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Operator: Hello, everyone, and welcome to Yara's Fourth Quarter Results Call. Please note that this call is being recorded. I will now hand over the call to Maria Gabrielsen, Head of Investor Relations in Yara. Please go ahead.
Maria Gabrielsen: Thank you, operator, and welcome to everyone for joining us for this conference call for our fourth quarter results. And I'm here together with the representatives in Yara's management, our CFO, Magnus Krogh Ankarstrand; Head of Market Intelligence, on Dag Tore Mo, well is the representative from Yara. We're not planning to give a presentation or further opening remarks as we hope you all just watched our webcast, and we will therefore go straight into questions. And I will ask operator, if you may please open the first line.
Operator: Our first question comes from the line of Joel Jackson of BMO Capital Markets.
Joel Jackson: I'll ask a couple of questions, maybe one by one. Can you talk a little bit about the difference in Q4 between Europe and the Americas. You had a lot of buying in Q4 in Europe. Was that ahead of CBAM, and the Americas was flat. Was that weather? Can you talk about that, please?
Dag Mo: Yes. Yes, in Europe, we had a strong Q4, both when it comes to our own sales, but also the market in general, both up because we think a large part of that was due to positioning ahead of CBAM already from November, in particular, there was quite strong interest in buying, importing as well as from domestic producers to avoid the CBAM charge from January 1, and it's actually led to a price increase across the products already in Q4 because of that partly then reflecting the CBAM charge already in Q4. In the U.S., I think it's more -- there has been [indiscernible]. The norms of the recent seasons has been quite a lot of late buying in North America and the U.S. with a lot of imports focused in, let's say, the February through April period. And this season looks to be similar. It's just slightly ahead. But I would say that's not more than just more or less random variation. I have not seen anything kind of specific or any structure when it comes to that. There's a lot of buying from the U.S. that remains.
Joel Jackson: Okay. And then I'm trying to reconcile your comments around Q1. So you talk about how -- because there is some pre-bond in Q4 in Europe, your Q1 is ahead of [ a season ]. You kind of talk about, yes, but there's lots of products still to buy in Europe. So in one hand, you're kind of saying like, oh, people have bought ahead, but oh, they haven't bought enough. I'm just trying to understand your comments. And then can you -- as part of that, with some of the uncertainties around CBAM, whether there might be some offsets or not, can you try to sort of talk about that and how it's affecting the market and your strategy?
Dag Mo: I can start with some comments, and then Magnus can add if he wish. First of all, given that we -- as our estimate, that deliveries are 7% ahead as of end December compared to last year, even if not, you would think that the first application for the farmers are generally already purchased. And now we still have winter. So until there is a kind of a movement in the field there is no real need for farmers to replenish their inventories or further buying in order to -- for the subsequent applications. So -- and also, as you hint that there is now a CBAM in force. There's some political uncertainties that has kind of surfaced through January around this. So it's logical then that as we start the new year that we have a relative slowdown -- a little bit of a slowdown in the market after Christmas. But 7% ahead, almost half of the seasonal demand has yet to be bought. And we think that imports is slowing now in Q1. So that's where we are kind of coming from that, yes, it's a little bit slow start. No, we are kind of depending a little bit on spring arriving. And then it could be a very -- quite a busy period actually, and it depends a little bit on how much will be imported. Just for your reference, urea is the main product on the nitrogen side that is imported, less for nitrates. And Q1 last year, EU imported 2.2 million tonnes of urea. That's quite a lot. So even if imports is down, there is quite a lot needed. So that's kind of -- I can understand that you are a little bit puzzled by the formulations maybe. But -- so yes, the market is a little bit ahead by the end of December, but it's a lot that remains and we'll see how that plays out in a market where imports is now more expensive.
Magnus Ankarstrand: Yes. No. I think that's the key point. And obviously, with the prospect of CBAM in Q4, there was a bit of a rush on the import side, which is also reflected on the pricing or in prices. But I think it's also key to remember that CBAM is still enforced. I mean every ton that goes into Europe now faces CBAM. And of course, by the time any changes to that would be in place. Of course, that project will have been sold and probably applied a long time ago. So I mean we don't really see that. From a market perspective, this spring that any CBAM changes would impact anything on prices as such. And then also we believe it's highly questionable that there will be any changes to the CBAM at all.
