distributor in the world, we, of course, have a quite, quite good forecast, internally of where we think, that is going. So all those, you know, play into our, our decisions here. We will only, of course, make investment decisions that we believe are, value creative for, for our shareholders. And I think, I could say we are working on maturing-...
Several different options that we will, we will pick the ones that we believe are the most, value accretive. I think another important aspect there is that probably, I mean, we are one of the few, if not the only company in the world that can offtake the amount of, ammonia that would come out of a project, or projects like that as well, which, of course, gives us a lot of flexibility in terms of how we, how we want to play, and how we want to develop that market, going forward. But I think the summary, we, we are looking at what options would benefit, value creation for our shareholders the most.
Thank you very much.
Your next question comes from the line of Alexander Jones with Bank of America. Your line is open.
Great, thanks for taking my questions. A couple more on decarbonization. I guess, to follow up, first on your remarks there, Magnus, you talked about sort of attractive returns for shareholders. Are you able to quantify that in any terms, in terms of an IRR or ROCE threshold that you have on these investments in order to go ahead with them? And then the second is, during the quarter you signed an offtake contract for green ammonia from a project in Oman. I'm interested in that aspect, whether there's an opportunity here for you to sort of outsource more of your clean ammonia production to others who might have lower IRR thresholds than you, rather than producing it internally, or whether there's a strategic value in having captive supply as well. Thank you.
Yeah, no, I think, you know, core, you know, a core attribute of our business model is, is exactly that, right? That we have a mix of own production and, and sourcing, and roughly 30% of what we handle today, we source from external parties, and, and the rest we, we produce, ourselves. And, and also, of the ammonia we handle, we sell 50% to external parties and, and take 50% ourselves. So I mean, we have quite a lot of flexibility there, and, and I think, you know, we certainly would want to keep, that, that model, because that gives us a lot of optionality. At the same time, in, in this industry, of course, it's very important to be asset-backed, as well. So, so I think the combination, is good.
I think there's obviously a significant difference here between blue projects and green projects. From a technology and market perspective, the green projects are, or the blue projects are, you know, have much more certainty, or around a lot of different factors. Whereas, some of the green ones could be, you know, yeah, there's different drivers, both sort of on the electricity side and price side. And as you say, where, you know, it's indispensable for us to take the position, like what we've done in the Oman example, where we are the offtaker.
We are also, you know, in the commissioning phase of our own pilot project, which is a small one, but today we have quite a broad portfolio here, and I would say quite good insight into sort of the profitability and the drivers of these different types of ammonia projects. So I think we will pursue both avenues, and but again, we are looking for significant returns in all our projects and basically, we don't go out with sort of numbers on what that means, but we'll do that in due course, while we get closer to key decisions.
Yeah, and Alex, if I can add, I mean, generally speaking, I mean, we have a hurdle rate of 10%, but that's before we start the risk adjustments. And you may have seen our comments today, that we are, you know, we need to have attractive returns on a risk-adjusted basis. As I'm sure you'll agree, there are any clean ammonia investments these days, especially involving cross-border exports and so on, are not free of risks. So I think you can deduce from that, that we're looking for considerably higher returns than the 10%.
Let me just add one thing. Of course, I mean, there are quite a few hardwire drivers in this game as well, right? Like ETS, CBAM, and so on, which is clearly a fundamental driver for our decision-making, and also why we, for instance, announced last year our, you know, our investment in capturing existing CO2 blue gas, which is obviously the case, has a very clear revenue side, in the sense that we avoid significant CO2 taxation from doing that.
Thank you.
Next question comes from the line of Rikin Patel with BNP Paribas. Your line is open.
Hi, thanks for taking my questions. I've got two. Firstly, I noticed in your EBITDA bridge that you booked about $47 million in the other line. I think $20 million of that is fixed cost inflation. So could you maybe explain what the remainder is, and whether that will reoccur, for the remainder of this year? And then secondly, I guess there's been a lot of back and forth around whether the Chinese export restrictions will be lifted over the past few weeks. I was just wondering what your views are there and whether you have any further insights on the ground. Thank you.
Yeah. Hi, Rikin. On the first one, we had about $12 million lower other income. This is related to another income that we had in history last year. We also had it this year, but it's lower this year, related to gas interruptibility. And it's linked to lower gas prices. The remainder is, or most of the remainder is lower interest income from customer prepayments and also linked to the price level. Maybe I'll hand over to Thor Giæver on the China question.
