Yara International Asa

Hello, everyone, and welcome to Yara's third quarter results 2025 conference call. Please note that this call is being recorded. If you'd like to ask a question, please press star followed by one on your telephone keypad. Thank you. I'd now like to hand the call over to Maria Gabrielson, head of investor relations. You may now go ahead, please.

Thank you, and a big welcome to everyone from me as well. I'm here in the room together with a representative from Europe's management. We have our CEO, Svein Tore Morsetter, our CFO, Magnus Krogh-Ankerström, and the head of market intelligence, Dag Tore Morsetter. We're not planning to give a presentation, so we hope you all just watched our webcast. So we will dive straight into questions. So if operator, you could open the first slide. That would be great. Thank you.

Your first question comes from the line of Christian Feitz of Capilar Charveaux. Your line is now open.

Yes, thanks for taking my two questions. Good afternoon, everyone. First of all, can you talk about the current demand conditions in Brazil? I noted that you talked about improved NPK sales in Q3 there. Is that also a trend we should expect to see in Q4? And my second question would be, how long will the plane maintenance last and which quarters in 2026 according to your current schedule are affected? Thanks very much.

On the Brazil market in general, we feel that it's relatively stable this year compared to last year, particularly on the nitrogen side. There is a stable import of nitrogen in total with a little bit of a switch towards ammonium sulfate because of the increased availability of ammonium sulfate from China. So urea imports is a little bit down, but the total nitrogen is stable, and I think that It's not very different elsewhere. I don't know exactly on our side on the NPKs, but... Yeah, no, I think... Yeah, nothing to add on that.

I think, as to your question around Beltane... We typically do our turnaround there after the season is over. They have a very comprised season. And that typically takes place in the early third quarter.

Okay, great. Thanks very much.

Next question comes from the line of Lisa Deneve of Morgan Stanley. Your line is now open.

Hi, thank you very much for taking my questions. I have three, if I may. So one, I would like to come back to your presentation, and I would love for you to speak a little bit more about how we should think about urea prices or nitrogen prices, also nitrate and NPK prices in the European market, both into 2026 and midterm, in the light of Currently, European duties on nitrogen fertilizers from Russia being in place, which seem to have caused a level of inflation in the internal European market, as well as the expected implementation of CBAM from the start of 2026. And maybe following on from that, what do you hear from farmers on this? Because they face quite significant price inflation on their inputs this year. And I wonder what their stance on CBAM is. So anything you have on that will be very helpful. Secondly, on the Clean Ammonia Project, I recall over the summer you sort of put aside the Clean Ammonia Project you would potentially pursue in collaboration with BASF. But I would love for you to sort of remind us a little bit of how many U.S. clean ammonia projects are being under consideration. I'm aware of the CoLab with Enbridge, but it would be great to sort of make sure that we have a good overview of what you're actually considering in the U.S., And lastly, I mean, very strongly in the third quarter, how should you think about the free cash flow generation into the end of the year, given the networking capital outflow was quite meaningful in the third quarter? Thank you.

Let's start with the European nitrogen prices and, as you say, all the legislation and politics around that, I think. It's a bit early to call. I think if you look at the current nitrogen price level in Europe, it's fairly logical and consistent with the global level with the same kind of premiums that we've had historically. And on the Russian duty, that you mentioned, the 40 euros on nitrogen products, 45 euros on phosphate products, that was put in place from July 1st. So far, I don't think we've seen any major effects on that. First, what happened is that Russia pushed a lot of products into EU ahead of July 1st. Very strong numbers in May and June, particularly. Norway, Eurostat announced their August numbers today, and we can see that July and August numbers are low, but that's from a position where there probably were quite a lot of inventories So I think if you look at a nitrate or an NPK or even a urea price in Europe now, it's not very different compared to global values as we've seen in the past. It's a bit early to conclude on that. And you've also probably seen that there are consultants out there stating that this duty will not have a major impact on the price level in Europe because of alternatives that Europe has when it comes to the nitrogen sourcing. As to CBAN... Of course, there are a lot of unknowns, but there will be an additional cost on imports of nitrogen into Europe that you would think to a larger degree, will have to be reflected in the price, as Magnus also explained during the conference call. And it remains to be seen, of course, exactly how that plays out.

