Investor Relations

Financial performance 2009

Yara’s 2009 net income after non-controlling interests was NOK 3,782 million, a 54 percent decline from 2008. The corresponding earnings per share were NOK 13.08 compared to NOK 28.27 in 2008.

Full-year results declined significantly from 2008 due to lower prices and margins. Fertilizer deliveries decreased two percent compared with 2008. European volumes were down eleven percent while volumes outside Europe were up eight percent from last year. Average realized nitrate prices were approximately 50 percent lower than 2008, while realized urea prices declined approximately 40 percent.

Net interest-bearing debt decreased by NOK 8,567 million during 2009, ending at NOK 16,227 million. The decline primarily reflects a significant release of net operating capital, partially offset by growth investments.

Financial Highlights    
NOK million, except where otherwise indicated 2009 2008
Revenue and other income 61,418 88,775
Operating income 1,271 12,281
Share net income equity-accounted investees 1,412 2,760
EBITDA 5,549 17,917
EBITDA excl. special items 5,492 17,722
Net income after non-controlling interests 3,782 8,228
Earnings per share 1) 13.08 28.27
Earnings per share excl. currency and special items 1) 8.82 36.28
Average number of shares outstanding (millions)     289.2 291.1
CROGI (12-month rolling average) 8.5%  22.9% 
ROCE (12-month rolling average) 7.4 % 29.0 %

1) NOK per share. Yara currently has no share-based compensation programs that result in a dilutive effect on earnings per share.


Key statistics 
2009 2008
Fertilizer  20,099 20,540
Industrial products (excl. industrial gases) 3,756 3,898
Total 23,855 24,438
Production 1)
Ammonia 6,736 6,377
Finished fertilizer and industrial products, excl. bulk blends 15,457 16,695
Total 22,193 23,072

1) Including Yara share of production in associated companies and joint ventures.

The Downstream segment delivered an EBITDA of NOK 963 million, a weak result as earnings were impacted by reduced volumes, lower market prices and position losses from declining prices. Global fertilizer sales were down two percent from 2008, mainly reflecting NPK deliveries of 18 percent below last year.

The Industrial segment delivered strong results with an EBITDA of NOK 1,248 million, more than doubled from 2008 excluding special items, primarily reflecting higher margins from contracts entered into at higher prices. Despite a challenging macro environment, total volumes were only marginally lower, four percent, compared with 2008.

The Upstream segment delivered an EBITDA of NOK 4,013 million, a weak financial result impacted primarily by low margins for all finished fertilizer products and lower sales of NPK in particular.

Like other parts of the industry, Yara’s operations were affected by the market turmoil in the 2008/09 season, as a sharp drop in demand saw fertilizer sales down 18 percent in the first half of 2009. In response, Yara minimized third-party sourcing and curtailed own production, thereby normalizing stock levels and delivering strong operating cash flow.

Yara’s production system ran at approximately 84 percent of capacity for ammonia, 86 percent for urea, 91 percent for nitrates and 67 percent for NPKs. The strong NPK curtailments 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 smaller than for nitrogen. The majority of Yara’s operational cash costs are variable, reducing the financial impact of such curtailments.

EBITDA was down 69 percent compared to 2008, primarily reflecting significantly lower prices and margins.

Fertilizer deliveries were down two percent on 2008, with NPKs down 18 percent while nitrate sales increased nine percent. European NPK sales were hampered throughout 2009 by high potash prices, but increased in December as nitrogen and phosphate demand improved. Total European volumes declined eleven percent, while volumes outside Europe were up eight percent from last year, primarily in Asia and North America. Industrial volumes declined four percent, recovering in the second half from a mid-year shortfall of 14 percent.

Prices for all main products were down compared to 2008, with average realized nitrate prices approximately 50 percent lower, while realized urea prices declined approximately 40 percent. Industrial margins were strong, as contracts entered into at higher prices towards the end of 2008 remained in place for much of 2009.

European oil and gas costs decreased significantly, reflecting both lower oil-linked and hub gas prices and Yara’s decision to maximize spot exposure in its energy contracts. However, European oil and gas costs increased eight percent from third quarter to fourth quarter 2009, as both natural gas and oil product prices increased.