Joel Jackson: Okay. Just to fit one more in. Would you expect '26 -- for ammonia production, would you expect '26 to play out largely like 2025 and 2024, where you're producing 1.7 million, 1.8 million tonnes a quarter, except for Q3, where you produce significantly more. Should it be similar kind of ranges across the quarters this year?
Magnus Ankarstrand: I think when -- if you're referring to Yara's ammonia production, I mean, we...
Joel Jackson: Yara. Just Yara, 1.7%, 1.8% a quarter except for Q3, where you produce more.
Magnus Ankarstrand: Well, I mean, we run our facilities 24/7 all year around, if there's a positive cash margin. So -- and then, of course, there are some turnarounds that impact the schedule. And of course, from now and then, there's a plan to stop as well. But in general, our uptime is very, very strong. So I think our plan is to produce sort of the practical production rate that we have. Right now, there is strong -- right now, there is good cash margin in all our production facilities.
Joel Jackson: So do you have any special turnarounds or any additions this year in '26, that would be significantly different than '25, excluding unplanned adages?
Magnus Ankarstrand: No. No. I mean I think we distribute our turnarounds fairly evenly. So there's nothing special compared to other years.
Operator: Next question comes from the line of Christian Faitz of Kepler Cheuvreux.
Christian Faitz: Two questions, please. First, your scheduled maintenance CapEx for '26, some USD 200 million higher versus '25. I'm aware of the phasing that you mentioned in the webcast, but can you elucidate this a bit, for example, which plants are mainly concerned? And the second question would be, can I ask whether the sequential property plant equipment increase over the past few quarters is largely U.S. dollar driven?
Magnus Ankarstrand: Yes. No, I think on the first question, our maintenance schedule is basically driven by the turnaround. So we do have a few turnarounds this year, which have a bigger scope. I think in referring to the previous question in terms of sort of how much we will produce this year or not produce because of turnarounds, that's pretty stable, but some turnaround are more expensive than others because scope change from turnaround to turnaround. So that's why the maintenance for 2026 is somewhat higher than the sort of the -- or in the upper part of the range that we've given from sort of USD 700 million to USD 850 million per year. And then that includes -- a small portion of that includes a little bit of phasing from 2025 as well, but that's not much. And could you repeat your question on PP&E, please?
Christian Faitz: Your plant, property and equipment in your balance sheet seems to be going up sequentially over the past 3 quarters or so. Is that largely U.S. dollar driven?
Maria Gabrielsen: Yes. Most of the increase is -- most of our assets are booked in euros across Europe. So that will likely reflect the currency rate.
Operator: Your next question comes from the line of Lisa De Neve of Morgan Stanley.
Lisa Hortense De Neve: I want to follow up on the first question around spring demand. If you can give us an idea of what you think current channel inventories are across the Americas and Europe? Some idea on that would be great. That's my first question. And my second question would be around CBAM. I mean to which extent have you been involved with European policymakers around what your view is on the importance of CBAM and what sort of variables are being discussed to make the -- potentially move ahead with banning CBAM for fertilizers or maintaining that structure?
Dag Mo: On your first question, when it comes to North America, I mean players supplying nitrogen to the U.S. or North American markets are normally coming down with their feet on the ground, playing this out quite well. And I can say that already now, U.S. Gulf pricing for urea is up at $500, which is kind of sufficient to attract quite a lot of tonnage. So it seems -- to us, it seems like it is fairly normal. It's one of the reasons why the market globally is so tight, I mean it's $500 basically, is part of that reason is outstanding U.S. demand. And there is also activity into Europe from North Africa, in particular. You've probably seen last week, there was quite a substantial volume that was bought. So there is also that's going on in anticipation of the spring that will come. So I would say it's fairly normal, both in North America and Europe in that sense. And now you have Indian addition that is trying to fight for March availability by announcing a 1.5 million tonne tender as we probably saw. So it's fairly busy in the very short term.
Magnus Ankarstrand: And on CBAM, I think what's important, first and foremost, is to kind of be accurate on what's actually happening, right? So right now, CBAM as per EU legislation is in force. Then there is a proposal, Paragraph 27a, which is passed was open for temporary suspension or give the commission a temporary suspension opportunity. If there are unforeseen impact on the single market or something like that. For that to even be a possibility, that paragraph has to be passed by the European Parliament, which is obviously not a given -- this is not something that either the member states or the commission can decide on their own. So obviously, and referring to your questions, we are, of course, in close contact with at the political level, in several member states with the EU Commission and also the EU Parliament to voice our view on that. And I think our CEO has been very clear on that, of course, there's absolutely nothing with CBAM that is unforeseen. I think it should be evident that prices will go up equivalent to the import tax you put on ag. So it's very difficult from our perspective to see any logic in implementing such a paragraph. But of course, politics is politics. And this will then -- we will see what the mood in Europe and how receptive the MEP will be for that. But as a reference, in the same -- same event where this was introduced, the commission also and the member state agreed on Mercosur, which was later rejected by the MEP. So, there is certainly no guarantee that the proposal from the EU Commission is approved by the European Parliament.