I don't know, Magnus. I could add it, Svartore, here. And I had a similar question on CNBC this morning as well when it comes to the farmers. And clearly, we need to listen to the messages that they're sending. And... and the burden on the shoulders of farmers. At the same time, and in the long term, the CBAM will support a stable supply of sustainable fertilizers. It's about strengthening Europe's food security. It's about helping the whole agri-food chain, including farmers, to have sustainable solutions. But clearly, we need to listen to farmers. This is also for policymakers, making sure that we have support and incentives in place to help them as well. And it's about creating a level playing field in Europe and reflecting carbon prices into the price of fertilizers as well. And that's what CBAM is designed to do. To do. So this is being implemented. It will have an impact, but it's important that the entire impact is not put on the shoulders of farmers.

Yeah, and I can continue a bit on the other question. So in terms of our ammonia investments in the U.S., We will return with more details on that when we have more details to share and when things have matured. And I think from a timing perspective, we still communicate the plan that we communicated earlier, which is first half next year. But I think the way to think around it, as we also said in our presentation today and in the Q2 presentation as well, is that we aim to size the equity portion in a manner that enables us to uphold our capital allocation policy and we will not seek to, for instance, do an equity issue in connection with a project in the US. And then... Beyond that, of course, the investment itself needs to be a double-digit return investment in terms of the strategic fit. I think that kind of goes without saying, but the economics need to work as well. On free cash flow, obviously, with this pandemic, pricing and price level in the market has a significant impact on our operating capital. All in all, that's, of course, good news when prices go up and market goes up like it has in the recent months and this year, particularly when we build a little bit more inventory outside the main season. That also, the combination of the two leads to an increase in operating capital. which then obviously is released if price levels flatten or even soften a bit. So I think we are not concerned about that per se. I think a strong price environment is a good thing for Yara, and I think our focus, as we also said, is to make sure that volumes flow out like they did in Q3.

Thank you very much.

Question comes from the line of Joel Jackson of BMO Capital Markets. Your line is now open.

Hi, good morning. I'll ask a couple questions, but maybe in order. The first question I'd ask is just on the U.S. potential market. blue ammonia plants. So you're going to give updates soon when you have some more information, but maybe you can go through some of the rationale or drivers in that decision, what's changed in the last six months, positive, neutral, negative to that decision. And then also, you know, are you seeing a blue premium in the market right now unrelated to 45Q? Are you seeing like a blue nitrogen, a blue ammonia premium for products that are coming out lower carbon? Some of your competitors trying to put products into the market.

I think the main strategic drivers and also the ones that can drive value creation for our shareholders in such a project is of course the strong synergies that we have with our global ammonia system. As a starting point, as an ammonia producer, obviously access to low-cost gas, which will contribute to EBIT margin improvement for us, increased scale, which will lower fixed costs and capex per ton. All of these are the fundamental underlying drivers that need to be in place for such an investment. And then, in addition, of course, in the U.S., you have 45Q, And in terms of what's changed, I think with the big beautiful bill, 45Q has been confirmed there. So of course it's going to change, but of course it removes some uncertainty maybe that was introduced around that in connection with the shift of the U.S. administration. Okay. So I think that's a clear positive in that regard. And I think, and again, I mean, in addition to the strategic levers I just mentioned, obviously the return, the expected return for us would have to be, you know, at the double digit stage. And then it's a matter of, you know, finding the best approach given that risk reward perspective for us and for our shareholders. And that's what we're doing as it be. When it comes to blue premiums, I think as Dr. Wood just mentioned and as we also talked about today, we have with CBAM now being implemented in Europe from next year. That in itself constitutes a premium on top of grey ammonia in Europe. um and in addition to that we continue to see developments in in new segments for ammonia as well such as shipping although um uh slower than perhaps what many had anticipated a couple years ago uh but i think the the real sort of value driver for us in this regard is that we are able to take significant amounts of ammonia into our own system both that we consume for our own production, but also that we sell into other markets already today. And that's really the unique part of this for us and in connection with any project that we have that ability to off-stake, which of course is the Achilles heel for most projects these days.

