An investment in knowledge always pays the best interest

170 Pages·2015·6.85 MB·English

Theme | Yara financial report 2014 A
“An investment in knowledge
always pays the best interest”
– Benjamin Franklin
Financial Report 2014
“An investment in knowledge always pays the best interest”
Benjamin Franklin (1706–90) was a citizen of many interests and diverse knowledge
– a polymath driven by curiosity and creativity; accumulating, nurturing and spreading
knowledge through his life-long work as an author and activist, publisher and politician,
scientist and inventor. As one of the founding fathers of the USA and as a diplomat,
Franklin seized opportunities to seek knowledge and share ideas – engaging in the
Age of Enlightenment.
Growing through knowledge
Knowledge grows. Knowledge drives business.
Yara is founded on knowledge, We improve our competitive
and we flourish on knowledge. edge with agility and innovation.
We have invested in developing We gain, employ and distribute
and disseminating critical knowledge throughout the
knowledge for more than a company, and share it with
century, building our business partners and customers – driving
model on industrial experience business through collaboration
and agronomic expertise to and interaction.
create a unique global position.
Knowledge creates value.
Knowledge is an asset. Fuelled by knowledge our
We offer solutions stemming company strategy supports
from our institutional knowledge sustainable, profitable and
and the skills of our employees. responsible growth. We are
Knowledge is one of our core inspired by knowledge to continue
assets and a cornerstone of searching for new opportunities
our advantage in the market and best practices, and we share
– preparing us to meet our knowledge to create value for
the challenges of an ever- our customers – and the society.
changing world. Knowledge grows.
Who we are
Yara´s knowledge, products and solutions grow farmers and industrial customers´
businesses profitably and responsibly, while nurturing and protecting the earth´s
resources, food and environment.

Our fertilizers, crop nutrition programs and technologies increase yields, improve
produce quality, and reduce environmental impact from agricultural practices.
Our industrial and environmental solutions reduce emissions and improve air
quality from industry and transportation, and serve as key ingredients in the
production of a wide range of goods.

Founded in 1905 to solve emerging famine in Europe, Yara today has a global
presence with more than 12,000 employees and sales to more than 150 countries.
What we do
Yara grows knowledge to nurture life by delivering solutions provider of nitrogen fertilizers and industrial applications, we
for sustainable agriculture and the environment. Our leverage our experience and knowledge to tailor solutions to
fertilizers and crop nutrition programs help produce the local needs.
food required for a growing world population. Our industrial
products and solutions reduce emissions; improve air quality We deliver quality and reliability globally through an exten-
and support safe and efficient operations. sive suite of networks. In addition to our strong production
and marketing base in Europe we have increased our
Our operations are based on efficient conversion of energy, activities in North America, Latin America and Australia
natural minerals and nitrogen from the air into essential significantly, while also expanding our footprint in Africa
products for agriculture and industry. As the leading global and Asia.
Our history
Scandinavian pioneer and France. Growth continued during the next two decades
Yara International ASA was established in 2004 when the as we entered into Italy and acquired the major Finnish
former agricultural division of Norsk Hydro was demerged. producer Kemira GrowHow as well as interests in Russia.
Our history started when Norsk Hydro, the world’s first in- In parallel, we acquired CO2 plants in Norway, Sweden and
dustrial scale producer of nitrogen fertilizer, was established Denmark in the 1970s and opened a new plant in Germany
in 1905. Regular production started at Notodden, Norway in 2004.
in 1907 and several production plants were added over the
following four decades. Building on the fertilizer production, Global presence
we developed our first industrial products in the 1930s, Our presence overseas grew with marketing activities in the
including heavy water and CO2. Our first move abroad USA from 1949, the opening of a sales office in Brazil in
was within Scandinavia, where we opened sales offices in 1977, a sales partnership in Thailand in 1982, and an office
Copenhagen in 1919, and in Stockholm in 1945. in Zimbabwe in 1985. Starting with the joint venture Qafco,
Qatar, in 1969, we have continued to add to our global
European position production platform through acquisitions and joint ventures
The acquisition of NSM in the Netherlands in 1979 marked in Australia, Canada, Libya, Trinidad and Brazil as well as
our first major step into Europe outside Scandinavia. We ac- other countries in Latin America. Recently, we have added
celerated our European expansion in the 1980s, establish- leading technologies for water management and, not least,
ing a strong production and marketing platform through new emission abatement, serving a global market.