Operator: Your next question comes from the line of John Campbell of Bank of America.
John Campbell: Maybe sticking with CBAM. So do you have a sense within Yara of the potential time line for when the EU could pass or not pass this modification to the suspension tool, et cetera, number one. Number two, on your Air Products projects, sort of what confidence do you have at this stage that it can be delivered within the NOK 8 billion to NOK 9 billion budget. I think it's probably fair to say the projects have seen numerous costs increases. Air Products, I think, are quite clear on their calls that there's a lot of construction market labor bids from data centers. I think Air Products has tried to basically split up the construction to several different tenders, et cetera. Maybe you could tell us how that's going? But I can tell you, at least from the Air Product call, they said 90% of the missing puzzle piece to reach FID relates to the cost. So is there any reassurance you can offer that NOK 8 billion to NOK 9 billion figure will be achieved?
Magnus Ankarstrand: Yes. I think on your CBAM question, I mean it's difficult for us to sort of give us sort of a fair estimate on how much time EU need to pass this through parliament. So that's, of course, something that we are watching closely. However, we do note that there is significant resistance both in the European parliament, but also from several member states as well as the industry as well as commissioners against this proposal of opening for a possibility of suspension. So at least, I think it's fair to say that it's going to be a fight -- pretty good fight. I think -- and whether that sort of comes in time or how that sort of matches up with our time line for the Air Products project is, of course, equally difficult to say. But of course, next month, we'll hopefully, provide some direct entities in terms of what the political mood is and where this is going. On the cost increases, we don't have any sort of further update to what we and Air Products have stated earlier in terms of the range that we are looking at. I think, of course, as you say, from the original outset of that project from a product side, CapEx has gone up, but it's also important to remember that the technical maturity of the work detailed engineering, et cetera, has developed a lot as well, right? So I think sort of costs that -- comparing cost estimates, is not like comparing apples and apples necessarily, right? It's a big difference between cost estimate after detailed engineering and the cost estimate that you do on your first FID as an example. So they are working diligently to get these estimates in place. We are supporting that as well with our expertise. And as you said, there is competition for this, but there are also not many ammonia plants being actually being built in the U.S. So we will see how that works out over the next month. And of course, a very important element in the decision making as Air Products have pointed out. And of course, that will case for us as well.
Operator: The question comes from the line of David Symonds of BNP Paribas.
David Symonds: So 2 questions for me, please. Firstly, you mentioned strong demand fundamentals, but you're showing optimal nitrogen application on Slide 29 for a wheat farmer. As being 4% lower versus this time last year. And I think if you scale that up to the whole nitrogen market, the equipment of losing maybe 5 million tonnes of urea demand in 2026 ex-China. Now I know you're not just selling to wheat farmers, but soy and corn, economics are very weak as well. So could you comment on expectations for supply and demand balances in 2026 based on current farmer economics as opposed to long-term averages that you show on the slide? That's question one. And then question two, the NPK margins have come down, and you mentioned that's normal in a type and nitrogen market. But I noticed that compound NPK inventories also look like they've built in the 3Q and 4Q. So are you seeing farmers down trading to straight nutrients? Or what's behind that larger than usual inventory build in compound NPKs?
Dag Mo: Yes. As you mentioned, the example we showed there is, kind of, course, a little bit of a theoretic issue where we have a yield curve that we have, kind of, based ourselves on from a research center in Germany. And it, as you say, if a farmer already is at optimal application rate, it does show what hold that optimal application rate is changing with the price ratio between wheat and fertilizer. And the fertilizer is clearly expensive. I mean, affordability issues is high on the agenda, both on nitrogen, even more on phosphate. So it's a limiting factor. I think that if not for relatively modest or low grain prices, we will have even higher prices for N and P than what we have today. And if you look at, as you said, demand, has this led to lower global demand, this pressure on affordability, it hasn't. And that's, of course, maybe it can be more or less surprised by that. If you look at 2025, with that increase in Chinese exports of 5 million tonnes, even if you then take away some production outside China due to India producing less, due to Iran and Egypt producing less, due to the conflict and also gas diverted to other purposes, I think you'll find that fairly healthy supply growth for nitrogen in 2025 and into '26 and even despite that we are having $500 urea prices now. So -- and I think that has taken some players by surprise. If you look at -- if you look, let's say, a year ago at forecast for 2025 and 2026 pricing from most players, consultants, et cetera, they will be considerably lower than what we have been realizing. So yes, we have a very strong and tight supply demand balance despite relatively poor affordability.