I'm sorry. Just out of On that and what Marius pointed out in terms of offtake and to have stable and predictable offtake for an ammonia pump is of course key and as we touched upon in the presentation earlier today as well, we're consuming 3 million tons of ammonia for nitrates and NPK production in Europe now and already half of that is imported and we have the flexibility to produce all our nitrates and the NPKs with imported So that is a unique position that Yara has that creates a significant value to any product.

Just following up on Brazil, I think you said the market was stable. I was looking at some of the inventory data this week and it was saying, when you talk about stable nitrogen markets, I look at some of the inventory data, it seemed like potash inventories are pretty good, like snug and not too much, where faucet inventories are getting kind of high. Can you maybe talk about the different fertilizer markets or dynamics you're seeing in Brazil, not just nitrogen, but the whole sort of complex?

Yeah, I think on the potash side, I think the whole potash market globally, but also including in Brazil, has seen a very strong growth over the last few years due to relatively high affordability at relatively low prices. $350 is not It's not a high potash price, so deliveries have been running very well on the potash side, and there's been record deliveries on the global scene with ramp-up both in Russia, Belarus, and Canada. So I think that market is doing fine from a demand perspective. It's more a question that there has been quite a lot of supply additions as well. Of course, phosphate is quite different at $800 DAP. That's a very high phosphate price. and you're seeing them on the destructions many places right and now the prices are coming under pressure and i think that is that that is understandable uh for a farmer i've seldom seen so poor affordability ratios on phosphate as there's been recently so i so i can understand what you're saying there that there might be some some inventory buildup around due to the fact that the farmers maybe are not taking quite as much as many of the distribution system would have expected.

Thank you.

Next question comes from the line of Elliot Jones of Dansk Bank.

Your line is now open.

So thanks for taking my questions. Just going back to the pharma affordability side, I think you said in the presentation it's been a good achievement to deliver these results given pharma economics. So I'm just kind of wondering, is it fair to assume that if prices do go up from here, do you see a point whereby we will start to see this really bite and pharma's having to kind of revert to wait and see mode for the remainder of the year or are you just not really seeing that around these levels? I'll let you answer that first and I'll come back to the questions.

Yeah, no, I mean, that is the inherent nature of a demand-driven market, right? That you have, it's not, prices are not set by costs. It's set by the demand side, basically, and how much they are willing and able to pay. And that is the situation we have. It creates quite a lot of volatility short-term, logically, as demand is coming in, going out. So then this becomes the topic as you raise. And And of course, as we know, mentioned that the European market for third quarter was pretty stable compared to last year. That is a relatively slow quarter in a historic context. In the US, we don't have that much data due to the shutdown. We only have July import numbers and they were zero. They were basically a net export. So the way we read the market in the US is that we have another season where we will have very concentrated demand in Q1. And so, yeah.

Yeah, and I think, I mean, as Dr. Hood, of course, mentioned, affordability on P&K and, of course, also applies to nitrogen. On the other side, particularly as it comes to Europe, with CBAN being implemented from January 1st, which, of course, will come at a a cost on imports, right? I mean, you would think that just from pure economics perspective, obviously buying your nitrogen before that happens is better than after. So that also, of course, may have an impact on the market as well. But of course, there are other constraints such as storage, credit, and so on. So, yeah.

Got it. That's helpful. And then just, again, on C-BAM, just to kind of confirm that, like you said, in theory... you know, the costs should be reflected in the European prices. But again, it just seems impossible that the farmers can then, you know, take all of the, put that on their shoulders. So I'm just wondering if policy doesn't step in to help, is your stance that, who would then have to pay for the extra CBAM cost if policy doesn't come in to help farmers?

Well, I think, you know, classic microeconomics would kind of tell you that eventually would be reflected in the food prices but I think if there are sort of schemes or things in place to help the farmer bear this cost we don't have any overview of that of course but as far as we can see from a regulation perspective there are no intentions to not implement this as communicated from January 1st But of course, as the EU has communicated when they updated this earlier this year, is that the actual cash payment will be deferred to 2027.

Got it. That's very helpful. And then, sorry, last question. Just on CapEx, on your 2026 guidance, I think that included $200 million of uncommitted growth CapEx. Is it fair for us to kind of read into that that that could include the equity capex of the U.S. project, or is this a completely separate bucket to any potential U.S. project, and that would actually come on top of the $200 million uncommitted?

