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Second-quarter and half-year report 2018
Yara International ASA
Higher deliveries and prices offset by higher gas cost
Cubatatildeo acquisition successfully completed
Yara improvement program on track
Non-cash currency loss due to USD strengthening in 2Q
-04
-02
0
02
04
06
08
Earnings per share USD
005
010
015
020
025
030
035
040
Debtequity ratio
0
50
100
150
200
250
300
350
400
450
EBITDA USD millions
000 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18
-06
-08 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18
2 Yara second quarter 2018
Second quarter 2018 Financial highlights USD millions except where indicated otherwise
Revenue and other income Operating income Share net income equity-accounted investees EBITDA EBITDA excl special items Net income after non-controlling interests Basic earnings per share 1)
Basic earnings per share excl currency 1)
Basic earnings per share excl currency and special items 1)
Average number of shares outstanding (millions) CROGI (Cash Return on Gross Investment) 2)
ROCE (Return on Capital Employed) 2)
2Q 2018
3192
38
17
296
321
(211)
(077)
004
017
2732
53
13
2Q 2017
2759
130
7
352
338
82
030
033
034
2732
70
38
1H 2018 1H 2017
6048 5442
171 310
27 16
666 733
698 733
(96) 283
(035) 103
045 088
059 093
2732 2732
64 68
30 36
1) USD per share Yara currently has no share-based compensation programs resulting in a dilutive effect on earnings per share 2) Quarterly numbers annualized Year-to-date numbers 12-month rolling average
Key Yara statistics 2Q 2017 1H 2017
Yara Production (Thousand tonnes) 1)
Ammonia 2033 1803 4160 3683
Finished fertilizer and industrial products excl bulk blends 5240 4751 10560 9943
Yara Deliveries (Thousand tonnes) Ammonia trade 689 627 1274 1049
Fertilizer 7331 6604 13263 12962
Industrial products 1982 1707 3737 3475
Total deliveries 10109 8971 18410 17554
Yaras Energy prices (USD per MMBtu) Global weighted average gas cost 61 47 60 50
European weighted average gas cost 81 56 79 61
1) Including Yara share of production in equity-accounted investees excluding Yara-produced blends
2Q 2018 1H 2018
Market information Average prices
Urea granular (fob Egypt) CAN (cif Germany) Ammonia (fob Black Sea) DAP (fob US Gulf) Phosphate rock (fob Morocco)
European gas (TTF) US gas (Henry Hub) EURUSD currency rate USDBRL currency rate
2Q 2017 1H 2017
USD per tonne USD per tonne USD per tonne USD per tonne USD per tonne
247
211
231
410
89
201
198
282
357
93
254
228
259
406
88
233
215
291
355
95
USD per MMBtu USD per MMBtu
73
29
119
50
30
110
75
30
121
54
30
108
360 321 342 318
2Q 2018 1H 2018
Yararsquos second-quarter net income after non-controlling interests was negative USD 211 million compared with USD 82 million a year earlier The negative result includes a currency translation loss of USD 302 million which is a non -cash effect mainly resulting from a strengthening US dollar through the quarter which is fundamentally positive for Yara
Excluding net foreign currency translation gainloss and special items the result was USD 46 million (USD 017 per share) compared with USD 93 million (USD 034 per share) in second quarter 2017
ldquoYara reports 13 higher deliveries despite the truck-driversrsquo strike in Brazil However underlying EBITDA was five percent lower as improved deliveries and sales prices were offset by increased energy costrdquo said Svein Tore Holsether President and Chief Executive Officer of Yara
ldquoWhile the operating environment for our business is likely to remain tough for some time yet the market balance looks set to gradually improve after 2018 We remain focused on our improvement and growth programs which have improved Yararsquos earnings by more than 25 in the last 12 months and will deliver even higher earnings going forwardrdquo said Holsether
3 Yara second quarter 2018
Fertilizer market conditions Global grain markets are expected to tighten Following a modest production deficit for the 201718 season the US Department of Agriculture forecasts an increased deficit for the 201819 season resulting in lower grain inventories The projected ending stocks-to-use ratio at 82 days of consumption is down eight days from the start of the season and grain prices have improved supporting fertilizer demand The Food and Agriculture Organization of the United Nations (FAO) food price index is up 1 from second quarter last year and 2 below the five-year average while the cereal price index was up 13 on second quarter last year and 1 above the five-year average Recent pressure on several agricultural commodities could be linked to the ongoing trade tensions
Granular urea prices fob Egypt averaged USD 247 per tonne for second quarter up from USD 201 per tonne same quarter last year and improving sharply in June The urea market continues to be supported by high production cost in China with anthracite coal prices higher than a year ago resulting in domestic urea prices in China at or above USD 300 per tonne However urea prices elsewhere remained lower than Chinese prices as relatively weak demand combined with increased production outside China reduced demand for Chinese exports Before the improvement in June global market prices were low enough for Chinese imports to become viable Short term price volatility in the global market is high as the global balance excluding China moves between a modest surplus or deficit This was evident in June when demand improved leading to rapidly increasing prices
Ammonia prices fob Black Sea were on average USD 231 per tonne for the quarter compared with USD 282 per tonne last year Due to capacity additions in USA Russia and Saudi Arabia the ammonia market is fundamentally oversupplied when production runs at high utilization rates Prices were close to production costs for many producers in second quarter 2018 resulting in modest production curtailments
Phosphate prices averaged USD 410 per tonne fob US Gulf for DAP for the quarter up from USD 357 per tonne last year amid strong demand and a major production curtailment by Mosaic in Florida In addition Chinese exporters have raised the price at which they are willing to export
The average phosphate rock price fob Morocco was down 4 compared to a year earlier with upgrading margins from rock to DAP stronger than a year ago
Regional market developments Second-quarter nitrogen deliveries in Western Europe were up by an estimated 6 from last year catching up some of the deficit caused by the late spring while imports were down 8 For the full season deliveries were down 4 partly due to the late spring with a similar decline for imports
In Brazil April fertilizer deliveries were strong 25 above April last year But the transport strike followed by the uncertainty related to trucking cost led to a sharp drop in activity For May fertilizer deliveries were 27 lower than May last year and 4 behind year to date Year-to-date urea imports were 23 million tonnes down from 29 million tonnes in the same period last year Second-quarter urea imports were 10 million tonnes compared to 09 million tonnes last year
Second-quarter US nitrogen supply is estimated to be up around 13 compared to a year earlier driven by a 20 increase in domestic production bringing seasonal supply to the same level as the previous season Due to the increase in domestic production imports of all the major nitrogen products are reduced sharply
Second-quarter urea production in China is estimated to be 4 above second quarter last year and down 3 for the season An increased environmental focus is limiting urea production together with higher coal prices anthracite coal in particular increasing production costs As a result although domestic urea prices have increased production curtailments remain significant including production based on natural gas The average domestic urea price for the second quarter was 22 higher than a year earlier (measured in local currency) equivalent to an increase of USD 73 per tonne indicating a relatively tight domestic market China exported only 03 million tonnes urea during April and May down from 09 million tonnes same period last year Season-to-date (July-May) China exported 25 million tonnes of urea down from 60 million tonnes same period last season as the domestic market offered better value for the producers
In India second quarter is off-season but urea sales are reported 2 higher than a year earlier while urea production was up by 8 At the end of second quarter urea stocks are reported 15 lower than a year earlier
4 Yara second quarter 2018
Production volumes 1)
Thousand tonnes 2Q 2018 2Q 2017 1H 2018 1H 2017
Ammonia 2033 1803 4160 3683
of which equity-accounted investees 500 260 996 512
Urea 1597 1259 3203 2572
of which equity-accounted investees 395 382 784 743
Nitrate 1387 1360 2912 2977
NPK 1359 1362 2721 2732
CN 408 385 814 748
UAN 207 233 416 483
SSP-based fertilizer 260 152 473 431
MAP 21 - 21 -
Total Finished Products1) 5240 4751 10560 9943
1) Including Yara share of production in equity-accounted investees excluding Yara-produced blends
Fertilizer deliveries Thousand tonnes 2Q 2018 2Q 2017 1H 2018 1H 2017
Urea 1872 1244 3289 2413
907 563 1621 1037 of which Yara-produced 711 448 1225 829 of which equity-accounted investees
Nitrate 1401 1137 2708 2672
1319 1079 2523 2543 of which Yara-produced NPK 2366 2310 4519 4714
1289 1162 2566 2588 of which Yara-produced compounds 1007 1097 1740 1954 of which Yara-produced blends
CN 371 355 662 655
364 350 652 647 of which Yara-produced UAN 475 465 746 785
of which Yara-produced 361 337 591 607
SSP 218 295 282 373
191 211 227 258 of which Yara-produced DAPMAP 94 178 223 358
MOPSOP 296 366 425 535
Fertilizer deliveries per product
Other fertilizer products Total fertilizer deliveries
Fertilizer deliveries per region Europe Brazil Latin America excluding Brazil North America Asia Africa Total fertilizer deliveries For a description of the key global fertilizer products see the Yara Fertilizer Industry Handbook httpyaracominvestor_relationsreports_presentations
Industrial product deliveries Thousand tonnes
Ammonia 1)
Urea 1) 584 528 1147 1086246 216 461 433 of which Environmental products
Nitrate 2) 246 192 436 389 CN 91 97 187 195
Other industrial products 3) 382 277 649 537 Water content in Industrial Ammonia and Urea 501 454 968 897
Total Industrial product deliveries 4) 1982 1707 3737 3475
2Q 2018
1) Pure product equivalents 2) Including AN Solution 3) Including nitric acid feed phosphates sulphuric acid and other minor products 4) 2017 deliveries restated Divested business excluded (30-40 kt quarterly impact)
238
7331
2413
1671
711
1076
1045
414
7331
179
255 408 457
6604 13263 12962
2039 4676 4790
2052 3021 3581
664 1156 1138
961 1849 1717
586 1849 1114
302 712 622
6604 13262 12962
2Q 2017 1H 2018 1H 2017
160 349 370
5 Yara second quarter 2018
Variance analysis second quarter
2Q 2018 USD millions
EBITDA 2018 296 EBITDA 2017 352 Reported EBITDA variance (55) Special items variance (see page 12 for details) (38) EBITDA ex special items variance (17)
Volume 20 PriceMargin 74 Energy costs (86) Currency (14) Other (12) Total variance explained (17)
Yararsquos second-quarter results were 16 lower compared with a year earlier The result include negative net special items of USD 24 million compared to net positive special items last year of USD 14 million (for more details on special items see page 12) Underlying EBITDA results were 5 lower than last year as higher deliveries and sales prices were more than offset by higher European gas costs and a weaker US dollar
Total fertilizer deliveries were 11 higher compared to a year earlier driven by increased deliveries in Europe and inclusion of the Babrala acquisition in India and the Cubatatildeo acquisition in Brazil (included from mid-May) Adjusted for these portfolio effects fertilizer deliveries were 6 higher than a year ago Industrial deliveries were 16 higher than a year ago including the Cubatatildeo acquisition Adjusting for Cubatatildeo deliveries were 7 higher than a year ago
After a slow first quarter deliveries in Europe picked up in second quarter and were 18 higher than a year earlier Yara has seen strong order taking at the start of the new season enabling higher and more frequent price increases than a year ago
Yararsquos fertilizer deliveries in Brazil were 19 lower than a year earlier impacted by the truck-driversrsquo strike during the quarter Yararsquos EBITDA impact of the strike is approximately USD 15 million in the quarter
Margins in the quarter were somewhat lower than a year ago as higher realized prices were offset by higher gas prices in Europe
Ammonia production was 13 higher than second quarter last year Adjusted for portfolio effects (Babrala Cubatatildeo and Freeport) ammonia production was 1 lower compared to last year Finished fertilizer production increased 10 Adjusted for portfolio effects finished fertilizer production was 1 higher than a year ago Yara has scheduled several large ammonia turnarounds in second half 2018 with an expected net volume impact of around 150 kilotonnes compared with a year earlier
A weaker US dollar versus Yararsquos other main currencies resulted in a negative translation effect on Yararsquos fixed cost base compared with second quarter 2017
The negative Other variance of USD 12 million include USD 10 million in EBITDA contribution from new businesses (Babrala Cubatatildeo and Freeport) more than offset by higher fixed costs
Yara Improvement program
At the end of second quarter 2018 the Yara Improvement Program has delivered USD 310 million of annual sustained benefits up from USD 275 million reported end first quarter 2018 The increase reflects continued improvements in production reliability in addition to further procurement related savings The total program is on track to reach the 2018 target of USD 350 million
The improvements valued at current margins are roughly in line with the USD 310 million based on 2015 margins
6 Yara second quarter 2018
last year Adjusted for the Cubatatildeo acquisition in second quarter 2018 deliveries were 3 higher compared to first half last year
Realized prices were higher compared to first half last year for all main product groups but most of the price increase was offset by higher gas costs in Europe leaving overall margins only marginally higher compared to a year earlier
Total ammonia production was 13 higher than first half last year Adjusted for portfolio effects (Babrala Cubatatildeo and Freeport) production was 3 higher than first half last year mainly reflecting regularity improvements Finished fertilizer production increased 6 compared to first half 2017 Adjusted for portfolio effects finished fertilizer production was 1 lower than a year ago
A weaker US dollar versus Yararsquos other main currencies during the first half of 2018 resulted in a negative translation effect on Yararsquos fixed cost
A net EBITDA impact of around USD 20 million coming from the Babrala and Cubatatildeo acquisitions and the Freeport ammonia plant is included in the Other variance
Variance analysis first half
USD millions
EBITDA 2018 EBITDA 2017 Reported EBITDA variance Special items variance (see page 12 for details) EBITDA ex special items variance
Volume PriceMargin Energy costs Currency translation Other Total variance explained
Yara delivered weaker first-half results compared with a year earlier EBITDA excluding special items was 5 lower as higher sales prices were more than offset by higher energy prices and a weaker US dollar
Total fertilizer deliveries were 2 higher compared to a year earlier Adjusted for the Babrala (India) and Cubatatildeo (Brazil) acquisitions fertilizer deliveries were 2 lower than a year ago driven primarily by lower deliveries in Brazil Industrial deliveries were 8 higher compared to first half
1H 2018
666
733
(66)
(31)
(35)
(11)
153
(136)
(49)
7
(35)
7 Yara second quarter 2018
Financial items
USD millions
Interest income
Dividends and net gain(loss) on securities
Interest income and other financial income
Interest expense
Net interest expense on net pension liability
Net foreign currency translation gain(loss)
Other
Interest expense and foreign currency translation gain(loss)
Net financial income(expense)
Second-quarter net financial expense was USD 316 million compared with USD 21 million in the same quarter last year The variance primarily reflects a net foreign currency translation loss of USD 302 million this quarter
Interest expense was USD 12 million higher than a year earlier mainly reflecting an average gross debt level around USD 15 billion higher
The net foreign currency translation loss for the quarter was USD 302 million reflecting currency rate changes from 31 March to 30 June 2018 The currency loss is a non-cash effect mainly resulting from a stronger US dollar which is fundamentally positive for Yara
The US dollar appreciated around 5 against both the euro and the Norwegian krone and 17 against the Brazilian real generating a net loss of USD 192 million on Yararsquos US dollar denominated debt positions Internal funding positions mainly in euro against Norwegian krone and in Brazilian real vs both euro and Norwegian krone generated a net loss of USD 110 million Last year gains on US dollar
2Q 2018
20
3
22
(28)
(2)
(302)
(6)
(338)
(316)
2Q 2017 1H 2017
18
2
19
40
3
43
38
2
40
(16)
(2)
(18)
(4)
(40)
(50)
(3)
(294)
(9)
(357)
(32)
(4)
51
(7)
8
(21) (314) 48
1H 2018
denominated debt positions against euro and Norwegian krone (as the USD depreciated against both currencies) offset losses due to the Brazilian real and other emerging market currencies depreciating against the US dollar and the euro
Yararsquos US dollar debt generating currency effects in the income statement was approximately USD 3200 million at the start of the third quarter 2018 Around 40 of the exposure was towards the Norwegian krone and around 30 against Yararsquos emerging market currencies
First-half net financial expense was USD 314 million compared with an income of USD 48 million in the same period last year The variance is primarily explained by a net foreign currency translation loss of USD 294 million compared with a net gain of USD 51 million a year ago
8 Yara second quarter 2018
Net interest-bearing debt
USD millions 2Q 2018 1H 2018
Net interest-bearing debt at beginning of period (2879) (2367)
Cash earnings 1) 159 455
Dividends received from equity-accounted investees 26 98
Net operating capital change 388 213
Acquisition of Cubatatildeo (278) (278)
Acquisition of Babrala - (435)
Other investments (net) (353) (654)
Yara dividend (219) (219)
Other including foreign currency translation gain(loss) 3 33
Net interest-bearing debt at end of period (3153) (3153)
1) Operating income plus depreciation and amortization minus tax paid net gain(loss) on disposals net interest expense and bank charges
Working capital decreased during the quarter reflecting seasonal accumulation of customer prepayments in Brazil
The debtequity ratio at the end of second quarter 2018 calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests was 035 compared with 030 at the end of first quarter 2018
As a supplement to the consolidated statement of cash flows (page 18) this table highlights the key factors behind the development in net interest-bearing debt
Net interest-bearing debt at the end of second quarter was USD 3153 million up from USD 2879 million at the end of the first quarter 2018 The increase reflects the acquisition of Cubatatildeo in addition to other investments of USD 353 million of which Rio Grande plant modernization and the Salitre mining project in Brazil amounted to around USD 120 million
9 Yara second quarter 2018
Outlook Although prices have increased recently global urea supply increases are strong in 2018 and gas cost has increased in many regions including Europe Based on current forward markets for natural gas (10 July) Yararsquos spot-priced gas costs for third and fourth quarter 2018 are expected to be respectively USD 100 million higher and USD 70 million higher than a year earlier The estimates may change depending on future spot gas prices
Although global new capacity additions are almost halved compared with last year higher utilization of existing capacity (eg in North Africa) contributes to an overall projected production increase for 2018 well above trend demand growth Also nitrogen demand growth has been muted during the recent 3 years and food prices remain at low levels The FAO cereal and dairy price indices are higher than a year ago but the overall food price index is slightly lower
Yararsquos near-term strategic focus is on delivering its onshygoing improvement and growth pipeline Applying average 2015 market prices the Improvement program has to date delivered approximately USD 310 million of the targeted minimum USD 500 million of annual EBITDA improvement (USD 125 net income per share) within 2020
Yararsquos growth investments reach their peak this year with strong earnings contribution from 2019 onwards as a total of
7 plant expansions and MampA come on stream in 2018 with an annualized 14 million tonnes of new ammonia production and 31 million tonnes of new finished fertilizer production Applying average 2015 market prices the growth pipeline is expected in 2018 to deliver approximately USD 150 million of the targeted USD 600 million of annual EBITDA improvement (USD 090 net income per share)
Beyond 2018 the global urea supply-demand balance looks set to gradually improve Nitrogen supply growth is forecast to reduce significantly after 2018 and current nitrogen price levels do not provide economic incentives for new investment Also demand growth is likely to pick up compared with the last 3 years as global grain stocks are relatively low particularly excluding China and increased production is needed to keep pace with growing consumption
Yararsquos longer-term strategic focus will be on crop nutrition leadership growing sustainable solutions to farmers and industry while delivering a superior return on capital with a strong focus on capital discipline and active portfolio management As part of this focus solution selling including digital farming tools and services will be important growth vehicles for Yara to reach more farmers
10 Yara second quarter 2018
Risk and uncertainty As described in Yararsquos Annual Report for 2017 Yararsquos total risk exposure is analyzed and evaluated at group level Risk evaluations are integrated in all business activities both at group and business unit level increasing Yararsquos ability to take advantage of business opportunities Yararsquos most important market risk is related to the margin between nitrogen fertilizer prices and natural gas prices Although there is a positive long-term correlation between these prices margins are influenced by the supplydemand balance for food relative to energy Yara has in place a system for credit and currency risk management with
defined limits for exposure both at country customer and currency level Yararsquos geographically diversified portfolio reduces the overall credit and currency risk of the Group As the fertilizer business is essentially a US dollar business with both revenues and raw material costs mainly priced in US dollars Yara seeks to keep most of its debt in US dollars to reduce its overall US dollar currency exposure There has not been any significant change in the risk exposures The risks and uncertainties for the remaining six months of the year are described in Outlook
Related parties Note 35 in the annual report for 2017 provides details of related parties During the first half of 2018 there have not been any changes or transactions that significantly impact the grouprsquos financial position or result for the period
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Board member
Trond Berger Board member
Rune Bratteberg Board member
Kjersti Aass Board member
Svein Tore Holsether President and CEO
11 Yara second quarter 2018
Definitions and variance analysis Several of Yararsquos purchase and sales contracts for commodities are or have embedded terms and conditions which under IFRS are accounted for as derivatives The derivative elements of these contracts are presented under ldquoCommodity-based derivatives gain(loss)rdquo in the condensed consolidated interim statement of income and are referenced in the variance analysis (see below) as ldquoSpecial itemsrdquo
In the segment information ldquoOther and eliminationsrdquo consists mainly of cross-segment eliminations in addition to Yararsquos headquarter costs Profits on sales from Production to Crop Nutrition and Industrial are not recognized in the consolidated Yara condensed consolidated interim statement of income before the products are sold to external customers These internal profits are eliminated in ldquoOther and eliminationsrdquo Changes in ldquoOther and eliminationsrdquo EBITDA therefore usually reflect changes in Production-sourced stock (volumes) held by Crop Nutrition and Industrial but can also be affected by changes in Production margins on products sold to Crop Nutrition and Industrial as transfer prices move in line with arms-length market prices With all other variables held constant higher stocks would result in a higher (negative) elimination effect in Yararsquos results as would higher Production margins Over time these effects tend to even out to the extent that stock levels and margins normalize
In the discussion of historical operating results Yara refers to certain non-GAAP financial measures including operating income EBITDA and CROGI Yararsquos management makes regular use of these measures to evaluate the performance both in absolute terms and comparatively from period to period Yara manages long-term debt and taxes on a group basis Therefore net income is discussed only for the Group as a whole
Operating income include all activities which normally are to be considered as ldquooperatingrdquo Share of net income in equity-accounted investees is however not included
EBITDA is presented because Yara believe that it is frequently used by securities analysts investors and other interested parties as a measure of a companyrsquos operating performance and debt servicing ability It assists in comparing performance on a consistent basis without regard to depreciation and amortization which can vary
significantly depending on accounting methods or non-operating factors and provides a more complete and comprehensive analysis of our operating performance relative to other companies EBITDA as defined by Yara includes operating income interest income other financial income and share of net income in equity-accounted investees It excludes depreciation amortization and impairment loss as well as amortization of excess values in equity-accounted investees Yararsquos definition of EBITDA may differ from that of other companies
EBITDA should not be considered as an alternative to operating income and income before tax as an indicator of the companyrsquos operations in accordance with generally accepted accounting principles Nor is EBITDA an alternative to cash flow from operating activities in accordance with generally accepted accounting principles
