Risk management 2009
Yara’s total risk exposure is analyzed and evaluated at corporate level. Risk evaluations are integrated in all business activities, both at corporate and business unit level, increasing Yara’s ability to take advantage of business opportunities.
Yara’s most significant market risk is related to the margin between nitrogen fertilizer prices and natural gas prices. Although there is a positive long-term correlation between these prices, margins are influenced by the supply/demand balance for food relative to energy.
Yara has a well-established system for credit and currency risk management, with defined limits for exposure, both at customer and at country level. Yara’s geographically diversified portfolio reduces the company’s overall credit and currency risk. As the fertilizer business is essentially a US dollar business, with both revenues and raw material costs priced in US dollars, Yara seeks to maintain its debt primarily in US dollars, thereby reducing its overall US dollars currency exposure. Yara has a conservative financing strategy and aims to hold the majority of its net interest-bearing debt in long-term bonds with fixed interest rates.
Reference is made to page 24-26 in the annual report for a more comprehensive description of Yara’s risk and risk management.