Yara’s vision is to be an Industry Shaper, aiming to set industry standards and being a positive force in developing the industry through performance and growth. The company’s mission – Better Yield – is aimed at delivering good returns for its customers and owners.
Yara aims to drive an inspiring and innovative performance culture based on its vision and mission, the Code of Conduct and the Ethics Program developed during 2009, and its four core values: ambition, teamwork, trust, accountability. Yara’s ambition – further detailed through the ten strategic goals for long-term value creation – is based on the company’s global position, its industrial platform and business model, its growth strategy and its combined strengths.
Yara has for several years consistently implemented a strategy of profitable and sustainable growth. The strategy is a roadmap for industry shaper performance and long-term value-creation. Yara has consistently expressed its opinion of the need for further consolidation of the nitrogen fertilizer industry, and its readiness to participate in such a development through acquisitions and joint ventures.
Yara is ready for step growth beyond the current pipeline. With the current business platform, Yara aims for a 10 percent global market share, which would be a more optimal utilization of the company’s global marketing and distribution system. Reaching this long-term objective will require productivity gains in the existing business as well as organic growth and step growth initiatives.
Principally, Yara will focus and grow within three main business areas: nitrogen-based fertilizers; nitrogen for industrial applications; and sourcing of phosphate and potash. Larger initiatives will focus on increasing production in regions with stable supplies of competitively priced natural gas for ammonia production, and phosphate and potash resources, expanding presence in high-growth markets and participating in consolidation in mature markets. For all growth categories, scale, synergy and timing are important factors together with strict financial discipline.
During 2009, the CEO and the Executive Management Team pursued a Leadership Agenda supporting the strategic ambitions. It concentrates on five areas the company needs to focus on in order to realize its industry shaper vision: There is a need to continuously drive profitable growth, to be a leading enterprise in global agricultural development, to drive strong performance and positioning on environmental solutions, and to perfect operations throughout the organization. Additionally, a companywide focus on best practice corporate governance has to be ensured.
Underlying the agenda is the drive to consistently explore new business opportunities. Such opportunities arise from global developments as well as the company’s knowledge base and market-oriented R&D activities. Major global challenges affecting the company’s market, such as climate change and food security, offer opportunities for Yara to fully exploit its position as industry leader.
Yara’s strategy is closely connected to its unique business model. With global optimization at its core, the model builds upon Yara’s scale advantages, extensive flexibility and unrivalled presence.
Yara benefits from scale as the world’s largest producer of ammonia, nitrate and NPK fertilizer, with more than one quarter of global ammonia trade. Furthermore, Yara has developed an unrivalled global presence: the global distribution and marketing network includes chartered shipping capacity and more than 200 terminals, warehouses, blending plants and bagging facilities. Local sales and marketing units provide customer services as well as agronomical support - sharing knowledge and working with farmers worldwide to increase yields and improve crop quality. This local market insight and close customer relations, combined with agronomic expertise and ability to develop new products and technologies, have given Yara a knowledge margin in the market.
The business model has built-in flexibility to enable quick response to changing market conditions. The majority of the company’s operational cash cost is variable and related to energy, raw materials, freight and third-party fertilizer sourcing. Purchases and plants can be halted at short notice to respond to delivery slow-downs, which was duly demonstrated during the volatile market situation in 2008–09.
This flexibility also extends to energy costs in Europe: increased costs can be mitigated by cheaper ammonia imported from other sources. Most of Yara’s European production sites have deep-sea import/export ammonia terminals, and Yara is the global leader in trade and shipping of ammonia. Furthermore, Yara has the world’s largest storage capacity for fertilizers, with the capacity to build inventory before peak seasons, handle delivery volatility and take advantage of geographical arbitrage opportunities.
In 2009, Yara cautiously followed up on previous initiatives, mainly through the finalization of agreements establishing the new JV, the Libyan Norwegian Fertiliser Company (Lifeco) in Libya. Effective February 2009, with a Yara stake of 50 percent, and taking over the fertilizer assets at Marsa el Bregna, Lifeco added to Yara’s low-cost gas capacity.
The investment in Libya complements Yara’s global commercial activities and is an addition to major acquisitions in recent years: Saskferco, Canada in 2008; Kemira GrowHow, Finland, in 2007; and Fertibras, Brazil, in 2006. In accordance with its step growth strategy, Yara acquired the remaining 50 percent ownership in Balderton Fertilisers, Switzerland, in January 2010 (initial 50 percent acquired in 2006). Full ownership of this leading fertilizer trading company, with an especially strong position in the former Soviet Union, the Mediterranean region as well as in Asia and Africa, complements Yara’s position and global distribution system.
In September 2009, the Dutch Prime Minister, Jan Peter Balkenende, laid the first stone of the new Urea 7 plant at Sluiskil, together with the CEO of Yara International ASA, Jørgen Ole Haslestad. This EUR 400 million investment will be a world-class urea plant. Another step forward was taken the following month, when a letter of intent for the construction of the Qafco-6 expansion project in Qatar was signed. Yara owns 25 percent of Qafco, the remaining 75 percent is owned by Industries Qatar.