Magnus Ankarstrand: On the NPK side, I think what's important to remember is that most of our NPKs goes into what we call premium products, where, of course, the value of those products on yield quality and several other aspects, is kind of what determines price and the willingness to pay, which is, of course, on the absolute price that the farmers pay. When we talk about premiums, we refer to that price less sort of commodity value of the 3 nutrients in the product. So in that scenario, even though sort of NPK prices go up when NP&K go up as well, when they go up as much as they do now, it's natural to sort of see some contraction in the premium in the way we measure it. And I think if you look at across nitros and NPK, premiums that actually hold up very well, I would say, considering the high commodity price environment that we have. But we have, as we reported, seen some tightening on the premium side, particularly in Asia, whereas sort of margins, which is Yara margin, are not down in the same way. When it comes to inventories, actually, our sales in Q4 and the year in total are slightly up. But our production levels are also significantly up due to improvements in productivity in our production system. So that has led to I would say, a fairly slight inventory buildup, which we believe that -- which we are working hard to, of course, sell the additional tonnages that we get out of our plants now in the spring.
Operator: Your next question comes from the line of Bengt Jonassen of ABG Sundal Collier.
Bengt Jonassen: I have 2, if I may, both related to Q4. If you take your EBITDA bridge year-over-year, prices had a tailwind of [ 140 ], looking at your nitrate price realization is [ 358 ] versus your own pre-quarter material list prices at [ 370 ]. Could you talk a little bit about the price realization and if it's timing or discounting.
Maria Gabrielsen: So the prices for fourth quarter realized slightly lower than publication prices, but it actually was last year as well. So we typically -- that's why we typically recommend using the delta for publication prices or delta realized prices, I think you will end up with roughly the same impact in the EBITDA bridge. But then the other part is also that if you look at the publication prices for CAN, it's not a fully liquid reference in the sense that publications aren't able to capture the exact price that every trade goes. And I'm sure that could expand on that. And also they aren't volume weighted. So it means that you will always have these deviations a bit between publication prices and realized prices, which are also linked to how they make their estimates and not only commercial performance. So the biggest impact in the price margin compared to the outside in if you use pure publication prices is really related to the NPK premiums that were pressured, especially in Asia, China and Thailand, and that we estimate to be roughly $20 million, $30 million impact this quarter compared to same quarter last year.
Magnus Ankarstrand: And then I think it's fair to say that the impact the risk in Europe is mostly due to timing in the quarter.
Bengt Jonassen: Yes. Okay. But let me ask the question the other way around that. If you take your official publication prices, your list prices to your clients, it's much higher than your price realization implies. And then back to the question, why our realized price is so much lower than the prices that you're actually announces to your client? There seems to be some kind of either increased competition or discounting or timing independent of the EBITDA bridge year-over-year.
Magnus Ankarstrand: The biggest factor in that regard is timing, right? That's -- and in a way, that's difficult to predict from year-to-year for us as well as for you guys, of course, as well. I mean there are -- it depends on a lot of different factors when the markets move, right, when buyers step in to buy, when imports come in and so on. So there are a lot of factors there that impact what -- how we have -- I mean, how our sales team have to determine what's the optimal volume to sell at each point in time. We can have an idea of where we think prices are going or will go. But if the market moves, you have to move with it to some extent in order to stay a part of the market. So I think of the factors you mentioned, I would say sort of timing is the key one.
Maria Gabrielsen: Also you're right, when we announce prices, which we do from time to time, but it depends a bit on how often we do it publicly through official announcements and how much do we announce at a certain point in time and ongoing negotiation. So -- and that's really typically based on Germany and France, right? And then there can be other deviations from that in the other markets, which can then lead us to deviate from those which prices you're correct [indiscernible].
Bengt Jonassen: And on that topic, how should we view current publication prices? Are they a reflection of the actual market or is the softness that you are communicating, maybe delaying some purchases on the price realization for the current quarter?