Yeah, and I think that we don't have any hard facts that is not in the public space. But I can give some comments around the possible interpretation. I think it seems pretty clear that the Chinese government are high extreme, high priority in securing plentiful supply of nitrogen to their farmers at a stable cost level or price level for the farmers. And it seems to us that it has, that kind of priority has become even more important over the last year or two. So what then happened is that, you know, they have not exported anything in first quarter, and there was an expectation based on fairly strong domestic production that it would soon open up.
And the Chinese then indicated that we can start these export processes approval processes again. And as soon as that was known, you know, the producers in China actually raised their prices in the domestic market based on the assumption that they could now turn to the export market. And that must clearly have upset the government quite a lot because they backtracked immediately and said that, "Okay, we can still accept applications, but you cannot expect to be allowed to export at least through May." Some are talking about June, some are talking about July. So this of course is it makes it very unclear for the market how much to be... How much can you count on from China?
Because I think many kind of count it off quite a lot because their, their supply situation should be rather good. But this may also point to the fact that it could be that there is a consumption development in China. It's also quite positive, that makes this kind of a little bit more, a question mark also for the government. So, as we planned, one of the key risks for the remainder of 2024, is this, what level of, of export the Chinese will, they may manage to supply.
Okay, thank you very much.
Question comes from the line of Aron Ceccarelli with Berenberg. Your line is open.
Ask if you can provide a little bit more color on marginal producer capacity coming back. I believe you guys switched your Italian plant in Ferrara. Recently, we saw some players in Poland and some in Romania coming back. Just wanted to have more color around what kind of speed you see at what speed you see players coming back, and what expectation do you have here for the next remainder of the year? Thank you.
Yes. Looking back a couple of years in 2022, when the gas and there were some curtailments already in the second half of 2021, gas price in Europe increased during the second half of 2021, even, even before the invasion of Ukraine. But let's say the big hit was in 2022, then we can say that Western and Central Europe, or EU, if you may, lost roughly 2.5 million tons of urea supply or production, and of course, also other products. So, that is kind of the range. We're talking about the high end of the range, so what possibly can come back, some of it, some, a little bit came back already second half of last year. But, you are right, that it is probably more of an impact this year.
You may have seen also that, let's say you mentioned Poland, they announced just now, recently, that they produced 30% more in March than they did March last year, for instance. And as we are also ramping up that also. So yes, 1-2 million tons urea, maybe, and some other products is kind of the, I think, potential of how much will be returning. Depending on the gas prices also going forward. Yeah.
Your next question comes from the line of Tristan Lamotte with Deutsche Bank. Your line is open.
Hi, thanks for taking my question. Two, please, and kind of related. The first is, I was wondering if you could talk through what you're expecting to be the impact of CBAM on your profitability, and how you expect that to evolve in the short and long term. And then second, you made a comment about the impact of Russian exports to Europe in urea. Could you elaborate on the relative cost position between the different global regions at current feedstock prices, and how you expect that to evolve? Thank you.
Yeah, I can start maybe on the CBAM part. I mean, a bit simplistically, I mean, we have the EU ETS today with basically not the level playing field for European producers, because we pay a carbon cost while importers don't. And then now gradually over the next six years, we will get CBAM phased in while the EUA allowances are phased out.
We actually touched on this in the fourth quarter presentation, how this provided we continue to succeed to decarbonize, which we're doing, and we mentioned the example this quarter that we have improved our energy intensity per ton to the tune of roughly $40 million annual EUA savings that we take.
So provided we decarbonize, and then if you see the main nitrogen imports are urea, which is a lot harder to decarbonize than nitrates, then we actually see this as an upside for Yara going forward, because we will then, or at least are likely to have a market price that is set by, again, the highest cost products, which is, like, well, it being decarbonized products will be the highest cost. So again, with and this is linking into our strategy for clean ammonia too, but a key route to decarbonize nitrates is to have decarbonized or low carbon ammonia feedstock.
And then, as a note also, the advantage you have with nitrates is that the product doesn't actually contain carbon, and nor does ammonia. But you decarbonize the; you capture the carbon in the process of producing it. Whereas on urea, you don't, you can't actually do that because the product in the end still contains carbon. And that is under CBAM. That is how it is measured. Yeah, the second question was on the imports and Russia, but within-
Yeah. I mean, it's not, that is not something new, that Russia has a very low gas price level in Russia. And it hasn't been any higher recently, with essentially now stranded gas because of a sharp reduction in the flows through the pipelines to Europe. So it's also, so it's clearly very different than, and I would think that it's precisely where it is. I think I don't have the exact number, but I mean, the Henry Hub price today in the US is $1.6-$1.7. I think that it's probably not very different. And alongside the some of the Arab Gulf producers, is probably the low end of the cost curve. So yeah.
