Demand for fertilizer and industrial nitrogen products remained strong overall in 2014, based on continued healthy farm margins. Continued curtailments in many key urea export regions increased the need for Chinese urea exports which reached a record 14 million tons. Urea prices were mostly stable through the year reflecting supply-driven market conditions with the production cost for anthracite coal based producers in China setting the floor at around USD 300 per ton fob China.
Urea is the largest traded nitrogen fertilizer and sets the global nitrogen commodity price, but Yara sells most of its production as more differentiated nitrate and NPK fertilizer as well as industrial applications. Nitrate premiums and NPK compound premium above blend remained strong and at higher levels than the historical average.
Yara delivered strong financial results in 2014, with net income after non-controlling interests at NOK 7,625 million, an increase of more than 30% compared to 2013 reflecting lower energy costs in Europe and a stronger US dollar. Earnings per share were NOK 27.59 in 2014, compared with NOK 20.67 in 2013. Operating income was NOK 10,305 million, up from NOK 8,074 million in 2013, while EBITDA was NOK 16,407 million, compared with NOK 13,399 million in 2013. Revenue and other income was NOK 95.3 billion in 2014, up from 85.1 billion in 2013.
Cash flow and financial position
Net cash from operating activities was NOK 8,607 million, reflecting strong earnings based on a continued strong market situation for Yara’s products and partly offset by an increase in working capital primarily driven by higher inventories at year-end. Net cash from operating activities in 2013 was NOK 12,300 million. Net cash used for investing activities in 2014 was NOK 9,700 million, reflecting the acquisition of OFD in Colombia and a 60% stake in the Brazilian phosphate producer Galvani Indústria, Comércio e Serviços S.A. (Galvani) in addition to planned maintenance, continuity and organic growth investment activity.
Yara’s financial position remained strong in 2014 although the debt/equity ratio increased from 0.06 to 0.17, reflecting growth investments and a build-up in working capital primarily reflecting higher inventories. Net interest-bearing debt at year-end was NOK 11,808 million, while total assets were NOK 111,632 million. Total equity attributable to shareholders of the parent company as of 31 December 2014 amounted to NOK 63,765 million. At the end of 2014 Yara had NOK 3,591 million in cash and cash equivalents and approximately NOK 16,235 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 2014 and financial position on 31 December 2014. 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.
The Downstream segment delivered an 11% increase in fertilizer sales volumes and higher NPK premiums.
The Industrial segment delivered a 5% increase in sales volumes with higher margins.
The Upstream segment delivered a 4% reduction in ammonia production and a 1% increase in finished fertilizer production.
Net income after non-controlling interests
Yara International ASA
The parent company Yara International ASA is a holding company, with financial activities and non-material operations. Yara International ASA had negative net income of NOK 386 million in 2013, down from a positive NOK 4,656 million in 2012, after dividends and group relief from subsidiaries of NOK 731 million (NOK 4,053 million in 2012). The net foreign exchange loss was NOK 1,826 million compared with a gain of NOK 190 million in 2012.