Investor Relations

Operational Performance 2008

Like other parts of the industry, Yara’s operation was affected by the market turmoil at the end of 2008, experiencing a sharp drop in demand, which resulted in major sales reductions in the 4th quarter. At the same time, Yara management chose to reduce third-party sourcing substantially and to curtail its own production, while deliberately building stocks, in order to handle the market volatility – thereby demonstrating the flexibility of its business model.
Operational performance

Yara’s plants have shown a solid production increase over the years, both for ammonia and finished fertilizer products. Productivity improvements have been driven by continuous production enhancements. Recent growth is driven by step-growth initiatives such as the Kemira GrowHow, and Burrup acquisitions, supplemented with Saskferco in 2008 and Lifeco in 2009. Stable production increases in European plants, combined with a continuous focus on fixed cost reduction, have resulted in declining costs per ton, improving the competitiveness of Yara’s Upstream activities.

Yara stopped or reduced production at some European plants during the fourth quarter of 2008, following a slow-down in urea and NPK demand. The production curtailments at the end of the year equaled 29 percent of Yara’s global ammonia capacity; 43 percent of its European ammonia capacity. Whereas ammonia curtailments primarily were made to benefit from cheaper import, urea production was curtailed to reduce costs. The NPK plant closures were made in response to slower demand for phosphate and potash, as the short-term yield impact of reducing application of these nutrients on average is larger than for nitrogen.

For several years, Yara has delivered strong results with regards to workers’ health and safety. In 2008, the LTI rate (lost-time injuries per million hours worked) was 1.2 for employees and contractors combined, down from 1.4 in 2007, firmly placing the company among the leaders in industrial safety.

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