2009 special items were a net positive NOK 57 million, while 2008 special items were a net positive NOK 195 million.

Fixed costs were lower than in 2008, reflecting a combination of Kemira GrowHow synergies, other cost reductions and one-time effects that year.

The US dollar was approximately 13 percent stronger versus the Norwegian krone, compared with 2008, resulting in a negative translation effect in Yara’s results.

Variance analysis
NOK million 2009
EBITDA 2009 5,549
EBITDA 2008 17,917
Variance EBITDA (12,369)
Volume & mix (491)
Price/Margin (20,671)
Oil & gas costs in Europe 4,656
Special items (138)
Other 852
Conversion (NOK vs. USD) 1) 3,422
Total variance explained (12,369)
1) Based on average NOK/USD rates, 2009: 6.27 (2008: 5.57)

Yara exercised tight inventory management in 2009, releasing approximately NOK 13 billion of operating capital and ending the year with stocks 43 percent below a year earlier.

Net income from equity-accounted investees

Net income from equity-accounted investees declined 49 percent from a year earlier, reflecting lower prices and margins. The Burrup plant delivered improved results since it was not operating in second half 2008 and in the same period also incurred currency losses on US dollar debt. The Lifeco joint venture began operating in February 2009, making a positive contribution to 2009 income from equity-accounted investees.

Net income from equity-accounted investees    
NOK million 2009 2008
Quafco 607 1,446
Tringen 118 295
Rossosh 81 506
Burrup 311 (193) 1)
GrowHow UK Ltd 112 514
Lifeco 127 0
Other 56 193
Total 1,412 2,760
1) Burrup production halted from June to December 2008 due to gas supply disruption.

Qafco, Burrup and Tringen results are strongly exposed to international ammonia and urea prices, which were both down approximately 50 percent compared with 2008 (fob Black Sea). GrowHow UK Ltd. results are primarily exposed to nitrate and NPK margins and sales volumes.

2009 Rossosh results reflect lower NPK sales and lower margins for both ammonia and NPKs.

Other and elimination

EBITDA was a negative NOK 676 million, compared with a positive NOK 268 million 2008. The negative variance reflects a lower reversal of write-down for Yara-sourced products, partially offset by a lower elimination of internal profit in inventory, as average margins were lower than a year earlier.

Financial items

Yara bases its long-term funding on diversified sources of capital to avoid dependency on single markets. As the fertilizer business is essentially a US dollar business, with both revenues and raw material costs denominated or determined in dollars, Yara keeps a major part of its debt in US dollars in order to reduce overall currency exposure. At year-end, 80 percent of Yara’s long-term debt was US dollar denominated, and USD 900 million of Yara’s long-term debt carried fixed interest rates at an average interest cost of 7.3 percent.

Yara successfully completed four bond issues in March, totaling NOK 1,925 million due from 2012 to 2016, and a further bond issue in June, totaling USD 500 million due 2019. In addition, a loan agreement totaling USD 170 million due 2015 was signed in September.  See Note 23 for further details on long-term debt.

2009 net financial income was NOK 794 million, compared with net financial expense of NOK 4,136 million in 2008. The difference was mainly due to lower interest expense and a foreign exchange gain in 2009 versus a loss in 2008.

Financial items
NOK million
2009 2008
Interest income from customers 130 238
Interest income, other 121  132
Dividends and net gain/(loss) on securities 124  306
Interest income and other financial income 376  676 
Interest expense (728) (1,347)
Return on pension plan assets 376  423
Interest expense re. pension liabilities (504) (490)
Foreign exchange gain/(loss) 1,364  (3,313)
Other (89) (86)
Interest expense and foreign exchange gain/(loss) 419  (4,813)
Net financial income/(expense) 794 (4,136)

The net foreign exchange gain for the year totaled NOK 1,364 million as the US dollar depreciated against both the Norwegian krone and Yara’s emerging market currencies such as the Brazilian real. During the year, Yara’s US dollar debt generating currency effects was reduced from USD 2 billion to USD 1.4 billion. Between USD 1.3 billion and USD 1 billion of this debt was held to hedge future earnings while the remainder was emerging markets inventory financing.

