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Yara CEO message 2015
Summary

We delivered strong results with a return on investment of 14%, driven by growing sales volumes, lower energy cost and a stronger US dollar.

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An eventful year

Oslo, March 21, 2016

2015 was another eventful year for Yara. We continued to invest in our production facilities and develop our markets, serving growing global demand and helping farmers improve both yield and crop quality.

Expanding our footprint

“Transforming global challenges into value-creating business opportunities is a key element in Yara’s strategy”

Svein Tore Holsether, President and CEO

Our fertilizer deliveries in Latin America and Brazil were boosted by the acquisitions of OFD and Galvani, and also growing appetite for our premium products. In Europe, sales were somewhat lower reflecting a tougher market environment with declining prices.

Sales in our Industrial segment grew steadily, in line with increasing demand for air pollution and urban odor abatement solutions. Yara’s environmental solutions help reduce harmful emissions both on land and at sea. Our NOx abatement reagent deliveries rose 20% in 2015, demonstrating the growing need to protect the environment and improve air quality.

Yara delivered several important growth actions during the year, including acquiring Greenbelt Fertilizers in Zambia and the remaining 49% of Yara Pilbara in Australia. We continued to expand production capacity, investing USD 263 million in our Sluiskil plant (Netherlands) and injecting USD 132 million into the Salitre phosphate project (Brazil). We also signed a non-binding Heads of Terms for the sale of the European CO2 business to Praxair, with closing planned for second quarter 2016.

A key concern in 2015 is related to the excessive unplanned downtime we experienced in some of our plants. It is of vital importance going forward that we improve our processes and systems to ensure stable operations at our plants.

Our people

Since I joined Yara in September, I have visited numerous production and distribution sites, and met many of Yara’s highly dedicated and motivated employees. My main takeaway from these meetings is that our people and their knowledge is our key strength.

Being responsible for almost 13,000 employees, my main concern is the safety of our workforce and I am therefore pleased to see our Total Recordable Injury (TRI) rate come down 10% in 2015, ending at 3.4. Achieving sustainable improvements in safety performance requires focused efforts by the whole organization, from plant operator to senior management, and our Safe by Choice way of working is an integral part of the operations at all our sites.

In 2016 we will bring the OFD and Galvani acquisitions into our statistics, and these have higher – but rapidly improving – incident rates. In Brazil we have seen significant progress in the safety work and performance in recent years, and some of our facilities there are now delivering best in class safety performance. I believe that all accidents can be avoided, and we will continue to strengthen our safety performance, with the ultimate goal of zero accidents.

To shift the emphasis of the company even closer to the market and operations, there was a need to make some organizational adjustments. To better reflect Yara’s operational footprint I have included Brazil in corporate management, as one third of our employees and tonnes sold are in Brazil. Furthermore, the organizational changes reflect the importance of improving operational performance within production and supply chain, and to secure Yara’s interests in its largest joint ventures.

Anchored in the integrated business model

I truly believe that the integrated business model is our key competitive advantage, as demonstrated through years of growth and strong returns for our owners. But although we have delivered well, we must not become complacent. Maintaining momentum will require further improvements to our operations, to further strengthen our competitive edge.

We will continually adapt our strategic positioning, while staying anchored within the integrated Yara business model. The flexibility of Yara’s production system combined with our global footprint and optimization capability enables us to swiftly adapt to changing market conditions.

While Yara has a strong global position in the industry, there are several areas where we can improve, and we will prioritize these in the coming years. I firmly believe that safety and operational performance go hand-in-hand, and that even the best companies can and should keep pushing for further improvements. We will therefore continue to focus on safety, process improvement and standardization through a structured corporate improvement program.

Improving lives with our solutions and knowledge

Today, 800 million people do not have enough food, and by 2050 the world’s population will have increased to 9.7 billion people. At the same time we know that agriculture is the source of one quarter of all greenhouse gas emissions. How can we feed the current and future population, and at the same time reduce global warming?

Transforming global challenges into value-creating business opportunities is a key element in Yara’s strategy. We intend to seize business opportunities and deliver shared value that will contribute to reaching the UN Sustainable Development Goals. We will contribute through our core business in the areas of food security, resource optimization and environment, by delivering innovative products and solutions, partnerships and knowledge sharing.

Responsible growth makes us stronger, and positions us as an attractive partner. Our safety focus and commitment to internationally recognized standards such as the UN Global Compact are examples of how we work and grow responsibly. We also work in cross-sector partnerships to bring about change.

The Patient Procurement Platform is an example of a partnership we have entered which supports smallholder farmers with improved market access and the means to improve their yields. The ambition is to aggregate USD 750 million of purchasing power demand, by engaging with approximately 1.5 million farmers in Africa, Asia and Latin America. The agreement is also signed by among others The United Nations World Food Programme, Alliance for a Green Revolution in Africa (AGRA), Rabobank and Syngenta.

Agriculture is an important engine for economic growth, and has the potential to reduce poverty three times faster than any other sector. Our aspiration is to be the farmer’s crop nutrition partner, supporting agricultural profitability while reducing the carbon footprint of farming.

One of my favorite parts of working at Yara is meeting the people and communities whose lives have been improved by our products and knowledge. In Thailand I recently met a lime and banana farmer who achieved significantly higher yields and income by working with the Yara team, using our products and crop nutrition programs. The impact on the individual farmer demonstrates the potential improved farming methods can have in a global perspective.

The global challenges we face cannot be solved by one player alone, and not even by one sector alone. We have to both work across industries and across private and public sectors. Yara can play an important part within agricultural inputs and knowledge of sustainable farming, and will embrace partnerships with other companies and international organizations, for better business and a better environment.

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