Looking at 2012, Yara executed its growth strategy, increasing our sales of mineral fertilizers as well as industrial products. The Board of Directors’ proposal to raise the dividend to NOK 13 per share, the highest so far, reflects our strong financial results and a firmer interpretation of the dividend policy. Revenues, total production and sales increased from 2011.
“Yara is ready to meet rising demands in growth markets.”
Jørgen Ole Haslestad, President and CEO
We are well on our way to reaching the ambitious growth target set for 2016, of adding 8 million tons of sales compared to 2010. Recent growth initiatives include the expansions completed at our joint venture Qafco, Qatar, and upcoming add-on of capacity in Porsgrunn, Norway. We also took a majority position in what has now become Yara Pilbara, Australia, where we are set to expand by building a 330,000 kiloton TAN plant together with Orica. Beyond 2016 the capacity at our facility in Belle Plaine, Canada is set to double.
Following up on previous investments, we entered an agreement to acquire the Brazilian fertilizer business of Bunge. This positions Yara for future opportunities within the Brazilian fertilizer industry and we take a strong position in this large, and not least, growing fertilizer market.
Our Libyan JV, Lifeco, had to shut down production during the uprising in 2011. Starting last fall production commenced again, and the facilities are now ready to run at full capacity. Though production may be slowed down due to infrastructure constraints, it is set to add to Yara’s production volumes again. Coming growth initiatives are likely to include regional and medium-sized M&A activities.
Responding to trends
Increasing volumes are an obvious part of improved value creation. At the same time, we continuously strengthen our competitive edge, driving operational excellence and optimizing from our global position and scale advantages. Not least, we aim to capitalize on our knowledge margin.
Food prices remained at high levels in 2012, which supports healthy farm income levels and fertilizer demand. The slow European market in early 2012 was more than offset by increased sales to overseas markets including Latin America and Asia – not least of our value added premium products – reaffirming a development that we have promoted over the past years.
Brazil has become our single biggest market as an individual country. I had the pleasure of visiting Brazil in 2012, taking part in Yara’s local gathering, ‘O Grande Econtro’. This reaffirmed my conviction that this regional powerhouse is a key growth market with significant potential for further acreage and increased yield.
Brazil’s growth demonstrates the value of enabling policies. Bold decisions are also taken across Africa, where government support for the African Green Revolution is mounting. In Yara, we have been engaged in sustainable agricultural development in Africa for decades. We remain firmly committed to improving productivity and profitability, making farming in Africa a viable business opportunity – also for small and medium sized farms.
In 2012 I had the honor of representing the private sector on stage in Washington D.C. when the US president, Barack Obama, presented the New Alliance for Food Security and Nutrition. This public-private partnership, aiming specifically at improving African agriculture, was launched at the G8 summit.
The New Alliance leverages the efforts made in the Grow Africa partnership, which was established in 2011 with Yara actively involved. Grow Africa aims to accelerate investments into African agriculture, not least from the private sector. Delivering sustainable and inclusive growth is a governing principle for the investments, which are aligned with national policies for agricultural development.
One prime example is the Southern Agricultural Growth Corridor of Tanzania, SAGCOT. Here, Yara has a key position and also invests in infrastructure development through our USD 20 million fertilizer terminal being built in Dar es Salaam. Yara’s Board reviewed the progress of this key pilot of Yara’s African agenda during a visit to Tanzania, where we also had the pleasure of discussing SAGCOT progress with President Jakaya Kikwete.
Global engagement and business partnerships – not least in food value chains – is part of our strategy. We engage in global and regional processes to enhance the frameworks needed to improve agricultural productivity and increase food production.
Agriculture has to produce more food using less resources in the future: less water, land area and fertilizer per kilo crops harvested. The growing attention towards productivity and sustainability performance will provide business opportunities which Yara is uniquely positioned to seize. Efficient use of resources is a focal area of Yara’s innovation platform, which aims to develop our capability to shape the industry and agricultural markets. Offering solutions that create value for our customers, shareholders and society at large provides Yara a competitive edge.
In 2008 the world experienced a global food price crisis. One of the major triggers for the 2008 crisis was adverse weather conditions. The close connections of global warming, water and resource scarcity and food security have since become embedded in global debates. Yara has consistently advocated the need to take a holistic perspective, to avoid having debates in silos on these intersecting issues.
With both consumers’ and policymakers’ climate consciousness on the rise, food companies are searching for ways to reduce their carbon footprint and to increase transparency in the value chain of their products. These are strategic areas of intervention for Yara.
We have low-emission fertilizers based on our catalyst technology in manufacturing processes, fertilizer application solutions to help improve on-the-farm efficiency and crop specific knowledge to help optimize nutritious, quality crops and yields. Adding a life cycle approach and full transparency to all our products, including nutrient contents and raw materials used, Yara is uniquely positioned as a knowledge partner in this area.
Emerging business cases in this area are already providing results – yielding quality products for food companies, improving farmers’ income and reducing emissions substantially. And of course strengthening Yara’s market position.
Entering 2013, we have placed the ambition of Creating Impact center-stage in our strategy. Yara already makes a difference – on resource efficiency, sustainable agriculture and emissions to air. For the future, we have charted a course to create even more substantial impact through innovation, responding to global challenges and creating value across stakeholder groups.
Jørgen Ole Haslestad
President and CEO