Yara management uses CROGI (Cash Return On Gross Investment) to measure financial performance of Yararsquos segments as well as the whole of the business CROGI is defined as gross cash flow divided by average gross investment and is calculated on a 12-month rolling basis ldquoGross cash flowrdquo is defined as EBITDA less total tax expense excluding tax on net foreign currency translation gainloss On Yara level actual tax expense is used for the calculation while a standardized tax rate of 25 is used on segment level ldquoGross Investmentrdquo is defined as total assets (exclusive of deferred tax assets cash and cash equivalents other liquid assets and fair value adjustment recognized in equity) plus accumulated depreciation and amortization less all short-term interest-free liabilities except deferred tax liabilities On segment level cash and other liquid assets are not excluded from ldquoGross Investmentrdquo
ROCE (Return on capital employed) is presented as an additional performance measure to CROGI to simplify benchmarking with other companies ROCE is defined as EBIT minus tax (less tax on net foreign currency translation gainloss) divided by average capital employed and is calculated on a 12-month rolling average basis Capital employed is defined as total assets adjusted for cash and cash equivalents other liquid assets deferred tax assets fair value adjustment recognized in equity minus other current liabilities
12 Yara second quarter 2018
In order to track underlying business developments from period to period Yararsquos management also uses a variance analysis methodology developed within the Company (ldquoVariance Analysisrdquo) that involves the extraction of financial information from the accounting system as well as statistical and other data from internal management information systems Management considers the estimates produced by the Variance Analysis and the identification of trends based on such analysis sufficiently precise to provide useful data to monitor our business However these estimates should be understood to be less than an exact quantification of the changes and trends indicated by such analysis
The variance analysis presented in Yara quarterly and annual financial reports is prepared on a Yara EBITDA basis including net income from equity-accounted investees The volume margin and other variances presented therefore include effects generated by performance in equity-accounted investees
Yara defines ldquospecial itemsrdquo as items in the results which are not regarded as part of underlying business performance for the period These comprise restructuring-related items contract derivatives impairments and other items which are not primarily related to the period in which they are recognized subject to a minimum value of USD 5 million per item within a 12 month period ldquoContract
Special items
derivativesrdquo are commodity-based derivative gains or losses (see above) which are not the result of active exposure or position management by Yara These are defined as special items regardless of amount
Net interest-bearing debt is defined by Yara as cash and cash equivalents and other liquid assets reduced for bank loans other short-term interest bearing debt and long-term interest-bearing debt including current portion The debtequity ratio is calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests
Earnings per share excluding currency and special items represent net income after non-controlling interests excluding foreign currency translation gainloss and special items after tax divided by average number of shares outstanding in the period Tax effect on foreign currency and special items is calculated based on relevant statutory tax rate for the sake of simplicity
Net operating capital is calculated as trade receivables net of impairments plus inventories net of write-downs less trade payables and prepayments from customers
Reconciliations of alternative performance measures are provided on page 34 to 36
EBITDA effect Operating income effect
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
(0) - (9) -
- - - -
(10) - (10) -
(10) - (19) -
(9) - (9) -
(9) - (9) -
1 2 2 (12)
- 12 - 12
- - - -
(7) (7) -
(6) 14 (4) -
(24) 14 (32) -
2Q 2017 2Q 2018 1H 2017 1H 2018
Stamp duty on purchase of Babrala (India) Asset impairment write-down Restructuring costs Total Crop Nutrition
Restructuring costs Total Industrial
Contract derivatives gain(loss) Refund of energy intensive tax Asset impairment write-down QAFCO tax adjustment Total Production
Total Yara
1 2 2 (12)
- 12 - 12
(6) (12) (6) (12)
- - - -
(5) (3) (12)
(37) (3) (44) (17)
(0) - (9) -
(14) (5) (14) (6)
(10) - (10) -
(24) (5) (33) (6)
(9) - (9) -
(9) - (9) -
2
Yara second quarter 2018 13
Condensed consolidated interim statement of income
USD millions except share information
Revenue Other income Commodity based derivatives gain(loss) Revenue and other income
Raw materials energy costs and freight expenses Payroll and related costs Depreciation and amortization Impairment loss Other operating expenses Operating costs and expenses
Operating income
Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax
Income tax Net income
Net income attributable to Shareholders of the parent Non-controlling interests Net income
Basic earnings per share 1)
Weighted average number of shares outstanding
Notes
3
6
6
67
2
2Q 2018
3185
6
1
3192
(2489)
(312)
(199)
(20)
(133)
(3154)
38
17
22
77
(302)
(36)
(261)
45
(216)
(211)
(5)
(216)
(077)
273217830
2Q 2017
2744
12
2
2759
(2070)
(257)
(178)
(18)
(106)
(2629)
130
7
19
156
(18)
(22)
115
(35)
80
82
(2)
80
030
273217830
1) Yara currently has no share-based compensation program resulting in a dilutive effect on earnings per share
1H 2018
6023
23
3
6048
(4596)
(613)
(401)
(23)
(244)
(5877)
171
27
43
242
(294)
(63)
(115)
12
(103)
(96)
(7)
(103)
(035)
273217830
1H 2017 2017
5440 11358
14 55
(12) (13)
5442 11400
(4055) (8547)
(518) (1090)
(348) (724)
(19) (60)
(193) (521)
(5132) (10942)
310 457
16 29
40 77
366 563
51 99
(43) (82)
374 581
(97) (99)
277 482
283 477
(5) 5
277 482
103 175
273217830 273217830
14 Yara second quarter 2018
Condensed consolidated interim statement of comprehensive income
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Net income (216) 80 (103) 277 482
Other comprehensive income that may be reclassified to statement of income (net of tax) Currency translation adjustments (174) 95 (211) 133 235
Hedge of net investments (30) 15 3 16 33 Share of other comprehensive income of equity-accounted investees excluding remeasurements (0) 2 (0) 2 4
Net other comprehensive income(loss) that may be reclassified to statement of income in subsequent periods net of tax (204) 112 (208) 151 273
Other comprehensive income that will not be reclassified to statement of income in subsequent periods (net of tax) Currency translation adjustments 1) (107) 30 15 33 85
Net gain(loss) on equity instruments at fair value through other comprehensive income (1) (0) (3) (0) (1)
Remeasurement gains(losses) on defined benefit plans - - - - 64
Net other comprehensive income that will not be reclassified to statement of income in subsequent periods net of tax (108) 29 12 33 148
Reclassification adjustments of the period Cash flow hedges 0 0 0 0 1
Total other comprehensive income net of tax (312) 141 (196) 184 421
Total comprehensive income net of tax (528) 222 (298) 461 903
Total comprehensive income attributable to Shareholders of the parent (496) 232 (265) 469 900
Non-controlling interests (32) (10) (33) (7) 3
Total (528) 222 (298) 461 903
1) Currency translation adjustments that will not be reclassified to statement of income are related to entities with functional currency NOK as these are not classified as foreign operations to Yara International ASA
Yara second quarter 2018 15
Condensed consolidated interim statement of changes in equity
USD millions
Balance at 31 December 2016
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Share capital increase in subsidiary non-controlling interest
Dividends distributed Balance at 30 June 2017
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Balance at 31 December 2017
IFRS 9 and IFRS 15 implementation effect 3)
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Dividends distributed Balance at 30 June 2018
1) Par value 170
Share Capital1)
66
-
-
-
-
-
-
-
-
66
-
-
-
-
-
66
-
-
-
-
-
-
-
66
Premium paid-in capital
(49)
-
-
-
-
-
-
-
-
(49)
-
-
-
-
-
(49)
-
-
-
-
-
-
-
(49)
Currency translation
adjustments
(1321)
-
168
-
168
-
-
-
-
(1154)
-
154
-
154
-
(1000)
-
(170)
(0)
(170)
-
-
-
(1169)
Fair value reserve of financial assets at FVOCI 2)
2
-
-
-
-
-
-
-
-
1
-
(1)
-
(1)
-
-
-
(3)
-
(3)
-
-
-
(3)
Hedge Attributable Cash of net Total to share- Non-flow invest- other Retained holders of controlling Total
hedges ments reserves earnings the parent interests equity
(8) (192) (1520) 10150 8647 270 8917
- - - 283 283 (5) 277
- 16 184 - 184 (2) 182
2 - 2 - 2 - 2
2 16 186 - 186 (2) 184
- - - 1 1 - 1
- - - (1) (1) (2) (3)
- - - - - 9 9
- - - (321) (321) (0) (322)
(6) (176) (1334) 10112 8795 269 9064
- - - 194 194 10 205
1 17 171 64 235 - 235
2 - 2 - 2 - 2
2 17 173 64 237 - 237
- - - (1) (1) - (1)
(3) (159) (1161) 10369 9225 280 9505
(4) (4) (4)
- - - (96) (96) (7) (103)
- 3 (169) - (169) (27) (195)
- - (0) - (0) - (0)
- 3 (169) - (169) (27) (196)
- - - 1 1 - 1
- - - - - (1) (2)
- - - (219) (219) (2) (221)
(3) (155) (1330) 10050 8737 243 8980
2) Gains or losses on investments in equity instruments for which the Group has elected to present changes in fair value in OCI will no longer be transferred to profit or loss
upon derecognition of the equity instrument 3) Please see Accounting Policies page 19 and 20 for further information
16 Yara second quarter 2018
Condensed consolidated interim statement of financial position
USD millions Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Assets Non-current assets Deferred tax assets Intangible assets Property plant and equipment Equity-accounted investees Other non-current assets Total non-current assets
5
567
410
1134
8322
1030
472
11369
355
1091
7432
1051
368
10298
371
1106
7967
1096
460
11000
300
1067
6939
1067
377
9750
Prepaid expenses and other current assets Cash and cash equivalents Non-current assets and disposal group classified as held-for-sale Total current assets
Current assets Inventories Trade receivables
8
5
2376
1638
638
998
4
5653
2263
1264
604
274
10
4415
2229
1398
607
544
4
4783
2042
1200
559
436
11
4247
Total assets 17022 14713 15783 13997
30 Jun 2018
Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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 DEU 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 ESP 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 ETI 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 FRA 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 GRE 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 HEB ltFEFF05D405E905EA05DE05E905D5002005D105D405D205D305E805D505EA002005D005DC05D4002005DB05D305D9002005DC05D905E605D505E8002005DE05E105DE05DB05D9002000410064006F006200650020005000440046002005D405DE05D505EA05D005DE05D905DD002005DC05D405D305E405E105EA002005E705D305DD002D05D305E405D505E1002005D005D905DB05D505EA05D905EA002E002005DE05E105DE05DB05D90020005000440046002005E905E005D505E605E805D5002005E005D905EA05E005D905DD002005DC05E405EA05D905D705D4002005D105D005DE05E605E205D505EA0020004100630072006F006200610074002005D5002D00410064006F00620065002000520065006100640065007200200035002E0030002005D505D205E805E105D005D505EA002005DE05EA05E705D305DE05D505EA002005D905D505EA05E8002E05D005DE05D905DD002005DC002D005000440046002F0058002D0033002C002005E205D905D905E005D5002005D105DE05D305E805D905DA002005DC05DE05E905EA05DE05E9002005E905DC0020004100630072006F006200610074002E002005DE05E105DE05DB05D90020005000440046002005E905E005D505E605E805D5002005E005D905EA05E005D905DD002005DC05E405EA05D905D705D4002005D105D005DE05E605E205D505EA0020004100630072006F006200610074002005D5002D00410064006F00620065002000520065006100640065007200200035002E0030002005D505D205E805E105D005D505EA002005DE05EA05E705D305DE05D505EA002005D905D505EA05E8002Egt13 HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA 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 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH ltFEFF004e006100750064006f006b0069007400650020016100690075006f007300200070006100720061006d006500740072007500730020006e006f0072011700640061006d00690020006b0075007200740069002000410064006f00620065002000500044004600200064006f006b0075006d0065006e007400750073002c0020006b00750072006900650020006c0061006200690061007500730069006100690020007000720069007400610069006b007900740069002000610075006b01610074006f00730020006b006f006b007900620117007300200070006100720065006e006700740069006e00690061006d00200073007000610075007300640069006e0069006d00750069002e0020002000530075006b0075007200740069002000500044004600200064006f006b0075006d0065006e007400610069002000670061006c006900200062016b007400690020006100740069006400610072006f006d00690020004100630072006f006200610074002000690072002000410064006f00620065002000520065006100640065007200200035002e0030002000610072002000760117006c00650073006e0117006d00690073002000760065007200730069006a006f006d00690073002egt13 LVI 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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 RUM 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 RUS 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 SKY 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 SLV ltFEFF005400650020006e006100730074006100760069007400760065002000750070006f0072006100620069007400650020007a00610020007500730074007600610072006a0061006e006a006500200064006f006b0075006d0065006e0074006f0076002000410064006f006200650020005000440046002c0020006b006900200073006f0020006e0061006a007000720069006d00650072006e0065006a016100690020007a00610020006b0061006b006f0076006f00730074006e006f0020007400690073006b0061006e006a00650020007300200070007200690070007200610076006f0020006e00610020007400690073006b002e00200020005500730074007600610072006a0065006e006500200064006f006b0075006d0065006e0074006500200050004400460020006a00650020006d006f0067006f010d00650020006f0064007000720065007400690020007a0020004100630072006f00620061007400200069006e002000410064006f00620065002000520065006100640065007200200035002e003000200069006e0020006e006f00760065006a01610069006d002egt13 SUO 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 TUR 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2 Yara second quarter 2018
Second quarter 2018 Financial highlights USD millions except where indicated otherwise
Revenue and other income Operating income Share net income equity-accounted investees EBITDA EBITDA excl special items Net income after non-controlling interests Basic earnings per share 1)
Basic earnings per share excl currency 1)
Basic earnings per share excl currency and special items 1)
Average number of shares outstanding (millions) CROGI (Cash Return on Gross Investment) 2)
ROCE (Return on Capital Employed) 2)
2Q 2018
3192
38
17
296
321
(211)
(077)
004
017
2732
53
13
2Q 2017
2759
130
7
352
338
82
030
033
034
2732
70
38
1H 2018 1H 2017
6048 5442
171 310
27 16
666 733
698 733
(96) 283
(035) 103
045 088
059 093
2732 2732
64 68
30 36
1) USD per share Yara currently has no share-based compensation programs resulting in a dilutive effect on earnings per share 2) Quarterly numbers annualized Year-to-date numbers 12-month rolling average
Key Yara statistics 2Q 2017 1H 2017
Yara Production (Thousand tonnes) 1)
Ammonia 2033 1803 4160 3683
Finished fertilizer and industrial products excl bulk blends 5240 4751 10560 9943
Yara Deliveries (Thousand tonnes) Ammonia trade 689 627 1274 1049
Fertilizer 7331 6604 13263 12962
Industrial products 1982 1707 3737 3475
Total deliveries 10109 8971 18410 17554
Yaras Energy prices (USD per MMBtu) Global weighted average gas cost 61 47 60 50
European weighted average gas cost 81 56 79 61
1) Including Yara share of production in equity-accounted investees excluding Yara-produced blends
2Q 2018 1H 2018
Market information Average prices
Urea granular (fob Egypt) CAN (cif Germany) Ammonia (fob Black Sea) DAP (fob US Gulf) Phosphate rock (fob Morocco)
European gas (TTF) US gas (Henry Hub) EURUSD currency rate USDBRL currency rate
2Q 2017 1H 2017
USD per tonne USD per tonne USD per tonne USD per tonne USD per tonne
247
211
231
410
89
201
198
282
357
93
254
228
259
406
88
233
215
291
355
95
USD per MMBtu USD per MMBtu
73
29
119
50
30
110
75
30
121
54
30
108
360 321 342 318
2Q 2018 1H 2018
Yararsquos second-quarter net income after non-controlling interests was negative USD 211 million compared with USD 82 million a year earlier The negative result includes a currency translation loss of USD 302 million which is a non -cash effect mainly resulting from a strengthening US dollar through the quarter which is fundamentally positive for Yara
Excluding net foreign currency translation gainloss and special items the result was USD 46 million (USD 017 per share) compared with USD 93 million (USD 034 per share) in second quarter 2017
ldquoYara reports 13 higher deliveries despite the truck-driversrsquo strike in Brazil However underlying EBITDA was five percent lower as improved deliveries and sales prices were offset by increased energy costrdquo said Svein Tore Holsether President and Chief Executive Officer of Yara
ldquoWhile the operating environment for our business is likely to remain tough for some time yet the market balance looks set to gradually improve after 2018 We remain focused on our improvement and growth programs which have improved Yararsquos earnings by more than 25 in the last 12 months and will deliver even higher earnings going forwardrdquo said Holsether
3 Yara second quarter 2018
Fertilizer market conditions Global grain markets are expected to tighten Following a modest production deficit for the 201718 season the US Department of Agriculture forecasts an increased deficit for the 201819 season resulting in lower grain inventories The projected ending stocks-to-use ratio at 82 days of consumption is down eight days from the start of the season and grain prices have improved supporting fertilizer demand The Food and Agriculture Organization of the United Nations (FAO) food price index is up 1 from second quarter last year and 2 below the five-year average while the cereal price index was up 13 on second quarter last year and 1 above the five-year average Recent pressure on several agricultural commodities could be linked to the ongoing trade tensions
Granular urea prices fob Egypt averaged USD 247 per tonne for second quarter up from USD 201 per tonne same quarter last year and improving sharply in June The urea market continues to be supported by high production cost in China with anthracite coal prices higher than a year ago resulting in domestic urea prices in China at or above USD 300 per tonne However urea prices elsewhere remained lower than Chinese prices as relatively weak demand combined with increased production outside China reduced demand for Chinese exports Before the improvement in June global market prices were low enough for Chinese imports to become viable Short term price volatility in the global market is high as the global balance excluding China moves between a modest surplus or deficit This was evident in June when demand improved leading to rapidly increasing prices
Ammonia prices fob Black Sea were on average USD 231 per tonne for the quarter compared with USD 282 per tonne last year Due to capacity additions in USA Russia and Saudi Arabia the ammonia market is fundamentally oversupplied when production runs at high utilization rates Prices were close to production costs for many producers in second quarter 2018 resulting in modest production curtailments
Phosphate prices averaged USD 410 per tonne fob US Gulf for DAP for the quarter up from USD 357 per tonne last year amid strong demand and a major production curtailment by Mosaic in Florida In addition Chinese exporters have raised the price at which they are willing to export
The average phosphate rock price fob Morocco was down 4 compared to a year earlier with upgrading margins from rock to DAP stronger than a year ago
Regional market developments Second-quarter nitrogen deliveries in Western Europe were up by an estimated 6 from last year catching up some of the deficit caused by the late spring while imports were down 8 For the full season deliveries were down 4 partly due to the late spring with a similar decline for imports
In Brazil April fertilizer deliveries were strong 25 above April last year But the transport strike followed by the uncertainty related to trucking cost led to a sharp drop in activity For May fertilizer deliveries were 27 lower than May last year and 4 behind year to date Year-to-date urea imports were 23 million tonnes down from 29 million tonnes in the same period last year Second-quarter urea imports were 10 million tonnes compared to 09 million tonnes last year
Second-quarter US nitrogen supply is estimated to be up around 13 compared to a year earlier driven by a 20 increase in domestic production bringing seasonal supply to the same level as the previous season Due to the increase in domestic production imports of all the major nitrogen products are reduced sharply
Second-quarter urea production in China is estimated to be 4 above second quarter last year and down 3 for the season An increased environmental focus is limiting urea production together with higher coal prices anthracite coal in particular increasing production costs As a result although domestic urea prices have increased production curtailments remain significant including production based on natural gas The average domestic urea price for the second quarter was 22 higher than a year earlier (measured in local currency) equivalent to an increase of USD 73 per tonne indicating a relatively tight domestic market China exported only 03 million tonnes urea during April and May down from 09 million tonnes same period last year Season-to-date (July-May) China exported 25 million tonnes of urea down from 60 million tonnes same period last season as the domestic market offered better value for the producers
In India second quarter is off-season but urea sales are reported 2 higher than a year earlier while urea production was up by 8 At the end of second quarter urea stocks are reported 15 lower than a year earlier
4 Yara second quarter 2018
Production volumes 1)
Thousand tonnes 2Q 2018 2Q 2017 1H 2018 1H 2017
Ammonia 2033 1803 4160 3683
of which equity-accounted investees 500 260 996 512
Urea 1597 1259 3203 2572
of which equity-accounted investees 395 382 784 743
Nitrate 1387 1360 2912 2977
NPK 1359 1362 2721 2732
CN 408 385 814 748
UAN 207 233 416 483
SSP-based fertilizer 260 152 473 431
MAP 21 - 21 -
Total Finished Products1) 5240 4751 10560 9943
1) Including Yara share of production in equity-accounted investees excluding Yara-produced blends
Fertilizer deliveries Thousand tonnes 2Q 2018 2Q 2017 1H 2018 1H 2017
Urea 1872 1244 3289 2413
907 563 1621 1037 of which Yara-produced 711 448 1225 829 of which equity-accounted investees
Nitrate 1401 1137 2708 2672
1319 1079 2523 2543 of which Yara-produced NPK 2366 2310 4519 4714
1289 1162 2566 2588 of which Yara-produced compounds 1007 1097 1740 1954 of which Yara-produced blends
CN 371 355 662 655
364 350 652 647 of which Yara-produced UAN 475 465 746 785
of which Yara-produced 361 337 591 607
SSP 218 295 282 373
191 211 227 258 of which Yara-produced DAPMAP 94 178 223 358
MOPSOP 296 366 425 535
Fertilizer deliveries per product
Other fertilizer products Total fertilizer deliveries
Fertilizer deliveries per region Europe Brazil Latin America excluding Brazil North America Asia Africa Total fertilizer deliveries For a description of the key global fertilizer products see the Yara Fertilizer Industry Handbook httpyaracominvestor_relationsreports_presentations
Industrial product deliveries Thousand tonnes
Ammonia 1)
Urea 1) 584 528 1147 1086246 216 461 433 of which Environmental products
Nitrate 2) 246 192 436 389 CN 91 97 187 195
Other industrial products 3) 382 277 649 537 Water content in Industrial Ammonia and Urea 501 454 968 897
Total Industrial product deliveries 4) 1982 1707 3737 3475
2Q 2018
1) Pure product equivalents 2) Including AN Solution 3) Including nitric acid feed phosphates sulphuric acid and other minor products 4) 2017 deliveries restated Divested business excluded (30-40 kt quarterly impact)
238
7331
2413
1671
711
1076
1045
414
7331
179
255 408 457
6604 13263 12962
2039 4676 4790
2052 3021 3581
664 1156 1138
961 1849 1717
586 1849 1114
302 712 622
6604 13262 12962
2Q 2017 1H 2018 1H 2017
160 349 370
5 Yara second quarter 2018
Variance analysis second quarter
2Q 2018 USD millions
EBITDA 2018 296 EBITDA 2017 352 Reported EBITDA variance (55) Special items variance (see page 12 for details) (38) EBITDA ex special items variance (17)
Volume 20 PriceMargin 74 Energy costs (86) Currency (14) Other (12) Total variance explained (17)
Yararsquos second-quarter results were 16 lower compared with a year earlier The result include negative net special items of USD 24 million compared to net positive special items last year of USD 14 million (for more details on special items see page 12) Underlying EBITDA results were 5 lower than last year as higher deliveries and sales prices were more than offset by higher European gas costs and a weaker US dollar
Total fertilizer deliveries were 11 higher compared to a year earlier driven by increased deliveries in Europe and inclusion of the Babrala acquisition in India and the Cubatatildeo acquisition in Brazil (included from mid-May) Adjusted for these portfolio effects fertilizer deliveries were 6 higher than a year ago Industrial deliveries were 16 higher than a year ago including the Cubatatildeo acquisition Adjusting for Cubatatildeo deliveries were 7 higher than a year ago
After a slow first quarter deliveries in Europe picked up in second quarter and were 18 higher than a year earlier Yara has seen strong order taking at the start of the new season enabling higher and more frequent price increases than a year ago
Yararsquos fertilizer deliveries in Brazil were 19 lower than a year earlier impacted by the truck-driversrsquo strike during the quarter Yararsquos EBITDA impact of the strike is approximately USD 15 million in the quarter
Margins in the quarter were somewhat lower than a year ago as higher realized prices were offset by higher gas prices in Europe
Ammonia production was 13 higher than second quarter last year Adjusted for portfolio effects (Babrala Cubatatildeo and Freeport) ammonia production was 1 lower compared to last year Finished fertilizer production increased 10 Adjusted for portfolio effects finished fertilizer production was 1 higher than a year ago Yara has scheduled several large ammonia turnarounds in second half 2018 with an expected net volume impact of around 150 kilotonnes compared with a year earlier
A weaker US dollar versus Yararsquos other main currencies resulted in a negative translation effect on Yararsquos fixed cost base compared with second quarter 2017
The negative Other variance of USD 12 million include USD 10 million in EBITDA contribution from new businesses (Babrala Cubatatildeo and Freeport) more than offset by higher fixed costs
