Net income was NOK 12,090 million, up 37% from 2010. 2011 earnings per share were NOK 41.99, compared with NOK 30.24 in 2010. Yara’s after-tax measure for return on capital, CROGI (Cash Return on Gross Investment), was at 20.9% compared with a target of minimum 10% average over the business cycle, and up from 17.4% in 2010.
Operating income was NOK 13,240 million, up from NOK 7,467 million in 2010. EBITDA increased to NOK 18,163 million, from NOK 15,315 million in 2010. Yara’s revenue and other income was NOK 80.4 billion in 2011, up from 65.4 billion in 2010.
Yara’s 2011 results improved significantly from 2010 due to higher prices and margins, more than offsetting higher energy prices and lower volumes. Overall fertilizer deliveries were 4% lower than in 2010, with lower second-half sales in Europe only partially offset by stronger sales elsewhere. Average realized nitrate prices were 49% higher than 2010, while realized urea prices increased 37%. The major positive non-recurring items were generated by the sale of Yara’s share in Rossosh and the part-divestment of Yara’s share in Yara Praxair.
Net income after non-controlling interest
The Downstream segment delivered an EBITDA of NOK 5,085 million, a strong result as a tight fertilizer market improved margins and increased sales to premium markets outside Europe. Strong global grain prices increased farm margins, lifting fertilizer demand and, subsequently, fertilizer prices during 2011. Realized sales prices were up for all main products.
The Industrial segment delivered strong results with an EBITDA of NOK 2,001 million, including a gain of NOK 967 million for the sale of Yara’s 16% ownership in Yara Praxair. The underlying EBITDA was 6% below 2010 despite the 7% volume increase, which did not compensate for the loss in margins in CO2 and environmental products.
The Upstream segment delivered an EBITDA of NOK 11,446 million, an increase of 92% from 2010. The result reflects the increase in prices for all products, which more than offset the negative effect of higher energy cost. Finished fertilizer production volumes were in line with 2010, whereas ammonia production decreased 9% compared with 2010. The EBITDA includes the one-time gain of NOK 1,419 million for the sale of Yara’s share of Rossosh. EBITDA excluding special items was up 69% compared with 2010.
Net cash from operating activities in 2011 was NOK 7,363 million, reflecting strong earnings based on a continued strong market situation for Yara’s products. Net cash from operating activities in 2010 was NOK 7,093 million. Net cash from investment activities for 2011 was NOK 431 million, a positive cash flow due to proceeds from the Rossosh and Yara Praxair divestments.
Yara strengthened its financial position during 2011. The debt/equity ratio decreased from 0.27 to 0.12 primarily due to strong earnings sale. Yara’s net interest-bearing debt at the end of the year was NOK 5,539 million, while total assets were NOK 73,900 million. Total equity attributable to shareholders of the parent company as of 31 December 2011 amounted to NOK 44,623 million. At the end of the year, Yara had NOK 5,868 million in cash and cash equivalents and approximately NOK 10,585 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 2011 and financial position at 31 December 2011. 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.
On 1 February 2012, Yara acquired additional 16% of Burrup Holdings Limited (BHL) for USD 143 million, increasing its ownership share in the company to 51%. Yara will consolidate BHL and its subsidiaries from the acquisition date, including possible goodwill, and measure all identifiable assets acquired and liabilities assumed at their acquisition-date fair values.
On 1 March 2012 Yara signed a heads of agreement with Orica and Apache via joint venture to build a 330,000 metric tons ammonium nitrate plant on the Burrup peninsula and to distribute ammonium nitrate and other explosives products to mining customers in the Pilbara region. Yara will be the operator of the ammonium nitrate plant and Orica will manage the sales and distribution. Final agreement is subject to concluding negotiations on the contract for the engineering, procurement and construction of the ammonium nitrate plant and Board approvals.