acquisitions in Sweden, the UK, Germany, the Netherlands
2014 numbers
Number of employees Total sales Revenues
12,073 35.0 95.3
Globally Million tons NOK billion
Employees by region Sales by product Revenues by region
Share of employees Share of sales volume (thousand ton) Share of revenues (NOK million)
Europe 5,655 47 % Fertilizer 26,317 75 % Europe 37,191 39 %
Latin-America 4,905 41 % Industrial products 6,593 19 % Latin-America 30,049 32 %
North-America 561 5 % Ammonia trade 2,041 6 % North-America 11,944 13 %
Asia & Oceania 562 5 % Asia & Oceania 10,674 11 %
Africa 390 3 % Africa 5,189 5 %
Where we are
Global map
As the industry’s only global player, we have production facilities on six continents,
operations in more than 50 countries – and sales to about 150 countries.
Sales offices
Sales offices Yara Plants
Small sites
Yara Plants
Joint venture and
Small sites phosphate mines
R&D sites
Joint venture and phosphate mines
Head office
R&D sites Countries with sales
Head office
Countries with sales
Performance overview | Yara financial report 2014 1
Financial report 2014
Introduction
0 2 Performance overview
06 CEO message
08 Segment introduction
09 Downstream
10 Industrial
11 Upstream
12 Supply & Trade
Chapter 01
13 Report of the Board of Directors
Chapter 02
23 Governance and risk management
Chapter 03
43 Financial review
Financial statements
56 Consolidated financial statements
137 Financial statements for
Yara International ASA
2 Yara financial report 2014 | Performance overview
Leveraging scale and knowledge
– from input to impact
Hydrocarbons Minerals Fertilizer production Marketing,
Hydrocarbons, mostly We secure deliveries of Our value-added fertilizers are tailored shipping and
harvested from natural gas, key raw materials for plant to meet the needs of a large variety storage
are the most important growth through mining of crop or soil conditions by combining With our global
feedstock in the production activities and large volume nitrates with essential minerals. marketing and
of nitrogen (N). We are sourcing of phosphate (P) distribution net-
the largest industrial buyer and potash (K). Ammonia production work, we ensure
of natural gas in Europe, Ammonia, along with urea and nitric reliable product
putting the gas to good use. acid, form the starting point for deliveries and
our extensive portfolio of mineral knowledge trans-
fertilizers, environmental solutions fer worldwide.
and industrial applications.
Industrial experience Business model
We pioneered the production of nitrogen fertilizer We are the world’s largest producer of nitrogen
a century ago. We have since then continuously fertilizers, building on a unique business model:
perfected our industrial processes, setting standards With our operational flexibility, supported by
for greenhouse gas emissions and energy efficiency. global ammonia trade, we pursue optimization and
scale advantages, creating a competitive edge.
Knowledge is the core of our business Knowledge is a major strategic asset
Yara has grown – and still grows – through a Yara consistently executes a strategy of
combination of commercial daring, scientific sustainable, profitable growth. We build on a
research and market knowledge. We nurture a strong competitive edge in which our knowledge
culture that values expertise and encourages the margin plays an important role, adding to our
search for improved methods and new solutions. competitiveness and ability to serve our customers.
Performance overview | Yara financial report 2014 3
Crop nutrition Production of food, fiber and fuel
We offer the industry’s most com- Our crop nutrition solutions, used on
prehensive product portfolio, ranging about 50 million hectares of land, help
from standard nitrogen fertilizers to farmers around the world to improve
complete crop nutrition solutions. productivity by increasing yields to meet
the global challenge of food security.
Environmental solutions Improved air and water quality
We offer complete solutions for NOx and Our emission abatement solutions helped
SOx emission abatement, odor control, water customers cleanse more than 1.1 million tons of
treatment and corrosion prevention in our NOx emissions in 2014. We also help control
growing environmental solutions portfolio. odor in cities and improve water quality.