Yara Improvement program
At the end of second quarter 2018 the Yara Improvement Program has delivered USD 310 million of annual sustained benefits up from USD 275 million reported end first quarter 2018 The increase reflects continued improvements in production reliability in addition to further procurement related savings The total program is on track to reach the 2018 target of USD 350 million
The improvements valued at current margins are roughly in line with the USD 310 million based on 2015 margins
6 Yara second quarter 2018
last year Adjusted for the Cubatatildeo acquisition in second quarter 2018 deliveries were 3 higher compared to first half last year
Realized prices were higher compared to first half last year for all main product groups but most of the price increase was offset by higher gas costs in Europe leaving overall margins only marginally higher compared to a year earlier
Total ammonia production was 13 higher than first half last year Adjusted for portfolio effects (Babrala Cubatatildeo and Freeport) production was 3 higher than first half last year mainly reflecting regularity improvements Finished fertilizer production increased 6 compared to first half 2017 Adjusted for portfolio effects finished fertilizer production was 1 lower than a year ago
A weaker US dollar versus Yararsquos other main currencies during the first half of 2018 resulted in a negative translation effect on Yararsquos fixed cost
A net EBITDA impact of around USD 20 million coming from the Babrala and Cubatatildeo acquisitions and the Freeport ammonia plant is included in the Other variance
Variance analysis first half
USD millions
EBITDA 2018 EBITDA 2017 Reported EBITDA variance Special items variance (see page 12 for details) EBITDA ex special items variance
Volume PriceMargin Energy costs Currency translation Other Total variance explained
Yara delivered weaker first-half results compared with a year earlier EBITDA excluding special items was 5 lower as higher sales prices were more than offset by higher energy prices and a weaker US dollar
Total fertilizer deliveries were 2 higher compared to a year earlier Adjusted for the Babrala (India) and Cubatatildeo (Brazil) acquisitions fertilizer deliveries were 2 lower than a year ago driven primarily by lower deliveries in Brazil Industrial deliveries were 8 higher compared to first half
1H 2018
666
733
(66)
(31)
(35)
(11)
153
(136)
(49)
7
(35)
7 Yara second quarter 2018
Financial items
USD millions
Interest income
Dividends and net gain(loss) on securities
Interest income and other financial income
Interest expense
Net interest expense on net pension liability
Net foreign currency translation gain(loss)
Other
Interest expense and foreign currency translation gain(loss)
Net financial income(expense)
Second-quarter net financial expense was USD 316 million compared with USD 21 million in the same quarter last year The variance primarily reflects a net foreign currency translation loss of USD 302 million this quarter
Interest expense was USD 12 million higher than a year earlier mainly reflecting an average gross debt level around USD 15 billion higher
The net foreign currency translation loss for the quarter was USD 302 million reflecting currency rate changes from 31 March to 30 June 2018 The currency loss is a non-cash effect mainly resulting from a stronger US dollar which is fundamentally positive for Yara
The US dollar appreciated around 5 against both the euro and the Norwegian krone and 17 against the Brazilian real generating a net loss of USD 192 million on Yararsquos US dollar denominated debt positions Internal funding positions mainly in euro against Norwegian krone and in Brazilian real vs both euro and Norwegian krone generated a net loss of USD 110 million Last year gains on US dollar
2Q 2018
20
3
22
(28)
(2)
(302)
(6)
(338)
(316)
2Q 2017 1H 2017
18
2
19
40
3
43
38
2
40
(16)
(2)
(18)
(4)
(40)
(50)
(3)
(294)
(9)
(357)
(32)
(4)
51
(7)
8
(21) (314) 48
1H 2018
denominated debt positions against euro and Norwegian krone (as the USD depreciated against both currencies) offset losses due to the Brazilian real and other emerging market currencies depreciating against the US dollar and the euro
Yararsquos US dollar debt generating currency effects in the income statement was approximately USD 3200 million at the start of the third quarter 2018 Around 40 of the exposure was towards the Norwegian krone and around 30 against Yararsquos emerging market currencies
First-half net financial expense was USD 314 million compared with an income of USD 48 million in the same period last year The variance is primarily explained by a net foreign currency translation loss of USD 294 million compared with a net gain of USD 51 million a year ago
8 Yara second quarter 2018
Net interest-bearing debt
USD millions 2Q 2018 1H 2018
Net interest-bearing debt at beginning of period (2879) (2367)
Cash earnings 1) 159 455
Dividends received from equity-accounted investees 26 98
Net operating capital change 388 213
Acquisition of Cubatatildeo (278) (278)
Acquisition of Babrala - (435)
Other investments (net) (353) (654)
Yara dividend (219) (219)
Other including foreign currency translation gain(loss) 3 33
Net interest-bearing debt at end of period (3153) (3153)
1) Operating income plus depreciation and amortization minus tax paid net gain(loss) on disposals net interest expense and bank charges
Working capital decreased during the quarter reflecting seasonal accumulation of customer prepayments in Brazil
The debtequity ratio at the end of second quarter 2018 calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests was 035 compared with 030 at the end of first quarter 2018
As a supplement to the consolidated statement of cash flows (page 18) this table highlights the key factors behind the development in net interest-bearing debt
Net interest-bearing debt at the end of second quarter was USD 3153 million up from USD 2879 million at the end of the first quarter 2018 The increase reflects the acquisition of Cubatatildeo in addition to other investments of USD 353 million of which Rio Grande plant modernization and the Salitre mining project in Brazil amounted to around USD 120 million
9 Yara second quarter 2018
Outlook Although prices have increased recently global urea supply increases are strong in 2018 and gas cost has increased in many regions including Europe Based on current forward markets for natural gas (10 July) Yararsquos spot-priced gas costs for third and fourth quarter 2018 are expected to be respectively USD 100 million higher and USD 70 million higher than a year earlier The estimates may change depending on future spot gas prices
Although global new capacity additions are almost halved compared with last year higher utilization of existing capacity (eg in North Africa) contributes to an overall projected production increase for 2018 well above trend demand growth Also nitrogen demand growth has been muted during the recent 3 years and food prices remain at low levels The FAO cereal and dairy price indices are higher than a year ago but the overall food price index is slightly lower
Yararsquos near-term strategic focus is on delivering its onshygoing improvement and growth pipeline Applying average 2015 market prices the Improvement program has to date delivered approximately USD 310 million of the targeted minimum USD 500 million of annual EBITDA improvement (USD 125 net income per share) within 2020
Yararsquos growth investments reach their peak this year with strong earnings contribution from 2019 onwards as a total of
7 plant expansions and MampA come on stream in 2018 with an annualized 14 million tonnes of new ammonia production and 31 million tonnes of new finished fertilizer production Applying average 2015 market prices the growth pipeline is expected in 2018 to deliver approximately USD 150 million of the targeted USD 600 million of annual EBITDA improvement (USD 090 net income per share)
Beyond 2018 the global urea supply-demand balance looks set to gradually improve Nitrogen supply growth is forecast to reduce significantly after 2018 and current nitrogen price levels do not provide economic incentives for new investment Also demand growth is likely to pick up compared with the last 3 years as global grain stocks are relatively low particularly excluding China and increased production is needed to keep pace with growing consumption
Yararsquos longer-term strategic focus will be on crop nutrition leadership growing sustainable solutions to farmers and industry while delivering a superior return on capital with a strong focus on capital discipline and active portfolio management As part of this focus solution selling including digital farming tools and services will be important growth vehicles for Yara to reach more farmers
10 Yara second quarter 2018
Risk and uncertainty As described in Yararsquos Annual Report for 2017 Yararsquos total risk exposure is analyzed and evaluated at group level Risk evaluations are integrated in all business activities both at group and business unit level increasing Yararsquos ability to take advantage of business opportunities Yararsquos most important market risk is related to the margin between nitrogen fertilizer prices and natural gas prices Although there is a positive long-term correlation between these prices margins are influenced by the supplydemand balance for food relative to energy Yara has in place a system for credit and currency risk management with
defined limits for exposure both at country customer and currency level Yararsquos geographically diversified portfolio reduces the overall credit and currency risk of the Group As the fertilizer business is essentially a US dollar business with both revenues and raw material costs mainly priced in US dollars Yara seeks to keep most of its debt in US dollars to reduce its overall US dollar currency exposure There has not been any significant change in the risk exposures The risks and uncertainties for the remaining six months of the year are described in Outlook
Related parties Note 35 in the annual report for 2017 provides details of related parties During the first half of 2018 there have not been any changes or transactions that significantly impact the grouprsquos financial position or result for the period
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Board member
Trond Berger Board member
Rune Bratteberg Board member
Kjersti Aass Board member
Svein Tore Holsether President and CEO
11 Yara second quarter 2018
Definitions and variance analysis Several of Yararsquos purchase and sales contracts for commodities are or have embedded terms and conditions which under IFRS are accounted for as derivatives The derivative elements of these contracts are presented under ldquoCommodity-based derivatives gain(loss)rdquo in the condensed consolidated interim statement of income and are referenced in the variance analysis (see below) as ldquoSpecial itemsrdquo
In the segment information ldquoOther and eliminationsrdquo consists mainly of cross-segment eliminations in addition to Yararsquos headquarter costs Profits on sales from Production to Crop Nutrition and Industrial are not recognized in the consolidated Yara condensed consolidated interim statement of income before the products are sold to external customers These internal profits are eliminated in ldquoOther and eliminationsrdquo Changes in ldquoOther and eliminationsrdquo EBITDA therefore usually reflect changes in Production-sourced stock (volumes) held by Crop Nutrition and Industrial but can also be affected by changes in Production margins on products sold to Crop Nutrition and Industrial as transfer prices move in line with arms-length market prices With all other variables held constant higher stocks would result in a higher (negative) elimination effect in Yararsquos results as would higher Production margins Over time these effects tend to even out to the extent that stock levels and margins normalize
In the discussion of historical operating results Yara refers to certain non-GAAP financial measures including operating income EBITDA and CROGI Yararsquos management makes regular use of these measures to evaluate the performance both in absolute terms and comparatively from period to period Yara manages long-term debt and taxes on a group basis Therefore net income is discussed only for the Group as a whole
Operating income include all activities which normally are to be considered as ldquooperatingrdquo Share of net income in equity-accounted investees is however not included
EBITDA is presented because Yara believe that it is frequently used by securities analysts investors and other interested parties as a measure of a companyrsquos operating performance and debt servicing ability It assists in comparing performance on a consistent basis without regard to depreciation and amortization which can vary
significantly depending on accounting methods or non-operating factors and provides a more complete and comprehensive analysis of our operating performance relative to other companies EBITDA as defined by Yara includes operating income interest income other financial income and share of net income in equity-accounted investees It excludes depreciation amortization and impairment loss as well as amortization of excess values in equity-accounted investees Yararsquos definition of EBITDA may differ from that of other companies
EBITDA should not be considered as an alternative to operating income and income before tax as an indicator of the companyrsquos operations in accordance with generally accepted accounting principles Nor is EBITDA an alternative to cash flow from operating activities in accordance with generally accepted accounting principles
Yara management uses CROGI (Cash Return On Gross Investment) to measure financial performance of Yararsquos segments as well as the whole of the business CROGI is defined as gross cash flow divided by average gross investment and is calculated on a 12-month rolling basis ldquoGross cash flowrdquo is defined as EBITDA less total tax expense excluding tax on net foreign currency translation gainloss On Yara level actual tax expense is used for the calculation while a standardized tax rate of 25 is used on segment level ldquoGross Investmentrdquo is defined as total assets (exclusive of deferred tax assets cash and cash equivalents other liquid assets and fair value adjustment recognized in equity) plus accumulated depreciation and amortization less all short-term interest-free liabilities except deferred tax liabilities On segment level cash and other liquid assets are not excluded from ldquoGross Investmentrdquo
ROCE (Return on capital employed) is presented as an additional performance measure to CROGI to simplify benchmarking with other companies ROCE is defined as EBIT minus tax (less tax on net foreign currency translation gainloss) divided by average capital employed and is calculated on a 12-month rolling average basis Capital employed is defined as total assets adjusted for cash and cash equivalents other liquid assets deferred tax assets fair value adjustment recognized in equity minus other current liabilities
12 Yara second quarter 2018
In order to track underlying business developments from period to period Yararsquos management also uses a variance analysis methodology developed within the Company (ldquoVariance Analysisrdquo) that involves the extraction of financial information from the accounting system as well as statistical and other data from internal management information systems Management considers the estimates produced by the Variance Analysis and the identification of trends based on such analysis sufficiently precise to provide useful data to monitor our business However these estimates should be understood to be less than an exact quantification of the changes and trends indicated by such analysis
The variance analysis presented in Yara quarterly and annual financial reports is prepared on a Yara EBITDA basis including net income from equity-accounted investees The volume margin and other variances presented therefore include effects generated by performance in equity-accounted investees
Yara defines ldquospecial itemsrdquo as items in the results which are not regarded as part of underlying business performance for the period These comprise restructuring-related items contract derivatives impairments and other items which are not primarily related to the period in which they are recognized subject to a minimum value of USD 5 million per item within a 12 month period ldquoContract
Special items
derivativesrdquo are commodity-based derivative gains or losses (see above) which are not the result of active exposure or position management by Yara These are defined as special items regardless of amount
Net interest-bearing debt is defined by Yara as cash and cash equivalents and other liquid assets reduced for bank loans other short-term interest bearing debt and long-term interest-bearing debt including current portion The debtequity ratio is calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests
Earnings per share excluding currency and special items represent net income after non-controlling interests excluding foreign currency translation gainloss and special items after tax divided by average number of shares outstanding in the period Tax effect on foreign currency and special items is calculated based on relevant statutory tax rate for the sake of simplicity
Net operating capital is calculated as trade receivables net of impairments plus inventories net of write-downs less trade payables and prepayments from customers
Reconciliations of alternative performance measures are provided on page 34 to 36
EBITDA effect Operating income effect
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
(0) - (9) -
- - - -
(10) - (10) -
(10) - (19) -
(9) - (9) -
(9) - (9) -
1 2 2 (12)
- 12 - 12
- - - -
(7) (7) -
(6) 14 (4) -
(24) 14 (32) -
2Q 2017 2Q 2018 1H 2017 1H 2018
Stamp duty on purchase of Babrala (India) Asset impairment write-down Restructuring costs Total Crop Nutrition
Restructuring costs Total Industrial
Contract derivatives gain(loss) Refund of energy intensive tax Asset impairment write-down QAFCO tax adjustment Total Production
Total Yara
1 2 2 (12)
- 12 - 12
(6) (12) (6) (12)
- - - -
(5) (3) (12)
(37) (3) (44) (17)
(0) - (9) -
(14) (5) (14) (6)
(10) - (10) -
(24) (5) (33) (6)
(9) - (9) -
(9) - (9) -
2
Yara second quarter 2018 13
Condensed consolidated interim statement of income
USD millions except share information
Revenue Other income Commodity based derivatives gain(loss) Revenue and other income
Raw materials energy costs and freight expenses Payroll and related costs Depreciation and amortization Impairment loss Other operating expenses Operating costs and expenses
Operating income
Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax
Income tax Net income
Net income attributable to Shareholders of the parent Non-controlling interests Net income
Basic earnings per share 1)
Weighted average number of shares outstanding
Notes
3
6
6
67
2
2Q 2018
3185
6
1
3192
(2489)
(312)
(199)
(20)
(133)
(3154)
38
17
22
77
(302)
(36)
(261)
45
(216)
(211)
(5)
(216)
(077)
273217830
2Q 2017
2744
12
2
2759
(2070)
(257)
(178)
(18)
(106)
(2629)
130
7
19
156
(18)
(22)
115
(35)
80
82
(2)
80
030
273217830
1) Yara currently has no share-based compensation program resulting in a dilutive effect on earnings per share
1H 2018
6023
23
3
6048
(4596)
(613)
(401)
(23)
(244)
(5877)
171
27
43
242
(294)
(63)
(115)
12
(103)
(96)
(7)
(103)
(035)
273217830
1H 2017 2017
5440 11358
14 55
(12) (13)
5442 11400
(4055) (8547)
(518) (1090)
(348) (724)
(19) (60)
(193) (521)
(5132) (10942)
310 457
16 29
40 77
366 563
51 99
(43) (82)
374 581
(97) (99)
277 482
283 477
(5) 5
277 482
103 175
273217830 273217830
14 Yara second quarter 2018
Condensed consolidated interim statement of comprehensive income
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Net income (216) 80 (103) 277 482
Other comprehensive income that may be reclassified to statement of income (net of tax) Currency translation adjustments (174) 95 (211) 133 235
Hedge of net investments (30) 15 3 16 33 Share of other comprehensive income of equity-accounted investees excluding remeasurements (0) 2 (0) 2 4
Net other comprehensive income(loss) that may be reclassified to statement of income in subsequent periods net of tax (204) 112 (208) 151 273
Other comprehensive income that will not be reclassified to statement of income in subsequent periods (net of tax) Currency translation adjustments 1) (107) 30 15 33 85
Net gain(loss) on equity instruments at fair value through other comprehensive income (1) (0) (3) (0) (1)
Remeasurement gains(losses) on defined benefit plans - - - - 64
Net other comprehensive income that will not be reclassified to statement of income in subsequent periods net of tax (108) 29 12 33 148
Reclassification adjustments of the period Cash flow hedges 0 0 0 0 1
Total other comprehensive income net of tax (312) 141 (196) 184 421
Total comprehensive income net of tax (528) 222 (298) 461 903
Total comprehensive income attributable to Shareholders of the parent (496) 232 (265) 469 900
Non-controlling interests (32) (10) (33) (7) 3
Total (528) 222 (298) 461 903
1) Currency translation adjustments that will not be reclassified to statement of income are related to entities with functional currency NOK as these are not classified as foreign operations to Yara International ASA
Yara second quarter 2018 15
Condensed consolidated interim statement of changes in equity
USD millions
Balance at 31 December 2016
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Share capital increase in subsidiary non-controlling interest
Dividends distributed Balance at 30 June 2017
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Balance at 31 December 2017
IFRS 9 and IFRS 15 implementation effect 3)
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Dividends distributed Balance at 30 June 2018
1) Par value 170
Share Capital1)
66
-
-
-
-
-
-
-
-
66
-
-
-
-
-
66
-
-
-
-
-
-
-
66
Premium paid-in capital
(49)
-
-
-
-
-
-
-
-
(49)
-
-
-
-
-
(49)
-
-
-
-
-
-
-
(49)
Currency translation
adjustments
(1321)
-
168
-
168
-
-
-
-
(1154)
-
154
-
154
-
(1000)
-
(170)
(0)
(170)
-
-
-
(1169)
Fair value reserve of financial assets at FVOCI 2)
2
-
-
-
-
-
-
-
-
1
-
(1)
-
(1)
-
-
-
(3)
-
(3)
-
-
-
(3)
Hedge Attributable Cash of net Total to share- Non-flow invest- other Retained holders of controlling Total
hedges ments reserves earnings the parent interests equity
(8) (192) (1520) 10150 8647 270 8917
- - - 283 283 (5) 277
- 16 184 - 184 (2) 182
2 - 2 - 2 - 2
2 16 186 - 186 (2) 184
- - - 1 1 - 1
- - - (1) (1) (2) (3)
- - - - - 9 9
- - - (321) (321) (0) (322)
(6) (176) (1334) 10112 8795 269 9064
- - - 194 194 10 205
1 17 171 64 235 - 235
2 - 2 - 2 - 2
2 17 173 64 237 - 237
- - - (1) (1) - (1)
(3) (159) (1161) 10369 9225 280 9505
(4) (4) (4)
- - - (96) (96) (7) (103)
- 3 (169) - (169) (27) (195)
- - (0) - (0) - (0)
- 3 (169) - (169) (27) (196)
- - - 1 1 - 1
- - - - - (1) (2)
- - - (219) (219) (2) (221)
(3) (155) (1330) 10050 8737 243 8980
2) Gains or losses on investments in equity instruments for which the Group has elected to present changes in fair value in OCI will no longer be transferred to profit or loss
upon derecognition of the equity instrument 3) Please see Accounting Policies page 19 and 20 for further information
16 Yara second quarter 2018
Condensed consolidated interim statement of financial position
USD millions Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Assets Non-current assets Deferred tax assets Intangible assets Property plant and equipment Equity-accounted investees Other non-current assets Total non-current assets
5
567
410
1134
8322
1030
472
11369
355
1091
7432
1051
368
10298
371
1106
7967
1096
460
11000
300
1067
6939
1067
377
9750
Prepaid expenses and other current assets Cash and cash equivalents Non-current assets and disposal group classified as held-for-sale Total current assets
Current assets Inventories Trade receivables
8
5
2376
1638
638
998
4
5653
2263
1264
604
274
10
4415
2229
1398
607
544
4
4783
2042
1200
559
436
11
4247
Total assets 17022 14713 15783 13997
30 Jun 2018
Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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HEB 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HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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3 Yara second quarter 2018
Fertilizer market conditions Global grain markets are expected to tighten Following a modest production deficit for the 201718 season the US Department of Agriculture forecasts an increased deficit for the 201819 season resulting in lower grain inventories The projected ending stocks-to-use ratio at 82 days of consumption is down eight days from the start of the season and grain prices have improved supporting fertilizer demand The Food and Agriculture Organization of the United Nations (FAO) food price index is up 1 from second quarter last year and 2 below the five-year average while the cereal price index was up 13 on second quarter last year and 1 above the five-year average Recent pressure on several agricultural commodities could be linked to the ongoing trade tensions
Granular urea prices fob Egypt averaged USD 247 per tonne for second quarter up from USD 201 per tonne same quarter last year and improving sharply in June The urea market continues to be supported by high production cost in China with anthracite coal prices higher than a year ago resulting in domestic urea prices in China at or above USD 300 per tonne However urea prices elsewhere remained lower than Chinese prices as relatively weak demand combined with increased production outside China reduced demand for Chinese exports Before the improvement in June global market prices were low enough for Chinese imports to become viable Short term price volatility in the global market is high as the global balance excluding China moves between a modest surplus or deficit This was evident in June when demand improved leading to rapidly increasing prices
Ammonia prices fob Black Sea were on average USD 231 per tonne for the quarter compared with USD 282 per tonne last year Due to capacity additions in USA Russia and Saudi Arabia the ammonia market is fundamentally oversupplied when production runs at high utilization rates Prices were close to production costs for many producers in second quarter 2018 resulting in modest production curtailments
Phosphate prices averaged USD 410 per tonne fob US Gulf for DAP for the quarter up from USD 357 per tonne last year amid strong demand and a major production curtailment by Mosaic in Florida In addition Chinese exporters have raised the price at which they are willing to export
The average phosphate rock price fob Morocco was down 4 compared to a year earlier with upgrading margins from rock to DAP stronger than a year ago
Regional market developments Second-quarter nitrogen deliveries in Western Europe were up by an estimated 6 from last year catching up some of the deficit caused by the late spring while imports were down 8 For the full season deliveries were down 4 partly due to the late spring with a similar decline for imports
