Yara International ASA

Anders Lerstad - Acting Head of IR Torgeir Kvidal - Acting President and CEO Thor Giaever - Acting CFO

Bengt Jonassen - Carnegie

I think it's time to start. I'd like to welcome you all to the presentation of Yara's fourth quarter results.

The presentation today will be held by our CEO, Torgeir Kvidal and CFO Thor Giaever. After the main presentation we'll also invite Dag Tore Mo to the floor to have a Q&A session.

So with those words, Torgeir.

Thank you Anders. Welcome to all of you from me too, it's a pleasure to stand here and present Yara's fourth quarter results as it is strong results.

And we use the word 'strong' very deliberately and carefully, we use that when the company have a so called CROGI, cash return on gross investment, about 10%. And in the quarter in isolation we had a CROGI of 13.6% in this quarter.

This quarter also ends our strong year, full year, for Yara. In the full year we had a CROGI of 13.3%.

If I move then onto more details on the results. We reported in the fourth quarter an earnings per share of NOK6.74, that is compared to NOK0.23 in the fourth quarter the previous year.

If we then adjust for currency effects on our financing and special items we are up at NOK8.17 in the fourth quarter of this year, because we had losses on our U.S. dollar based funding as a hedge to the positive exposure we have to the U.S.

dollar in our operations. And we also had some minor special items.

So then we can compare the underlying, you could say, NOK8.17 in this quarter compared to NOK2.80 a year ago. So a strong improvement.

If we then take a little bit longer perspective and compare this 13.3% CROGI this year with previous years, we'll see that almost all these years have been significantly above the long term value creating target we have of a CROGI of minimum 10%. It was only in the aftermath of the financial crisis and the reduction in the fertilizer pipeline and agricultural pipeline after the financial crisis that we saw a CROGI below our target of 10%.

So over the last years when we, to a large extent, have been in a supply-driven global nitrogen market where the commodity value of nitrogen have been set by export out of China, we have in our business model where we earn significant premiums on top of the global commodity prices through our differentiated fertilizer, through our industrial sales into more value-added applications and in general ours sales and distribution system. With that business model we have been able to create sustainable, significant margins on top of the global commodity prices.

Based on these strong earnings then, the Board propose a dividend of NOK13 per share and that constitutes 47% of net income. On top of that we also did last year share buybacks and redemption of shares bringing the total cash return of last year's results up to 53%.

We have a long term policy on paying out on average cash return of 40% to 45%, so we have decided this year to be slightly above that due to our very strong balance sheet, to increase the efficiency in use of our funding capacity. If we then look at how the market is seen for our product and how we see that develop.

We see a continued strong fertilizer demand. To date we have seen fertilizer deliveries picking up in our main markets like Europe, like Latin-America and like North America.

You can also see that by the fact that prices have been quite stable while the market has needed more export out of China. China exported a record 5.5 million tonnes of urea this quarter to be able to balance their market.

But even with the strong demand, prices have been kept quite stable by the fact that the global commodity market is supply-driven and prices are set by the marginal cost of the high-cost producers, which is mainly the Chinese coal-based producers. In additional we've also seen curtailments in Ukraine and Egypt.

If we look more specifically in Europe then, deliveries in Europe for the industry were down 3% from last year in the fourth quarter. But, as I said, season-to-date deliveries are up.

So while we last year had a rather slow start of the season, the farmers and distributors were not that willing to take a risk and buy earlier, what we are seeing this season is that we have stronger deliveries at the beginning of the season and more, I would say, normal deliveries in the fourth quarter. In addition to nitrogen prices, which is the most important nutrient for Yara, we also have a significant position in phosphate through our phosphate mining, but even more important to the upgrading of phosphate fertilizer that we have in our NPK productions.

So improved phosphate prices from 2013 into 2014 have also improved profitability in our NPK production and sales. And in general what we see, as I touched upon earlier, we see strong earnings in our more differentiated products and the value we get out of those products through continuous improved marketing.

And finally, on the industrial use of our chemicals we see a little bit more mixed picture. Most of the segments and applications there continue to grow nicely with a good development and the strongest growth we have for industrial applications -- sorry for environmental applications of N-chemicals and the so-called Air1 which is our high-quality urea solution for NOx abatements for trucks and cars, there we saw a year-over-year growth in volumes of 32%.

We also continued to see a growth in the deliveries of nitrogen chemicals to the European process industry, an industry which has also improved profitability due to lower energy prices in Europe. This growth then has been partly offset by a slowdown in deliveries to the mining industry of technical ammonium nitrate as the mining industry has seen somewhat lower activity there.