Yeah, no, money is money. So I think what we have, as it says, is that there are $200 million that we, as per now, do not have any specific project assigned to that, but I think um we would uh as we said earlier and of course also depending on when um you know when potential um capex for us project would come we we want to maintain this within our policy and I think most importantly that of course we will have very strict capital discipline so if we go ahead and do a project or spend money in that area obviously that will restrict other spend other capex spend as well got it thanks a lot cheers

Next question comes from the line of Angelina Glazova of JP Morgan. Your line is now open.

Hi. Thanks very much for taking my questions. I would like to ask two questions, please. One is a follow-up on CBAM. As we know, this mechanism is intended to level the playing field in Europe, but it doesn't do much to help the competitiveness of exports of products made in Europe with carbon tax paid on it and then exported subsequently. Now, we have seen some headlines out of the Fertilizers Europe conference yesterday suggesting that the EU might consider some CBAM export support. And I was wondering, do you have any more color on that? Like, would you expect this to translate into some tangible support measures? And if so, how do you see JARA potentially benefiting from that? And then secondly, I would like to ask on your capital markets day. So obviously this is preliminary at this stage, but you have mentioned that strategy will be the key focus point at that event. But the timeline for the final investment decision on the U.S. project potentially is possibly further than the CMD in January. So I was wondering if you're expecting to give us some more clarity on that project or it's not necessarily the case at the CMD. Thank you.

I can talk briefly around CBAM. First, there are today in the European Union inward processing mechanisms on customs which already exist that cover exports made by or that allows you to avoid taxes and customs on intermediate goods and raw materials used for re-exports. So that, we believe, will, to quite some extent, apply also for us. And then this is a fairly complicated scheme, and so exactly how it takes out is difficult to give a very clear picture on here now, but I think we, for the large part, have benefits from that. On top of that, a lot of the exports that we do out of Europe comes out of Norway from our plant there in Porsgrunn. More than 90% of what we produce there, which is our second largest plant in the system, is exported. Norway will not implement CBAM in 2026. So there we can categorically say that there's no impact in this year. As it pertains to the capital markets day, we don't have any additional details around the agenda yet, but we will, of course, talk about all of the important strategic topics for Jara, and the money is, of course, certainly a part of that. And I think we'll leave it at that.

Thank you.

Next question comes from the line of Marcus Cavalli of Beretta. Your line is now open.

Yes, thank you. So I wondered if you could fire some color on the potential to see outside the 180 million, if you do, and also if you could try to produce some more idea of the portfolio optimization message you're talking about. You have mentioned those a couple of times, and Tetresio is clearly a good example, but Is this more of a potentially further restructurings or are you actually looking at divestments and so on of the portfolio just to get an idea of how you think about that? That would be very much appreciated. Thank you. Could you repeat your first question, please? Yeah. On the cost potential outside 180 million that you have mentioned in your presentation, if you see any further potential and what that could be.

I can start.

When we first launched the cost reduction program a little bit more than a year ago, in connection with the second quarter results in 2024, we set a target for $150 million. And we did spend a lot of time internally through the line organization together with the unions to define that target. program and to have a thorough process on that. It meant that when we entered the execution phase that we were able to move faster on that and that we're hitting that target now and we've seen further potential for this so that we've increased our target to $180 million by year and we're not going to stop reducing cost because of that, but then I think you should see it more in a continuous improvement as a normal ongoing part of business rather than one-off programs. So we're not planning to launch anything specific to that, but again, as I said, we will continue to focus on cost, and when we find opportunities, we'll take those and and reduce our cost base further.

On the portfolio side, as we talk about that in terms of our improvement programs, it's really a focus around making sure that we get the sufficient return from all our assets, including the maintenance, capex we spend, and so on, and ensuring that the assets that we have generate a good return on investment also in the longer term. So it's not sort of a scheme or a plan to look at sort of divestitures from a strategic perspective if you sort of understand the difference. I think when it comes to the asset portfolio, we have taken quite significant steps, not only the last year, also before that. The closures we've done in France, the closures we've done in Brazil, the closure of the ammonia plant in Belgium are all very significant changes to the portfolio. And then we continue to monitor this and, of course, uh those decisions also depend on timing it depends on where we see uh prices uh going both in the short and the medium term um yeah and um and of course uh importantly what improvement measures we can do as well anything there but we also done in parallel um as we talked about earlier today is to increase productivity in our assets as well which of course in a industry is tremendously important for the return on investment as well.