In Brazil April fertilizer deliveries were strong 25 above April last year But the transport strike followed by the uncertainty related to trucking cost led to a sharp drop in activity For May fertilizer deliveries were 27 lower than May last year and 4 behind year to date Year-to-date urea imports were 23 million tonnes down from 29 million tonnes in the same period last year Second-quarter urea imports were 10 million tonnes compared to 09 million tonnes last year
Second-quarter US nitrogen supply is estimated to be up around 13 compared to a year earlier driven by a 20 increase in domestic production bringing seasonal supply to the same level as the previous season Due to the increase in domestic production imports of all the major nitrogen products are reduced sharply
Second-quarter urea production in China is estimated to be 4 above second quarter last year and down 3 for the season An increased environmental focus is limiting urea production together with higher coal prices anthracite coal in particular increasing production costs As a result although domestic urea prices have increased production curtailments remain significant including production based on natural gas The average domestic urea price for the second quarter was 22 higher than a year earlier (measured in local currency) equivalent to an increase of USD 73 per tonne indicating a relatively tight domestic market China exported only 03 million tonnes urea during April and May down from 09 million tonnes same period last year Season-to-date (July-May) China exported 25 million tonnes of urea down from 60 million tonnes same period last season as the domestic market offered better value for the producers
In India second quarter is off-season but urea sales are reported 2 higher than a year earlier while urea production was up by 8 At the end of second quarter urea stocks are reported 15 lower than a year earlier
4 Yara second quarter 2018
Production volumes 1)
Thousand tonnes 2Q 2018 2Q 2017 1H 2018 1H 2017
Ammonia 2033 1803 4160 3683
of which equity-accounted investees 500 260 996 512
Urea 1597 1259 3203 2572
of which equity-accounted investees 395 382 784 743
Nitrate 1387 1360 2912 2977
NPK 1359 1362 2721 2732
CN 408 385 814 748
UAN 207 233 416 483
SSP-based fertilizer 260 152 473 431
MAP 21 - 21 -
Total Finished Products1) 5240 4751 10560 9943
1) Including Yara share of production in equity-accounted investees excluding Yara-produced blends
Fertilizer deliveries Thousand tonnes 2Q 2018 2Q 2017 1H 2018 1H 2017
Urea 1872 1244 3289 2413
907 563 1621 1037 of which Yara-produced 711 448 1225 829 of which equity-accounted investees
Nitrate 1401 1137 2708 2672
1319 1079 2523 2543 of which Yara-produced NPK 2366 2310 4519 4714
1289 1162 2566 2588 of which Yara-produced compounds 1007 1097 1740 1954 of which Yara-produced blends
CN 371 355 662 655
364 350 652 647 of which Yara-produced UAN 475 465 746 785
of which Yara-produced 361 337 591 607
SSP 218 295 282 373
191 211 227 258 of which Yara-produced DAPMAP 94 178 223 358
MOPSOP 296 366 425 535
Fertilizer deliveries per product
Other fertilizer products Total fertilizer deliveries
Fertilizer deliveries per region Europe Brazil Latin America excluding Brazil North America Asia Africa Total fertilizer deliveries For a description of the key global fertilizer products see the Yara Fertilizer Industry Handbook httpyaracominvestor_relationsreports_presentations
Industrial product deliveries Thousand tonnes
Ammonia 1)
Urea 1) 584 528 1147 1086246 216 461 433 of which Environmental products
Nitrate 2) 246 192 436 389 CN 91 97 187 195
Other industrial products 3) 382 277 649 537 Water content in Industrial Ammonia and Urea 501 454 968 897
Total Industrial product deliveries 4) 1982 1707 3737 3475
2Q 2018
1) Pure product equivalents 2) Including AN Solution 3) Including nitric acid feed phosphates sulphuric acid and other minor products 4) 2017 deliveries restated Divested business excluded (30-40 kt quarterly impact)
238
7331
2413
1671
711
1076
1045
414
7331
179
255 408 457
6604 13263 12962
2039 4676 4790
2052 3021 3581
664 1156 1138
961 1849 1717
586 1849 1114
302 712 622
6604 13262 12962
2Q 2017 1H 2018 1H 2017
160 349 370
5 Yara second quarter 2018
Variance analysis second quarter
2Q 2018 USD millions
EBITDA 2018 296 EBITDA 2017 352 Reported EBITDA variance (55) Special items variance (see page 12 for details) (38) EBITDA ex special items variance (17)
Volume 20 PriceMargin 74 Energy costs (86) Currency (14) Other (12) Total variance explained (17)
Yararsquos second-quarter results were 16 lower compared with a year earlier The result include negative net special items of USD 24 million compared to net positive special items last year of USD 14 million (for more details on special items see page 12) Underlying EBITDA results were 5 lower than last year as higher deliveries and sales prices were more than offset by higher European gas costs and a weaker US dollar
Total fertilizer deliveries were 11 higher compared to a year earlier driven by increased deliveries in Europe and inclusion of the Babrala acquisition in India and the Cubatatildeo acquisition in Brazil (included from mid-May) Adjusted for these portfolio effects fertilizer deliveries were 6 higher than a year ago Industrial deliveries were 16 higher than a year ago including the Cubatatildeo acquisition Adjusting for Cubatatildeo deliveries were 7 higher than a year ago
After a slow first quarter deliveries in Europe picked up in second quarter and were 18 higher than a year earlier Yara has seen strong order taking at the start of the new season enabling higher and more frequent price increases than a year ago
Yararsquos fertilizer deliveries in Brazil were 19 lower than a year earlier impacted by the truck-driversrsquo strike during the quarter Yararsquos EBITDA impact of the strike is approximately USD 15 million in the quarter
Margins in the quarter were somewhat lower than a year ago as higher realized prices were offset by higher gas prices in Europe
Ammonia production was 13 higher than second quarter last year Adjusted for portfolio effects (Babrala Cubatatildeo and Freeport) ammonia production was 1 lower compared to last year Finished fertilizer production increased 10 Adjusted for portfolio effects finished fertilizer production was 1 higher than a year ago Yara has scheduled several large ammonia turnarounds in second half 2018 with an expected net volume impact of around 150 kilotonnes compared with a year earlier
A weaker US dollar versus Yararsquos other main currencies resulted in a negative translation effect on Yararsquos fixed cost base compared with second quarter 2017
The negative Other variance of USD 12 million include USD 10 million in EBITDA contribution from new businesses (Babrala Cubatatildeo and Freeport) more than offset by higher fixed costs
Yara Improvement program
At the end of second quarter 2018 the Yara Improvement Program has delivered USD 310 million of annual sustained benefits up from USD 275 million reported end first quarter 2018 The increase reflects continued improvements in production reliability in addition to further procurement related savings The total program is on track to reach the 2018 target of USD 350 million
The improvements valued at current margins are roughly in line with the USD 310 million based on 2015 margins
6 Yara second quarter 2018
last year Adjusted for the Cubatatildeo acquisition in second quarter 2018 deliveries were 3 higher compared to first half last year
Realized prices were higher compared to first half last year for all main product groups but most of the price increase was offset by higher gas costs in Europe leaving overall margins only marginally higher compared to a year earlier
Total ammonia production was 13 higher than first half last year Adjusted for portfolio effects (Babrala Cubatatildeo and Freeport) production was 3 higher than first half last year mainly reflecting regularity improvements Finished fertilizer production increased 6 compared to first half 2017 Adjusted for portfolio effects finished fertilizer production was 1 lower than a year ago
A weaker US dollar versus Yararsquos other main currencies during the first half of 2018 resulted in a negative translation effect on Yararsquos fixed cost
A net EBITDA impact of around USD 20 million coming from the Babrala and Cubatatildeo acquisitions and the Freeport ammonia plant is included in the Other variance
Variance analysis first half
USD millions
EBITDA 2018 EBITDA 2017 Reported EBITDA variance Special items variance (see page 12 for details) EBITDA ex special items variance
Volume PriceMargin Energy costs Currency translation Other Total variance explained
Yara delivered weaker first-half results compared with a year earlier EBITDA excluding special items was 5 lower as higher sales prices were more than offset by higher energy prices and a weaker US dollar
Total fertilizer deliveries were 2 higher compared to a year earlier Adjusted for the Babrala (India) and Cubatatildeo (Brazil) acquisitions fertilizer deliveries were 2 lower than a year ago driven primarily by lower deliveries in Brazil Industrial deliveries were 8 higher compared to first half
1H 2018
666
733
(66)
(31)
(35)
(11)
153
(136)
(49)
7
(35)
7 Yara second quarter 2018
Financial items
USD millions
Interest income
Dividends and net gain(loss) on securities
Interest income and other financial income
Interest expense
Net interest expense on net pension liability
Net foreign currency translation gain(loss)
Other
Interest expense and foreign currency translation gain(loss)
Net financial income(expense)
Second-quarter net financial expense was USD 316 million compared with USD 21 million in the same quarter last year The variance primarily reflects a net foreign currency translation loss of USD 302 million this quarter
Interest expense was USD 12 million higher than a year earlier mainly reflecting an average gross debt level around USD 15 billion higher
The net foreign currency translation loss for the quarter was USD 302 million reflecting currency rate changes from 31 March to 30 June 2018 The currency loss is a non-cash effect mainly resulting from a stronger US dollar which is fundamentally positive for Yara
The US dollar appreciated around 5 against both the euro and the Norwegian krone and 17 against the Brazilian real generating a net loss of USD 192 million on Yararsquos US dollar denominated debt positions Internal funding positions mainly in euro against Norwegian krone and in Brazilian real vs both euro and Norwegian krone generated a net loss of USD 110 million Last year gains on US dollar
2Q 2018
20
3
22
(28)
(2)
(302)
(6)
(338)
(316)
2Q 2017 1H 2017
18
2
19
40
3
43
38
2
40
(16)
(2)
(18)
(4)
(40)
(50)
(3)
(294)
(9)
(357)
(32)
(4)
51
(7)
8
(21) (314) 48
1H 2018
denominated debt positions against euro and Norwegian krone (as the USD depreciated against both currencies) offset losses due to the Brazilian real and other emerging market currencies depreciating against the US dollar and the euro
Yararsquos US dollar debt generating currency effects in the income statement was approximately USD 3200 million at the start of the third quarter 2018 Around 40 of the exposure was towards the Norwegian krone and around 30 against Yararsquos emerging market currencies
First-half net financial expense was USD 314 million compared with an income of USD 48 million in the same period last year The variance is primarily explained by a net foreign currency translation loss of USD 294 million compared with a net gain of USD 51 million a year ago
8 Yara second quarter 2018
Net interest-bearing debt
USD millions 2Q 2018 1H 2018
Net interest-bearing debt at beginning of period (2879) (2367)
Cash earnings 1) 159 455
Dividends received from equity-accounted investees 26 98
Net operating capital change 388 213
Acquisition of Cubatatildeo (278) (278)
Acquisition of Babrala - (435)
Other investments (net) (353) (654)
Yara dividend (219) (219)
Other including foreign currency translation gain(loss) 3 33
Net interest-bearing debt at end of period (3153) (3153)
1) Operating income plus depreciation and amortization minus tax paid net gain(loss) on disposals net interest expense and bank charges
Working capital decreased during the quarter reflecting seasonal accumulation of customer prepayments in Brazil
The debtequity ratio at the end of second quarter 2018 calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests was 035 compared with 030 at the end of first quarter 2018
As a supplement to the consolidated statement of cash flows (page 18) this table highlights the key factors behind the development in net interest-bearing debt
Net interest-bearing debt at the end of second quarter was USD 3153 million up from USD 2879 million at the end of the first quarter 2018 The increase reflects the acquisition of Cubatatildeo in addition to other investments of USD 353 million of which Rio Grande plant modernization and the Salitre mining project in Brazil amounted to around USD 120 million
9 Yara second quarter 2018
Outlook Although prices have increased recently global urea supply increases are strong in 2018 and gas cost has increased in many regions including Europe Based on current forward markets for natural gas (10 July) Yararsquos spot-priced gas costs for third and fourth quarter 2018 are expected to be respectively USD 100 million higher and USD 70 million higher than a year earlier The estimates may change depending on future spot gas prices
Although global new capacity additions are almost halved compared with last year higher utilization of existing capacity (eg in North Africa) contributes to an overall projected production increase for 2018 well above trend demand growth Also nitrogen demand growth has been muted during the recent 3 years and food prices remain at low levels The FAO cereal and dairy price indices are higher than a year ago but the overall food price index is slightly lower
Yararsquos near-term strategic focus is on delivering its onshygoing improvement and growth pipeline Applying average 2015 market prices the Improvement program has to date delivered approximately USD 310 million of the targeted minimum USD 500 million of annual EBITDA improvement (USD 125 net income per share) within 2020
Yararsquos growth investments reach their peak this year with strong earnings contribution from 2019 onwards as a total of
7 plant expansions and MampA come on stream in 2018 with an annualized 14 million tonnes of new ammonia production and 31 million tonnes of new finished fertilizer production Applying average 2015 market prices the growth pipeline is expected in 2018 to deliver approximately USD 150 million of the targeted USD 600 million of annual EBITDA improvement (USD 090 net income per share)
Beyond 2018 the global urea supply-demand balance looks set to gradually improve Nitrogen supply growth is forecast to reduce significantly after 2018 and current nitrogen price levels do not provide economic incentives for new investment Also demand growth is likely to pick up compared with the last 3 years as global grain stocks are relatively low particularly excluding China and increased production is needed to keep pace with growing consumption
Yararsquos longer-term strategic focus will be on crop nutrition leadership growing sustainable solutions to farmers and industry while delivering a superior return on capital with a strong focus on capital discipline and active portfolio management As part of this focus solution selling including digital farming tools and services will be important growth vehicles for Yara to reach more farmers
10 Yara second quarter 2018
Risk and uncertainty As described in Yararsquos Annual Report for 2017 Yararsquos total risk exposure is analyzed and evaluated at group level Risk evaluations are integrated in all business activities both at group and business unit level increasing Yararsquos ability to take advantage of business opportunities Yararsquos most important market risk is related to the margin between nitrogen fertilizer prices and natural gas prices Although there is a positive long-term correlation between these prices margins are influenced by the supplydemand balance for food relative to energy Yara has in place a system for credit and currency risk management with
defined limits for exposure both at country customer and currency level Yararsquos geographically diversified portfolio reduces the overall credit and currency risk of the Group As the fertilizer business is essentially a US dollar business with both revenues and raw material costs mainly priced in US dollars Yara seeks to keep most of its debt in US dollars to reduce its overall US dollar currency exposure There has not been any significant change in the risk exposures The risks and uncertainties for the remaining six months of the year are described in Outlook
Related parties Note 35 in the annual report for 2017 provides details of related parties During the first half of 2018 there have not been any changes or transactions that significantly impact the grouprsquos financial position or result for the period
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Board member
Trond Berger Board member
Rune Bratteberg Board member
Kjersti Aass Board member
Svein Tore Holsether President and CEO
11 Yara second quarter 2018
Definitions and variance analysis Several of Yararsquos purchase and sales contracts for commodities are or have embedded terms and conditions which under IFRS are accounted for as derivatives The derivative elements of these contracts are presented under ldquoCommodity-based derivatives gain(loss)rdquo in the condensed consolidated interim statement of income and are referenced in the variance analysis (see below) as ldquoSpecial itemsrdquo
In the segment information ldquoOther and eliminationsrdquo consists mainly of cross-segment eliminations in addition to Yararsquos headquarter costs Profits on sales from Production to Crop Nutrition and Industrial are not recognized in the consolidated Yara condensed consolidated interim statement of income before the products are sold to external customers These internal profits are eliminated in ldquoOther and eliminationsrdquo Changes in ldquoOther and eliminationsrdquo EBITDA therefore usually reflect changes in Production-sourced stock (volumes) held by Crop Nutrition and Industrial but can also be affected by changes in Production margins on products sold to Crop Nutrition and Industrial as transfer prices move in line with arms-length market prices With all other variables held constant higher stocks would result in a higher (negative) elimination effect in Yararsquos results as would higher Production margins Over time these effects tend to even out to the extent that stock levels and margins normalize
In the discussion of historical operating results Yara refers to certain non-GAAP financial measures including operating income EBITDA and CROGI Yararsquos management makes regular use of these measures to evaluate the performance both in absolute terms and comparatively from period to period Yara manages long-term debt and taxes on a group basis Therefore net income is discussed only for the Group as a whole
Operating income include all activities which normally are to be considered as ldquooperatingrdquo Share of net income in equity-accounted investees is however not included
EBITDA is presented because Yara believe that it is frequently used by securities analysts investors and other interested parties as a measure of a companyrsquos operating performance and debt servicing ability It assists in comparing performance on a consistent basis without regard to depreciation and amortization which can vary
significantly depending on accounting methods or non-operating factors and provides a more complete and comprehensive analysis of our operating performance relative to other companies EBITDA as defined by Yara includes operating income interest income other financial income and share of net income in equity-accounted investees It excludes depreciation amortization and impairment loss as well as amortization of excess values in equity-accounted investees Yararsquos definition of EBITDA may differ from that of other companies
EBITDA should not be considered as an alternative to operating income and income before tax as an indicator of the companyrsquos operations in accordance with generally accepted accounting principles Nor is EBITDA an alternative to cash flow from operating activities in accordance with generally accepted accounting principles
Yara management uses CROGI (Cash Return On Gross Investment) to measure financial performance of Yararsquos segments as well as the whole of the business CROGI is defined as gross cash flow divided by average gross investment and is calculated on a 12-month rolling basis ldquoGross cash flowrdquo is defined as EBITDA less total tax expense excluding tax on net foreign currency translation gainloss On Yara level actual tax expense is used for the calculation while a standardized tax rate of 25 is used on segment level ldquoGross Investmentrdquo is defined as total assets (exclusive of deferred tax assets cash and cash equivalents other liquid assets and fair value adjustment recognized in equity) plus accumulated depreciation and amortization less all short-term interest-free liabilities except deferred tax liabilities On segment level cash and other liquid assets are not excluded from ldquoGross Investmentrdquo
ROCE (Return on capital employed) is presented as an additional performance measure to CROGI to simplify benchmarking with other companies ROCE is defined as EBIT minus tax (less tax on net foreign currency translation gainloss) divided by average capital employed and is calculated on a 12-month rolling average basis Capital employed is defined as total assets adjusted for cash and cash equivalents other liquid assets deferred tax assets fair value adjustment recognized in equity minus other current liabilities
12 Yara second quarter 2018
In order to track underlying business developments from period to period Yararsquos management also uses a variance analysis methodology developed within the Company (ldquoVariance Analysisrdquo) that involves the extraction of financial information from the accounting system as well as statistical and other data from internal management information systems Management considers the estimates produced by the Variance Analysis and the identification of trends based on such analysis sufficiently precise to provide useful data to monitor our business However these estimates should be understood to be less than an exact quantification of the changes and trends indicated by such analysis
The variance analysis presented in Yara quarterly and annual financial reports is prepared on a Yara EBITDA basis including net income from equity-accounted investees The volume margin and other variances presented therefore include effects generated by performance in equity-accounted investees
Yara defines ldquospecial itemsrdquo as items in the results which are not regarded as part of underlying business performance for the period These comprise restructuring-related items contract derivatives impairments and other items which are not primarily related to the period in which they are recognized subject to a minimum value of USD 5 million per item within a 12 month period ldquoContract
Special items
derivativesrdquo are commodity-based derivative gains or losses (see above) which are not the result of active exposure or position management by Yara These are defined as special items regardless of amount
Net interest-bearing debt is defined by Yara as cash and cash equivalents and other liquid assets reduced for bank loans other short-term interest bearing debt and long-term interest-bearing debt including current portion The debtequity ratio is calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests
Earnings per share excluding currency and special items represent net income after non-controlling interests excluding foreign currency translation gainloss and special items after tax divided by average number of shares outstanding in the period Tax effect on foreign currency and special items is calculated based on relevant statutory tax rate for the sake of simplicity
Net operating capital is calculated as trade receivables net of impairments plus inventories net of write-downs less trade payables and prepayments from customers
Reconciliations of alternative performance measures are provided on page 34 to 36
EBITDA effect Operating income effect
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
(0) - (9) -
- - - -
(10) - (10) -
(10) - (19) -
(9) - (9) -
(9) - (9) -
1 2 2 (12)
- 12 - 12
- - - -
(7) (7) -
(6) 14 (4) -
(24) 14 (32) -
2Q 2017 2Q 2018 1H 2017 1H 2018
Stamp duty on purchase of Babrala (India) Asset impairment write-down Restructuring costs Total Crop Nutrition
Restructuring costs Total Industrial
Contract derivatives gain(loss) Refund of energy intensive tax Asset impairment write-down QAFCO tax adjustment Total Production
Total Yara
1 2 2 (12)
- 12 - 12
(6) (12) (6) (12)
- - - -
(5) (3) (12)
(37) (3) (44) (17)
(0) - (9) -
(14) (5) (14) (6)
(10) - (10) -
(24) (5) (33) (6)
(9) - (9) -
(9) - (9) -
2
Yara second quarter 2018 13
Condensed consolidated interim statement of income
USD millions except share information
Revenue Other income Commodity based derivatives gain(loss) Revenue and other income
Raw materials energy costs and freight expenses Payroll and related costs Depreciation and amortization Impairment loss Other operating expenses Operating costs and expenses
Operating income
Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax
Income tax Net income
Net income attributable to Shareholders of the parent Non-controlling interests Net income
Basic earnings per share 1)
Weighted average number of shares outstanding
Notes
3
6
6
67
2
2Q 2018
3185
6
1
3192
(2489)
(312)
(199)
(20)
(133)
(3154)
38
17
22
77
(302)
(36)
(261)
45
(216)
(211)
(5)
(216)
(077)
273217830
2Q 2017
2744
12
2
2759
(2070)
(257)
(178)
(18)
(106)
(2629)
130
7
19
156
(18)
(22)
115
(35)
80
82
(2)
80
030
273217830
1) Yara currently has no share-based compensation program resulting in a dilutive effect on earnings per share
1H 2018
6023
23
3
6048
(4596)
(613)
(401)
(23)
(244)
(5877)
171
27
43
242
(294)
(63)
(115)
12
(103)
(96)
(7)
(103)
(035)
273217830
1H 2017 2017
5440 11358
14 55
(12) (13)
5442 11400
(4055) (8547)
(518) (1090)
(348) (724)
(19) (60)
(193) (521)
(5132) (10942)
310 457
16 29
40 77
366 563
51 99
(43) (82)
374 581
(97) (99)
277 482
283 477
(5) 5
277 482
103 175
273217830 273217830
14 Yara second quarter 2018
Condensed consolidated interim statement of comprehensive income
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Net income (216) 80 (103) 277 482
Other comprehensive income that may be reclassified to statement of income (net of tax) Currency translation adjustments (174) 95 (211) 133 235
Hedge of net investments (30) 15 3 16 33 Share of other comprehensive income of equity-accounted investees excluding remeasurements (0) 2 (0) 2 4