We can partly mitigate that by using the nitric acid that we normally use in the technical ammonium nitrate and shift that over to fertilizer, but we see some drop in the margins related to those productions of course. If we go back for a moment again to the food market, which is the substantial driver, fundamental driver for our business, when you see market comments it's normally focused on the short-term picture.

And the short-term picture is that food prices, and particularly grain prices being in focus, is slightly down this year compared to a year ago and that is due to two consecutive record harvests. There have been very good growing conditions aggregated globally for the two last years.

Then I could say for non-grain, for cash crops for instance, the situation hasn't been so good so cash crop prices have kept up better. But the important part that I would like to point to on the right hand side in this slide is that even if you've had a short-term price decline over the last year, if you have a somewhat longer perspective, and if you own fertilizer plants you need to have a long term perspective, they have a long term lifetime, prices are still at very good historical levels.

And that is also reflected back in the demand that we see and that I touched upon earlier. And then on the right hand side I will just underline that the world's demand for food and agriculture continued to grow and that has to be covered in the future in an even more sustainable way than today.

So that means that we cannot continue deforestation, what we need to do is to continue to increase yield from existing arable areas. And one way to do that is in some areas to use more fertilizer and in all areas to use fertilizer even more precisely.

That means that Yara's products continue to be well-suited as they are precise products like nitrates and NPKs and we will continue to benefit from the competence in the marketing organization advising distributors and farmers to apply their fertilizer even more precisely at the right time with the right product. So we continue to look at very positive market prospects long term.

If I go back to the supply side then, as I mentioned, China have continued to be [seen] on the commodity side of the business and China need to export even more since we have seen production problems and cutbacks in some of the exporting regions. Especially in Ukraine due to the political turmoil there, not to call it a war, and in Egypt due to shortage of gas and the fact that the Egyptian authorities prioritize that gas for electricity production for local consumption and also they prioritize more of the fertilizer for local consumption.

And this is significant, Egypt and Ukraine in combination constitute between 12% to 15% typically of international trade, so then that is halved from 2013 into 2014, it gives us significant effect. What has happened now then is that China has been willing and able to compensate for this and export more, but they are also limited by the cost level and we believe, as we'll come back to in some sensitivity calculations later today, that they are close to their cost level.

But a positive effect for Yara then is as supplies are reduced, you can say west of Suez, but compensated by more supply out of areas east of Suez, the relative prices west of Suez are improved and that is positive for Yara because most of our production is west of Suez, it is in Europe as a big part and most of our markets are clearly west of Suez. It is Latin-America the biggest one, it's Europe and it's North America.

So that is an important positive situation for Yara. Then I'm going to show a short video on our position in Brazil, as Brazil has, through acquisitions and organic growth, become more and more important for Yara.

And as I said, or as I can say, Latin-America is now our biggest market, Latin-America is bigger as a sales market of fertilizer for us than Europe and actually Brazil alone has roughly the same sales volume going forward with the new acquisitions as Europe has today. So if you're able to start that video (video playing).

So Brazil, the Brazil fertilizer demand has been growing rapidly for many years. As you see here over the last 30 -- or 25 years there has been an average growth in fertilizer demand of close to 6%.

And if you look at the right side and look at yield levels per major crop you're seeing a significant development. For corn, for instance, you see that the yield has doubled per acre over the last 20 years and for wheat it has increased with 50%.

But you also see an indication there that there is as substantial potential going forward, we have compared it with best practice, we could say what you find in some areas in North America and Europe, and there you can say you see a further potential or maybe a doubling just to continue to implement best practice all over Brazil. And for wheat you also see the same potential indication of a doubling of yields.

So we foresee that the demand for fertilizer in Brazil will continue to grow strongly. Not so much because of increased acreage, you have some possibility clearly in Brazil also for increased acreage, but probably and I will say hopefully if you think about the climate effect of it, more through sustainable intensification of agriculture in Brazil also.

And if you, for instance, compare then and say that if you use U.S. standards for fertilizer application you could increase use of fertilizer in Brazil with another 40% on arable land.

So this is one of the reasons why we are Brazil and have wanted to expand our exposure to Brazil. [indiscernible] of course that we have a business model where we think we can do this in a very profitable way and by doing it increase also the competitive edge of Yara and we have tried to list some main reasons for it here.

One is that by expanding in Brazil we are increasing also Yara's scale in logistics and raw material sourcing. If you go two years back from before we acquired Bunge's fertilizer activity in Brazil we imported roughly about 3 million tonnes of product into Brazil.

