"The impact of the war on global food security will be dramatic," Yara chief executive Svein Tore Holsether said during the quarterly results presentation.
“We renew our call for action by the authorities to strengthen food supply chains and reduce reliance on Russia,” he added in a statement.
The conflict affects both the food industry, Russia and Ukraine being major exporters of cereals, and the fertilizer sector, Russia being a major supplier of raw materials (natural gas, phosphate, potassium, ammonia... .)
"The war has boosted fertilizer and energy prices around the world, including those of natural gas in Europe," Yara said in his report.
Thanks to sales prices whose increase exceeded the surge in the price of gas - one of the main inputs for mineral fertilizers - and to favorable exchange rate effects, Yara generated a net profit of 944 million dollars in the first quarter against 13 million a year earlier.
Its operating income tripled over the same period, to 1 billion dollars, for a turnover up 88%, to 5.9 billion.
However, its production and delivery volumes were down over the quarter, particularly in Europe where “consumers are reluctant to commit to the current price environment”.
Its total deliveries of ammonia, fertilizers and industrial products thus fell to less than 8.4 million tonnes compared to nearly 9.1 million tonnes in the first quarter of 2021.
At the same time, Yara's energy bill has more than tripled globally, and even quadrupled in Europe, prompting the group to reduce its activities in several European ammonia and urea plants.
"But they resumed production as margins improved," Yara said.
The company says it expects to have to pay $1.15 billion more for its natural gas in the second quarter than in the same period of 2021. The additional cost for the third quarter is expected to be $750 million.
© 2022 AFP