Net other comprehensive income(loss) that may be reclassified to statement of income in subsequent periods net of tax (204) 112 (208) 151 273
Other comprehensive income that will not be reclassified to statement of income in subsequent periods (net of tax) Currency translation adjustments 1) (107) 30 15 33 85
Net gain(loss) on equity instruments at fair value through other comprehensive income (1) (0) (3) (0) (1)
Remeasurement gains(losses) on defined benefit plans - - - - 64
Net other comprehensive income that will not be reclassified to statement of income in subsequent periods net of tax (108) 29 12 33 148
Reclassification adjustments of the period Cash flow hedges 0 0 0 0 1
Total other comprehensive income net of tax (312) 141 (196) 184 421
Total comprehensive income net of tax (528) 222 (298) 461 903
Total comprehensive income attributable to Shareholders of the parent (496) 232 (265) 469 900
Non-controlling interests (32) (10) (33) (7) 3
Total (528) 222 (298) 461 903
1) Currency translation adjustments that will not be reclassified to statement of income are related to entities with functional currency NOK as these are not classified as foreign operations to Yara International ASA
Yara second quarter 2018 15
Condensed consolidated interim statement of changes in equity
USD millions
Balance at 31 December 2016
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Share capital increase in subsidiary non-controlling interest
Dividends distributed Balance at 30 June 2017
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Balance at 31 December 2017
IFRS 9 and IFRS 15 implementation effect 3)
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Dividends distributed Balance at 30 June 2018
1) Par value 170
Share Capital1)
66
-
-
-
-
-
-
-
-
66
-
-
-
-
-
66
-
-
-
-
-
-
-
66
Premium paid-in capital
(49)
-
-
-
-
-
-
-
-
(49)
-
-
-
-
-
(49)
-
-
-
-
-
-
-
(49)
Currency translation
adjustments
(1321)
-
168
-
168
-
-
-
-
(1154)
-
154
-
154
-
(1000)
-
(170)
(0)
(170)
-
-
-
(1169)
Fair value reserve of financial assets at FVOCI 2)
2
-
-
-
-
-
-
-
-
1
-
(1)
-
(1)
-
-
-
(3)
-
(3)
-
-
-
(3)
Hedge Attributable Cash of net Total to share- Non-flow invest- other Retained holders of controlling Total
hedges ments reserves earnings the parent interests equity
(8) (192) (1520) 10150 8647 270 8917
- - - 283 283 (5) 277
- 16 184 - 184 (2) 182
2 - 2 - 2 - 2
2 16 186 - 186 (2) 184
- - - 1 1 - 1
- - - (1) (1) (2) (3)
- - - - - 9 9
- - - (321) (321) (0) (322)
(6) (176) (1334) 10112 8795 269 9064
- - - 194 194 10 205
1 17 171 64 235 - 235
2 - 2 - 2 - 2
2 17 173 64 237 - 237
- - - (1) (1) - (1)
(3) (159) (1161) 10369 9225 280 9505
(4) (4) (4)
- - - (96) (96) (7) (103)
- 3 (169) - (169) (27) (195)
- - (0) - (0) - (0)
- 3 (169) - (169) (27) (196)
- - - 1 1 - 1
- - - - - (1) (2)
- - - (219) (219) (2) (221)
(3) (155) (1330) 10050 8737 243 8980
2) Gains or losses on investments in equity instruments for which the Group has elected to present changes in fair value in OCI will no longer be transferred to profit or loss
upon derecognition of the equity instrument 3) Please see Accounting Policies page 19 and 20 for further information
16 Yara second quarter 2018
Condensed consolidated interim statement of financial position
USD millions Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Assets Non-current assets Deferred tax assets Intangible assets Property plant and equipment Equity-accounted investees Other non-current assets Total non-current assets
5
567
410
1134
8322
1030
472
11369
355
1091
7432
1051
368
10298
371
1106
7967
1096
460
11000
300
1067
6939
1067
377
9750
Prepaid expenses and other current assets Cash and cash equivalents Non-current assets and disposal group classified as held-for-sale Total current assets
Current assets Inventories Trade receivables
8
5
2376
1638
638
998
4
5653
2263
1264
604
274
10
4415
2229
1398
607
544
4
4783
2042
1200
559
436
11
4247
Total assets 17022 14713 15783 13997
30 Jun 2018
Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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HEB 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4 Yara second quarter 2018
Production volumes 1)
Thousand tonnes 2Q 2018 2Q 2017 1H 2018 1H 2017
Ammonia 2033 1803 4160 3683
of which equity-accounted investees 500 260 996 512
Urea 1597 1259 3203 2572
of which equity-accounted investees 395 382 784 743
Nitrate 1387 1360 2912 2977
NPK 1359 1362 2721 2732
CN 408 385 814 748
UAN 207 233 416 483
SSP-based fertilizer 260 152 473 431
MAP 21 - 21 -
Total Finished Products1) 5240 4751 10560 9943
1) Including Yara share of production in equity-accounted investees excluding Yara-produced blends
Fertilizer deliveries Thousand tonnes 2Q 2018 2Q 2017 1H 2018 1H 2017
Urea 1872 1244 3289 2413
907 563 1621 1037 of which Yara-produced 711 448 1225 829 of which equity-accounted investees
Nitrate 1401 1137 2708 2672
1319 1079 2523 2543 of which Yara-produced NPK 2366 2310 4519 4714
1289 1162 2566 2588 of which Yara-produced compounds 1007 1097 1740 1954 of which Yara-produced blends
CN 371 355 662 655
364 350 652 647 of which Yara-produced UAN 475 465 746 785
of which Yara-produced 361 337 591 607
SSP 218 295 282 373
191 211 227 258 of which Yara-produced DAPMAP 94 178 223 358
MOPSOP 296 366 425 535
Fertilizer deliveries per product
Other fertilizer products Total fertilizer deliveries
Fertilizer deliveries per region Europe Brazil Latin America excluding Brazil North America Asia Africa Total fertilizer deliveries For a description of the key global fertilizer products see the Yara Fertilizer Industry Handbook httpyaracominvestor_relationsreports_presentations
Industrial product deliveries Thousand tonnes
Ammonia 1)
Urea 1) 584 528 1147 1086246 216 461 433 of which Environmental products
Nitrate 2) 246 192 436 389 CN 91 97 187 195
Other industrial products 3) 382 277 649 537 Water content in Industrial Ammonia and Urea 501 454 968 897
Total Industrial product deliveries 4) 1982 1707 3737 3475
2Q 2018
1) Pure product equivalents 2) Including AN Solution 3) Including nitric acid feed phosphates sulphuric acid and other minor products 4) 2017 deliveries restated Divested business excluded (30-40 kt quarterly impact)
238
7331
2413
1671
711
1076
1045
414
7331
179
255 408 457
6604 13263 12962
2039 4676 4790
2052 3021 3581
664 1156 1138
961 1849 1717
586 1849 1114
302 712 622
6604 13262 12962
2Q 2017 1H 2018 1H 2017
160 349 370
5 Yara second quarter 2018
Variance analysis second quarter
2Q 2018 USD millions
EBITDA 2018 296 EBITDA 2017 352 Reported EBITDA variance (55) Special items variance (see page 12 for details) (38) EBITDA ex special items variance (17)
Volume 20 PriceMargin 74 Energy costs (86) Currency (14) Other (12) Total variance explained (17)
Yararsquos second-quarter results were 16 lower compared with a year earlier The result include negative net special items of USD 24 million compared to net positive special items last year of USD 14 million (for more details on special items see page 12) Underlying EBITDA results were 5 lower than last year as higher deliveries and sales prices were more than offset by higher European gas costs and a weaker US dollar
Total fertilizer deliveries were 11 higher compared to a year earlier driven by increased deliveries in Europe and inclusion of the Babrala acquisition in India and the Cubatatildeo acquisition in Brazil (included from mid-May) Adjusted for these portfolio effects fertilizer deliveries were 6 higher than a year ago Industrial deliveries were 16 higher than a year ago including the Cubatatildeo acquisition Adjusting for Cubatatildeo deliveries were 7 higher than a year ago
After a slow first quarter deliveries in Europe picked up in second quarter and were 18 higher than a year earlier Yara has seen strong order taking at the start of the new season enabling higher and more frequent price increases than a year ago
Yararsquos fertilizer deliveries in Brazil were 19 lower than a year earlier impacted by the truck-driversrsquo strike during the quarter Yararsquos EBITDA impact of the strike is approximately USD 15 million in the quarter
Margins in the quarter were somewhat lower than a year ago as higher realized prices were offset by higher gas prices in Europe
Ammonia production was 13 higher than second quarter last year Adjusted for portfolio effects (Babrala Cubatatildeo and Freeport) ammonia production was 1 lower compared to last year Finished fertilizer production increased 10 Adjusted for portfolio effects finished fertilizer production was 1 higher than a year ago Yara has scheduled several large ammonia turnarounds in second half 2018 with an expected net volume impact of around 150 kilotonnes compared with a year earlier
A weaker US dollar versus Yararsquos other main currencies resulted in a negative translation effect on Yararsquos fixed cost base compared with second quarter 2017
The negative Other variance of USD 12 million include USD 10 million in EBITDA contribution from new businesses (Babrala Cubatatildeo and Freeport) more than offset by higher fixed costs
Yara Improvement program
At the end of second quarter 2018 the Yara Improvement Program has delivered USD 310 million of annual sustained benefits up from USD 275 million reported end first quarter 2018 The increase reflects continued improvements in production reliability in addition to further procurement related savings The total program is on track to reach the 2018 target of USD 350 million
The improvements valued at current margins are roughly in line with the USD 310 million based on 2015 margins
6 Yara second quarter 2018
last year Adjusted for the Cubatatildeo acquisition in second quarter 2018 deliveries were 3 higher compared to first half last year
Realized prices were higher compared to first half last year for all main product groups but most of the price increase was offset by higher gas costs in Europe leaving overall margins only marginally higher compared to a year earlier
Total ammonia production was 13 higher than first half last year Adjusted for portfolio effects (Babrala Cubatatildeo and Freeport) production was 3 higher than first half last year mainly reflecting regularity improvements Finished fertilizer production increased 6 compared to first half 2017 Adjusted for portfolio effects finished fertilizer production was 1 lower than a year ago
A weaker US dollar versus Yararsquos other main currencies during the first half of 2018 resulted in a negative translation effect on Yararsquos fixed cost
A net EBITDA impact of around USD 20 million coming from the Babrala and Cubatatildeo acquisitions and the Freeport ammonia plant is included in the Other variance
Variance analysis first half
USD millions
EBITDA 2018 EBITDA 2017 Reported EBITDA variance Special items variance (see page 12 for details) EBITDA ex special items variance
Volume PriceMargin Energy costs Currency translation Other Total variance explained
Yara delivered weaker first-half results compared with a year earlier EBITDA excluding special items was 5 lower as higher sales prices were more than offset by higher energy prices and a weaker US dollar
Total fertilizer deliveries were 2 higher compared to a year earlier Adjusted for the Babrala (India) and Cubatatildeo (Brazil) acquisitions fertilizer deliveries were 2 lower than a year ago driven primarily by lower deliveries in Brazil Industrial deliveries were 8 higher compared to first half
1H 2018
666
733
(66)
(31)
(35)
(11)
153
(136)
(49)
7
(35)
7 Yara second quarter 2018
Financial items
USD millions
Interest income
Dividends and net gain(loss) on securities
Interest income and other financial income
Interest expense
Net interest expense on net pension liability
Net foreign currency translation gain(loss)
Other
Interest expense and foreign currency translation gain(loss)
Net financial income(expense)
Second-quarter net financial expense was USD 316 million compared with USD 21 million in the same quarter last year The variance primarily reflects a net foreign currency translation loss of USD 302 million this quarter
Interest expense was USD 12 million higher than a year earlier mainly reflecting an average gross debt level around USD 15 billion higher
The net foreign currency translation loss for the quarter was USD 302 million reflecting currency rate changes from 31 March to 30 June 2018 The currency loss is a non-cash effect mainly resulting from a stronger US dollar which is fundamentally positive for Yara
The US dollar appreciated around 5 against both the euro and the Norwegian krone and 17 against the Brazilian real generating a net loss of USD 192 million on Yararsquos US dollar denominated debt positions Internal funding positions mainly in euro against Norwegian krone and in Brazilian real vs both euro and Norwegian krone generated a net loss of USD 110 million Last year gains on US dollar
2Q 2018
20
3
22
(28)
(2)
(302)
(6)
(338)
(316)
2Q 2017 1H 2017
18
2
19
40
3
43
38
2
40
(16)
(2)
(18)
(4)
(40)
(50)
(3)
(294)
(9)
(357)
(32)
(4)
51
(7)
8
(21) (314) 48
1H 2018
denominated debt positions against euro and Norwegian krone (as the USD depreciated against both currencies) offset losses due to the Brazilian real and other emerging market currencies depreciating against the US dollar and the euro
Yararsquos US dollar debt generating currency effects in the income statement was approximately USD 3200 million at the start of the third quarter 2018 Around 40 of the exposure was towards the Norwegian krone and around 30 against Yararsquos emerging market currencies
First-half net financial expense was USD 314 million compared with an income of USD 48 million in the same period last year The variance is primarily explained by a net foreign currency translation loss of USD 294 million compared with a net gain of USD 51 million a year ago
8 Yara second quarter 2018
Net interest-bearing debt
USD millions 2Q 2018 1H 2018
Net interest-bearing debt at beginning of period (2879) (2367)
Cash earnings 1) 159 455
Dividends received from equity-accounted investees 26 98
Net operating capital change 388 213
Acquisition of Cubatatildeo (278) (278)
Acquisition of Babrala - (435)
Other investments (net) (353) (654)
Yara dividend (219) (219)
Other including foreign currency translation gain(loss) 3 33
Net interest-bearing debt at end of period (3153) (3153)
1) Operating income plus depreciation and amortization minus tax paid net gain(loss) on disposals net interest expense and bank charges
Working capital decreased during the quarter reflecting seasonal accumulation of customer prepayments in Brazil
The debtequity ratio at the end of second quarter 2018 calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests was 035 compared with 030 at the end of first quarter 2018
As a supplement to the consolidated statement of cash flows (page 18) this table highlights the key factors behind the development in net interest-bearing debt
Net interest-bearing debt at the end of second quarter was USD 3153 million up from USD 2879 million at the end of the first quarter 2018 The increase reflects the acquisition of Cubatatildeo in addition to other investments of USD 353 million of which Rio Grande plant modernization and the Salitre mining project in Brazil amounted to around USD 120 million
9 Yara second quarter 2018
Outlook Although prices have increased recently global urea supply increases are strong in 2018 and gas cost has increased in many regions including Europe Based on current forward markets for natural gas (10 July) Yararsquos spot-priced gas costs for third and fourth quarter 2018 are expected to be respectively USD 100 million higher and USD 70 million higher than a year earlier The estimates may change depending on future spot gas prices
Although global new capacity additions are almost halved compared with last year higher utilization of existing capacity (eg in North Africa) contributes to an overall projected production increase for 2018 well above trend demand growth Also nitrogen demand growth has been muted during the recent 3 years and food prices remain at low levels The FAO cereal and dairy price indices are higher than a year ago but the overall food price index is slightly lower
Yararsquos near-term strategic focus is on delivering its onshygoing improvement and growth pipeline Applying average 2015 market prices the Improvement program has to date delivered approximately USD 310 million of the targeted minimum USD 500 million of annual EBITDA improvement (USD 125 net income per share) within 2020
Yararsquos growth investments reach their peak this year with strong earnings contribution from 2019 onwards as a total of
7 plant expansions and MampA come on stream in 2018 with an annualized 14 million tonnes of new ammonia production and 31 million tonnes of new finished fertilizer production Applying average 2015 market prices the growth pipeline is expected in 2018 to deliver approximately USD 150 million of the targeted USD 600 million of annual EBITDA improvement (USD 090 net income per share)
Beyond 2018 the global urea supply-demand balance looks set to gradually improve Nitrogen supply growth is forecast to reduce significantly after 2018 and current nitrogen price levels do not provide economic incentives for new investment Also demand growth is likely to pick up compared with the last 3 years as global grain stocks are relatively low particularly excluding China and increased production is needed to keep pace with growing consumption
Yararsquos longer-term strategic focus will be on crop nutrition leadership growing sustainable solutions to farmers and industry while delivering a superior return on capital with a strong focus on capital discipline and active portfolio management As part of this focus solution selling including digital farming tools and services will be important growth vehicles for Yara to reach more farmers
10 Yara second quarter 2018
Risk and uncertainty As described in Yararsquos Annual Report for 2017 Yararsquos total risk exposure is analyzed and evaluated at group level Risk evaluations are integrated in all business activities both at group and business unit level increasing Yararsquos ability to take advantage of business opportunities Yararsquos most important market risk is related to the margin between nitrogen fertilizer prices and natural gas prices Although there is a positive long-term correlation between these prices margins are influenced by the supplydemand balance for food relative to energy Yara has in place a system for credit and currency risk management with
defined limits for exposure both at country customer and currency level Yararsquos geographically diversified portfolio reduces the overall credit and currency risk of the Group As the fertilizer business is essentially a US dollar business with both revenues and raw material costs mainly priced in US dollars Yara seeks to keep most of its debt in US dollars to reduce its overall US dollar currency exposure There has not been any significant change in the risk exposures The risks and uncertainties for the remaining six months of the year are described in Outlook
Related parties Note 35 in the annual report for 2017 provides details of related parties During the first half of 2018 there have not been any changes or transactions that significantly impact the grouprsquos financial position or result for the period
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Board member
Trond Berger Board member
Rune Bratteberg Board member
Kjersti Aass Board member
Svein Tore Holsether President and CEO
11 Yara second quarter 2018
Definitions and variance analysis Several of Yararsquos purchase and sales contracts for commodities are or have embedded terms and conditions which under IFRS are accounted for as derivatives The derivative elements of these contracts are presented under ldquoCommodity-based derivatives gain(loss)rdquo in the condensed consolidated interim statement of income and are referenced in the variance analysis (see below) as ldquoSpecial itemsrdquo
In the segment information ldquoOther and eliminationsrdquo consists mainly of cross-segment eliminations in addition to Yararsquos headquarter costs Profits on sales from Production to Crop Nutrition and Industrial are not recognized in the consolidated Yara condensed consolidated interim statement of income before the products are sold to external customers These internal profits are eliminated in ldquoOther and eliminationsrdquo Changes in ldquoOther and eliminationsrdquo EBITDA therefore usually reflect changes in Production-sourced stock (volumes) held by Crop Nutrition and Industrial but can also be affected by changes in Production margins on products sold to Crop Nutrition and Industrial as transfer prices move in line with arms-length market prices With all other variables held constant higher stocks would result in a higher (negative) elimination effect in Yararsquos results as would higher Production margins Over time these effects tend to even out to the extent that stock levels and margins normalize
In the discussion of historical operating results Yara refers to certain non-GAAP financial measures including operating income EBITDA and CROGI Yararsquos management makes regular use of these measures to evaluate the performance both in absolute terms and comparatively from period to period Yara manages long-term debt and taxes on a group basis Therefore net income is discussed only for the Group as a whole
Operating income include all activities which normally are to be considered as ldquooperatingrdquo Share of net income in equity-accounted investees is however not included
EBITDA is presented because Yara believe that it is frequently used by securities analysts investors and other interested parties as a measure of a companyrsquos operating performance and debt servicing ability It assists in comparing performance on a consistent basis without regard to depreciation and amortization which can vary
significantly depending on accounting methods or non-operating factors and provides a more complete and comprehensive analysis of our operating performance relative to other companies EBITDA as defined by Yara includes operating income interest income other financial income and share of net income in equity-accounted investees It excludes depreciation amortization and impairment loss as well as amortization of excess values in equity-accounted investees Yararsquos definition of EBITDA may differ from that of other companies
EBITDA should not be considered as an alternative to operating income and income before tax as an indicator of the companyrsquos operations in accordance with generally accepted accounting principles Nor is EBITDA an alternative to cash flow from operating activities in accordance with generally accepted accounting principles
Yara management uses CROGI (Cash Return On Gross Investment) to measure financial performance of Yararsquos segments as well as the whole of the business CROGI is defined as gross cash flow divided by average gross investment and is calculated on a 12-month rolling basis ldquoGross cash flowrdquo is defined as EBITDA less total tax expense excluding tax on net foreign currency translation gainloss On Yara level actual tax expense is used for the calculation while a standardized tax rate of 25 is used on segment level ldquoGross Investmentrdquo is defined as total assets (exclusive of deferred tax assets cash and cash equivalents other liquid assets and fair value adjustment recognized in equity) plus accumulated depreciation and amortization less all short-term interest-free liabilities except deferred tax liabilities On segment level cash and other liquid assets are not excluded from ldquoGross Investmentrdquo
ROCE (Return on capital employed) is presented as an additional performance measure to CROGI to simplify benchmarking with other companies ROCE is defined as EBIT minus tax (less tax on net foreign currency translation gainloss) divided by average capital employed and is calculated on a 12-month rolling average basis Capital employed is defined as total assets adjusted for cash and cash equivalents other liquid assets deferred tax assets fair value adjustment recognized in equity minus other current liabilities
12 Yara second quarter 2018
In order to track underlying business developments from period to period Yararsquos management also uses a variance analysis methodology developed within the Company (ldquoVariance Analysisrdquo) that involves the extraction of financial information from the accounting system as well as statistical and other data from internal management information systems Management considers the estimates produced by the Variance Analysis and the identification of trends based on such analysis sufficiently precise to provide useful data to monitor our business However these estimates should be understood to be less than an exact quantification of the changes and trends indicated by such analysis
The variance analysis presented in Yara quarterly and annual financial reports is prepared on a Yara EBITDA basis including net income from equity-accounted investees The volume margin and other variances presented therefore include effects generated by performance in equity-accounted investees
Yara defines ldquospecial itemsrdquo as items in the results which are not regarded as part of underlying business performance for the period These comprise restructuring-related items contract derivatives impairments and other items which are not primarily related to the period in which they are recognized subject to a minimum value of USD 5 million per item within a 12 month period ldquoContract
Special items
derivativesrdquo are commodity-based derivative gains or losses (see above) which are not the result of active exposure or position management by Yara These are defined as special items regardless of amount
Net interest-bearing debt is defined by Yara as cash and cash equivalents and other liquid assets reduced for bank loans other short-term interest bearing debt and long-term interest-bearing debt including current portion The debtequity ratio is calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests
Earnings per share excluding currency and special items represent net income after non-controlling interests excluding foreign currency translation gainloss and special items after tax divided by average number of shares outstanding in the period Tax effect on foreign currency and special items is calculated based on relevant statutory tax rate for the sake of simplicity
Net operating capital is calculated as trade receivables net of impairments plus inventories net of write-downs less trade payables and prepayments from customers
Reconciliations of alternative performance measures are provided on page 34 to 36
EBITDA effect Operating income effect
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
(0) - (9) -
- - - -
(10) - (10) -
(10) - (19) -
(9) - (9) -
(9) - (9) -
1 2 2 (12)
- 12 - 12
- - - -
(7) (7) -
(6) 14 (4) -
(24) 14 (32) -
2Q 2017 2Q 2018 1H 2017 1H 2018
Stamp duty on purchase of Babrala (India) Asset impairment write-down Restructuring costs Total Crop Nutrition
Restructuring costs Total Industrial