Magnus Ankarstrand: Yes. No, list prices, we have a reflection of the current market.
Dag Mo: Here CAN around EUR 350 that we think is pretty close to where it's actually.
Operator: Your next question comes from the line of Angelina Glazova of JPMorgan.
Angelina Glazova: I will also have 2. And my first question is on free cash flow dynamics. We have noticed that in the past couple of quarters, there was a sizable working capital buildup. And I'm wondering how you the working capital to develop into 2026? And we, of course, know that the working capital trend is impacted by seasonality, can be path on a quarterly basis. But I'm just wondering, in general, if you could give us some color on next year? And also because you now have a free cash flow target. So just wondering how you think of working capital as a variable in achieving that target? And my second question would just be a follow-up on CBAM. Apologies again on this topic, but I just wanted to make sure I understand correctly what you have said earlier in the call. I believe you have mentioned that [ you doubt ] there will be any meaningful changes to CBAM in principle. So I just wanted to understand, is this something that you're seeing based on the discussions that maybe you have had with regulators so far? Or what is this view based on?
Magnus Ankarstrand: Yes. Thank you for your questions. I think on the first one on working capital. So I mean, first half is the -- as you know, the season in the Western Northern Hemisphere, right, and that forget that's the biggest part of the global application as well. So that's where we have higher deliveries. And so that -- in that you see typically see a buildup of inventories somewhat and working capital before season. And then we release indices. So that's kind of the, I would say, the price neutral view. But then, of course, when prices go up or down, that impacts working capital as well. And when prices go up like they have done through Q4, which is, of course, very good for Yara. But that, of course, also means that the value of receivables and so on is higher, also then working capital goes up. But there's nothing uncommon on credit days or inventory days or anything like that, that will constitute a change. So this is kind of purely seasonality as such. And then of course, there are, from time to time, some sort of changes on when prepayments happen and so on. So I think as well as season starts and also let's see if prices stabilize at this level, it's fair to think that everything else equal, is the release of working capital. If prices go up, it will -- there will be a buildup, it also will, of course, be released from sales done in Q4 but nothing uncommon compared to the previous years. And that, of course, also plays a little bit into -- when you talk about improvement or how to sort of think about working capital from a value perspective, then you, of course, think about sort of the average for the year or average towards the season, which is kind of what matters. That being said, of course, working capital improvement in itself is an important topic, but that's not something we sort of improve by moving things around between the quarters. That's more a question of working on the different aspects of working capital such as reducing credit days, optimizing product flows based on inventory days, obviously, products we sell close to our plants, generally typically tend to have lower working capital and so on. So that's really something that we work on as well. And which, of course, we have to measure against the premiums we achieved for some of these products in markets far away from the plant. On CBAM, just to be precise because I think I've seen a lot of different comments on this. And I think you sometimes read it as if either CBAM has been suspended, which is absolutely not the case. Or as if it's something that the EU commission or a member state could just decide on their own tomorrow. So what I said was that the commission has proposed a new paragraph, which does not take us today or it's not in part of the legislation today. That allows them to suspend CBAM not only for fertilizer, for any product, temporarily if there are unforeseen negative impact on the single market. Now for them to even have that possibility, that paragraph needs to be included in the legislation and that will require sort of the full legislative process, including an approval by the European Parliament. And then when it comes to sort of what the likelihood of that happening, that's, of course, anybody's guess. But if you read the media, there have been both several members of the European Parliament who've spoken out against these changes. There have been people from the commission stating that CBAM is the cornerstone of the European decarbonization policy and so on. So I mean there's clearly in all -- in all camps, strong resistance of even contemplating this, even though the proposal is there. But of course, as we then in politics, it's very difficult to sort of predict what that outcome could be. But I think what's important also to emphasize is that even if that was implemented, then unforeseen consequence, it's very hard to see how a price increase equivalent to a tariff could be unforeseen. That's -- so I mean, at least judging by the letter of the law, even if it was implemented, that shouldn't really open the opportunity for any suspension of CBAM on product fertilizer due to the grounds of being unforeseen. But of course, that's my personal interpretation not necessarily the interpretation of the European Commission.
Operator: Your next question comes from the line of Tristan Lamotte of Deutsche Bank.