Now with the acquisition of Bunge we import about 6 million tonnes, so we've doubled our imports into Brazil which improves scale in in-bound logistics and shipping in product, but it also improved purchasing power. And about two-thirds of this increase is related to phosphate fertilizer which we mainly buy externally and potash fertilizer which we can combine with our worldwide acquisitions.

Then we see in Brazil a huge potential for our premium products and you can say crop nutrition programs, meaning how we advise the farmers to use fertilizer more efficiently and grow more efficiently, due to the fact that Brazil and Latin-America are huge cash crop markets. So you see a huge potential to take more of our high quality product produced today [indiscernible] in Europe into Brazil and have seen that development positively over the last couple of years.

And then the scale also increased our cost position making us able to operate this even more efficiently, partly by closing down some of the blenders that we took over from Bunge, or some of our weakest owned ones and maximize the total system. And you can see in our quarterly report that we presented today that we are doing some minor write-offs of blenders in Brazil and that was a planned improvement effort when we took over Bunge back in August 2013, but it's gradually being realized now as we have been able to modify our system and do minor upgrading investments.

In addition the fact that Brazil is a tropical land, or maybe even more on the Southern Hemisphere, make it a different, opposite, fertilizer season than our European markets which also gives optimization opportunities on working capital and exposure. And here we have highlighted how much more potential do we think we have to take out on these synergies.

And what we clearly say is that there are always more opportunities in all areas, so we work hard on that, but the one area where we see the biggest potential to continue to develop and which takes time and hard marketing work to gradually introduce it and sell it into more and more segments, convincing farmers to trial test and so on, is to introduce more high quality fertilizer in a managed Yara crop program. And in addition operational excellence takes time because it involves some small investments and modifying of blenders and so on.

But we are on track and even more than that with [indiscernible]. But we are on track and even more than that with our synergy harvest in Brazil and we think it's very important for as we spend your money, talking to the shareholders, on growing Brazil, that we also show that we are able to get out synergies and profitability from these acquisitions clearly.

And when we planned and concluded on taking over Bunge's fertilizer activity our business case was about that in the first full year for the takeover in 2014 we were expecting to realize synergies of $44 million. After having taken over and started to work on it we foresaw that we could do this somewhat faster so during last year we communicated that we were planning to reach the $50 million long term target already through 2014 and we have been able to do that.

So we are now reporting that in 2014 we took out synergies of $55 million. What you see is that we have been able to take out even a little bit more logistical savings, both overseas in-bound but also domestic.

Still lagging a little bit on the total target on fixed costs and that is ongoing now, as I mentioned also, with optimization of blenders. And one reason also that we haven't fully reached that target in 2014 is that we have prioritized also to keep up volumes and we have rented in also some capacity short-term to keep up those volumes and the market position.

But so far $55 million and we foresee also to reach our target this year on fixed costs as we continue more synergies to take out. And then on the right side, here you see the volume development, where two years back we had a volume of 3.3 million tonnes, last year, or in 2014 then we sold 7.9 million in Brazil.

So if you look at the previous slide of the total market you'll see we have market share in Brazil of roughly 25%. Another aspect with Brazil is that we sell quite a lot directly to farmers.

In most other countries Yara sell to agri distributors, in Brazil we've quite some big farmers but also through the bulk blending and bagged market we sell 45% of our product now directly to farmers, roughly about 40,000 farmers we are in direct contact with. That also gives a huge potential to sell in our premium products since we are in that close contact with the farmer and convey, you can say, our crop focus or product portfolio and our application knowledge to them.

And we also believe going forward productivity in agriculture will become even more under focus that the trend is probably towards somewhat more direct sales to farmers to be able to come fully through with also the competence transfer to the farmers. But we will continue to play together with agri distributors to optimize the physical value chain.

Then some words on Galvani. We acquired 60% of a Brazilian company named Galvani December 1, 2014, so it's only one month of that operation which is into our quarterly figures.

Galvani is a company that has two phosphate mines in operation in Brazil producing in total about 0.5 million ton of phosphate rock and it upgrades that into roughly 1 million tonnes of phosphate fertilizer SSP. Even more interesting or valuable is that this company sits on some of the best phosphate mining resources in Brazil and the plan is to develop two new mines in Brazil which will bring the phosphate rock production up from 0.5 million tonnes to 2 million tonnes and that can -- currently it's planned to use that into upgraded phosphate fertilizer adding on some feed phosphate maybe too, adding up to 2.2 million tonnes of finished product.