Contract derivatives gain(loss) Refund of energy intensive tax Asset impairment write-down QAFCO tax adjustment Total Production
Total Yara
1 2 2 (12)
- 12 - 12
(6) (12) (6) (12)
- - - -
(5) (3) (12)
(37) (3) (44) (17)
(0) - (9) -
(14) (5) (14) (6)
(10) - (10) -
(24) (5) (33) (6)
(9) - (9) -
(9) - (9) -
2
Yara second quarter 2018 13
Condensed consolidated interim statement of income
USD millions except share information
Revenue Other income Commodity based derivatives gain(loss) Revenue and other income
Raw materials energy costs and freight expenses Payroll and related costs Depreciation and amortization Impairment loss Other operating expenses Operating costs and expenses
Operating income
Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax
Income tax Net income
Net income attributable to Shareholders of the parent Non-controlling interests Net income
Basic earnings per share 1)
Weighted average number of shares outstanding
Notes
3
6
6
67
2
2Q 2018
3185
6
1
3192
(2489)
(312)
(199)
(20)
(133)
(3154)
38
17
22
77
(302)
(36)
(261)
45
(216)
(211)
(5)
(216)
(077)
273217830
2Q 2017
2744
12
2
2759
(2070)
(257)
(178)
(18)
(106)
(2629)
130
7
19
156
(18)
(22)
115
(35)
80
82
(2)
80
030
273217830
1) Yara currently has no share-based compensation program resulting in a dilutive effect on earnings per share
1H 2018
6023
23
3
6048
(4596)
(613)
(401)
(23)
(244)
(5877)
171
27
43
242
(294)
(63)
(115)
12
(103)
(96)
(7)
(103)
(035)
273217830
1H 2017 2017
5440 11358
14 55
(12) (13)
5442 11400
(4055) (8547)
(518) (1090)
(348) (724)
(19) (60)
(193) (521)
(5132) (10942)
310 457
16 29
40 77
366 563
51 99
(43) (82)
374 581
(97) (99)
277 482
283 477
(5) 5
277 482
103 175
273217830 273217830
14 Yara second quarter 2018
Condensed consolidated interim statement of comprehensive income
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Net income (216) 80 (103) 277 482
Other comprehensive income that may be reclassified to statement of income (net of tax) Currency translation adjustments (174) 95 (211) 133 235
Hedge of net investments (30) 15 3 16 33 Share of other comprehensive income of equity-accounted investees excluding remeasurements (0) 2 (0) 2 4
Net other comprehensive income(loss) that may be reclassified to statement of income in subsequent periods net of tax (204) 112 (208) 151 273
Other comprehensive income that will not be reclassified to statement of income in subsequent periods (net of tax) Currency translation adjustments 1) (107) 30 15 33 85
Net gain(loss) on equity instruments at fair value through other comprehensive income (1) (0) (3) (0) (1)
Remeasurement gains(losses) on defined benefit plans - - - - 64
Net other comprehensive income that will not be reclassified to statement of income in subsequent periods net of tax (108) 29 12 33 148
Reclassification adjustments of the period Cash flow hedges 0 0 0 0 1
Total other comprehensive income net of tax (312) 141 (196) 184 421
Total comprehensive income net of tax (528) 222 (298) 461 903
Total comprehensive income attributable to Shareholders of the parent (496) 232 (265) 469 900
Non-controlling interests (32) (10) (33) (7) 3
Total (528) 222 (298) 461 903
1) Currency translation adjustments that will not be reclassified to statement of income are related to entities with functional currency NOK as these are not classified as foreign operations to Yara International ASA
Yara second quarter 2018 15
Condensed consolidated interim statement of changes in equity
USD millions
Balance at 31 December 2016
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Share capital increase in subsidiary non-controlling interest
Dividends distributed Balance at 30 June 2017
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Balance at 31 December 2017
IFRS 9 and IFRS 15 implementation effect 3)
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Dividends distributed Balance at 30 June 2018
1) Par value 170
Share Capital1)
66
-
-
-
-
-
-
-
-
66
-
-
-
-
-
66
-
-
-
-
-
-
-
66
Premium paid-in capital
(49)
-
-
-
-
-
-
-
-
(49)
-
-
-
-
-
(49)
-
-
-
-
-
-
-
(49)
Currency translation
adjustments
(1321)
-
168
-
168
-
-
-
-
(1154)
-
154
-
154
-
(1000)
-
(170)
(0)
(170)
-
-
-
(1169)
Fair value reserve of financial assets at FVOCI 2)
2
-
-
-
-
-
-
-
-
1
-
(1)
-
(1)
-
-
-
(3)
-
(3)
-
-
-
(3)
Hedge Attributable Cash of net Total to share- Non-flow invest- other Retained holders of controlling Total
hedges ments reserves earnings the parent interests equity
(8) (192) (1520) 10150 8647 270 8917
- - - 283 283 (5) 277
- 16 184 - 184 (2) 182
2 - 2 - 2 - 2
2 16 186 - 186 (2) 184
- - - 1 1 - 1
- - - (1) (1) (2) (3)
- - - - - 9 9
- - - (321) (321) (0) (322)
(6) (176) (1334) 10112 8795 269 9064
- - - 194 194 10 205
1 17 171 64 235 - 235
2 - 2 - 2 - 2
2 17 173 64 237 - 237
- - - (1) (1) - (1)
(3) (159) (1161) 10369 9225 280 9505
(4) (4) (4)
- - - (96) (96) (7) (103)
- 3 (169) - (169) (27) (195)
- - (0) - (0) - (0)
- 3 (169) - (169) (27) (196)
- - - 1 1 - 1
- - - - - (1) (2)
- - - (219) (219) (2) (221)
(3) (155) (1330) 10050 8737 243 8980
2) Gains or losses on investments in equity instruments for which the Group has elected to present changes in fair value in OCI will no longer be transferred to profit or loss
upon derecognition of the equity instrument 3) Please see Accounting Policies page 19 and 20 for further information
16 Yara second quarter 2018
Condensed consolidated interim statement of financial position
USD millions Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Assets Non-current assets Deferred tax assets Intangible assets Property plant and equipment Equity-accounted investees Other non-current assets Total non-current assets
5
567
410
1134
8322
1030
472
11369
355
1091
7432
1051
368
10298
371
1106
7967
1096
460
11000
300
1067
6939
1067
377
9750
Prepaid expenses and other current assets Cash and cash equivalents Non-current assets and disposal group classified as held-for-sale Total current assets
Current assets Inventories Trade receivables
8
5
2376
1638
638
998
4
5653
2263
1264
604
274
10
4415
2229
1398
607
544
4
4783
2042
1200
559
436
11
4247
Total assets 17022 14713 15783 13997
30 Jun 2018
Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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HEB 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HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13
5 Yara second quarter 2018
Variance analysis second quarter
2Q 2018 USD millions
EBITDA 2018 296 EBITDA 2017 352 Reported EBITDA variance (55) Special items variance (see page 12 for details) (38) EBITDA ex special items variance (17)
Volume 20 PriceMargin 74 Energy costs (86) Currency (14) Other (12) Total variance explained (17)
Yararsquos second-quarter results were 16 lower compared with a year earlier The result include negative net special items of USD 24 million compared to net positive special items last year of USD 14 million (for more details on special items see page 12) Underlying EBITDA results were 5 lower than last year as higher deliveries and sales prices were more than offset by higher European gas costs and a weaker US dollar
Total fertilizer deliveries were 11 higher compared to a year earlier driven by increased deliveries in Europe and inclusion of the Babrala acquisition in India and the Cubatatildeo acquisition in Brazil (included from mid-May) Adjusted for these portfolio effects fertilizer deliveries were 6 higher than a year ago Industrial deliveries were 16 higher than a year ago including the Cubatatildeo acquisition Adjusting for Cubatatildeo deliveries were 7 higher than a year ago
After a slow first quarter deliveries in Europe picked up in second quarter and were 18 higher than a year earlier Yara has seen strong order taking at the start of the new season enabling higher and more frequent price increases than a year ago
Yararsquos fertilizer deliveries in Brazil were 19 lower than a year earlier impacted by the truck-driversrsquo strike during the quarter Yararsquos EBITDA impact of the strike is approximately USD 15 million in the quarter
Margins in the quarter were somewhat lower than a year ago as higher realized prices were offset by higher gas prices in Europe
Ammonia production was 13 higher than second quarter last year Adjusted for portfolio effects (Babrala Cubatatildeo and Freeport) ammonia production was 1 lower compared to last year Finished fertilizer production increased 10 Adjusted for portfolio effects finished fertilizer production was 1 higher than a year ago Yara has scheduled several large ammonia turnarounds in second half 2018 with an expected net volume impact of around 150 kilotonnes compared with a year earlier
A weaker US dollar versus Yararsquos other main currencies resulted in a negative translation effect on Yararsquos fixed cost base compared with second quarter 2017
The negative Other variance of USD 12 million include USD 10 million in EBITDA contribution from new businesses (Babrala Cubatatildeo and Freeport) more than offset by higher fixed costs
Yara Improvement program
At the end of second quarter 2018 the Yara Improvement Program has delivered USD 310 million of annual sustained benefits up from USD 275 million reported end first quarter 2018 The increase reflects continued improvements in production reliability in addition to further procurement related savings The total program is on track to reach the 2018 target of USD 350 million
The improvements valued at current margins are roughly in line with the USD 310 million based on 2015 margins
6 Yara second quarter 2018
last year Adjusted for the Cubatatildeo acquisition in second quarter 2018 deliveries were 3 higher compared to first half last year
Realized prices were higher compared to first half last year for all main product groups but most of the price increase was offset by higher gas costs in Europe leaving overall margins only marginally higher compared to a year earlier
Total ammonia production was 13 higher than first half last year Adjusted for portfolio effects (Babrala Cubatatildeo and Freeport) production was 3 higher than first half last year mainly reflecting regularity improvements Finished fertilizer production increased 6 compared to first half 2017 Adjusted for portfolio effects finished fertilizer production was 1 lower than a year ago
A weaker US dollar versus Yararsquos other main currencies during the first half of 2018 resulted in a negative translation effect on Yararsquos fixed cost
A net EBITDA impact of around USD 20 million coming from the Babrala and Cubatatildeo acquisitions and the Freeport ammonia plant is included in the Other variance
Variance analysis first half
USD millions
EBITDA 2018 EBITDA 2017 Reported EBITDA variance Special items variance (see page 12 for details) EBITDA ex special items variance
Volume PriceMargin Energy costs Currency translation Other Total variance explained
Yara delivered weaker first-half results compared with a year earlier EBITDA excluding special items was 5 lower as higher sales prices were more than offset by higher energy prices and a weaker US dollar
Total fertilizer deliveries were 2 higher compared to a year earlier Adjusted for the Babrala (India) and Cubatatildeo (Brazil) acquisitions fertilizer deliveries were 2 lower than a year ago driven primarily by lower deliveries in Brazil Industrial deliveries were 8 higher compared to first half
1H 2018
666
733
(66)
(31)
(35)
(11)
153
(136)
(49)
7
(35)
7 Yara second quarter 2018
Financial items
USD millions
Interest income
Dividends and net gain(loss) on securities
Interest income and other financial income
Interest expense
Net interest expense on net pension liability
Net foreign currency translation gain(loss)
Other
Interest expense and foreign currency translation gain(loss)
Net financial income(expense)
Second-quarter net financial expense was USD 316 million compared with USD 21 million in the same quarter last year The variance primarily reflects a net foreign currency translation loss of USD 302 million this quarter
Interest expense was USD 12 million higher than a year earlier mainly reflecting an average gross debt level around USD 15 billion higher
The net foreign currency translation loss for the quarter was USD 302 million reflecting currency rate changes from 31 March to 30 June 2018 The currency loss is a non-cash effect mainly resulting from a stronger US dollar which is fundamentally positive for Yara
The US dollar appreciated around 5 against both the euro and the Norwegian krone and 17 against the Brazilian real generating a net loss of USD 192 million on Yararsquos US dollar denominated debt positions Internal funding positions mainly in euro against Norwegian krone and in Brazilian real vs both euro and Norwegian krone generated a net loss of USD 110 million Last year gains on US dollar
2Q 2018
20
3
22
(28)
(2)
(302)
(6)
(338)
(316)
2Q 2017 1H 2017
18
2
19
40
3
43
38
2
40
(16)
(2)
(18)
(4)
(40)
(50)
(3)
(294)
(9)
(357)
(32)
(4)
51
(7)
8
(21) (314) 48
1H 2018
denominated debt positions against euro and Norwegian krone (as the USD depreciated against both currencies) offset losses due to the Brazilian real and other emerging market currencies depreciating against the US dollar and the euro
Yararsquos US dollar debt generating currency effects in the income statement was approximately USD 3200 million at the start of the third quarter 2018 Around 40 of the exposure was towards the Norwegian krone and around 30 against Yararsquos emerging market currencies
First-half net financial expense was USD 314 million compared with an income of USD 48 million in the same period last year The variance is primarily explained by a net foreign currency translation loss of USD 294 million compared with a net gain of USD 51 million a year ago
8 Yara second quarter 2018
Net interest-bearing debt
USD millions 2Q 2018 1H 2018
Net interest-bearing debt at beginning of period (2879) (2367)
Cash earnings 1) 159 455
Dividends received from equity-accounted investees 26 98
Net operating capital change 388 213
Acquisition of Cubatatildeo (278) (278)
Acquisition of Babrala - (435)
Other investments (net) (353) (654)
Yara dividend (219) (219)
Other including foreign currency translation gain(loss) 3 33
Net interest-bearing debt at end of period (3153) (3153)
1) Operating income plus depreciation and amortization minus tax paid net gain(loss) on disposals net interest expense and bank charges
Working capital decreased during the quarter reflecting seasonal accumulation of customer prepayments in Brazil
The debtequity ratio at the end of second quarter 2018 calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests was 035 compared with 030 at the end of first quarter 2018
As a supplement to the consolidated statement of cash flows (page 18) this table highlights the key factors behind the development in net interest-bearing debt
Net interest-bearing debt at the end of second quarter was USD 3153 million up from USD 2879 million at the end of the first quarter 2018 The increase reflects the acquisition of Cubatatildeo in addition to other investments of USD 353 million of which Rio Grande plant modernization and the Salitre mining project in Brazil amounted to around USD 120 million
9 Yara second quarter 2018
Outlook Although prices have increased recently global urea supply increases are strong in 2018 and gas cost has increased in many regions including Europe Based on current forward markets for natural gas (10 July) Yararsquos spot-priced gas costs for third and fourth quarter 2018 are expected to be respectively USD 100 million higher and USD 70 million higher than a year earlier The estimates may change depending on future spot gas prices
Although global new capacity additions are almost halved compared with last year higher utilization of existing capacity (eg in North Africa) contributes to an overall projected production increase for 2018 well above trend demand growth Also nitrogen demand growth has been muted during the recent 3 years and food prices remain at low levels The FAO cereal and dairy price indices are higher than a year ago but the overall food price index is slightly lower
Yararsquos near-term strategic focus is on delivering its onshygoing improvement and growth pipeline Applying average 2015 market prices the Improvement program has to date delivered approximately USD 310 million of the targeted minimum USD 500 million of annual EBITDA improvement (USD 125 net income per share) within 2020
Yararsquos growth investments reach their peak this year with strong earnings contribution from 2019 onwards as a total of
7 plant expansions and MampA come on stream in 2018 with an annualized 14 million tonnes of new ammonia production and 31 million tonnes of new finished fertilizer production Applying average 2015 market prices the growth pipeline is expected in 2018 to deliver approximately USD 150 million of the targeted USD 600 million of annual EBITDA improvement (USD 090 net income per share)
Beyond 2018 the global urea supply-demand balance looks set to gradually improve Nitrogen supply growth is forecast to reduce significantly after 2018 and current nitrogen price levels do not provide economic incentives for new investment Also demand growth is likely to pick up compared with the last 3 years as global grain stocks are relatively low particularly excluding China and increased production is needed to keep pace with growing consumption
Yararsquos longer-term strategic focus will be on crop nutrition leadership growing sustainable solutions to farmers and industry while delivering a superior return on capital with a strong focus on capital discipline and active portfolio management As part of this focus solution selling including digital farming tools and services will be important growth vehicles for Yara to reach more farmers
10 Yara second quarter 2018
Risk and uncertainty As described in Yararsquos Annual Report for 2017 Yararsquos total risk exposure is analyzed and evaluated at group level Risk evaluations are integrated in all business activities both at group and business unit level increasing Yararsquos ability to take advantage of business opportunities Yararsquos most important market risk is related to the margin between nitrogen fertilizer prices and natural gas prices Although there is a positive long-term correlation between these prices margins are influenced by the supplydemand balance for food relative to energy Yara has in place a system for credit and currency risk management with
defined limits for exposure both at country customer and currency level Yararsquos geographically diversified portfolio reduces the overall credit and currency risk of the Group As the fertilizer business is essentially a US dollar business with both revenues and raw material costs mainly priced in US dollars Yara seeks to keep most of its debt in US dollars to reduce its overall US dollar currency exposure There has not been any significant change in the risk exposures The risks and uncertainties for the remaining six months of the year are described in Outlook
Related parties Note 35 in the annual report for 2017 provides details of related parties During the first half of 2018 there have not been any changes or transactions that significantly impact the grouprsquos financial position or result for the period
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Board member
Trond Berger Board member
Rune Bratteberg Board member
Kjersti Aass Board member
Svein Tore Holsether President and CEO
11 Yara second quarter 2018
Definitions and variance analysis Several of Yararsquos purchase and sales contracts for commodities are or have embedded terms and conditions which under IFRS are accounted for as derivatives The derivative elements of these contracts are presented under ldquoCommodity-based derivatives gain(loss)rdquo in the condensed consolidated interim statement of income and are referenced in the variance analysis (see below) as ldquoSpecial itemsrdquo
In the segment information ldquoOther and eliminationsrdquo consists mainly of cross-segment eliminations in addition to Yararsquos headquarter costs Profits on sales from Production to Crop Nutrition and Industrial are not recognized in the consolidated Yara condensed consolidated interim statement of income before the products are sold to external customers These internal profits are eliminated in ldquoOther and eliminationsrdquo Changes in ldquoOther and eliminationsrdquo EBITDA therefore usually reflect changes in Production-sourced stock (volumes) held by Crop Nutrition and Industrial but can also be affected by changes in Production margins on products sold to Crop Nutrition and Industrial as transfer prices move in line with arms-length market prices With all other variables held constant higher stocks would result in a higher (negative) elimination effect in Yararsquos results as would higher Production margins Over time these effects tend to even out to the extent that stock levels and margins normalize
In the discussion of historical operating results Yara refers to certain non-GAAP financial measures including operating income EBITDA and CROGI Yararsquos management makes regular use of these measures to evaluate the performance both in absolute terms and comparatively from period to period Yara manages long-term debt and taxes on a group basis Therefore net income is discussed only for the Group as a whole
Operating income include all activities which normally are to be considered as ldquooperatingrdquo Share of net income in equity-accounted investees is however not included
EBITDA is presented because Yara believe that it is frequently used by securities analysts investors and other interested parties as a measure of a companyrsquos operating performance and debt servicing ability It assists in comparing performance on a consistent basis without regard to depreciation and amortization which can vary
significantly depending on accounting methods or non-operating factors and provides a more complete and comprehensive analysis of our operating performance relative to other companies EBITDA as defined by Yara includes operating income interest income other financial income and share of net income in equity-accounted investees It excludes depreciation amortization and impairment loss as well as amortization of excess values in equity-accounted investees Yararsquos definition of EBITDA may differ from that of other companies
EBITDA should not be considered as an alternative to operating income and income before tax as an indicator of the companyrsquos operations in accordance with generally accepted accounting principles Nor is EBITDA an alternative to cash flow from operating activities in accordance with generally accepted accounting principles
Yara management uses CROGI (Cash Return On Gross Investment) to measure financial performance of Yararsquos segments as well as the whole of the business CROGI is defined as gross cash flow divided by average gross investment and is calculated on a 12-month rolling basis ldquoGross cash flowrdquo is defined as EBITDA less total tax expense excluding tax on net foreign currency translation gainloss On Yara level actual tax expense is used for the calculation while a standardized tax rate of 25 is used on segment level ldquoGross Investmentrdquo is defined as total assets (exclusive of deferred tax assets cash and cash equivalents other liquid assets and fair value adjustment recognized in equity) plus accumulated depreciation and amortization less all short-term interest-free liabilities except deferred tax liabilities On segment level cash and other liquid assets are not excluded from ldquoGross Investmentrdquo
ROCE (Return on capital employed) is presented as an additional performance measure to CROGI to simplify benchmarking with other companies ROCE is defined as EBIT minus tax (less tax on net foreign currency translation gainloss) divided by average capital employed and is calculated on a 12-month rolling average basis Capital employed is defined as total assets adjusted for cash and cash equivalents other liquid assets deferred tax assets fair value adjustment recognized in equity minus other current liabilities
12 Yara second quarter 2018
In order to track underlying business developments from period to period Yararsquos management also uses a variance analysis methodology developed within the Company (ldquoVariance Analysisrdquo) that involves the extraction of financial information from the accounting system as well as statistical and other data from internal management information systems Management considers the estimates produced by the Variance Analysis and the identification of trends based on such analysis sufficiently precise to provide useful data to monitor our business However these estimates should be understood to be less than an exact quantification of the changes and trends indicated by such analysis
The variance analysis presented in Yara quarterly and annual financial reports is prepared on a Yara EBITDA basis including net income from equity-accounted investees The volume margin and other variances presented therefore include effects generated by performance in equity-accounted investees
Yara defines ldquospecial itemsrdquo as items in the results which are not regarded as part of underlying business performance for the period These comprise restructuring-related items contract derivatives impairments and other items which are not primarily related to the period in which they are recognized subject to a minimum value of USD 5 million per item within a 12 month period ldquoContract
Special items
derivativesrdquo are commodity-based derivative gains or losses (see above) which are not the result of active exposure or position management by Yara These are defined as special items regardless of amount
Net interest-bearing debt is defined by Yara as cash and cash equivalents and other liquid assets reduced for bank loans other short-term interest bearing debt and long-term interest-bearing debt including current portion The debtequity ratio is calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests
Earnings per share excluding currency and special items represent net income after non-controlling interests excluding foreign currency translation gainloss and special items after tax divided by average number of shares outstanding in the period Tax effect on foreign currency and special items is calculated based on relevant statutory tax rate for the sake of simplicity
Net operating capital is calculated as trade receivables net of impairments plus inventories net of write-downs less trade payables and prepayments from customers
Reconciliations of alternative performance measures are provided on page 34 to 36
EBITDA effect Operating income effect
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
(0) - (9) -
- - - -
(10) - (10) -
(10) - (19) -
(9) - (9) -
(9) - (9) -
1 2 2 (12)
- 12 - 12
- - - -
(7) (7) -
(6) 14 (4) -
(24) 14 (32) -
2Q 2017 2Q 2018 1H 2017 1H 2018
Stamp duty on purchase of Babrala (India) Asset impairment write-down Restructuring costs Total Crop Nutrition
Restructuring costs Total Industrial
Contract derivatives gain(loss) Refund of energy intensive tax Asset impairment write-down QAFCO tax adjustment Total Production