Sure, thank you. Just one last question. Not something we used to discuss too much on this call, but it would also be nice just to hear your opinion on what sort of measures you're doing on reducing operating capital days, because it's something that has been fairly flat since 2023, but also clearly something that would you know, or could change your cash flow assumptions a fair bit if you actually reach further targets. So, yeah, could you elaborate on that, what you're actually actively doing right now?

Yeah, I mean, we are quite, I mean, when we monitor performance... projects across different markets. We calculate the cost of operating capital per ton and deduct that from margins when we evaluate and compare. And of course, we try to optimize flows accordingly as well. But I think what's important to keep in mind is that one of the strong advantages that Yara has is the ability to distribute worldwide, which, you know, which yields us from a lot of seasonality variation, which, you know, allows us to optimize the markets better. But obviously, that also comes with somewhat higher operating capital as, you know, these projects ship relatively far and, you know, So that's, in a way, you always have to look at the operating capital in connection with that flexibility that we have and which many others do not. But, of course, we are looking at operating capital every day and looking to how we can optimize that and increase cash flow.

Thank you. That's all for me.

Your next question comes from the line of Tristan Mamato. of Deutsche Bank. Your line is now open.

Hi, thanks for taking my questions. The first one is just following up on CapEx. You talked about elevated maintenance CapEx. What do you see as a normalized maintenance CapEx level stands? And then second, there was some one-offs in other in Q3 that you mentioned in the bridge as a headwind. I'm just wondering if there's anything similar to think about in Q4.

Thanks. I think on the maintenance aspects, we communicated a range of 700 to 850 in Q2 per year, and the range simply comes from the fact that the way maintenance is done in our industry is that we typically have turnarounds of the plant with three or four years in between, and then the plants run more or less. uh 24 7 uh in between those so uh so so even though we sort of have an uh an annual average uh capex the actual capex per site varies significantly uh where it's very high in the in the turnaround year and and significantly lower in the other year so and of course different plants have different uh well um different sizes and so on. So sometimes the turnaround budgets are higher and some years it's lower. And as we said in 2026, we will be in the higher end of that scale because some of the larger but also most profitable plants that we have in our system will have a turnaround.

Yeah, exactly, the other bucket.

So that's largely something you can think of as real one-offs. A portion of that gap came from positive other effects last year, such as the divestment of our business on the Ivory Coast, as an example. And then we have a few sort of negative one-offs in this quarter. So there's nothing particular to sort of see a continuation of in Q4.

That's great. Thanks a lot.

Our next question comes from the line of John Campbell of Bank of America. Your line is now open.

Hi, everyone. Thank you for taking my questions. First one I had was, when do you expect to basically have clarity on the EU ETS and the CBAM benchmark emissions level? Because if we think about it, it's only roughly two and a half months before the 1st of Jan 2026. And as far as I understand, we do not have an emissions benchmark yet for ammonia. Excuse me. My second question basically had around CBAM and NPK, etc. If I sort of follow the logic I think you presented previously, was that urea prices will be naturally higher in Europe under CBAM and under ETS particularly. They are major inputs, I guess, into nitrates and NPKs. Therefore, NPK prices in Europe should be higher. But also, if we think about it, a lot of your footprint for producing NPKs is located within Europe or Norway, which I guess will have CBAM from 2027. and you sell a lot of products of MDKs outside of Europe where presumably there wouldn't be as much of a price premium because they wouldn't have CBAM and ETS. How should we think about this? And does this come back to the point that Angelina raised related to some sort of CBAM export allowance, et cetera, or re-export allowance? Thank you.