Of course not important for price setting in any way, but just illustrating the fact that it's very profitable for that production is very profitable.
Thank you.
Your next question comes from the line of Chetan Udeshi with JP Morgan. Your line is open. Mr. Udeshi, your line is open.
Hi, can you hear me?
Yes.
Yes. Okay, cool. I have 3 questions. The first one probably for Tor. Why is the maintenance CapEx of Yara so high? I mean, it's $900 million. It's 6% of your annualized revenue, and typically, maintenance CapEx for other companies tend to be more like 3%-4% of revenue. So what is different at Yara? Or, or is this just some one-off CapEx that you have this year, which is not something we should think about as recurring? The second question was a bit more difficult one, I'm sorry, but I couldn't help asking it, which is: you know, last year, where your volumes were falling and hence the earnings were depressed, this year, volumes have recovered, and even then, the earnings are depressed. Is there something you can change in terms of strategy?
Because it seems this market is inherently just structurally more difficult. So is there something that you can adapt in terms of strategy, you know, that means that you can at least have some sort of an earnings upside with volume growth? And the reason I'm asking this is, you know, previously you had pretty good dividend, and based on what you guys are doing today in terms of earnings and the dividend policy, for investors, there's not even a sustainable dividend at the moment. So just curious if there is a sort of internal discussion on whether you can re- sort of base the strategy somehow.
Chetan, I think you said three questions, but-
Yeah, I think these two-
Well, that's it.
Yeah, for now.
Yeah. Okay. No, good. And I'm glad you only pointed to me for the first, presumably less difficult question. Although, let's see. I mean, the maintenance CapEx, it... You know, you're comparing to other companies and industries, but that's the first part. And I think if you stay... If we stay within the fertilizer business, as you know, we have a wider and more global and more integrated footprint than most of the other big players. So where most of the others are single nutrients, commodity-focused, and not engaged in downstream activities, we have multi-nutrients.
We have specialty as well as commodity, and that's one part of that is more complex plants, an NPK plant or an integrated NPK plant is more complex than an integrated ammonia urea plant. And we go further into the value chain. We have terminals, blending units, and so on. So there are a number of factors linked to that. And of course, it's not just an added expense or investment. We also get higher premiums in the market. So that's that sort of is a there are pluses and minuses to that equation.
But having said that, of course, how we allocate that CapEx is hugely important and something that we are always working on, and in particular now, as we mentioned, evaluating the portfolio. And for example, within our production plants, we make a clear distinction between the higher returning, consistently higher returning plants and the others, in terms of how we allocate funds. The second question, we can, we may have some comments around the table, but, and of course, the varied rewards one. Maybe the first place I start when you sort of, you're comparing, or looking in particular at the last year or so, I think it's maybe an obvious statement, but we are in a cyclical business.
And I think if you look at 2022 and 2023, I think it's, there are good reasons to see those years together. The first of which were, we were able to use our flexible business model, our global position, our ammonia position, to really cope really well with a high energy cost situation, which probably many thought would be more challenging for us earnings-wise, as well as operationally. But then, as you mentioned, 2023 was challenging. We had falling prices for certainly the first half of the year and also the end of 2022, and also position losses.
But if you look at those two years together, again, with the sort of cyclicality comment in mind, if I remember right, you're looking at an average return of 14%-15%. Of course, we are working on our strategy, and I think we have quite a number of initiatives there, both in terms of improving what we already have across the portfolio, but more importantly, how do we adapt for the future? And the clean ammonia growth is a really important part of that.
I think the just to briefly touch on dividends, yeah, I mean, you, you will get some years where, as you say, dividend capacity is low, but then, the previous two years, I would argue it's been pretty high. So again, through the cycle, it's a good return. Don't know if you want to add?
Yeah, no, I think, I mean, of course, there are structural changes in markets, I mean, in different markets. But I think in a way, so I mean, those changes are in a way replicated in other markets. And I think this is where the strength of our global business model comes in, our flexibility on ammonia, as an example, our ability to ship products in different parts of the world and optimize on a quarterly and annual basis. So I think in a way, we as a company are well positioned for structural changes in the market, which, you know, in this industry happens from time to time.
And we are, as we mentioned, working on making adaptations like that, and some of them we can make quite easily, and some, you know, sometimes may, you know, require more structural changes. And I think, you know, the move into green nitrogen and clean ammonia is, of course, an example of the latter. But I think there's also a lot we do that are, you know, we can optimize the situation on, although on a sort of a shorter time frame. But of course, with the volatility that we've seen over the last two years, you know, takes time, some time for that to settle as well. And as we mentioned, I mean, we have to also see this period a bit under one lens.