Industrial applications Efficient and safe industrial production
We offer a wide range of nitrogen and Our industrial solutions and chemicals are
specialty chemicals along with CO2, dry vital to the production of a wide range of
ice and civil explosives solutions. everyday staples, incl. soap, glue, paint,
plastics, electronics, food and beverages.
Agronomic expertise Global impact
We have developed crop-specific nutrition concepts We invest in developing solutions that address
tailored to local conditions, optimizing yields while global challenges such as climate change,
minimizing inputs. Employing our application resource scarcity and food security. By engaging
expertise, we transfer knowledge to improve in partnerships, we leverage our knowledge,
agricultural productivity, farming profitability and to products and solutions; creating shared value.
support safe and efficient industrial production.
Knowledge is shared with customers Knowledge is applied with effect
Yara invests in R&D activities that deliver improve- Yara develops knowledge and commerce, sharing
ments in process technology, crop nutrition strategies ideas and experience with a purpose. Our strategy
and environmental solutions. In collaboration with bridges business and global challenges and allows us to
partners and customers we bring knowledge to create value for shareholders, customers and society.
bear in fields and industries across the world.
4 Yara financial report 2014 | Performance overview
How we performed 2014
2014 2013
Financial performance
Revenue and other income NOK million 95,343 85,092
Operating income NOK million 10,305 8,074
EBITDA 1) NOK million 16,407 13,399
Net income after non-controlling interests NOK million 7,625 5,759
Investments 2) NOK million 13,411 7,984
Debt/equity ratio 3) % 0.17 0.06
Cash flow from operations NOK million 8,607 12,300
CROGI 4) % 13.3 12.6
ROCE 5) % 13.3 12.6
Earnings per share 6) NOK 27.59 20.67
Total equity NOK million 67,962 55,773
Share price on OSE NOK at year-end 333.8 261
Social performance
Employees Number at year-end 12,073 9,759
TRI rate 7) Per million hours worked 3.9 4.3
Environmental performance
GHG emissions 8) Million tons CO2 eq. 11.6 12.6
Energy use 8) Petajoules 258 275
Notes
1) EBITDA: Earnings before Interest, Tax, Depreciation and Amortization.
2) Investment in property, plant and equipment, long-term securities, intangibles, long-term advances and investments in non-consolidated investees.
3) Net interest-bearing debt divided by shareholders’ equity plus non-controlling interests.
4) CROGI: Cash Return on Gross Investment (12 month rolling average).
5) ROCE: Return On Capital Employed (12 month rolling average).
6) Yara currently has no share-based compensation program that results in a dilutive effect on earnings per share.
7) TRI: Number of Total Recordable Injuries per million hours worked, contractors included.
8) Including JV Pilbara and JV Lifeco.
Highlights
Uusikaupunki, Finland Scrubber, NCL-Escape
Growing in Latin America Norway and Uusikaupunki, Finland – expanding scrubber technology to our portfolio of emission
We completed the acquisition of OFD Holding capacities of TAN, NPK and calcium nitrate in abatement solutions for the maritime segment.
Inc. with its fertilizer production facility in the Nordic region. In France, we attained full The NOx side of the portfolio was significantly
Cartagena, Colombia and regional distribution control of the Le Havre urea plant. strengthened through the acquisition of H+H
network. We also acquired a 60 percent stake Umwelt- und Industrietechnik GmbH, Germa-
in the independent Brazilian fertilizer company Progress in joint venture ny. Finally, we acquired the flue gas cleaning
Galvani Indústria, Comércio e Serviços S/A to Together with BASF, we made good progress division of STRABAG SE, Austria, consolidating
secure phosphate fertilizer capacity in the north- with our plan to jointly build a world-scale our position as a leading global, full-service
east of the country. Lastly, the integration of ammonia plant in Freeport, USA. Using a emissions-to-air control company
Bunge’s fertilizer division is ahead of schedule, hydrogen-synthesis process, the plant is set to
with realized synergies of USD 55 million. have an annual capacity of 750,000 tons. Developing water technology
We acquired ZIM Plant Technology GmbH
Building capacity in Europe Expanding emission abatement business in Germany, starting integration of its water
We decided on investments in our produc- The acquisition of a majority stake in Yara sensor technology for plants with our existing
tion facilities in Köping, Sweden; Porsgrunn, Marine Technologies, in Norway added SOx decision support tools for precision farming.
