Yara sees demand picking up

Oslo (2009-12-10): Yara International ASA today meets with investors
and analysts for Yara's Capital Markets Day to present how the
company responded to the slow-down last season, how the market is now
picking up and how the company is preparing for long-term growth in
an attractive market.
 
"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:
http://www.yara.com/investor_relations/index.aspx
 
Link to webcast of Yara's Capital Markets Day 10 December 2009 08:30
CET:
 
http://media01.smartcom.no/Microsite/start.aspx?eventid=4868
 
Contact
 
Torgeir Kvidal, Investor Relations
Telephone  (+47) 24 15 72 95
Cellular (+47) 91 339 832
E-mail torgeir.kvidal@yara.com
 
Asle Skredderberget, Media Relations
Cellular: +47 41 44 36 10
E-mail asle.skredderberget@yara.com
 
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.
www.yara.com
 
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