Thanks for the comprehensive and good response. Sorry, didn't mean to be difficult, but I thought it was a good thing to check. Thank you.
Your next question comes from the line of Joel Jackson with BMO. Your line is open.
Hi, good afternoon. A couple questions. I'll go one by one. Just looking back at the China dynamic, so we've seen the last, I don't know, three quarters, Chinese urea production rates really pick up, Chinese urea production really pick up. That's been despite obviously, you know, a more restrictive urea export policy. We're gonna see what happens in the months to come. Can you give a sense of why, you know, what's going on in China? The production rates are going up. Do you see demand going up? I've seen some reports that maybe non-ag urea demand has been going up, but are there concerns that if the taps do turn back on for exports, that there's just gonna be a flood in the middle of the year because production's been so high?
... Yeah, please, Patrick.
Yeah, I think demand is going up. If you just look at 2023, if you just look at the current consumption and ignore any inventory changes, I think consumption must have gone up by somewhere between 5%-10%. And I mean, it's hard to understand why these inventories would be very high at the end of last year anyway. So I think there is an underlying positive development on demand, and I think food production seems to me like increased food production, increased yields, are quite important in China recently, compared to, let's say, some years back, when they were more focused on concerns around local pollution, environmental issues, nutrient use efficiency, et cetera. But these things shift.
To what extent that has anything to do with the general geopolitical situation, I don't know. But then, of course, China is very dependent on food imports, both grains and oilseeds. So what will happen this year? I don't know either. As we mentioned, I mean, there is a wide range of expectations out there. But it is interesting that the domestic prices in China still today are in the range of $300, giving all producers healthy margins on their, or above their variable costs. So it's an interesting question, how much excess supply is there? As we say, we'll probably find out as the year proceeds.
As I answered also your earlier question, I think it's one of the key risk factors on the supply side in 2024, and it's hard to know the answer.
Okay. My second question is, can you help me be a little more granular on the performance in the Americas in Q1 and the outlook in the Americas between North America and South America? So maybe you can break down how the quarter played out, specifically all the different factors in North America versus South America, please.
Yeah. I, not, not in great granularity, I'm afraid. I mean, we, we, report at the Americas level, externally, and, and need to stay with that. But I, I, I think, I mean, one, one, perhaps somewhat obvious observation is that, the northern hemisphere is in peak season in, in the, in the, first quarter, while the southern hemisphere is not. We've, we've mentioned the main factors being, of course, you know, even being in main season, North America is still, exposed to, lower prices compared to last year. And then also in, in Brazil, we mentioned, kind of just-in-time buying patterns there.
So, you know, both are impacted, but I think you, as you probably know, I mean, we are more integrated in terms of our own produced product in North America, and the effects tend to be bigger, for example, on a farm like Belle Plaine, in terms of the nitrogen price exposures. In Brazil, the business model, I mean, in addition to it not being high season there, but the business model is, you know, more based on imported and third-party products. So you can at least weigh the North America part a bit more than the South America part.
Okay, thank you.
Question comes from the line of Charles Bentley with Jefferies. The line is open.
So just the first one, I mean, just on this kind of, what, I guess, measured tone on, on CapEx projects and the returns focus, can I ask what, what variables change the most? Is it, is it around build costs as you look towards FID? Is it basically the kind of core economics of, US ammonia into Europe? And kind of midterm gas prices might not stack up in quite the same way. Is it kind of higher risk in terms of regulatory certainty? Just kind of any thoughts about those, kind of, those three factors, like the economics versus risk. The, the second question is, it relates to that, is basically there's a, seems to be a mix of messages, between some projects being pulled and seeing progress and others not.
I guess if I look at like, CF and JERA very forward with, the JDA in the last few weeks. I know you signed a MOU with JERA. Just any thoughts on that relationship and where that's kind of next steps there? And then just kind of finally, just in terms of this point around currencies and demand in Europe, I would have thought we're basically in the very, very kind of latter days. So, is there anything you can say around when you'd think that would be kind of fully done? And if I can try my luck, where you'd expect deliveries to be versus that kind of average on slide 15? Thanks.
Yeah, I can maybe start on the Europe part. I mean, it's if you look back at past seasons. I mean, the point in time at which new season prices are issued, either by ourselves or others in the industry, I think is maybe the nearest you have to a point to which you're moving into the new season. I would say, you know, a normal timing for us is around mid-May. We've had some years recently where we've gone out earlier, and that's been linked to situations where, as probably seen in our presentation, where volumes have been lower.