Tristan Lamotte: Kind of CBAM adjacent, but I'm just wondering on proposed changes to ETFs and the phaseouts of free emissions. Can you just remind us of your position there? And I think you mentioned in the past that you have credits that you could start at some point. So could you also talk about your exposure to the need to buy credits over time? And then second question is, just given whether net debt is now sitting, which I think is below your range, what's your view on kind of capital allocation and buybacks?
Magnus Ankarstrand: Yes. When it comes to ETFs, we have -- we take before around 6 million credits in our bank, so to speak. And then I mean we -- the way it works, of course, is that you -- we get a certain fee allowance per year that matches so far -- has matched or exceeded our need to buy ETF [ quotas ] and then now free allowances will be gradually phased out at least according to the current plan. And I think -- I mean you can think about the credits that we hold in different ways, but just sort of a measuring it physically, that kind of takes us to 2029 or something like that -- through 2029, kind of where we could cover our need for actually buying credits with what we have in the bank. And of course, I mean, given that your question was adjacent to CBAM, obviously, we would -- we almost assume that in the event that the EU Commission would take away or suspend CBAM temporarily. I would also almost they were granted that they would suspend or extend free allowances for the same period. Of course, it's not -- it would be treating domestic industry very, very unfavorably compared to imports. And did you repeat your second question, please?
Maria Gabrielsen: Can I just add a comment to the -- so if we have then a slower phase out, Tristan, right? So basically, it means that the deficit we expect in 2029 and 2030, that won't increase as much as we would have otherwise done until 2034, right? But whether we use those closes in the bank or whether we sell them, that's a pure financial decision ultimately depending on where prices are and where we think they're going because they have a cost regardless of when we materialize the cash effect related to them.
Tristan Lamotte: And yes, the second question was just around your net debt-to-EBITDA level, which I think is below the range and your thoughts around kind of buybacks or what you would do with extra headroom.
Magnus Ankarstrand: Yes. No, I think we outlined our capital allocation policy in our CMD month ago. And our main priority on the investment side or on the growth investment side is clearly U.S. projects and reducing our energy costs or investments into ammonia. I think that beyond that capital discipline will be very strict. Of course, if we have smaller value very value-accretive opportunities, that's of course, something that we'll always consider. And then we sort of stick to our dividend policy of 50% cash dividend of net income. Of course, as we also said earlier today, if there is headroom or availability for it, we will always also consider additional buybacks depending on what we believe is the most accretive for the shareholder.
Operator: Your next question comes from the line of Magnus Rasmussen of SEB.
Magnus Rasmussen: I have 2, if I may. Firstly, when you announced the Air Products project, you said that you could do that within your $1.2 billion CapEx frame. I assume that implies you have to be quite a bit below that level towards 2030, still guide for $1.2 billion '26. So I'm just wondering sort of what's your thinking here? And how should we think about that beyond 2026? And the other question I had was whether you could talk about -- a bit about the factors impacting your earnings, which are not captured in your sensitivities such as NPK premiums, phosphate margins, et cetera? Where are we now relative to '25? And how does '25 compare to sort of historical averages?
Magnus Ankarstrand: I'm not sure I capture your full first question. But I think what we've said is that the Air Products project is within our capital allocation policy. We've also indicated that we see sort of CapEx spend in real terms around $1.2 billion next year -- sorry, in the coming years. And then, of course, if you sort of deduct the maintenance level that we've indicated as well, that there should be within that also sufficient space for the project portfolio that we are looking at towards 2030. And then -- yes, and then of course, as in the previous question, that also opens up for the dividend policy that we have and, of course, evaluating buybacks versus very accretive opportunities that might arise in addition. But I think, again, U.S. projects will be a priority, and of course, also CapEx discipline is critical. In terms of variables beyond the one that we've given the sensitivity, I'll give the word to Maria.
Maria Gabrielsen: Yes. Just to mention, I think the largest one, we have the phosphate upgrading margin which we used to have a sensitivity on but don't have currently, but it has had an impact in 2025 compared to 2024,,in general on the positive side, even though prices have been following for the later half. In the case premiums, for example, it tends to be fairly stable, but we do see some variations like we did in this quarter. So that will also impact us even though not covered in the bridge as such. And then you could also -- because we have gas exposure mainly to TTF and Henry Hub, but we have some class exposed to other gas costs, which tends to be more stable. But in the degree they vary, they wouldn't typically reflected in our sensitivities. And fixed costs, for example, which obviously has been the impact for the year that to be the main drivers where most of them have contributed positively for '25 as such.