Yeah. Now, to your first question, we don't know and we will have clarity. And as you say, even though it's only two and a half months, there are information suggesting that these benchmarks will not be known until March, April, the earliest. I even heard that they might not be released until 2027 when the actual payment is going to be made. So this is, of course, going to create a lot of uncertainty around these issues and how this is going to... Because when you import a ton of nitrogen, as you say, and hint at, you don't actually know the precise cost of that ton, but you have to allow for it and pay it in 2027.

And I think, of course, when it comes to EU ETS, there we have a very good overview of... I mean, that scheme has been... in place for quite some time. And of course, we've received free allowances, which then goes against CO2 emissions and so on. And of course, we have a very good control of how the free allowances are reduced and the surplus of free allowances that we have in our bank and so on. So that side of the equation is relatively straightforward, I would say. I think When it comes to the import side, it's important to have that. I mean, we are not to a very limited degree importing urea into Europe ourselves. Of course, we do import ammonia. And as we said earlier, there is an inward processing scheme there for ammonia and, you know, or any intermediary that used into re-exports. And as mentioned, for 2026, our production in Norway, that imports around half a million tons of ammonia, so more than 40% of our current imports into Europe. There will be no CBAM in 2026, and it will be in 2027 at the earliest. So I appreciate that this topic is quite confusing, but I think at least from... I mean, we are as prepared as we can be, I would say, given the uncertainties that still remain.

Thanks for taking my questions.

Our next question comes from the line of Magnus Rasmussen of SEB. Your line is now open.

Thank you for taking my questions. Firstly, I wonder if you can explain what impact you've seen from, I assume, improving phosphate economics year on year this quarter. And also, we have seen a bit higher both interest costs and depreciation today than we've seen in the past couple of quarters. So just to comment on whether that is... is temporary or whether we should expect that to continue. And finally, the 35 million special items labeled as other in Europe, what that is. Thank you.

Can I start on the phosphate? Of course, we benefit from high phosphate prices through our captive phosphate operations in Finland as a large part of our of all the phosphate raw materials we need. We produce ourselves in Finland, and we benefit from a very tight and strong phosphate market. And as you also probably are alluding to, while finished phosphate products have increased quite sharply, a little bit under pressure recently, but at a very high level, the rock prices have been very stable. So although, of course, we buy rock on different contracts and there's a lot of price differentiation in the rock market between quality and grades, you cannot just easily find a benchmark for our average purchase rock price, but we do benefit also when that happens. difference between the rock and the finished fertilizer is increasing. So yes, particularly now in the third quarter, we have had expanded margins because of the phosphate situation as well on top of the nitrogen. I don't know if you want to give more details.

Yeah, no, maybe just also to remind that the way we sort of present this is that we talk about our NPK premiums, that's sort of the realized prices that we have above a global commodity blend. And then when we talk about the P upgrading margin, that's, of course, the difference between ROC purchases and sort of commodity reference on the AP. And I think that could explain the rest. In terms of depreciation, there's nothing particular to say around that or, you know, nothing out of the extraordinary there. When it comes to your question around Europe, that pertains... to a couple of items. One is recognition of future commitments in terms of environmental work that we are mandatory to do in our plant in Silinälvi in Finland. So it's simply an accrual of running costs that we already have today, but which we, from an accounting perspective, accrue for now. So it's not a cash effect this year per se. Then there's also some provisions linked to an older site that we closed in 2008 where we expect to sort of finish off our connection to that site in a few years' time. And those were the two main elements when it comes to provisions for Europe.

Thank you.

Our final question for today comes from the line of bank, Jonathan, of ABG Sondal Collier. Your line is now open.

Thank you for taking the final questions from me. Maybe a bit on the side of the previous questions, but I'm interested to hear your thinking. Maybe the first one to Dr. Rimmel, and that's the difference between the politics from China on the urea and ammonium sulfate. We have seen that ammonium sulfate export has skyrocketed the last years, whereas there has been several restrictions on the urea. Do you have any theory or good explanations behind that?