Theme | Yara financial report 2014 5
Company overview 2014
06 CEO message
2014 2013
Financial performance 08 Segment introduction
Revenue and other income NOK million 95,343 85,092 09 Downstream
Operating income NOK million 10,305 8,074
10 Industrial
EBITDA 1) NOK million 16,407 13,399
11 Upstream
Net income after non-controlling interests NOK million 7,625 5,759
Investments 2) NOK million 13,411 7,984 12 Supply & Trade
Debt/equity ratio 3) % 0.17 0.06
Cash flow from operations NOK million 8,607 12,300
CROGI 4) % 13.3 12.6
ROCE 5) % 13.3 12.6
Earnings per share 6) NOK 27.59 20.67
Total equity NOK million 67,962 55,773
Share price on OSE NOK at year-end 333.8 261
Social performance
Employees Number at year-end 12,073 9,759
TRI rate 7) Per million hours worked 3.9 4.3
Environmental performance
GHG emissions 8) Million tons CO2 eq. 11.6 12.6
Energy use 8) Petajoules 258 275
“Safety is the top priority. Our work
on product safety helps customers
and authorities to reduce risks.”
Nina Hammer, Senior Researcher,
Porsgrunn, Norway
Scrubber, NCL-Escape
“In Norway, Yara’s R&D constantly coated fertilizers, a valuable tech-
looks at ways to improve processes nology. Transferring documented
to ensure a safe operation and knowledge, we help national
to develop products that are safe authorities with classification
to handle. In 2014 we tested the and to create safety data sheets
thermal stability of Micronutrient – positioning the company.”
Yara invests in knowledge – and transfers knowledge.
Nina Hammer joined Yara in 2012, and works as a Senior Researcher with Yara Process
R&D and Manufacturing, in Porsgrunn, Norway. She earned her Ph.D degree in chemical
engineering.
6 Yara financial report 2014 | Theme
“Our employees are the
company’s greatest asset.
People, products, solutions
and application competence
give Yara a competitive edge
and knowledge margin.”
Torgeir Kvidal
President and CEO (acting)
Strong growth in an exciting year
2014 was a year of growth, adding new revenue streams to Yara from increased production
capacity and market presence as well as expert knowledge on environmental technology. Sup-
ported by lower gas prices and a stronger US dollar, Yara’s margins increased through the year.
Growth initiatives The plant will use hydrogen as raw harmful emissions to air. Yara is well
We strengthened our global produc- material, reducing both capital expen- positioned in an attractive market,
tion base both through acquisitions diture and greenhouse gas emissions. aiming for environmental solution
and brownfield expansions. In Europe revenues of NOK 10 billion by 2020.
we completed a project adding In Brazil we took a majority
300,000 tons of premium product position in the phosphate company Our people
capacity in Porsgrunn, Norway, Galvani, adding upstream capacity to Our employees are the company’s
and we gained full ownership of complement our recently expanded greatest asset. People, products,
a urea plant in Le Havre, France. downstream footprint. The Bunge solutions and application com-
We announced further investments integration is ahead of schedule, petence give Yara a competitive
into several of our Nordic sites. with realized synergies of USD 55 edge and knowledge margin.
million, demonstrating how Yara’s
Overseas, Yara started the integration global market knowledge enables Safety is a prerequisite in all of
process of OFD Holding, which it to maximize value creation our activities. Systematic work has
includes an NPK plant in Colombia from growth opportunities. improved Yara’s safety performance
and Downstream positions in six significantly over the past two decades.
Latin American countries. We also At the other end of the value chain, We report positive results from the
announced the construction of a we acquired three industrial technol- efforts to further improve our safety
world scale ammonia plant in Texas, ogy companies, becoming a leading performance. Total Recordable
USA, in a joint venture with BASF. total solution provider for cleansing Injuries (TRI) rates dropped from 4.3