In addition we will have then a surplus also of phosphate rock which is not yet concluded how we would like to use in an optimized way. And one point here is that this is apatite rock, the high-quality rock with low heavy metal content which is also a positive market attribute I think in the future.

So we plan to conclude on the biggest mining project during second half of this year with a conclusion roughly two years thereafter -- production roughly two years after. And Yara's indicated capital expenditures for these projects are in the magnitude of $550 million.

Then to summarize a little bit our total value chain in Brazil and visualize where are we in the value chain there. You could say the current set up is now selling about 9 million tonnes of product in Brazil, 1 million tonnes in Galvani, 8 million tonnes in the 100%-owned Yara Brazil.

Of those 8 million tonnes you'll see that roughly about 5 million tonnes is so-called bulk blends and which make up about 50% of the company's contribution. And what you see there is that that part of the leg we have the blending and the bagging and we have sales and marketing and we only ourselves produce a minor part of it, about 800,000 tonnes of those products we produce ourselves in smaller SSP plants and in our plant in the Rio Grande.

In addition we have a value creation that we take part of these products over our own import port in Rio Grande, in total we're taking about 3 million tonnes of product over that import port. In addition to the 5 million tonnes of blend we currently sell about 1 million tonnes of premium product where we have the full value chain for almost all of that, it's Yara's own produced nitrates, own produced calcium nitrate, own produced NPKs, we are mainly taking in also partly over the Rio Grande port.

And that constitutes about 20% currently of our contribution in Brazil and clearly we see one of the biggest growth potentials in that premium segment. And then we do roughly about 2 million tonnes of bagged straights where we also use the logistical infrastructure in the blending -- well maybe not the blending in the straights, but in the bagging part of our terminals in Brazil, constituting roughly 20% also of the contribution.

So my last slide on Latin-America then. We have talked about Brazil but also mention that through the acquisition of OFD with effect of October 1, 2014 we have also more than doubled our position in Latin-American excluding OFD.

If you go back before that acquisition we sold about 1 million tonnes in Latin-America excluding OFD, the biggest market was Mexico followed by Colombia and Argentina. Argentina used to be the second biggest country after Brazil in fertilizer sales in Latin-America but due to the very difficult macroeconomic situation there we and, I would say, most others have drawn back on fertilizer sales into that country.

With the acquisition of OFD you see that we have expanded our position from 1 million tonnes up to 2.4 million tonnes in the rest of the Latin-American countries excluding Brazil. A big part of the additional is in Colombia where OFD has their major production facilities.

The second biggest is in Peru which to a large extent is a new and very interesting market for us for cash crops and then it's a significant addition also in Mexico making still Mexico our third biggest country in Latin-America now after Colombia and Brazil. And if you look at the product side you can say that more than half of the products that we sold into Latin-America was premium products, it was nitrates, it was NPKs, also calcium nitrate.

And adding OFD keeps that portfolio because OFD brings in production in Brazil with NPK and calcium nitrate of the same quality that we produce in our European system and based on the same technology. So to summarize then, for the fourth quarter Yara reports strong results, it's driven by improved margins partly and a major contributor there is Brazil and Latin-America.

Another major contributor is of course energy, energy costs in Europe is down 24% from last year, so saving more than NOK700 million. We also benefit from a stronger U.S.

dollar. Yara has its main underlying revenues in dollars but quite a lot of our fixed costs, most of our fixed cost is non-dollar which has depreciated towards the dollar, so that is positive for us.

So with that highlights of the fourth quarter I give the word over to Thor for him to go into more details on Yara's financial performance.

Thank you Torgeir and good morning to all of you. I will start, I think our CEO has already introduced the results very well so I'll see if I can add a bit to that, some of the details.

And also as we did not have a capital markets day last year we also have a section where we update a bit on our sensitivities and financial scenarios. But first of all in terms of the results, as Torgeir has already mentioned, a strong result.

A strong CROGI and a big improvement versus last year, we see this also on the EBITDA, almost doubling on an underlying basis compared to a year ago. And I think as an overall comment, it is of course a mix of external factors and Yara actions, I think, that drive the result improvement.

And let's go a bit more into some of those factors. If we look at the variance analysis then, the EBITDA fourth quarter 2014 versus a year earlier, you see the -- there is a positive volume improvement.

At first glance maybe less than you'd expect given the ongoing growth in Latin America that we've taken over OFD on December 1. But in financial terms, as you've probably seen in the past both for Yara and other companies, typically the first quarter when you take on board a company like this, you will have stocks valued at fair value, meaning that the first few months of results you do not have a big contribution in addition per tonne.

And that is the case here also, hence a smaller year-over-year effect in volume terms. On the margin, of course it's the big improvement.