But this year, we're seeing that currency in demand now, so it's looking like a more normal year like that. So Marc is going to comment a lot on the ammonia side of things, but I can maybe just introduce by, I think in terms of the factors you mentioned, it's all of the above and then some. Which these are projects that are, you know, as we look at our alternatives, it's, you know, gas price differentials matter. Of course, construction cost is a variable, incentive structures both in the US and Europe.
But maybe sort of the advantage that we have, I think, is that the internal synergies we are probably stronger than all other players because, in the case of building a plant in the U.S., it's not purely just the plant economics. It's also how we can utilize that into both our global ammonia trading and shipping, and not least into our European system, as we touched on earlier, in terms of decarbonizing nitrate and NPK production in Europe. And then on top of that, the growth opportunities into other applications. But I'll hand over to Magnus.
Yeah, no, and I think it's, I mean, you point out the important factors, right? I think, obviously, we don't comment on other companies' projects. But I think, and it is worth noting that, I think, you know, even the companies who are incumbent in this industry, like ourselves, I mean, you see, you know, it takes time to develop these projects, right? And I think that's, you know, specifically because we have good experience, and we take our time to evaluate those risk factors, construction costs being one of them, very, very carefully and look for ways of doing this that, you know, create the most value.
We also have very valuable experience from being, I mean, our project in Freeport, together with BASF, is the last, you know, project to complete of ammonia project in the US Gulf, so we have recent experience there as well. And I think, you know, we take all these factors into account and evaluate, you know, the different options very carefully, and that, you know, tends to take time to develop, which, you know, we know from projects in the past, as well. And I think it's no surprise, as we've seen, you know, in the past as well, late in 2015 or, yeah, 2013, 2014, 2015, 2016, is that, you know, the discrepancy between projects announced and projects that realized is very significant, right?
And again, we will sort of choose the options and the routes that creates the most value for our shareholders. As we've also announced, you know, we are developing, I think, all of our opportunities in partnerships as well. And there as well, we have you know a very good success story from the same region in recent years. And again, we will evaluate that very carefully. I think again, I mean, I mean stating the obvious, of course, but it is absolutely crucial to realize the project of the magnitude that we you know and the ammonia project is that you have the offtake capability, right?
And I think today, very few companies worldwide have the capabilities to offtake ammonia from, you know, from a project of this magnitude. Where we are, it fits perfectly well into our business model. And that also, of course, gives us a lot of flexibility in terms of how we approach, you know, getting hold of that ammonia, and again, gives us the flexibility to find routes that maximize its value creation. But as we said, it's all of the above, as in any project, but and you mentioned the important ones, so yeah. So look forward to having them, great.
Thank you.
Again, if you would like to ask a question, press star one on your telephone keypad. Your next question comes from the line of Bengt Jonassen with ABG Sundal Collier. Your line is open.
Thank you, and thank you for taking my question. Thor earlier stated that there are still some last-minute buying. I just wanted to relate that to your working capital. Is there a structural change in the market that means that you need to carry more working capital than normal, or should we see some working capital release during 2024? Thank you.
Yeah. Hi, Ben. Of course, the structural change, as we've mentioned, is or is a structural. At least we've seen more just-in-time buying in the recent seasons. Not sure whether it's structural or in a way, the structural change probably. We saw the risk appetite in the distribution chain go down after the financial crisis. But with the extremes we saw on gas pricing, particularly in 2022 and part of 2023, there was a sort of, if you like, tightening the screw there as well. I think in another environment, you know, that's more stable, I suspect that some of that risk appetite returns. In our case, I think we tend to manage that more in terms of our production levels.
It's not like we're sort of building up or can build up huge stock levels. So this is part of the background also for how we've, over the years, you know, had this set up with new season prices, incentivizing buying throughout the season, not just in time, because we have to, as a focal industry, we spread some of that risk. And then, you know, going back to the effect this quarter, it is, you know, the operating capital part is partly linked to that. Okay, you had a slightly later main season this time. So let's say in a normal year, you'll get that operating capital.
You might have actually started releasing some of that already by the end of the first quarter, if you had, you know, good levels of buying in February and March. But this year it's slightly delayed pattern, and so the operating capital exposure runs a bit later as well.
Thank you.
That concludes our Q&A session. I will now turn the conference back over to management for closing remarks.
Nothing to add from our side. Thank you for to everyone for helping in questions. Have a good day. Bye.
Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.