Investor Relations

Other and eliminations 2008

“Other and eliminations” consists mainly of Yara headquarters costs and cross-segment eliminations. Profits on sales from Upstream to Downstream and Industrial are not recognized in the consolidated Yara income statement before the products are sold to external customers. These internal profits are eliminated in the “Other and Elimination” segment.

Full-year EBITDA was a positive NOK 268 million, compared with a negative NOK 36 million last year (see page XX). The positive variance reflected NOK 1,553 million write down on inventories described above, partly offset by internal profit elimination and increased central fixed costs.

Business and financial information

The fertilizer season in Western Europe referred to in this discussion starts 1 July and ends 30 June.

Yara’s business is strongly linked to the US dollar, both with regard to the purchase of energy and raw materials and prices of finished products. The variance analyses are therefore developed in US dollars, as management considers this to provide a better understanding of underlying business performance.

“Currency effect on net fixed cost”, as given in the variance analyses, reflects the effect of US dollar changes on net fixed cost in euro and Norwegian krone. Yara’s competitive position versus US producers is negatively impacted when the US dollar depreciates against the euro and Norwegian krone.

Several of Yara’s purchase and sales contracts for commodities are accounted for as derivatives, or have embedded terms and conditions which, under IFRS, are accounted for as derivatives. The derivative elements of these contracts are presented under “Commodity-based derivatives gain/(loss)” in the income statement.

Operational data

Thousand tons 2008 2007
Purchase of raw materials 1)
Rock Phosphate 1,051 1,276
Potassium 1,646 1,641
     
Downstream production
Ammonia 175 212
Nitrate 3,166 3,034
NPK 2,125 2,087
CN 242 223
UAN 304 488
Upstream production 2) 2008 2007
Ammonia 6,167 5,546
Urea 2,743 2,543
Nitrate 3,227 2,224
NPK 3,688 2,550
CN 956 1,049
UAN 351 350
Fertilizer prices – monthly average USD/tons
Urea - fob Black Sea prilled 499 308
Ammonia - fob Black Sea 525 264
CAN - cif Germany 466 245

1) Purchased for consumption in Yara plants, including blending in Yara Brazil.
2) Including share of Tringen, Qafco, Rossosh, Burrup and GrowHow UK Ltd

Special items

2008 2007
     
EBITDA effect (NOK million)
Sale of shares SQM 440
Closure of Kedainiai plant  (29)
Part divestment of Baltic joint ventures 48
Terni plant closure  (79)
Compensation Nitric Acid 22
UAN plant closure   (17)
Brazil restructuring  (24)
Asset disposal Glomfjord 23
Inventory fair value adjustment Kemira GrowHow 2
Restructuring costs Kemira GrowHow  (49)  (13)
Downstream 410  (87)
     
Sale of business to Brenntag 90
Redundancy costs KGH Belgium  (6)
Compensation Nitric Acid 22
Sale gas activity Yara Praxair 795
Startup Argon plant   (47)
Contract derivatives 11 15
Industrial 95 786
     
Sale of gas Tertre (52) 
Sales of shares in China BlueChemical 80
Retroactive effect gas contract renegotiation 27
Inventory fair value adjustment Saskferco  (359)
Sale of vessels Carbonor joint venture 116
Inventory fair value adjustment Kemira GrowHow  (63)
Restructuring costs Kemira GrowHow  (86)  (70)
Contract derivatives 97  (29)
Upstream  (293)  (46)
     
Restructuring costs Kemira GrowHow  (18)
Other and eliminations  (18)     
Total 195 653
1) Special items in NOK using monthly accounting exchange rates for the respective periods. Translation differences compared with variance analysis may occur.
2008 2007
Net income only effects (NOK million)
Interest rate derivatives gain / (loss)  (557)  (4)
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