There, if you take this NOK1.3 million -- sorry, NOK1.3 billion improvement, somewhat under a third, I guess, is what you could in advance calculate based on Yara sensitivities when you look at the change in urea and ammonia prices in particular. And then there are, say, Yara-related issues that make this a larger number.

The main categories here, I'd say first of all another external factor which we've already touched on is currency. We have currency translation as the last explanation factor here.

But in addition we have the fact that the -- our NOK, euro and Brazilian reais-based fixed costs have reduced relative to the dollar. So that fixed cost -- positive currency impact of fixed cost is also within the price/margin variance here.

So that is another explanation factor. Then I would highlight the ammonia part, including our JVs, because in addition to the fact that the ammonia price is higher, the external impact in the market, this situation where the ammonia price for the fourth quarter is higher than a year ago but declined a bit at the end of the quarter has been a good situation for us to both generate additional value on our trading business in a situation where Yara has JVs outside of Europe which sell ammonia directly, but actually within Europe, where we upgrade most of the ammonia.

We are short and we are buying in ammonia. And in this situation our ammonia trade business has performed well.

And also our pure ammonia JVs outside of Europe, as you will see in the details of the results, also have a significant improvement, somewhat in excess of Yara's long-term sensitivity. The final factor that I would highlight on price/margin is the Americas.

We've already touched a bit on Brazil. A strong performance in Brazil.

And also the blend margins there are somewhat improved. But also North America has been a strong year-over-year performance for Yara, partly within Belle Plaine, but also the North American market performance.

We have delivered better in terms of relative margins there. So quite a few, as I say, a mix of external factors but also Yara margin performance within the quarter and compared to last year.

On the energy cost, of course you are probably and probably were well aware before we announced the results that that would be a good positive impact for us in the quarter. And this effect is more or less in line with our guiding and sensitivities.

On the special items I should spend probably a couple of minutes. First of all, we had negative special items last year and on EBITDA net positive special items this year.

So that is the overall reason for a positive variance here. But as Torgeir touched on also, on the operating income level and on EPS we have net negative special items.

And that is because we have some write-downs in the quarter. So if I briefly comment on them, again, Torgeir touched on this.

The biggest single one is in Brazil. Roughly NOK100 million or, to be precise, NOK102 million.

It is part of the optimization effort as we took on the Bunge assets and are realizing synergies. But in an accounting sense, then the fact that when we overtook these 22 blending units in Brazil, we did not have, asset by asset, identified which ones would be closed, sold, optimized and so on.

So that is the reason why we get an impairment then on mainly two of these 22 that we now have decided one to sell and one to close. But we also covered in the video part of the reason why we can optimize this.

And one example is the -- this new Sumare blending unit, which is newly constructed in Brazil, which is then the positive side of this equation, where we overall get a better financial performance in Brazil, as evidenced in the results in 2014 and also going forward. Then in terms of other effects here, that is mainly -- the NOK491 million is mainly the effect of a higher fixed cost base as we consolidate these new activities within -- where OFD is the main factor.

And then, as mentioned, we also have a positive currency effect, which is the pure translation effect on our margin, which is, to all intents and purposes, dollars. Looking then at the segment results, it's -- the big positive effects in this quarter are within upstream.

It's energy. It's margin and also currency, with a significant positive impact there.

Also on downstream, the items I've already mentioned, particularly within Brazil. The addition of OFD and the North American margin performance also create a strong improvement there.

On industrial it's a low result year over year, which, as Torgeir touched on, really the main reason for that is that the TAN market, TAN sales and margins are down. But the rest of the business is performing well.

To also make a comment or rather to reinforce also the comment that Torgeir made that Yara, as a bigger company, is in a good position to optimize in those situations. As mentioned that the phosphoric acid that is upgraded to technical ammonium nitrate normally can be used and put into other parts of the business.

So that optimization, you could say, in the other segment results, there are positive effects that offset some of the reduction in industrial. On the nitrate premium is, I would say, at the same level as we've seen in the last couple of years.

Slightly down from last year, but I would really add -- the main comment there is that we price the nitrates in euros and those who follow us have seen that we have increased that -- the euro price quite regularly through the -- also the fourth quarter. But of course, at the same time the dollar has been appreciating.

So this is a dollar picture. And we have almost managed to keep the same nitrate premium but in the face of a strongly appreciating dollar versus euro.

On NPKs, two effects. One positive and one slightly negative.

The positive is that the upgrading, the phosphate upgrading margin has increased compared to last year. The difference on the left-hand side here between the DAP price and the input cost of phosphate rock and ammonia.

