Dec 10, 2009
"From third quarter 2008 Yara experienced an unprecedented drop in fertilizer prices and deliveries. We mitigated the effects of the slow-down by reducing third-party purchases, cutting production and reducing fixed cost while financial flexibility was maintained by reducing working capital by NOK 14 billion and securing more long-term financing. The last months we have seen demand for straight nitrogen fertilizer picking up, and the market has turned from being temporarily over-supplied to becoming tight. However, NPK remains Yara's most challenging business area as farmers continue to delay purchases due to high potash prices", says President and CEO Jørgen Ole Haslestad.
Yara presents new scenarios for future earnings at the Capital Markets Day. The scenarios are not a prediction of future results, but are "what if" examples based on selected fertilizer and energy price scenarios. The earnings reflect the current business portfolio without any future growth.
A supply-driven market with an Eastern European swing scenario translates into an estimated Earnings Per Share (EPS) of NOK 15. The swing scenario is relevant if the fertilizer market is over-supplied and Eastern Europe is the highest cost producer. A slow-down in fertilizer deliveries like in the first three quarters of 2009 could give such a market situation. Continued growth in food demand and the need for improved agricultural productivity increase the probability of a return to a demand-driven market. A demand-driven scenario with USD 100 per ton urea margins yields an estimated EPS of NOK 35.
"The long-term fundamentals for fertilizer demand are strong as global grain consumption has proven robust during last year's macro-economic slow-down, requiring continued improvements in agricultural productivity going forward. In addition, increased agricultural efficiency represents a major opportunity for greenhouse gas reduction. Yara has essential products and competence to achieve this as well as environmental products from the Industrial segment to reduce air emissions like NOx. Yara's cost position has continued to improve over the last year. The JV in Libya increases Yara's share of our gas sourcing from low-cost locations, but also our Western European cost position has improved as we have increased our hub gas exposure while East European gas prices are moving up. Yara's global business model forms a strong basis for future growth", says President and CEO Jørgen Ole Haslestad.
Link to Yara Capital Markets Day presentation material:
Link to webcast of Yara's Capital Markets Day 10 December 2009 08:30 CET:
Torgeir Kvidal, Investor Relations
Telephone (+47) 24 15 72 95
Cellular (+47) 91 339 832
Asle Skredderberget, Media Relations
Cellular: +47 41 44 36 10
Yara International ASA is the world's leading chemical company that converts energy, natural minerals and nitrogen from the air into essential products for farmers and industrial customers. As the number one global supplier of mineral fertilizers, we help provide food for a growing world population. Our industrial product portfolio includes environmental protection agents that prevent air pollution. Yara's global workforce of 8000 employees represents the great diversity and knowledge that enables Yara to remain a leading performer in the industry.