Yara International ASA

The stable outlook reflects our view that Yara will maintain adjusted FFO to debt of 30%-45% through the cycle, which we view as commensurate with the rating. This is based on our assumption that, in 2020, Yara's adjusted EBITDA will amount to $2.0 billion-$2.1 billion, benefiting from supportive prices of natural gas, strong premium NPK deliveries, and efficiency gains; notwithstanding low cycle prices of nitrogen-based fertilizers. We could lower the rating if Yara's adjusted FFO-to-debt ratio declined below 30%. This could occur, in our view, if Yara's margins declined as a result of sustained pressure from European natural gas prices, or if the company increased its capital expenditure (capex), acquisitions, or shareholder distributions. Over time, upside potential could emerge and

...S&P Global Ratings forecasts that Yara will deliver strong credit metrics in 2020, supported by asset sales and lower natural gas prices. We forecasts Yara's funds from operations (FFO) to debt at 44%-45% in 2020, at the higher end of the threshold we view as commensurate with the rating. This factors in Yara's strong operating performance so far in 2020, with our EBITDA forecast at $2.0 billion-$2.1 billion for the full year, reflecting profitability benefits of lower natural gas prices and strong premium NPK (nitrogen, phosphorus, and potassium) deliveries, notwithstanding low cycle prices for nitrogen and phosphates. The ratios in 2020 are also supported by about $1 billion in proceeds from the sale of Yara's 25% stake in Qatar Fertiliser Company (QAFCO). In 2021, we anticipate that Yara's FFO to debt will decline to 36%-38% but remain healthy and within the 30%-45% range commensurate with the rating. While we note that Yara intends to partly return the proceeds from the disposal of...

Full Report