On the NPK margin above all the nitrate, phosphate and potash comparable costs, it's slightly down but broadly in line with a year ago. So no big change overall here.

Energy cost I think we have already covered in quite some detail. I would just add that as a comment that this is based on forward prices on February 3.

We then estimate for the first quarter that we have a further improvement of NOK1.3 billion due to come year over year. We will come to the sensitivity part of this, but if you want to track in detail how the forward curve moves and spot prices day by day, then just to say that $0.10 on the European spot price is equal to roughly NOK35 million per quarter in this picture.

So day-ahead prices have moved up slightly since February 3. But actually for the first quarter most of this is already, if you like, fixed in Yara's books because with the normal one-month time lag from you produce to you sell the goods, then on February 3, in practice, we have locked in two-thirds of our energy cost for the first quarter.

Looking then at the debt development, we have increased during the quarter now at the end of 2014 at a debt/equity level of 0.17. And let's walk through the main factors here.

We have of course underlying a strong earnings level from the results in the quarter, almost NOK4 billion in cash earnings and just above that level including dividends from equity-accounted investees. On the operating capital, we have an increase of almost NOK2 billion, which is mainly a seasonal effect, with reduced prepayments in Brazil as the main season comes to an end.

There is also an inventory increase which is equivalent to roughly a week's sales for Yara. On the -- then of course we have the acquisitions in the quarter and the numbers here are -- including both the consideration and the debt consolidation effect and operating capital for these two, for OFD and Galvani.

Then on the investments activity during the quarter and the year, I will come back to that actually in a few minutes. And beyond that it's mainly currency effects.

We have the P&L currency effect listed here, but also within the other amount, we've specified this in the report. NOK1.1 billion of the other effect here is actually currency effects that aren't covered in the P&L because this is a net debt picture, not directly comparable to P&L.

Yes. Then we move into the even more analytical section of the presentation, as I mentioned.

This to provide an update on our sensitivities and earnings scenarios. So just to start with the sensitivities, here we have done mainly an update to capture the nitrate and NPK capacity in OFD and also the phosphate rock production in the as-is business of Galvani.

So beyond that, in terms of product sensitivities, these are fairly simple illustrations showing the capacities that we have. So, for example, when we say that a $10 effect on or change in the urea price equals $51 million in EBITDA, it reflects that we have roughly 5 million tonnes of urea equivalent capacity.

And we specify of that most of it is pure urea, but we also include UAN in that capacity or in the sensitivity. And then there is one also -- yes, conceptual change I guess is one way of describing it, in that the nitrate, we have moved from having a nitrate premium sensitivity to having a nitrate price sensitivity.

But again, the principle is the same, that we think given that often a price can be easier to relate to than a premium when you are forecasting these prices. But again, this reflects our product capacity.

Roughly 10 million tonnes of nitrate capacity overall, of which about 6 million tonnes is pure nitrates and the rest is the nitrate part of the NPK. We also add then a sensitivity on the compound NPK premium for Yara-produced NPK.

Then we have a separate analysis on currency. I would say if you feel this is a bit of a busy slide then we feel with you.

But this is also partly to have a reference point, I think, which you can also use and discuss a bit with IR within Yara primarily. But let me try to do the headlines here.

We want to illustrate here that we have two main currency sensitivities. One is that we have essentially a dollar margin so that when the dollar appreciates, that is a clearly positive effect for our business.

And the other is that our fixed cost are then mainly in euros, but also in NOK and Brazilian reais and, to a more limited extent, in dollars. So then moving from left to right in these charts, we start with the illustration of what does a 10% appreciation of the NOK here versus the average 2014 exchange rate mean.

And you see then against dollar, euro and reais, if all of those appreciate 10% versus NOK, then the combined impact is NOK1.2 billion negative on our fixed cost. But the equivalent then or the bigger effect on the margin would be roughly NOK3 billion positive of a -- and this is all then dollar, 10% appreciation.

So moving that, and then we show this both at EBITDA, EBIT and EPS level, applying then that then to the currency rates on February 3 and comparing it to the full year 2014, we arrive at an overall impact of just over NOK13 per share taking these point-in-time rates versus 2014. Then we -- and I should just make the comment then that these sensitivities are long-term.

They are based on a year and longer for Yara's business. Shorter term, this gets more complicated, of course, because you can be invoicing in one currency where you have an underlying -- for example, in energy we could be invoiced in euros but the underlying exposure is still in dollars.

