The sensitivities are based on Yara's capacities as stated in the capacity table assuming a 95% utilization. Sensitivities assume stable value-added margins and no inter-correlation between factors. EPS sensitivities are based on 275.5 million shares and assume 25% marginal tax rate on underlying business.
CAN sensitivities include fertilizer nitrate capacity and NPK capacity converted into CAN equivalents.
The currency sensitivities assume that revenues and raw material costs are USD-driven while fixed costs are exposed to local currencies at the locations where Yara operates. The currency sensitivities are based on the financial year 2015.
The European hub gas sensitivity is based on Yara's gas consumption in Europe linked to hub pricing.
How to use the sensitivities:
The sensitivities are based on Yara's capacity and a utilization of 95%. If sales differ from this assumption, the estimated effects using the sensitivities can be misleading. This is especially relevant when using the sensitivities on quarters when sales volumes, for various reasons, could differ from both actual production and the stated capacity.
Sensitivities do not include Yara's phosphate upgrading activities. Yara upgrades phosphate rock into NPK, which depending on the price development of both DAP as the finished product and phosphate rock and ammonia as the key raw materials, can generate significant value. This upgrading activity is not included in any of the sensitivities but can be estimated by looking at upgrading margins in the phosphate value chain.
There is an average time lag of approximately one month before changes in spot gas prices affect Yara's bottom line.