Investor Relations

Financial performance and operations 2010

Net income after non-controlling interests was NOK 8,729 million (NOK 30.24 per share) in 2010, up from NOK 3,782 million (NOK 13.08 per share) in 2009. Yara’s after-tax measure for return on capital, CROGI (cash return on gross investment), was at 17.4 percent compared to a target of minimum ten percent average over the business cycle. Operating income was NOK 7,467 million, up from NOK 1,271 million in 2009. EBITDA increased to NOK 15,315 million, from NOK 5,549 million in 2009. Yara’s revenue and other income was NOK 65.4 billion in 2010, up from 61.4 billion in 2009.

Yara’s 2010 results improved significantly from 2009 due to higher prices and margins, as well as positive non-recurring items. Overall fertilizer deliveries were in line with 2009, with a small increase in European volumes, while sales outside Europe were slightly lower. Average realized nitrate prices were approximately 14 percent higher than last year, while realized urea prices increased eight percent. The major positive non-recurring items were the sales gain from Yara’s minority ownership in Brazilian phosphate producer Fosfertil and the break-up fee received at the termination of the Terra merger agreement.

The Downstream segment delivered an EBITDA of NOK 7,796 million, a strong result as margins improved and sales to core markets increased. Global fertilizer sales were in line with 2009, as higher NPK and urea sales offset lower nitrate sales.

The Industrial segment delivered strong results with an EBITDA of NOK 1,135 million, down nine percent from 2009 despite a 13 percent volume increase, as margins declined due to increasing ammonia prices during 2010.

The Upstream segment delivered an EBITDA of NOK 5,975 million, a strong result reflecting an increase in both production volumes and product margins compared with 2009. Higher product prices more than offset the negative effect of higher energy cost.

CROGI

CROGI 2010 View graph

ROCE

ROCE 2010 View graph

Net cash from operating activities in 2010 was NOK 7,093 million, reflecting strong earnings as the market situation improved for Yara’s products. Net cash from operating activities in 2009 was NOK 11,925, reflecting lower cash earnings than in 2010, but a substantial reduction in net operating capital following the inventory build up late 2008 when financial turmoil slowed-down sales. Net cash from investment activities for 2010 was NOK 524 million, a positive cash flow due to proceedings from the sale of the minority position in Fosfertil.

Yara strengthened its financial position during 2010. The debt/equity ratio decreased from 0.56 to 0.27 due to strong earnings and Fosfertil sale. Yara’s net interest-bearing debt at the end of the year was NOK 9,540 million, while total assets equaled NOK 65,464 million.

Total equity attributable to shareholders of the parent company as of 31 December 2010 amounted to NOK 35,185 million. At the end of the year, Yara had NOK 2,946 million in cash and cash equivalents and approximately NOK 9,600 million in undrawn committed bank facilities. We consider the company’s cash and financial position to be strong.

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 2010 and financial position at 31 December 2010. 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 make that assumption.

Subsequent events
Yara’s jointly controlled entity Lifeco has temporarily suspended its operations due to the recent unrest in Libya. At this point in time, Yara has no information about material physical damage or depletion of Lifeco assets.

During 2010, Yara initiated legal action against the 35 percent Yara-owned joint venture in Burrup, Australia, after it had blocked attempts to allow an independent auditor to undertake a full inspection of their accounts. Yara believed the inspection was necessary to address a number of concerns, including high cost levels, a persistent lack of transparency and adherence to corporate governance principles and serious allegations raised by the media of misuse of Burrup funds.

In December 2010, the main financier appointed receivers and managers to the assets. Included in Yara’s share of net loss in 2010 is NOK 165 million share of impaired balance sheet items in the Burrup joint venture accounts  following the Yara-initiated investigations. In March 2011 the receiver lodged a AUS 115 million claim against the majority owner and related parties to him due to financial irregularities.

 

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