Yara aims to maintain a long-term mid-investment grade rating level, i.e. BBB according to Standard & Poor’s methodology and Baa2 according to Moody’s methodology. This implies that the company should normally operate with a net debt below two times EBITDA, and that larger acquisitions would normally be accompanied by new equity issuance.
Yara’s growth ambitions imply significant investments, both through expansion of existing operations, new builds and acquisitions. The Board of Directors underlines that the focus on growth opportunities is combined with strict valuation and capital discipline, seeking opportunities where Yara has the best relative synergies, at the right time of the cycle.
Yara expects to invest a total of approximately NOK 13 billion during 2014. The investment level required to maintain current Yara production capacity and productivity is estimated to be approximately NOK 4 billion per year. Most of the remaining NOK 9 billion is linked to volume and/or margin growth predominantly within value-added product capacity and downstream activities:
- The OFD Holding Inc. acquisition, with expected completion in mid-2014, represents approximately NOK 3 billion including land investments.
- NOK 2.5 billion is planned to be invested in brownfield plant expansions, smaller Downstream and Industrial acquisitions, ammonia ship investments and Downstream terminals and blending units.
- A frame of NOK 1.4 billion is set aside for productivity and efficiency improvement projects in Yara’s production plants.
- An additional NOK 1.2 billion of maintenance investments are required in 2014 to further improve reliability and accommodate a higher than normal number of plant turnarounds.
- The Yara Pilbara technical ammonium nitrate plant is scheduled for completion in 2015 with a total investment of USD 800 million, of which Yara’s 45% share in 2014 is approximately NOK 800 million.
Dividends and buy-backs
Yara’s objective is to pay out an average 40-45% of net income in the form of dividends and share buy-backs. Within this objective, a minimum 30% of net income shall be paid in the form of dividends, while share buy-backs make up the balance and are deployed with greater flexibility.
Yara’s Board will propose to the Annual General Meeting a dividend payment of NOK 10 per share for 2013 , which represents 48% of net income after non-controlling interests, totaling a payment of NOK 2,771 million based on outstanding shares at the date this financial statement was authorized for issue. The above-target dividend is proposed to improve Yara’s capital efficiency. Combined with the 2013 result for Yara International ASA and other effects, the proposed dividend results in a net reduction in equity of NOK 4,065 million.
In 2013, Yara paid out NOK 4,557 million in dividends and share buy-backs, representing approximately 43% of net income in 2013.
Yara executes share buy-back programs as an integral part of its shareholder policy. In 2013 Yara bought back and redeemed shares for a total of NOK 910 million. The Board intends to propose to the Annual General Meeting a new buy-back program along the lines of the existing one.