London, 26 June 2019: At its Capital Markets Day in London today, Yara announces it is evaluating an IPO of its industrial nitrogen businesses, expanding its improvement program by 70% and setting out clear principles for capital allocation.
"Yara has an unrivalled position in the fertilizer industry based on 114 years of crop nutrition experience. Going forward, our focus will be on growing value through continuous improvement and through our sustainable crop nutrition solutions including premium products and digital farming tools,” says President & CEO of Yara International ASA, Svein Tore Holsether.
Evaluating IPO of industrial assets
An IPO of Yara’s industrial nitrogen businesses would create the first integrated industrial nitrogen company. Such a company would take an industry-leading position, with the highest value proposition in core markets, a solid European platform and an attractive market portfolio balancing stability and growth.
The conclusion of a final IPO scope is expected early 2020. As part of the evaluation process, the business units Mining Applications (TAN), Transport Reagents and Industrial Nitrates will effective 1 July 2019 be organized in a separate entity. Yves Bonte, previously EVP New Business, will take up the role as CEO of this entity, reporting to an internal board of directors chaired by Yara’s President & CEO. Consequently, Bonte will no longer be a member of the Yara Corporate Management Team.
"Yara is well underway to becoming a focused crop nutrition company, and the evaluation of an IPO is an important step in that direction,” says Svein Tore Holsether. "This would create significant growth opportunities, strategic focus and flexibility, for both a carved out business and for Yara. A new ownership structure would allow these businesses to continue to thrive and grow profitably, while continuing to provide healthy returns to Yara.”
Updated targets for capital allocation
Following a period of several significant investments, Yara’s focus is on strict capital discipline and capturing the full value of recent investments. Yara today announces a targeted capital structure to maintain a mid-investment grade credit rating, targeting 1.5x-2.0x Net debt/EBITDA and Net debt/Equity <0.60. The target for ordinary dividends is lifted to 50% of Net Income, subject to maintaining a mid-investment credit rating.
"Our updated targets for capital allocation reflect our commitment to a mid-investment grade credit rating, while offering competitive returns to our shareholders,” says EVP & CFO Lars Røsæg.
Increased improvement program targets
Yara announces a 70% increase in targeted earnings improvements from the Yara Improvement Program, expanding the program from 2020 to 2023. Key levers to achieve these targets will be higher production volumes and energy efficiency, a leaner cost base with clear fixed cost targets and improved working capital management. The improvement program is on track to meet its original end 2020 target, representing an important milestone towards realizing the expanded targets by end 2023.
"The Yara improvement program is an important element in our culture of continuous improvements. Thanks to the quality of our organization, we have realized significant savings over the last years, providing important support to our bottom line in challenging market conditions. This gives us confidence that we will reach also the expanded targets,” says President & CEO Svein Tore Holsether.
Yara hosts its Capital Markets Day at Tate Modern in London today, starting 08:30 BST (09:30 CEST). The webcast and presentation are available at https://www.yara.com/investor-relations/
Thor Giæver, Investor Relations
Mobile: (+47) 480 75 356
Kristin Nordal, Media Relations
Mobile: (+47) 900 15 550
Yara grows knowledge to responsibly feed the world and protect the planet, to fulfill our vision of a collaborative society, a world without hunger and a planet respected. To meet these commitments, we have taken the lead in developing digital farming tools for precision farming and work closely with partners throughout the whole food value chain to develop more climate-friendly crop nutrition solutions. In addition, we are committed to working towards sustainable mineral fertilizer production. We foster an open culture of diversity and inclusion that promotes the safety and integrity of our employees, contractors, business partners, and society at large.
Founded in 1905 to solve the emerging famine in Europe, Yara has a worldwide presence with about 17,000 employees and operations in over 60 countries. In 2018, Yara reported revenues of USD 12.9 billion.
This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act