Dag Mo: I don't know if it's helpful, but you have this -- the phosphate upgrading depends on sulfur as a raw material for most production processes. And sulfur has been so volatile. So far, let's say, for a phosphoric acid base, which is a normal route phosphate upgrader. There has been a very strong cost increase on the sulfur part, which we don't have with our nitrate phosphate process, that is the NPK plant in Norway. So that may also make it a little bit more complicated for you to make that assessment because phosphate upgrading margins are a little bit different depending on which processing route you are using.
Maria Gabrielsen: We could also -- since we are talking a lot about CBAM today, for 2026, that will also have an impact. So CBAM costs doesn't impact our EBITDA as long as we're utilizing credits that we have. But the price effect will be there, of course, then dependent on whether it's in Europe or outside Europe, that will have different effects. So as we mentioned in CMD, we will pre-quarter package, we will update sensitivities to reflect that in due course before 1Q '26.
Operator: Our final question comes from the line of John Campbell of Bank of America.
John Campbell: I just had 1 or 2 follow-ups, if I could. Could you maybe give us a sense on your view in terms of the potential resumption of Chinese urea exports in '26? How many million tons basically, you're expecting? Number one. And number two, coming back, I guess, to Air Products, have you -- presumably you've done some sort of levelized cost analysis in terms of delivering that ammonia resuming the project can be built for [ $8 billion or $9 billion ] or whatever it is. And I thought maybe one way to think about it is how that compares to something like the gray cash cost have delivered U.S. ammonia and maybe what carbon price would be required or sustained to actually kind of make the blue ammonia projects look cost competitive with just importing gray ammonia and just paying for the CBAM? Have you kind of got a view on that? I think I came out to $160. Of course that's just a ballpark figure, but do you have a sense maybe on the longer-term carbon price?
Dag Mo: On your first question, I think we don't have a very specific opinion exactly how much that will be exported. We have just said that it's certainly a very important factor in the global balance how much that volume will be, but we are also referring to some external opinions around this in the press, where last year, it was, let's say, it was in second half April, that this was addressed initially by the Chinese Government and NDRC, I think it will be logical for something similar that when it gets to second half April, maybe there will be -- that will be on the agenda of the Chinese government. We observed that some of the consultants are working on that kind of baseline around 6 million tonnes, maybe a little bit higher than 2025. But of course, nobody knows all that is going to play out.
Magnus Ankarstrand: And I think -- I mean, obviously, that's very difficult to predict exactly what you're going to do, right? But I think more important than the actual number of tons as such is what would it potentially do to the global market and global pricing, right? And then there, I think it's just important to keep in mind that at least so far, it seems that the main policy from the Chinese government has been to keep urea prices low. And obviously, the more you export, the more you impacted the global pricing and if you export to the extent that you impact global pricing. And of course, it's very likely to assume that it will impact domestic prices as well. And as we've talked about in our Capital Markets Day and as we see there's nothing that would point to sort of a softening to try demand balance outside China, meaning that sort of any opening to exports will sort of face quite high price environment globally. And I think it's sort of safe to assume that they will sort of exports to the extent that it doesn't impact domestic prices very much. And of course, I think it's also logical to assume then that at least from funding perspective, that shouldn't impact global prices too much either. But of course, things are difficult to predict. And on the Air Products question or the U.S. project question, yes, I mean, we have, of course, our internal views on sort of what different levels of CBAM with due to more in the pricing into Europe and so on and how that impacts the project. But that's not something that we can share publicly. But I think as we have said before, it is -- I mean, it is an ammonia -- it is a regular ammonia plant with very high scale and certain advantages that we talked about in our Capital Markets Day and sort of there's a great sort of price comparison to that. And then there's added premium, obviously, from CBAM as well. And I think as we've said also that -- just when we see from a total project perspective, sort of the CO2 capture park in itself is more than covered by the 45Q tax credit. From that perspective, this is something that even without a CBAM premium, should be profitable. But obviously, the CBAM adds that up to the profitability of building a decarbonized plant.
Operator: [Operator Instructions] Your next question comes from the line of Julian Galliard of PGGM Investments.
Unknown Analyst: I have 2 questions. So first, on your capital allocation framework, you highlighted maintenance and growth CapEx, but there was no explicit mention of sustainability or the transition CapEx. Could you explain how decarbonization investments are reflected and prioritized within the framework?