So just with that comment, this will not be a precise -- as precise, perhaps, as it looks on a quarter-to-quarter basis. But taking that then into our scenarios and just to underline, we have one scenario now.

We are keeping it very simple and saying what does Yara -- what do Yara's run rate earnings look like now if you take these assumptions at February 3? So it's not a 2015 guidance.

It's simply an example to -- meant as a hopefully useful tool for the analysts to then make their own assessment and estimates depending on what assumptions they choose. So again, comparing then to 2014, I'd say, well, we've already touched the currency part here.

The main change is of course on energy, that we have roughly $1 lower energy price for -- forward for 2015 as of February 3 compared to the 2014 average rate. Also the ammonia price is lower, of course, while urea is roughly in line.

I guess on nitrates in particular it's worth bearing in mind this is a point-in-time price; it doesn't say anything about what our expected season price or premium, for that matter, is going to be. But using these assumptions then, we get an improvement of NOK14 per share compared to our 2014 EPS, excluding special items.

And then, as you see, as Anders mentioned, the currency impact is the main one. There we have an energy cost improvement again because of the lower prices we have in the forward curve as of February 3.

There is also some growth here, coming from the as-is business of OFD and Galvani, which are partially into the 2014 numbers, but this is the full-year impact. As mentioned, the ammonia price is lower.

And taking today's calcium ammonium nitrate price compared to 2014 is also a lower number. So this all adds up then to a run rate earnings roughly today of NOK45 per share.

My final slide is also quite busy, and that is about providing an update on Yara's CapEx situation. I'd say to start with 2014, the overall story here, because we provided a similar update a year ago, overall 2014 is in line with our guidance, especially on the maintenance part.

What we need to keep the existing business running, keep the plants running is in line with what we've communicated earlier. Also the productivity investments, and this is where we are improving the cost, a lot of smaller projects to improve the cost or capacity of a plant, are in line with what we planned for the year.

The M&A part is higher because at this time last year we had OFD in our plans but we did not have Galvani and also several smaller industrial acquisitions. And then on the other growth, which is mainly about expansion projects, like the ongoing ones in our Nordic NPK plants, are running slightly later than assumed because this time a year ago we were saying also including the TAN expansion in Australia, we were expecting somewhat over NOK3 billion of other growth investments.

And these are now ending up at the NOK1.3 billion plus NOK0.3 billion that you see in the chart here. But overall, 2014 is in line with expectations.

Moving then to 2015, the main features is that we have a higher level of maintenance investment. And -- but then, as we show on a normalized basis then, this will reduce in the next couple of years.

And there are, I guess, three main factors to highlight there. One is that we do have a higher level of maintenance investment with -- because of the acquisitions in -- with OFD and Galvani.

But the second is that we do, as you can see from then, that the normalized rate goes down as we temporarily have a higher level of maintenance investments. And there are -- this is -- you could say the overall explanation for this is that we are still in the phase of improving our reliability in our plants and there is one, if you want to take out the biggest factor in addition to the chemical plants there, is that in Finland we are working with the mining operation there to move into different parts of the mine.

And there is, you could say, both processing and treatment of material investments that need to be made over the next couple of years that increase this level. And finally then, as we also separate out here, there is a currency effect here as the -- in NOK terms, the stronger dollar and euro, it's mainly euro actually here, brings the NOK amount up by NOK300 million to NOK400 million compared to the 2014 numbers.

In -- yes, and there's one other factor also temporarily is that the turnaround, the ammonia plant turnaround in activity in 2015 is higher than normal. So that together with the temporary reliability and Finland mining issues is the reason why we have a higher level than that moves downwards after 2015.

Then in terms of the growth investments, we've listed here then the committed NPK and technical ammonium nitrate investments that are ongoing, both in terms of the investment announced, but of course equally importantly the tonnage that we are adding here. So over the next three years we are adding roughly 2 million tonnes of own-produced mainly value-added nitrates and NPKs or 10% roughly into our system.

And as you can see then, with just below or around NOK2 billion of investments in the next couple of years, and tailing off in 2017. So yes, on that note, I think to underline then that we are continuing to grow not only within M&A but also on the value-added production side.

Then I will hand you over to Torgeir who will also make some comments about the future.

Thank you. You have been quite patient with us in this presentation.

In addition to presenting the quarter we also try to give some information that we normally give at the Capital Markets Day that didn't happen last year. So I will not stretch your patience more than showing one more slide and summing up the prospects of Yara as we see it.

And the highlights, main highlights are that we continue to see strong incentives for fertilizer application. We see a strong demand.