I am a little bit speculative, maybe, but I don't think they really regard ammonium sulfate as a critical fertilizer in China. It's a kind of a byproduct of industrial production. It could, of course, be used as a fertilizer, and they also do sometimes, but not now much, because, of course, when the urea price is so depressed in China, while the global urea price is almost double. It gives all incentives to try to export all the ammonium sulfate they can because it's not controlled and then consume urea locally. And I think that given that the government feels that urea supply is adequate in China, they have no kind of interest in stopping ammonium sulfate exports just to stop it when they really don't need more nitrogen domestically. So that's why they probably have done it this way. They give priority to urea for their domestic consumption and see its ammonium sulfate as a kind of a different animal. Whether there are some agronomic issues as well into this, I don't know, because ammonium sulfate is quite acidifying for soils, et cetera, et cetera. there could be a kind of a limit to how much you want to use of that and so on. But now I'm kind of speculating, but you're totally right. There is absolutely no controls of ammonium sulfate, which I think you can find logical, given that they have more than sufficient urea supply for the domestic market.

Yeah. Thank you. Very good answer. The second question would be on the industrial side of Yara. If we look at volumes on a 12-month rolling basis, they are down close to 5%. Maybe some explanation behind the drivers behind that. I understand that there are several products in that portfolio, but also if there are any changes in demand going into 2026.

Yeah, and I assume you refer to our industrial segment. So it's basically two things. I think the major reason is we have a stop in one of our plants that predominantly serves industrial markets in Vindsbytsum this quarter. So that reduced production levels there. In addition, we have made, as we also communicated today, a small change in our segment reporting, where our assets in Australia, an ammonia plant and a technical ammonium nitrate plant, have been moved from JARA Asia and Africa to JARA Global Production and JARA Industrial Solutions, respectively. And in the nitrate plants there, that's now part of yeast, we also had some small production losses. And then the last point is that we have hibernated some of our assets in Brazil, specifically one producing sulfuric acid as part of the asset portfolio optimization. Yeah, so those three factors explain that difference. There's no changes on the demand side. Thank you.

A follow-up question from David Simmons of BNP Baribas. Your line is now open.

Yeah, thank you very much. Just a couple to finish from me. You mentioned, obviously, NPK margins came down in Q3 versus Q2. And you said this is pretty common with higher commodity prices, which we did see sequentially. But with nitrogen prices coming down again into the fourth quarter, can I just ask, are you currently seeing higher NPK margins in Q4 as those nitrogen prices come down? Or are those remaining a bit lower as a result of pharma weak economics, potentially? And then the second question on Brazil is clearly a growing credit issue for farmers in Brazil. But you're there's no real sign of that in your deliveries, even your deliveries of higher value MBKs to Brazil. So can I just ask what your distribution margins were in Brazilian Q3 and how were you able to sort of sidestep a pretty tough environment there?

Yeah, no, I think to, I mean, to answer your last question, I think, I mean, I'm going to say around margins for Q3 was that they were pretty stable and at the level that we usually have had them. I think when it comes to the volumes in Brazil and the issues that you raised, I think the Our commercial teams, they have done a very, very good job in positioning our volumes. I think also the value that our products create in particularly the cash crop segments is still significant for the farmer and enables... as opposed to alternatives. And then, of course, when it comes to credit, we manage that, obviously, very, very closely, but we've not seen any significant issues per se. I mean, we don't guide on premiums going forward, but we talk a little bit about the market right now, of course.

Yeah, and I think also when it comes to, let's say, the European situation, then back to the CBAM issue again, like what Magnus talked about earlier, that could lead to a facing where, let's say, the market now in the rest of Q4 will be quite stronger than without that CBAM effect. You may have seen that we issued a new nitrate price yesterday for Germany at 3.35, while that is kind of it's lower than the list price that we came up with earlier, but it's significantly higher than what the current recent pricing has been, more like 300 euros. So I think it's a little bit of, yeah, I don't think we would like to give any precise guiding on exactly how this plays out now for the rest of the year. Yeah.

No, but I think, and again, it's very difficult to predict, particularly with the moving parts we have around Sebum as well. But again, of course, 45% of nitrogen into Europe is imported. With the carbon adjustment tax on that, the cost of those imports will go up. I mean, from that perspective, obviously, buying before Christmas makes sense in that regard, and then we'll see what happens.

That's great, Kala. Thank you very much.

Thank you. I'd now like to hand the call back to Maria for final remarks.

Just thank you to everyone for good questions, and if there are any further questions, feel free to contact IR. Thank you.

Thank you for attending today's call. You may now disconnect. Goodbye.