Magnus Ankarstrand: Well, I think -- as we've said, the U.S. projects would be the lion's share of that growth CapEx, right? And sort of even though they represent lower gas costs, more scale over fixed cost per tonne, they also are key to the carbonization. So I think from that perspective, you can sort of say -- I mean, the benefit that we have, right, is that a project like that and our position in the ammonia market means that we can do the decarbonization profitably and have -- because we have the other benefits as well, right? So I think that part is fairly sort of, I would say, covering that. And I think when it comes to the maintenance CapEx, part of that go into improvements in our plant that are also related ESG related, such as energy efficiency, which also has a good momentary impact by using less energy and lowering costs. But I think in general, Yara does not do ESG investments unless they are profitable. So there's no separate budgets for that.
Unknown Analyst: Okay. Okay. Okay, that's clear. It would be helpful, though, if you would include a figure that would show that officially because now it's just maintenance and growth. Also to my second question. It stated that Yara's capital allocation policy is based on maximizing shareholder value. while maintaining a mid-investment grade profile. I'm wondering how do you operationally ensure that capital allocation decisions are still consistent with either a 1.5 degrees line pathway or a well below 2 degrees of pathway?
Magnus Ankarstrand: Yes. No, I think we have set targets for 2025, which we achieved in 2030 that we're working hard to achieve. And these are based on exactly that. And then we -- in our CapEx allocation, we I mean -- or to be different to achieve those targets, like we have done for 2025, we have a portfolio of different projects and of course, the U.S. ammonia investments being by far the biggest one, but also other projects like electrification project, we have our CCS project in Sluiskil that we complete this year and so on. So we look at our portfolio in totality and then we look at whether our CapEx or sort of the capital investment that we do provide a sufficient return or a strong return to our shareholders as well as how it sort of meets targets such as the ones we've set, right on the ESG side. But I think what's important to remember is that in order for that to be possible, there needs to be a firm sort of economic value drivers, right? So of course, our investment in [indiscernible] CCS, which contributes significantly to our targets, would not have been possible unless there was a carbon pricing in Europe, right? And I have to say, if the type of uncertainties, even though we believe firmly that CBAM will remain in place, would I think it's safe to say that is this kind of uncertainty would have come exactly when we were to do our investment decision on that project. It's just a guarantee that we would have actually approved that. So I think that's important to keep in mind as well. However, we do believe that, that project will make us very competitive in the European context. And that's kind of the basis for all the projects. They need to be -- they need -- so basically, what I'm saying is that the regulatory side needs to be in place so that these projects are profitable. Some of them are profitable, no matter what because saving electricity is typically possible. But some others will not be a profit on that -- yes, the regulatory side is in place.
Operator: Our next question comes from the line of Mazahir Mammadli of Rothchild.
Mazahir Mammadli: So my question is on CBAM. Basically, I wanted to ask. So we saw the benchmark values published by the EU on CO2 intensity of mitogen production in various countries. When you compare those benchmarks to the CO2 intensity of your own production. Do you see an advantage? If so, how big is it?
Maria Gabrielsen: Yes. So for urea, we will have a variation between our plants naturally, some will be very efficient and some will be less efficient. But in general, Yara's plant will be more efficient than the [indiscernible] average European, but more so the global averages and the benchmark for imports. Yes is the short answer.
Magnus Ankarstrand: Absolutely. And I would say, particularly in our nitrate production with the investments that we've done there over a long period of time, we are significantly more advantaged on the carbon footprint side. So that's, of course, a huge advantage on nitrates in Europe, particularly when you compare to imports of urea. And I think since this was the last question on the CBAM, many questions on CBAM, which, of course, is a very hot topic these days. I think you also sort of in its place to add that we are very concerned about sort of the impact on the farmer, obviously, not only from increased cost of fertilizer, but also on a lot of the other regulation that's put on the particular European farmers. But I think, it is a very easy way to solve that problem for the EU, particularly when it comes to CBAM, and that would simply be to give that the CBAM revenue as a subsidy back to the farmer who buy the fertilizer. I can see no better use of that money than that sort of the train of thought that you would sort of suspend CBAM. So that 30 imports from outside Europe can outcompete European industry is clearly not the best route of achieving that. So I think there is a very easy way for the EU to help farmers and not negatively impact European industries as well.
Operator: We have reached the end of our Q&A session. I'd now like to hand the call back to Maria for final remarks.
Maria Gabrielsen: Thank you for everyone for joining. No further comments from our side. But our Investor Relations is available for further questions, please feel free to have follow-up. Thank you and goodbye.
Operator: Thank you for attending today's call. You may now disconnect. Goodbye.