These strategic moves have strengthened Yara’s global position and expanded production capacity in major markets.
Building knowledge and inspiring innovation are keys to the future growth of Yara. With a renewed focus on human resources and R&D activities geared toward business development, Yara is ready to respond to global challenges and changing market demands.
During 2009, a new human resource (HR) strategy was developed, to be implemented in 2010. With this strategy, HR development in Yara is transformed into a business-focused global function. The strategy places great emphasis on providing direct support to managers, employees and the company as a whole. It is built upon three interdependent priorities: optimizing the workforce, building a candidate pipeline and building a highly-valued work force, with the latter increasing focus on talent retention, teamwork, and processes. Combining diversity and mobility with these three priorities is a goal.
The company’s R&D activities are decidedly market-oriented and geared towards business development. They support the development of cost-saving concepts and farmer best value concepts, as well as improved production processes and nitrogen-based environmental technologies. R&D is carried out at the company’s agronomic center Hanninghof in Dülmen, Germany, at the center for foliar products in Pocklington, UK, and at the technology centers in Porsgrunn, Norway and in Sluiskil in the Netherlands. In 2009, Yara founded an extension site of its Hanninghof Center for Plant Nutrition in Shandong, China.
Yara’s agronomic expertise has for decades been devoted to increasing yield, developing new solutions and improving farming practices. Besides the market’s most comprehensive portfolio of plant nutrition products, Yara offers nutrition strategies tailored to specific markets and growing conditions, setting the company apart in the industry. The novel Yara Crop Nutrition concept launched in 2009 brings together Yara’s crop knowledge, portfolio combinations, application competence and encourages a shift from traditional soil management to tailored crop management. Placing the plant’s nutritional needs first, it sets new standards in aiming for better yields and nutrition efficiency, adding to farmers’ value while minimizing environmental impact.
Yara’s technological R&D activities have continuously improved production processes, energy efficiency and environmental performance, adding to the company’s edge as a reliable supplier of high quality products. They also utilize the company’s leadership position in nitrogen production to develop a growing range of industrial products and solutions. In recent years, the company’s range of environmental solutions has been its fastest growing product category, driven by growing environmental concerns and stricter legislation.
Yara’s successful NOx abatement technologies and the much praised N2O catalyst technology, originally developed to reduce emissions from its own plants, have been made commercially available. Yara took part as a pioneer in developing the AdBlue solution and specifications for abating NOx emissions, creating a new market in Europe and now addressing the rest of the world.
Being a truly global company, Yara has chosen to adopt a strategic approach to global corporate citizenship. Externally, Yara leverages its core business and global position within areas where it can contribute and make a substantial positive impact, responding to major global challenges.
Internally, Yara is committed to adherence to the laws and regulations of the countries in which it operates, as well as its own code of conduct and stringent rules, not least with respect to safety and product stewardship. Yara adheres to the principles of the UN Global Compact, and is dedicated to contributing towards the UN Millennium Development Goals (MDGs), in particular the one on eradicating hunger and poverty.
Since 2005, Yara has carried out several activities within its program to support an African green revolution, based on a core business and key competence approach. In 2009, this engagement was further strengthened through the Agricultural Growth Corridor concept, which received international attention and support, from the United Nations and African governments as well as from the private sector. Yara continued to be involved on the global arena, with particular focus on connecting the issues of climate change and food security.
In so doing, Yara participated in several global initiatives, including the development of “A New Vision for Agriculture” spearheaded by the World Economic Forum (WEF). The CEO participated on panels, and Yara hosted sessions at the WEF annual summits in 2009 and 2010, as well as at the regional summit for Africa. Furthermore, Yara continued to be an active participant in key processes led by industry associations, the International Fertilizer Industry Association (IFA) and the European Fertilizer Manufacturers Association (Efma, as of 2010 Fertilizers Europe).
Due to the nature of its industry and business, Yara is exposed to certain risk factors either directly connected with its operations or indirectly linked to its markets. These encompass operational risks including HESQ (health, environmental, safety, quality) and financial risks, as well as strategic risk aspects including issues such as public acceptance of fertilizer and political restrictions and regulations.
Also, there are risks – as well as opportunities – connected to major global developments that affect the business framework of Yara’s key customers, not least the world farming community. The latter factors include the pace of economic growth, the market demand for – and price levels of – farmers’ products, and increasingly the effects of climate change. Expected to have a profound effect on growing conditions in most regions, climate change is a major issue for world agriculture, and consequently for Yara.
Yara has developed and implemented a risk management system, outlined on pages 24-26, monitoring primary risk exposures and assessing risk levels.
Furthermore, Yara is aware of the reputational risks connected with its operations. Throughout more than 100 years of operation, Yara has built a strong reputation with its stakeholders around the world. The company recognizes that reputational value results from the sum of its total operations. The management of reputational risk has a wide scope ranging from product issues, accidents, security and corporate matters to more externally-motivated events such as natural disasters and political interference.