Full-year interest expense was NOK 619 million lower than last year, reflecting both a NOK 4.5 billion lower average gross debt level and positive interest rate derivative effects. Yara recorded a NOK 323 million gain on interest rate derivatives during the first half of 2009, compared to a NOK 557 million loss in 2008. The last of these contracts were terminated in June 2009.


2009 current and deferred taxes amounted to an income of NOK 337 million. A normal tax rate would imply a charge of approximately NOK 600 million on income before tax excluding net income from equity-accounted investees.

The positive effect of approximately NOK 1 billion is primarily generated by internal group restructuring and utilization of tax losses in Belgium and Brazil, the latter following a court ruling during fourth quarter 2009.

Net interest-bearing debt
NOK million 2009
Net interest-bearing debt at beginning of period (24,794)
Cash earnings 1) 558
Dividends received from equity-accounted investees 409
Net operating capital change 13,207
Lifeco (Libya) (1,559)
Other investments (net) (3,908)
Yara dividend (1,544)
Foreign exchange gain/(loss) 1,365
Other 40
Net interest-bearing debt at end of period (16,227)
1) Operating income plus depreciation and amortization, minus tax paid, net gain/(loss) on disposals, net interest expense and bank charges

As a supplement to the consolidated statement of cash flows, the table highlights the key factors behind the development in net interest-bearing debt.

Net interest-bearing debt decreased by NOK 8,567 million during 2009, ending at NOK 16,227 million. The decline primarily reflects a significant release of net operating capital, partially offset by growth investments.

Cash earnings were low in 2009, reflecting a challenging market situation for most of the year, including significant position losses and plant curtailments, in addition to NOK 2.2 billion in tax paid despite tax income in the consolidated results. Dividends from equity-accounted investees were NOK 409 million. For further details, see note 12.

At the end of 2009, net operating capital was NOK 7,879 million, a decrease of NOK 13,207 million (excluding currency effects) from Dec. 31, 2008. The decrease is mainly due to reduced inventory. Net operating capital turnover declined from 4.9 at the end of 2008 to 4.5 at the end of 2009.

Growth investment activity was high in 2009, especially in Sluiskil, the Netherlands where a EUR 400 million urea expansion program is in its construction phase, for completion in 2011. The consideration from the sale of Yara’s remaining shares in China BlueChemical Ltd contributed a positive NOK 254 million.

Yara’s Annual General Meeting approved a dividend for 2008 of NOK 4.50 per share, giving a total dividend of NOK 1,304 million payable in 2009. A further NOK 240 million was paid to the Norwegian State for the redemption of shares under Yara’s 2008 share buy-back program.

The debt/equity ratio at the end of 2009, calculated as net interest-bearing debt divided by shareholders’ equity plus non-controlling interests, was 0.56 compared with 0.84 at the end of 2008.

In January 2010, Yara agreed with Vale to sell its shares in Fosfertil for USD 785 million. The theoretical end 2009 debt/equity ratio adjusted for a completed Fosfertil sale is 0.43, with tax payable included in debt. The sale is expected to close in second quarter 2010.

Dividend policy

Yara’s objective is to pay out a minimum 30 percent of net income as an average over the business cycle. Yara believes it will be beneficial for shareholders that the company strives for a gradual increase and predictability in the absolute dividend level over time, independent of the business cycle. Consequently, Yara expects to pay out somewhat more than 30 percent of net income in years with weaker than average cash flow from operations and less than 30 percent in years with stronger than average cash flow from operations.

Yara’s Board will propose to the Annual General Meeting a dividend payment of NOK 4.50 per share for 2009, which represents 34 percent of net income.

Cash payments to shareholders from dividends and share buy-back programs combined are expected to be an average 40 to 45 percent of net income over the business cycle. The Board intends to propose to the Annual General Meeting a new buy-back program along the lines of the previous one.

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