Investor Relations

MD&A Overview 2008

Yara achieved its best results so far in 2008 and consistently implemented its strategy by executing several major growth initiatives.
Yara MD&A Overview

Yara’s 2008 net income after minority interest was NOK 8,228 million, a 36 percent improvement on the year before. The corresponding earnings per share were NOK 28.27 compared with NOK 20.60 in 2007.

Full-year results improved considerably from last year due to higher fertilizer prices. Fertilizer volumes decreased by four percent compared with last year. In Europe, deliveries were up by six percent due to the Kemira GrowHow acquisition adding sales volumes. Outside Europe, fertilizer sales decreased by 13 percent, mainly in Brazil and Asia. All main product prices, in particular for nitrates and NPKs, were higher than the previous year, representing the main contribution to the strong results.

Net interest-bearing debt increased by NOK 15,870 million during 2008, ending at NOK 24,794 million. The increase reflects the Saskferco acquisition and an increase in net operating capital due to higher prices and higher inventories mainly outside Europe.

Operational segments

The Downstream segment delivered strong earnings in 2008, the best year ever, supported by improved margins, although with a decrease in volumes of four percent. Margins improved significantly compared to 2007, reflecting higher average prices for all main products, as well as timing effects on raw materials and product positions, partly offset by third- and fourth-quarter inventory write-downs.

The Industrial segment delivered strong earnings in 2008. Adjusting for special items and portfolio effects, the 2008 result was 23 percent lower than 2007. Volumes were 19 percent higher, mainly driven by sales of environmental applications and TAN, where growth has continued throughout the year. Temporary plant closures in Le Havre and Ferrara also impacted margins negatively.

The Upstream segment delivered strong earnings in 2008. All product prices were significantly up from 2007, with strong increases for ammonia, urea, NPK and nitrates. Despite major production curtailments in November and December, ammonia production increased by 11 percent and finished fertilizer production by 26 percent from the previous year, mainly reflecting the Kemira GrowHow acquisition.


On a global macro-level, 2008 was a year of exceptional international instability, increasing focus on and rising awareness of agricultural productivity and food production. Entering the year, high energy prices and low levels of grain stocks contributed to the prices on several agricultural products reaching record-high levels, causing a food crisis to surface, especially in developing regions. Exiting the year, the world was amidst a global financial crisis, with negative growth expected in several regions, and a global recession emerging.

Business overview

Yara is a global company that converts energy, natural minerals and nitrogen from the air into essential products for the farming community and industrial customers. Today, Yara is the number one global producer of ammonia, nitrates, NPK, specialty fertilizers and the European number one in industrial nitrogen applications. Yara is headquartered in Oslo, Norway, and listed on the Oslo Stock Exchange. Yara has developed a unique business model with three operating segments; Downstream, Industrial and Upstream:

Upstream includes Yara’s large-scale ammonia and fertilizer plants worldwide, phosphate mines, as well as the global trade of ammonia, providing the backbone of Yara’s production system.

Downstream consists of Yara’s worldwide marketing organization and global distribution network for fertilizer products and agronomic solutions, providing a unique global presence.

Industrial creates value by developing and selling chemical products and CO2 to non-fertilizer market segments, exploiting the industry base and market opportunities.


Yara’s activities stretch from phosphate mining and ammonia production to building market knowledge and local customer relationships. The backbone of Yara’s operations has historically been large-scale ammonia and fertilizer production in Europe, with new capacity largely shifting towards regions with low cost gas: the Middle East, Trinidad, Australia and North Africa. The 2008 acquisition of Saskferco, Canada, strengthened Yara’s position in North America, and the 2007 acquisition of Kemira GrowHow, Finland, complemented Yara’s nitrogen business to create a stronger platform within phosphate products and balanced fertilization.

Yara’s fertilizer and industrial product share a common platform, utilizing the company’s knowledge and leadership position in production and distribution of ammonia, urea and nitrates. They also share a common market approach, in which Yara looks to use its experience and expertise to provide total solutions that meet the needs of the customers and bring true value to their business. Yara offers the industry’s most comprehensive fertilizer product portfolio, supported by large-scale sourcing, production and trade as well as presence in the local marketplace. The industrial product portfolio includes key raw materials for several segments of the chemical and civil explosives industries and a growing range of environmental applications.


In October 2008, Jørgen Ole Haslestad took over as President and CEO of Yara International ASA, succeeding Thorleif Enger, who reached his desired retirement age. In August, Egil Hogna took over as CFO, replacing Sven Ombudstvedt. In May, Trygve Faksvaag took over as Chief Legal Counsel, replacing Ken Wallace. Management decided in 2008 to establish a central corporate compliance unit to coordinate and support its global compliance work, with special attention to measures to forestall corruption and bribery; a new Global Head of Compliance took office early 2009.

The Industry

Given the different locations of raw materials and the variety of nutrient requirements, as well as local market demands, the industry has evolved into a number of nutrient-specific sub-sectors, with most companies serving national or sub-regional markets. The nitrogen (N) fertilizer industry is less consolidated than the phosphorus (P) and potassium (K) fertilizer industries.

Whereas large suppliers of phosphorus and potassium fertilizers are limited in numbers and concentrated to regions close to natural deposits of phosphate rock and potash ores, nitrogen is produced on all continents from natural gas and air. The latter is by far the largest of the three primary plant nutrients, accounting for about 60 percent of global fertilizer consumption. Also, nitrogen consumption is less volatile than that of phosphorus and potassium.

Although the nitrogen fertilizer industry is fragmented on a global basis, it has undergone significant restructuring in Europe and North America. Consequently, several of the larger producers in the industry are based here, with Yara being the largest measured by revenues and production capacity in ammonia, nitrates and complex NPK fertilizers. Yara has in recent years been actively involved in the consolidation of the global nitrogen industry, especially through the acquisitions of Fertibras (Brazil, 2006), Kemira GrowHow (Finland, 2007) and Saskferco (Canada, 2008).

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