There have been two record crop harvests in a row globally now and the world will need to continue to grow its food production in a sustainable way going forward. So we see strong demand for total demand of crop [protection] and in particular I'd say for higher-quality products being more effective and for advice from a salesforce, an agronomist and also industrial application engineers on more efficient use of products.

We also see in our main markets that our customers are supported by the latest change in currency. So European farmers, international competitiveness has been significantly improved by the weaker euro.

I could add also, important for Yara, that the same has happened also in Brazil. Brazil is an export agriculture.

And with weakening of the reais, the farmers' situation in Brazil has also improved competitive-wise, so that is good. And we see in Europe that we have a strong order book for the first quarter.

So we are running our plants at full blast, except that in an old industry as this, we see some smaller technical problems all the time, but there are no special issues, as such, to report on. On the pricing side, as I said, there has been in one way a more dull market and there have been maybe some un-dull markets or existing markets globally in other industries over the last year.

But if you say in the commodity part on nitrogen, meaning urea, price-wise it has been quite dull by China setting the floor price and supplying the world. And going forward we think the market situation will still be short term that China will continue to balance the market.

And so far the cost level in China have held up well. We have not seen drop in cost levels in China.

There is a downside to that, but there is also a significant upside to that, at least if you think a little bit longer term than the next quarter or two. In 2014 China exported 14 million tonnes of urea.

And that is a huge part; it's one-third of international traded urea. So that means, of course, that if you, at a point in time, come to a situation where Chinese authorities or market forces in China start to work in a way that it's not that sensible to continue to export coal-fired urea out of China, it can have a significant tightening effect of the urea market.

And there are many reasons to believe that that would happen sooner or later. But the difficulty is, of course, to predict when China will have to start to optimize more on their energy use and contribute to the reduction of climate gas emissions, because urea produced on coal emits 2.5 times more CO2 typically than if you produce it in a more climate -- in a most climate-efficient way based on natural gas.

So with that long-term hope, I'll just end with a short-term estimate based on the forward gas prices in Europe, measured a week ago. We estimate that we will have about NOK2 billion in lower gas cost in the first half of the coming year.

So with those comments, finally you will be able to be active by having the opportunity to ask questions to us.

Dag Tore Mo, our Head of Market Intelligence, will be joining Thor and Torgeir. So if you have a question, just raise your hand and then Martin here, my colleague, will hand you a microphone.

Yes. Good morning.

Bengt Jonassen, Carnegie. Two questions.

On the CapEx, does that include the potential mining expansion and SSP expansion in Galvani or is that excluded from those figures? And secondly, on your NOK45 per share, how will that look after you have finished the expansion CapEx on the different production units that you currently are debottlenecking?

If I start with the most simplest answer and then Thor can think about the more complex one on the second one. If you look at the CapEx guidance, what we have included there is the expected maintenance investments.

And it is decided projects, where we have listed the major decided projects. The Galvani project is not concluded.

That is due to some milestones that have to be fulfilled before the partners conclude to start that project, which we said we expect to happen in the second half of this year. So this is not an estimate of what we believe is investments going forward, but it is what we are committed to, plus, you can say, expected forecasted maintenance investments.

So Galvani could come on top, but also other projects which have been mentioned which is not yet concluded. One of them is the ammonia plant with BASF, the joint venture there, which we are pretty close to conclude.

But it takes time to end, to finalize all agreements between BASF, between Yara and between an international industrial gas company which is going to deliver the hydrogen. So that's another example of a project which we expect will come.

Yes. I may not be able to live up to any high expectations of a complicated answer to a complicated question.

With regard to the NPK expansions, I think that's a good question what will the EPS impact be of those. I think partly we should leave the analysts to be able to make some estimates there.

But we will of course, as Yara, seek to help you in those evaluations. But we do not have scenarios including those expansions today.

And one is also when you ask about specific profitability on projects is that we don't guide on product prices. But what we could see in general is that on debottlenecking projects, like the one in Porsgrunn or like the one we do in our Uusikaupunki in Finland or like the one we do in Glomfjord where we take nitric acid up to Glomfjord, or building a new nitric acid plant in Koping also using part of the existing equipment there, is that in general we see higher profitability on those projects than in many M&A situations, especially if you enter into a competitive M&A situation.

No other questions?

We are a little bit short on people asking I think today because there are several other companies also presenting their results today, so they're probably sitting on webcasts. But while you think about the next question then I can say that you will have the opportunity later today to call in.

But having given you that -- those 30 seconds. Okay.

Then I can just repeat Torgeir's message that there will be a telephone conference at two o'clock this afternoon that you can dial into. Thank you for attending.