Net income was NOK 3,814 million (NOK 13.08 per share) in 2009, down from NOK 8,241 million (NOK 28.27 per share) in 2008. Yara’s after-tax measure for return on capital, CROGI (cash return on gross investment), was at 8.5 percent compared to a target of minimum ten percent average over the business cycle. Operating income was NOK 1,271 million, down from NOK 12,281 million in 2008. EBITDA declined to NOK 5,549 million, from NOK 17,917 million in 2008. Yara’s revenue and other income was NOK 61.4 billion in 2009, down from 88.8 billion in 2008.
Yara’s 2009 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 last year, while realized urea prices declined approximately 40 percent.
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. 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.
Yara’s production system ran at approximately 85 percent of capacity for ammonia and urea, 91 percent for nitrates and 67 percent for NPKs. The strong NPK curtailments were made in response to slower demand for potash and phosphate, as the short-term yield impact of reducing application of these nutrients on average is smaller than for nitrogen.
Net cash from operating activities in 2009 was NOK 11,925 million, reflecting a significant release of net operating capital, mainly due to lower fertilizer and raw material prices, but also reduced inventory volumes as production was curtailed and third-party purchases reduced. Inventory volumes at year-end were 43 percent lower than the previous year. Net cash from operating activities in 2008 was NOK 3,986 million. Net cash used in investment activities for 2009 was NOK 5,467 million.
Yara strengthened its financial position during 2009. The debt/equity ratio decreased from 0.84 to 0.56 due to lower net operating capital. Yara’s net interest-bearing debt at the end of the year was NOK 16,227 million, while total assets equaled NOK 61,665 million. Total majority shareholders’ equity as of 31 December 2009 amounted to NOK 28,705 million. At the end of the year, Yara had NOK 974 million in cash and cash equivalents and approximately NOK 10,500 million in un-drawn committed bank facilities. We consider the company’s cash position and financial strength to be satisfactory.
Yara possesses a knowledge margin in the market based on its insight in local markets, close customer relations, agronomic expertise and ability to develop new product offerings from its existing production base. To support this knowledge margin and to seize the opportunities presented by some of today’s pressing global challenges, Yara’s research and development targets both agronomical activities and product and process improvements. Several of the latter have led to commercialization of environmental solutions, such as an N2O catalyst and NOx abating technologies. In 2009, Yara’s R&D costs were NOK 88 million, compared with NOK 126 million in 2008.
In the opinion of the Board of Directors, the consolidated financial statements provide a true and fair view of the group’s financial performance during 2009 and financial position at Dec. 31, 2009. According to section 3-3 of the Norwegian Accounting Act, we confirm that the consolidated financial statements and the financial statements of the parent company have been prepared based on the going concern assumption and that it is appropriate to use this assumption.