Total Yara
1 2 2 (12)
- 12 - 12
(6) (12) (6) (12)
- - - -
(5) (3) (12)
(37) (3) (44) (17)
(0) - (9) -
(14) (5) (14) (6)
(10) - (10) -
(24) (5) (33) (6)
(9) - (9) -
(9) - (9) -
2
Yara second quarter 2018 13
Condensed consolidated interim statement of income
USD millions except share information
Revenue Other income Commodity based derivatives gain(loss) Revenue and other income
Raw materials energy costs and freight expenses Payroll and related costs Depreciation and amortization Impairment loss Other operating expenses Operating costs and expenses
Operating income
Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax
Income tax Net income
Net income attributable to Shareholders of the parent Non-controlling interests Net income
Basic earnings per share 1)
Weighted average number of shares outstanding
Notes
3
6
6
67
2
2Q 2018
3185
6
1
3192
(2489)
(312)
(199)
(20)
(133)
(3154)
38
17
22
77
(302)
(36)
(261)
45
(216)
(211)
(5)
(216)
(077)
273217830
2Q 2017
2744
12
2
2759
(2070)
(257)
(178)
(18)
(106)
(2629)
130
7
19
156
(18)
(22)
115
(35)
80
82
(2)
80
030
273217830
1) Yara currently has no share-based compensation program resulting in a dilutive effect on earnings per share
1H 2018
6023
23
3
6048
(4596)
(613)
(401)
(23)
(244)
(5877)
171
27
43
242
(294)
(63)
(115)
12
(103)
(96)
(7)
(103)
(035)
273217830
1H 2017 2017
5440 11358
14 55
(12) (13)
5442 11400
(4055) (8547)
(518) (1090)
(348) (724)
(19) (60)
(193) (521)
(5132) (10942)
310 457
16 29
40 77
366 563
51 99
(43) (82)
374 581
(97) (99)
277 482
283 477
(5) 5
277 482
103 175
273217830 273217830
14 Yara second quarter 2018
Condensed consolidated interim statement of comprehensive income
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Net income (216) 80 (103) 277 482
Other comprehensive income that may be reclassified to statement of income (net of tax) Currency translation adjustments (174) 95 (211) 133 235
Hedge of net investments (30) 15 3 16 33 Share of other comprehensive income of equity-accounted investees excluding remeasurements (0) 2 (0) 2 4
Net other comprehensive income(loss) that may be reclassified to statement of income in subsequent periods net of tax (204) 112 (208) 151 273
Other comprehensive income that will not be reclassified to statement of income in subsequent periods (net of tax) Currency translation adjustments 1) (107) 30 15 33 85
Net gain(loss) on equity instruments at fair value through other comprehensive income (1) (0) (3) (0) (1)
Remeasurement gains(losses) on defined benefit plans - - - - 64
Net other comprehensive income that will not be reclassified to statement of income in subsequent periods net of tax (108) 29 12 33 148
Reclassification adjustments of the period Cash flow hedges 0 0 0 0 1
Total other comprehensive income net of tax (312) 141 (196) 184 421
Total comprehensive income net of tax (528) 222 (298) 461 903
Total comprehensive income attributable to Shareholders of the parent (496) 232 (265) 469 900
Non-controlling interests (32) (10) (33) (7) 3
Total (528) 222 (298) 461 903
1) Currency translation adjustments that will not be reclassified to statement of income are related to entities with functional currency NOK as these are not classified as foreign operations to Yara International ASA
Yara second quarter 2018 15
Condensed consolidated interim statement of changes in equity
USD millions
Balance at 31 December 2016
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Share capital increase in subsidiary non-controlling interest
Dividends distributed Balance at 30 June 2017
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Balance at 31 December 2017
IFRS 9 and IFRS 15 implementation effect 3)
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Dividends distributed Balance at 30 June 2018
1) Par value 170
Share Capital1)
66
-
-
-
-
-
-
-
-
66
-
-
-
-
-
66
-
-
-
-
-
-
-
66
Premium paid-in capital
(49)
-
-
-
-
-
-
-
-
(49)
-
-
-
-
-
(49)
-
-
-
-
-
-
-
(49)
Currency translation
adjustments
(1321)
-
168
-
168
-
-
-
-
(1154)
-
154
-
154
-
(1000)
-
(170)
(0)
(170)
-
-
-
(1169)
Fair value reserve of financial assets at FVOCI 2)
2
-
-
-
-
-
-
-
-
1
-
(1)
-
(1)
-
-
-
(3)
-
(3)
-
-
-
(3)
Hedge Attributable Cash of net Total to share- Non-flow invest- other Retained holders of controlling Total
hedges ments reserves earnings the parent interests equity
(8) (192) (1520) 10150 8647 270 8917
- - - 283 283 (5) 277
- 16 184 - 184 (2) 182
2 - 2 - 2 - 2
2 16 186 - 186 (2) 184
- - - 1 1 - 1
- - - (1) (1) (2) (3)
- - - - - 9 9
- - - (321) (321) (0) (322)
(6) (176) (1334) 10112 8795 269 9064
- - - 194 194 10 205
1 17 171 64 235 - 235
2 - 2 - 2 - 2
2 17 173 64 237 - 237
- - - (1) (1) - (1)
(3) (159) (1161) 10369 9225 280 9505
(4) (4) (4)
- - - (96) (96) (7) (103)
- 3 (169) - (169) (27) (195)
- - (0) - (0) - (0)
- 3 (169) - (169) (27) (196)
- - - 1 1 - 1
- - - - - (1) (2)
- - - (219) (219) (2) (221)
(3) (155) (1330) 10050 8737 243 8980
2) Gains or losses on investments in equity instruments for which the Group has elected to present changes in fair value in OCI will no longer be transferred to profit or loss
upon derecognition of the equity instrument 3) Please see Accounting Policies page 19 and 20 for further information
16 Yara second quarter 2018
Condensed consolidated interim statement of financial position
USD millions Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Assets Non-current assets Deferred tax assets Intangible assets Property plant and equipment Equity-accounted investees Other non-current assets Total non-current assets
5
567
410
1134
8322
1030
472
11369
355
1091
7432
1051
368
10298
371
1106
7967
1096
460
11000
300
1067
6939
1067
377
9750
Prepaid expenses and other current assets Cash and cash equivalents Non-current assets and disposal group classified as held-for-sale Total current assets
Current assets Inventories Trade receivables
8
5
2376
1638
638
998
4
5653
2263
1264
604
274
10
4415
2229
1398
607
544
4
4783
2042
1200
559
436
11
4247
Total assets 17022 14713 15783 13997
30 Jun 2018
Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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 CHS ltFEFF4f7f75288fd94e9b8bbe5b9a521b5efa7684002000410064006f006200650020005000440046002065876863900275284e8e9ad88d2891cf76845370524d53705237300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c676562535f00521b5efa768400200050004400460020658768633002gt13 CHT ltFEFF4f7f752890194e9b8a2d7f6e5efa7acb7684002000410064006f006200650020005000440046002065874ef69069752865bc9ad854c18cea76845370524d5370523786557406300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c4f86958b555f5df25efa7acb76840020005000440046002065874ef63002gt13 CZE 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 DAN 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 DEU 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 ESP ltFEFF005500740069006c0069006300650020006500730074006100200063006f006e0066006900670075007200610063006900f3006e0020007000610072006100200063007200650061007200200064006f00630075006d0065006e0074006f00730020005000440046002000640065002000410064006f0062006500200061006400650063007500610064006f00730020007000610072006100200069006d0070007200650073006900f3006e0020007000720065002d0065006400690074006f007200690061006c00200064006500200061006c00740061002000630061006c0069006400610064002e002000530065002000700075006500640065006e00200061006200720069007200200064006f00630075006d0065006e0074006f00730020005000440046002000630072006500610064006f007300200063006f006e0020004100630072006f006200610074002c002000410064006f00620065002000520065006100640065007200200035002e003000200079002000760065007200730069006f006e0065007300200070006f00730074006500720069006f007200650073002egt13 ETI 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 FRA 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 GRE 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HEB 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HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA 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 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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 RUM 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 RUS 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 SKY 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 SLV 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 SUO 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 SVE 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 TUR ltFEFF005900fc006b00730065006b0020006b0061006c006900740065006c0069002000f6006e002000790061007a006401310072006d00610020006200610073006b013100730131006e006100200065006e0020006900790069002000750079006100620069006c006500630065006b002000410064006f006200650020005000440046002000620065006c00670065006c0065007200690020006f006c0075015f007400750072006d0061006b0020006900e70069006e00200062007500200061007900610072006c0061007201310020006b0075006c006c0061006e0131006e002e00200020004f006c0075015f0074007500720075006c0061006e0020005000440046002000620065006c00670065006c0065007200690020004100630072006f006200610074002000760065002000410064006f00620065002000520065006100640065007200200035002e003000200076006500200073006f006e0072006100730131006e00640061006b00690020007300fc007200fc006d006c00650072006c00650020006100e70131006c006100620069006c00690072002egt13 UKR 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 ENU (Use these settings to create Adobe PDF documents best suited for high-quality prepress printing Created PDF documents can be opened with Acrobat and Adobe Reader 50 and later)13 gtgt13 Namespace [13 (Adobe)13 (Common)13 (10)13 ]13 OtherNamespaces [13 ltlt13 AsReaderSpreads false13 CropImagesToFrames true13 ErrorControl WarnAndContinue13 FlattenerIgnoreSpreadOverrides false13 IncludeGuidesGrids false13 IncludeNonPrinting false13 IncludeSlug false13 Namespace [13 (Adobe)13 (InDesign)13 (40)13 ]13 OmitPlacedBitmaps false13 OmitPlacedEPS false13 OmitPlacedPDF false13 SimulateOverprint Legacy13 gtgt13 ltlt13 AddBleedMarks false13 AddColorBars false13 AddCropMarks false13 AddPageInfo false13 AddRegMarks false13 ConvertColors ConvertToCMYK13 DestinationProfileName ()13 DestinationProfileSelector DocumentCMYK13 Downsample16BitImages true13 FlattenerPreset ltlt13 PresetSelector MediumResolution13 gtgt13 FormElements false13 GenerateStructure false13 IncludeBookmarks false13 IncludeHyperlinks false13 IncludeInteractive false13 IncludeLayers false13 IncludeProfiles false13 MultimediaHandling UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13
6 Yara second quarter 2018
last year Adjusted for the Cubatatildeo acquisition in second quarter 2018 deliveries were 3 higher compared to first half last year
Realized prices were higher compared to first half last year for all main product groups but most of the price increase was offset by higher gas costs in Europe leaving overall margins only marginally higher compared to a year earlier
Total ammonia production was 13 higher than first half last year Adjusted for portfolio effects (Babrala Cubatatildeo and Freeport) production was 3 higher than first half last year mainly reflecting regularity improvements Finished fertilizer production increased 6 compared to first half 2017 Adjusted for portfolio effects finished fertilizer production was 1 lower than a year ago
A weaker US dollar versus Yararsquos other main currencies during the first half of 2018 resulted in a negative translation effect on Yararsquos fixed cost
A net EBITDA impact of around USD 20 million coming from the Babrala and Cubatatildeo acquisitions and the Freeport ammonia plant is included in the Other variance
Variance analysis first half
USD millions
EBITDA 2018 EBITDA 2017 Reported EBITDA variance Special items variance (see page 12 for details) EBITDA ex special items variance
Volume PriceMargin Energy costs Currency translation Other Total variance explained
Yara delivered weaker first-half results compared with a year earlier EBITDA excluding special items was 5 lower as higher sales prices were more than offset by higher energy prices and a weaker US dollar
Total fertilizer deliveries were 2 higher compared to a year earlier Adjusted for the Babrala (India) and Cubatatildeo (Brazil) acquisitions fertilizer deliveries were 2 lower than a year ago driven primarily by lower deliveries in Brazil Industrial deliveries were 8 higher compared to first half
1H 2018
666
733
(66)
(31)
(35)
(11)
153
(136)
(49)
7
(35)
7 Yara second quarter 2018
Financial items
USD millions
Interest income
Dividends and net gain(loss) on securities
Interest income and other financial income
Interest expense
Net interest expense on net pension liability
Net foreign currency translation gain(loss)
Other
Interest expense and foreign currency translation gain(loss)
Net financial income(expense)
Second-quarter net financial expense was USD 316 million compared with USD 21 million in the same quarter last year The variance primarily reflects a net foreign currency translation loss of USD 302 million this quarter
Interest expense was USD 12 million higher than a year earlier mainly reflecting an average gross debt level around USD 15 billion higher
The net foreign currency translation loss for the quarter was USD 302 million reflecting currency rate changes from 31 March to 30 June 2018 The currency loss is a non-cash effect mainly resulting from a stronger US dollar which is fundamentally positive for Yara
The US dollar appreciated around 5 against both the euro and the Norwegian krone and 17 against the Brazilian real generating a net loss of USD 192 million on Yararsquos US dollar denominated debt positions Internal funding positions mainly in euro against Norwegian krone and in Brazilian real vs both euro and Norwegian krone generated a net loss of USD 110 million Last year gains on US dollar
2Q 2018
20
3
22
(28)
(2)
(302)
(6)
(338)
(316)
2Q 2017 1H 2017
18
2
19
40
3
43
38
2
40
(16)
(2)
(18)
(4)
(40)
(50)
(3)
(294)
(9)
(357)
(32)
(4)
51
(7)
8
(21) (314) 48
1H 2018
denominated debt positions against euro and Norwegian krone (as the USD depreciated against both currencies) offset losses due to the Brazilian real and other emerging market currencies depreciating against the US dollar and the euro
Yararsquos US dollar debt generating currency effects in the income statement was approximately USD 3200 million at the start of the third quarter 2018 Around 40 of the exposure was towards the Norwegian krone and around 30 against Yararsquos emerging market currencies
First-half net financial expense was USD 314 million compared with an income of USD 48 million in the same period last year The variance is primarily explained by a net foreign currency translation loss of USD 294 million compared with a net gain of USD 51 million a year ago
8 Yara second quarter 2018
Net interest-bearing debt
USD millions 2Q 2018 1H 2018
Net interest-bearing debt at beginning of period (2879) (2367)
Cash earnings 1) 159 455
Dividends received from equity-accounted investees 26 98
Net operating capital change 388 213
Acquisition of Cubatatildeo (278) (278)
Acquisition of Babrala - (435)
Other investments (net) (353) (654)
Yara dividend (219) (219)
Other including foreign currency translation gain(loss) 3 33
Net interest-bearing debt at end of period (3153) (3153)
1) Operating income plus depreciation and amortization minus tax paid net gain(loss) on disposals net interest expense and bank charges
Working capital decreased during the quarter reflecting seasonal accumulation of customer prepayments in Brazil
The debtequity ratio at the end of second quarter 2018 calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests was 035 compared with 030 at the end of first quarter 2018
As a supplement to the consolidated statement of cash flows (page 18) this table highlights the key factors behind the development in net interest-bearing debt
Net interest-bearing debt at the end of second quarter was USD 3153 million up from USD 2879 million at the end of the first quarter 2018 The increase reflects the acquisition of Cubatatildeo in addition to other investments of USD 353 million of which Rio Grande plant modernization and the Salitre mining project in Brazil amounted to around USD 120 million
9 Yara second quarter 2018
Outlook Although prices have increased recently global urea supply increases are strong in 2018 and gas cost has increased in many regions including Europe Based on current forward markets for natural gas (10 July) Yararsquos spot-priced gas costs for third and fourth quarter 2018 are expected to be respectively USD 100 million higher and USD 70 million higher than a year earlier The estimates may change depending on future spot gas prices
Although global new capacity additions are almost halved compared with last year higher utilization of existing capacity (eg in North Africa) contributes to an overall projected production increase for 2018 well above trend demand growth Also nitrogen demand growth has been muted during the recent 3 years and food prices remain at low levels The FAO cereal and dairy price indices are higher than a year ago but the overall food price index is slightly lower
Yararsquos near-term strategic focus is on delivering its onshygoing improvement and growth pipeline Applying average 2015 market prices the Improvement program has to date delivered approximately USD 310 million of the targeted minimum USD 500 million of annual EBITDA improvement (USD 125 net income per share) within 2020
Yararsquos growth investments reach their peak this year with strong earnings contribution from 2019 onwards as a total of
7 plant expansions and MampA come on stream in 2018 with an annualized 14 million tonnes of new ammonia production and 31 million tonnes of new finished fertilizer production Applying average 2015 market prices the growth pipeline is expected in 2018 to deliver approximately USD 150 million of the targeted USD 600 million of annual EBITDA improvement (USD 090 net income per share)
Beyond 2018 the global urea supply-demand balance looks set to gradually improve Nitrogen supply growth is forecast to reduce significantly after 2018 and current nitrogen price levels do not provide economic incentives for new investment Also demand growth is likely to pick up compared with the last 3 years as global grain stocks are relatively low particularly excluding China and increased production is needed to keep pace with growing consumption
Yararsquos longer-term strategic focus will be on crop nutrition leadership growing sustainable solutions to farmers and industry while delivering a superior return on capital with a strong focus on capital discipline and active portfolio management As part of this focus solution selling including digital farming tools and services will be important growth vehicles for Yara to reach more farmers
10 Yara second quarter 2018
Risk and uncertainty As described in Yararsquos Annual Report for 2017 Yararsquos total risk exposure is analyzed and evaluated at group level Risk evaluations are integrated in all business activities both at group and business unit level increasing Yararsquos ability to take advantage of business opportunities Yararsquos most important market risk is related to the margin between nitrogen fertilizer prices and natural gas prices Although there is a positive long-term correlation between these prices margins are influenced by the supplydemand balance for food relative to energy Yara has in place a system for credit and currency risk management with
defined limits for exposure both at country customer and currency level Yararsquos geographically diversified portfolio reduces the overall credit and currency risk of the Group As the fertilizer business is essentially a US dollar business with both revenues and raw material costs mainly priced in US dollars Yara seeks to keep most of its debt in US dollars to reduce its overall US dollar currency exposure There has not been any significant change in the risk exposures The risks and uncertainties for the remaining six months of the year are described in Outlook
Related parties Note 35 in the annual report for 2017 provides details of related parties During the first half of 2018 there have not been any changes or transactions that significantly impact the grouprsquos financial position or result for the period
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Board member
Trond Berger Board member
Rune Bratteberg Board member
Kjersti Aass Board member
Svein Tore Holsether President and CEO
11 Yara second quarter 2018
Definitions and variance analysis Several of Yararsquos purchase and sales contracts for commodities are or have embedded terms and conditions which under IFRS are accounted for as derivatives The derivative elements of these contracts are presented under ldquoCommodity-based derivatives gain(loss)rdquo in the condensed consolidated interim statement of income and are referenced in the variance analysis (see below) as ldquoSpecial itemsrdquo
In the segment information ldquoOther and eliminationsrdquo consists mainly of cross-segment eliminations in addition to Yararsquos headquarter costs Profits on sales from Production to Crop Nutrition and Industrial are not recognized in the consolidated Yara condensed consolidated interim statement of income before the products are sold to external customers These internal profits are eliminated in ldquoOther and eliminationsrdquo Changes in ldquoOther and eliminationsrdquo EBITDA therefore usually reflect changes in Production-sourced stock (volumes) held by Crop Nutrition and Industrial but can also be affected by changes in Production margins on products sold to Crop Nutrition and Industrial as transfer prices move in line with arms-length market prices With all other variables held constant higher stocks would result in a higher (negative) elimination effect in Yararsquos results as would higher Production margins Over time these effects tend to even out to the extent that stock levels and margins normalize
In the discussion of historical operating results Yara refers to certain non-GAAP financial measures including operating income EBITDA and CROGI Yararsquos management makes regular use of these measures to evaluate the performance both in absolute terms and comparatively from period to period Yara manages long-term debt and taxes on a group basis Therefore net income is discussed only for the Group as a whole
Operating income include all activities which normally are to be considered as ldquooperatingrdquo Share of net income in equity-accounted investees is however not included
EBITDA is presented because Yara believe that it is frequently used by securities analysts investors and other interested parties as a measure of a companyrsquos operating performance and debt servicing ability It assists in comparing performance on a consistent basis without regard to depreciation and amortization which can vary
significantly depending on accounting methods or non-operating factors and provides a more complete and comprehensive analysis of our operating performance relative to other companies EBITDA as defined by Yara includes operating income interest income other financial income and share of net income in equity-accounted investees It excludes depreciation amortization and impairment loss as well as amortization of excess values in equity-accounted investees Yararsquos definition of EBITDA may differ from that of other companies
EBITDA should not be considered as an alternative to operating income and income before tax as an indicator of the companyrsquos operations in accordance with generally accepted accounting principles Nor is EBITDA an alternative to cash flow from operating activities in accordance with generally accepted accounting principles
Yara management uses CROGI (Cash Return On Gross Investment) to measure financial performance of Yararsquos segments as well as the whole of the business CROGI is defined as gross cash flow divided by average gross investment and is calculated on a 12-month rolling basis ldquoGross cash flowrdquo is defined as EBITDA less total tax expense excluding tax on net foreign currency translation gainloss On Yara level actual tax expense is used for the calculation while a standardized tax rate of 25 is used on segment level ldquoGross Investmentrdquo is defined as total assets (exclusive of deferred tax assets cash and cash equivalents other liquid assets and fair value adjustment recognized in equity) plus accumulated depreciation and amortization less all short-term interest-free liabilities except deferred tax liabilities On segment level cash and other liquid assets are not excluded from ldquoGross Investmentrdquo
ROCE (Return on capital employed) is presented as an additional performance measure to CROGI to simplify benchmarking with other companies ROCE is defined as EBIT minus tax (less tax on net foreign currency translation gainloss) divided by average capital employed and is calculated on a 12-month rolling average basis Capital employed is defined as total assets adjusted for cash and cash equivalents other liquid assets deferred tax assets fair value adjustment recognized in equity minus other current liabilities
12 Yara second quarter 2018
In order to track underlying business developments from period to period Yararsquos management also uses a variance analysis methodology developed within the Company (ldquoVariance Analysisrdquo) that involves the extraction of financial information from the accounting system as well as statistical and other data from internal management information systems Management considers the estimates produced by the Variance Analysis and the identification of trends based on such analysis sufficiently precise to provide useful data to monitor our business However these estimates should be understood to be less than an exact quantification of the changes and trends indicated by such analysis
The variance analysis presented in Yara quarterly and annual financial reports is prepared on a Yara EBITDA basis including net income from equity-accounted investees The volume margin and other variances presented therefore include effects generated by performance in equity-accounted investees
Yara defines ldquospecial itemsrdquo as items in the results which are not regarded as part of underlying business performance for the period These comprise restructuring-related items contract derivatives impairments and other items which are not primarily related to the period in which they are recognized subject to a minimum value of USD 5 million per item within a 12 month period ldquoContract
Special items
derivativesrdquo are commodity-based derivative gains or losses (see above) which are not the result of active exposure or position management by Yara These are defined as special items regardless of amount
Net interest-bearing debt is defined by Yara as cash and cash equivalents and other liquid assets reduced for bank loans other short-term interest bearing debt and long-term interest-bearing debt including current portion The debtequity ratio is calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests
Earnings per share excluding currency and special items represent net income after non-controlling interests excluding foreign currency translation gainloss and special items after tax divided by average number of shares outstanding in the period Tax effect on foreign currency and special items is calculated based on relevant statutory tax rate for the sake of simplicity
Net operating capital is calculated as trade receivables net of impairments plus inventories net of write-downs less trade payables and prepayments from customers
Reconciliations of alternative performance measures are provided on page 34 to 36
EBITDA effect Operating income effect
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
(0) - (9) -
- - - -
(10) - (10) -
(10) - (19) -
(9) - (9) -
(9) - (9) -
1 2 2 (12)
- 12 - 12
- - - -
(7) (7) -
(6) 14 (4) -
(24) 14 (32) -
2Q 2017 2Q 2018 1H 2017 1H 2018
Stamp duty on purchase of Babrala (India) Asset impairment write-down Restructuring costs Total Crop Nutrition
Restructuring costs Total Industrial
Contract derivatives gain(loss) Refund of energy intensive tax Asset impairment write-down QAFCO tax adjustment Total Production
Total Yara
1 2 2 (12)
- 12 - 12
(6) (12) (6) (12)
- - - -
(5) (3) (12)
(37) (3) (44) (17)
(0) - (9) -
(14) (5) (14) (6)
(10) - (10) -
(24) (5) (33) (6)
(9) - (9) -
(9) - (9) -
2
Yara second quarter 2018 13
Condensed consolidated interim statement of income
USD millions except share information
Revenue Other income Commodity based derivatives gain(loss) Revenue and other income
Raw materials energy costs and freight expenses Payroll and related costs Depreciation and amortization Impairment loss Other operating expenses Operating costs and expenses
Operating income
Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax
Income tax Net income
Net income attributable to Shareholders of the parent Non-controlling interests Net income
Basic earnings per share 1)
Weighted average number of shares outstanding
Notes
3
6
6
67
2
2Q 2018
3185
6
1
3192
(2489)
(312)
(199)
(20)
(133)
(3154)
38
17
22
77
(302)
(36)
(261)
45
(216)
(211)
(5)
(216)
(077)
273217830
2Q 2017
2744
12
2
2759
(2070)
(257)
(178)
(18)
(106)
(2629)
130
7
19
156
(18)
(22)
115
(35)
80
82
(2)
80
030
273217830
1) Yara currently has no share-based compensation program resulting in a dilutive effect on earnings per share
1H 2018
6023
23
3
6048
(4596)
(613)
(401)
(23)
(244)
(5877)
171
27
43
242
(294)
(63)
(115)
12
(103)
(96)
(7)
(103)
(035)
273217830
1H 2017 2017
5440 11358
14 55
(12) (13)
5442 11400
(4055) (8547)
(518) (1090)
(348) (724)
(19) (60)
(193) (521)
(5132) (10942)
310 457
16 29
40 77
366 563
51 99
(43) (82)
374 581
(97) (99)
277 482
283 477
(5) 5
277 482
103 175
273217830 273217830
14 Yara second quarter 2018
Condensed consolidated interim statement of comprehensive income
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Net income (216) 80 (103) 277 482
Other comprehensive income that may be reclassified to statement of income (net of tax) Currency translation adjustments (174) 95 (211) 133 235
Hedge of net investments (30) 15 3 16 33 Share of other comprehensive income of equity-accounted investees excluding remeasurements (0) 2 (0) 2 4
Net other comprehensive income(loss) that may be reclassified to statement of income in subsequent periods net of tax (204) 112 (208) 151 273
Other comprehensive income that will not be reclassified to statement of income in subsequent periods (net of tax) Currency translation adjustments 1) (107) 30 15 33 85
Net gain(loss) on equity instruments at fair value through other comprehensive income (1) (0) (3) (0) (1)
Remeasurement gains(losses) on defined benefit plans - - - - 64
Net other comprehensive income that will not be reclassified to statement of income in subsequent periods net of tax (108) 29 12 33 148
Reclassification adjustments of the period Cash flow hedges 0 0 0 0 1
Total other comprehensive income net of tax (312) 141 (196) 184 421
Total comprehensive income net of tax (528) 222 (298) 461 903
Total comprehensive income attributable to Shareholders of the parent (496) 232 (265) 469 900
Non-controlling interests (32) (10) (33) (7) 3
Total (528) 222 (298) 461 903
1) Currency translation adjustments that will not be reclassified to statement of income are related to entities with functional currency NOK as these are not classified as foreign operations to Yara International ASA
Yara second quarter 2018 15
Condensed consolidated interim statement of changes in equity
USD millions
Balance at 31 December 2016
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Share capital increase in subsidiary non-controlling interest
Dividends distributed Balance at 30 June 2017
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Balance at 31 December 2017
IFRS 9 and IFRS 15 implementation effect 3)
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Dividends distributed Balance at 30 June 2018
1) Par value 170
Share Capital1)
66
-
-
-
-
-
-
-
-
66
-
-
-
-
-
66
-
-
-
-
-
-
-
66
Premium paid-in capital
(49)
-
-
-
-
-
-
-
-
(49)
-
-
-
-
-
(49)
-
-
-
-
-
-
-
(49)
Currency translation
adjustments
(1321)
-
168
-
168
-
-
-
-
(1154)
-
154
-
154
-
(1000)
-
(170)
(0)
(170)
-
-
-
(1169)
Fair value reserve of financial assets at FVOCI 2)
2
-
-
-
-
-
-
-
-
1
-
(1)
-
(1)
-
-
-
(3)
-
(3)
-
-
-
(3)
Hedge Attributable Cash of net Total to share- Non-flow invest- other Retained holders of controlling Total
hedges ments reserves earnings the parent interests equity
(8) (192) (1520) 10150 8647 270 8917
- - - 283 283 (5) 277
- 16 184 - 184 (2) 182
2 - 2 - 2 - 2
2 16 186 - 186 (2) 184
- - - 1 1 - 1
- - - (1) (1) (2) (3)
- - - - - 9 9
- - - (321) (321) (0) (322)
(6) (176) (1334) 10112 8795 269 9064
- - - 194 194 10 205
1 17 171 64 235 - 235
2 - 2 - 2 - 2
2 17 173 64 237 - 237
- - - (1) (1) - (1)
(3) (159) (1161) 10369 9225 280 9505
(4) (4) (4)
- - - (96) (96) (7) (103)
- 3 (169) - (169) (27) (195)
- - (0) - (0) - (0)
- 3 (169) - (169) (27) (196)
- - - 1 1 - 1
- - - - - (1) (2)
- - - (219) (219) (2) (221)
(3) (155) (1330) 10050 8737 243 8980
2) Gains or losses on investments in equity instruments for which the Group has elected to present changes in fair value in OCI will no longer be transferred to profit or loss
upon derecognition of the equity instrument 3) Please see Accounting Policies page 19 and 20 for further information
16 Yara second quarter 2018
Condensed consolidated interim statement of financial position
USD millions Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Assets Non-current assets Deferred tax assets Intangible assets Property plant and equipment Equity-accounted investees Other non-current assets Total non-current assets
5
567
410
1134
8322
1030
472
11369
355
1091
7432
1051
368
10298
371
1106
7967
1096
460
11000
300
1067
6939
1067
377
9750
Prepaid expenses and other current assets Cash and cash equivalents Non-current assets and disposal group classified as held-for-sale Total current assets
Current assets Inventories Trade receivables
8
5
2376
1638
638
998
4
5653
2263
1264
604
274
10
4415
2229
1398
607
544
4
4783
2042
1200
559
436
11
4247
Total assets 17022 14713 15783 13997
30 Jun 2018
Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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 DEU 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 ESP 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 ETI 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 FRA 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 GRE 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 HEB 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 HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA 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 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 LVI 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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 RUM 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 RUS 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 SKY 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 SLV 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 SUO 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 SVE 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 TUR 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 UKR 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 ENU (Use these settings to create Adobe PDF documents best suited for high-quality prepress printing Created PDF documents can be opened with Acrobat and Adobe Reader 50 and later)13 gtgt13 Namespace [13 (Adobe)13 (Common)13 (10)13 ]13 OtherNamespaces [13 ltlt13 AsReaderSpreads false13 CropImagesToFrames true13 ErrorControl WarnAndContinue13 FlattenerIgnoreSpreadOverrides false13 IncludeGuidesGrids false13 IncludeNonPrinting false13 IncludeSlug false13 Namespace [13 (Adobe)13 (InDesign)13 (40)13 ]13 OmitPlacedBitmaps false13 OmitPlacedEPS false13 OmitPlacedPDF false13 SimulateOverprint Legacy13 gtgt13 ltlt13 AddBleedMarks false13 AddColorBars false13 AddCropMarks false13 AddPageInfo false13 AddRegMarks false13 ConvertColors ConvertToCMYK13 DestinationProfileName ()13 DestinationProfileSelector DocumentCMYK13 Downsample16BitImages true13 FlattenerPreset ltlt13 PresetSelector MediumResolution13 gtgt13 FormElements false13 GenerateStructure false13 IncludeBookmarks false13 IncludeHyperlinks false13 IncludeInteractive false13 IncludeLayers false13 IncludeProfiles false13 MultimediaHandling UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13
7 Yara second quarter 2018
Financial items
USD millions
Interest income
Dividends and net gain(loss) on securities
Interest income and other financial income
Interest expense
Net interest expense on net pension liability
Net foreign currency translation gain(loss)
Other
Interest expense and foreign currency translation gain(loss)
Net financial income(expense)
Second-quarter net financial expense was USD 316 million compared with USD 21 million in the same quarter last year The variance primarily reflects a net foreign currency translation loss of USD 302 million this quarter
Interest expense was USD 12 million higher than a year earlier mainly reflecting an average gross debt level around USD 15 billion higher
The net foreign currency translation loss for the quarter was USD 302 million reflecting currency rate changes from 31 March to 30 June 2018 The currency loss is a non-cash effect mainly resulting from a stronger US dollar which is fundamentally positive for Yara
The US dollar appreciated around 5 against both the euro and the Norwegian krone and 17 against the Brazilian real generating a net loss of USD 192 million on Yararsquos US dollar denominated debt positions Internal funding positions mainly in euro against Norwegian krone and in Brazilian real vs both euro and Norwegian krone generated a net loss of USD 110 million Last year gains on US dollar
2Q 2018
20
3
22
(28)
(2)
(302)
(6)
(338)
(316)
2Q 2017 1H 2017
18
2
19
40
3
43
38
2
40
(16)
(2)
(18)
(4)
(40)
(50)
(3)
(294)
(9)
(357)
(32)
(4)
51
(7)
8
(21) (314) 48
1H 2018
denominated debt positions against euro and Norwegian krone (as the USD depreciated against both currencies) offset losses due to the Brazilian real and other emerging market currencies depreciating against the US dollar and the euro
Yararsquos US dollar debt generating currency effects in the income statement was approximately USD 3200 million at the start of the third quarter 2018 Around 40 of the exposure was towards the Norwegian krone and around 30 against Yararsquos emerging market currencies
First-half net financial expense was USD 314 million compared with an income of USD 48 million in the same period last year The variance is primarily explained by a net foreign currency translation loss of USD 294 million compared with a net gain of USD 51 million a year ago
8 Yara second quarter 2018
Net interest-bearing debt
USD millions 2Q 2018 1H 2018
Net interest-bearing debt at beginning of period (2879) (2367)
Cash earnings 1) 159 455
Dividends received from equity-accounted investees 26 98
Net operating capital change 388 213
Acquisition of Cubatatildeo (278) (278)
Acquisition of Babrala - (435)
Other investments (net) (353) (654)
Yara dividend (219) (219)
Other including foreign currency translation gain(loss) 3 33
Net interest-bearing debt at end of period (3153) (3153)
1) Operating income plus depreciation and amortization minus tax paid net gain(loss) on disposals net interest expense and bank charges
Working capital decreased during the quarter reflecting seasonal accumulation of customer prepayments in Brazil
The debtequity ratio at the end of second quarter 2018 calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests was 035 compared with 030 at the end of first quarter 2018
As a supplement to the consolidated statement of cash flows (page 18) this table highlights the key factors behind the development in net interest-bearing debt
Net interest-bearing debt at the end of second quarter was USD 3153 million up from USD 2879 million at the end of the first quarter 2018 The increase reflects the acquisition of Cubatatildeo in addition to other investments of USD 353 million of which Rio Grande plant modernization and the Salitre mining project in Brazil amounted to around USD 120 million
9 Yara second quarter 2018
Outlook Although prices have increased recently global urea supply increases are strong in 2018 and gas cost has increased in many regions including Europe Based on current forward markets for natural gas (10 July) Yararsquos spot-priced gas costs for third and fourth quarter 2018 are expected to be respectively USD 100 million higher and USD 70 million higher than a year earlier The estimates may change depending on future spot gas prices
Although global new capacity additions are almost halved compared with last year higher utilization of existing capacity (eg in North Africa) contributes to an overall projected production increase for 2018 well above trend demand growth Also nitrogen demand growth has been muted during the recent 3 years and food prices remain at low levels The FAO cereal and dairy price indices are higher than a year ago but the overall food price index is slightly lower
Yararsquos near-term strategic focus is on delivering its onshygoing improvement and growth pipeline Applying average 2015 market prices the Improvement program has to date delivered approximately USD 310 million of the targeted minimum USD 500 million of annual EBITDA improvement (USD 125 net income per share) within 2020
Yararsquos growth investments reach their peak this year with strong earnings contribution from 2019 onwards as a total of
7 plant expansions and MampA come on stream in 2018 with an annualized 14 million tonnes of new ammonia production and 31 million tonnes of new finished fertilizer production Applying average 2015 market prices the growth pipeline is expected in 2018 to deliver approximately USD 150 million of the targeted USD 600 million of annual EBITDA improvement (USD 090 net income per share)
Beyond 2018 the global urea supply-demand balance looks set to gradually improve Nitrogen supply growth is forecast to reduce significantly after 2018 and current nitrogen price levels do not provide economic incentives for new investment Also demand growth is likely to pick up compared with the last 3 years as global grain stocks are relatively low particularly excluding China and increased production is needed to keep pace with growing consumption
Yararsquos longer-term strategic focus will be on crop nutrition leadership growing sustainable solutions to farmers and industry while delivering a superior return on capital with a strong focus on capital discipline and active portfolio management As part of this focus solution selling including digital farming tools and services will be important growth vehicles for Yara to reach more farmers
10 Yara second quarter 2018
Risk and uncertainty As described in Yararsquos Annual Report for 2017 Yararsquos total risk exposure is analyzed and evaluated at group level Risk evaluations are integrated in all business activities both at group and business unit level increasing Yararsquos ability to take advantage of business opportunities Yararsquos most important market risk is related to the margin between nitrogen fertilizer prices and natural gas prices Although there is a positive long-term correlation between these prices margins are influenced by the supplydemand balance for food relative to energy Yara has in place a system for credit and currency risk management with
defined limits for exposure both at country customer and currency level Yararsquos geographically diversified portfolio reduces the overall credit and currency risk of the Group As the fertilizer business is essentially a US dollar business with both revenues and raw material costs mainly priced in US dollars Yara seeks to keep most of its debt in US dollars to reduce its overall US dollar currency exposure There has not been any significant change in the risk exposures The risks and uncertainties for the remaining six months of the year are described in Outlook
Related parties Note 35 in the annual report for 2017 provides details of related parties During the first half of 2018 there have not been any changes or transactions that significantly impact the grouprsquos financial position or result for the period
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Board member
Trond Berger Board member
Rune Bratteberg Board member
Kjersti Aass Board member
Svein Tore Holsether President and CEO
11 Yara second quarter 2018
Definitions and variance analysis Several of Yararsquos purchase and sales contracts for commodities are or have embedded terms and conditions which under IFRS are accounted for as derivatives The derivative elements of these contracts are presented under ldquoCommodity-based derivatives gain(loss)rdquo in the condensed consolidated interim statement of income and are referenced in the variance analysis (see below) as ldquoSpecial itemsrdquo
In the segment information ldquoOther and eliminationsrdquo consists mainly of cross-segment eliminations in addition to Yararsquos headquarter costs Profits on sales from Production to Crop Nutrition and Industrial are not recognized in the consolidated Yara condensed consolidated interim statement of income before the products are sold to external customers These internal profits are eliminated in ldquoOther and eliminationsrdquo Changes in ldquoOther and eliminationsrdquo EBITDA therefore usually reflect changes in Production-sourced stock (volumes) held by Crop Nutrition and Industrial but can also be affected by changes in Production margins on products sold to Crop Nutrition and Industrial as transfer prices move in line with arms-length market prices With all other variables held constant higher stocks would result in a higher (negative) elimination effect in Yararsquos results as would higher Production margins Over time these effects tend to even out to the extent that stock levels and margins normalize
In the discussion of historical operating results Yara refers to certain non-GAAP financial measures including operating income EBITDA and CROGI Yararsquos management makes regular use of these measures to evaluate the performance both in absolute terms and comparatively from period to period Yara manages long-term debt and taxes on a group basis Therefore net income is discussed only for the Group as a whole
Operating income include all activities which normally are to be considered as ldquooperatingrdquo Share of net income in equity-accounted investees is however not included
EBITDA is presented because Yara believe that it is frequently used by securities analysts investors and other interested parties as a measure of a companyrsquos operating performance and debt servicing ability It assists in comparing performance on a consistent basis without regard to depreciation and amortization which can vary
significantly depending on accounting methods or non-operating factors and provides a more complete and comprehensive analysis of our operating performance relative to other companies EBITDA as defined by Yara includes operating income interest income other financial income and share of net income in equity-accounted investees It excludes depreciation amortization and impairment loss as well as amortization of excess values in equity-accounted investees Yararsquos definition of EBITDA may differ from that of other companies
EBITDA should not be considered as an alternative to operating income and income before tax as an indicator of the companyrsquos operations in accordance with generally accepted accounting principles Nor is EBITDA an alternative to cash flow from operating activities in accordance with generally accepted accounting principles
Yara management uses CROGI (Cash Return On Gross Investment) to measure financial performance of Yararsquos segments as well as the whole of the business CROGI is defined as gross cash flow divided by average gross investment and is calculated on a 12-month rolling basis ldquoGross cash flowrdquo is defined as EBITDA less total tax expense excluding tax on net foreign currency translation gainloss On Yara level actual tax expense is used for the calculation while a standardized tax rate of 25 is used on segment level ldquoGross Investmentrdquo is defined as total assets (exclusive of deferred tax assets cash and cash equivalents other liquid assets and fair value adjustment recognized in equity) plus accumulated depreciation and amortization less all short-term interest-free liabilities except deferred tax liabilities On segment level cash and other liquid assets are not excluded from ldquoGross Investmentrdquo
ROCE (Return on capital employed) is presented as an additional performance measure to CROGI to simplify benchmarking with other companies ROCE is defined as EBIT minus tax (less tax on net foreign currency translation gainloss) divided by average capital employed and is calculated on a 12-month rolling average basis Capital employed is defined as total assets adjusted for cash and cash equivalents other liquid assets deferred tax assets fair value adjustment recognized in equity minus other current liabilities
12 Yara second quarter 2018
In order to track underlying business developments from period to period Yararsquos management also uses a variance analysis methodology developed within the Company (ldquoVariance Analysisrdquo) that involves the extraction of financial information from the accounting system as well as statistical and other data from internal management information systems Management considers the estimates produced by the Variance Analysis and the identification of trends based on such analysis sufficiently precise to provide useful data to monitor our business However these estimates should be understood to be less than an exact quantification of the changes and trends indicated by such analysis
The variance analysis presented in Yara quarterly and annual financial reports is prepared on a Yara EBITDA basis including net income from equity-accounted investees The volume margin and other variances presented therefore include effects generated by performance in equity-accounted investees
Yara defines ldquospecial itemsrdquo as items in the results which are not regarded as part of underlying business performance for the period These comprise restructuring-related items contract derivatives impairments and other items which are not primarily related to the period in which they are recognized subject to a minimum value of USD 5 million per item within a 12 month period ldquoContract
Special items
derivativesrdquo are commodity-based derivative gains or losses (see above) which are not the result of active exposure or position management by Yara These are defined as special items regardless of amount
Net interest-bearing debt is defined by Yara as cash and cash equivalents and other liquid assets reduced for bank loans other short-term interest bearing debt and long-term interest-bearing debt including current portion The debtequity ratio is calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests
Earnings per share excluding currency and special items represent net income after non-controlling interests excluding foreign currency translation gainloss and special items after tax divided by average number of shares outstanding in the period Tax effect on foreign currency and special items is calculated based on relevant statutory tax rate for the sake of simplicity
Net operating capital is calculated as trade receivables net of impairments plus inventories net of write-downs less trade payables and prepayments from customers
Reconciliations of alternative performance measures are provided on page 34 to 36
EBITDA effect Operating income effect
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
(0) - (9) -
- - - -
(10) - (10) -
(10) - (19) -
(9) - (9) -
(9) - (9) -
1 2 2 (12)
- 12 - 12
- - - -
(7) (7) -
(6) 14 (4) -
(24) 14 (32) -
2Q 2017 2Q 2018 1H 2017 1H 2018
Stamp duty on purchase of Babrala (India) Asset impairment write-down Restructuring costs Total Crop Nutrition
Restructuring costs Total Industrial
Contract derivatives gain(loss) Refund of energy intensive tax Asset impairment write-down QAFCO tax adjustment Total Production
Total Yara
1 2 2 (12)
- 12 - 12
(6) (12) (6) (12)
- - - -
(5) (3) (12)
(37) (3) (44) (17)
(0) - (9) -
(14) (5) (14) (6)
(10) - (10) -
(24) (5) (33) (6)
(9) - (9) -
(9) - (9) -
2
Yara second quarter 2018 13
Condensed consolidated interim statement of income
USD millions except share information
Revenue Other income Commodity based derivatives gain(loss) Revenue and other income
Raw materials energy costs and freight expenses Payroll and related costs Depreciation and amortization Impairment loss Other operating expenses Operating costs and expenses
Operating income
Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax
Income tax Net income
Net income attributable to Shareholders of the parent Non-controlling interests Net income
Basic earnings per share 1)
Weighted average number of shares outstanding
Notes
3
6
6
67
2
2Q 2018
3185
6
1
3192
(2489)
(312)
(199)
(20)
(133)
(3154)
38
17
22
77
(302)
(36)
(261)
45
(216)
(211)
(5)
(216)
(077)
273217830
2Q 2017
2744
12
2
2759
(2070)
(257)
(178)
(18)
(106)
(2629)
130
7
19
156
(18)
(22)
115
(35)
80
82
(2)
80
030
273217830
1) Yara currently has no share-based compensation program resulting in a dilutive effect on earnings per share
1H 2018
6023
23
3
6048
(4596)
(613)
(401)
(23)
(244)
(5877)
171
27
43
242
(294)
(63)
(115)
12
(103)
(96)
(7)
(103)
(035)
273217830
1H 2017 2017
5440 11358
14 55
(12) (13)
5442 11400
(4055) (8547)
(518) (1090)
(348) (724)
(19) (60)
(193) (521)
(5132) (10942)
310 457
16 29
40 77
366 563
51 99
(43) (82)
374 581
(97) (99)
277 482
283 477
(5) 5
277 482
103 175
273217830 273217830
14 Yara second quarter 2018
Condensed consolidated interim statement of comprehensive income
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Net income (216) 80 (103) 277 482
Other comprehensive income that may be reclassified to statement of income (net of tax) Currency translation adjustments (174) 95 (211) 133 235
Hedge of net investments (30) 15 3 16 33 Share of other comprehensive income of equity-accounted investees excluding remeasurements (0) 2 (0) 2 4
Net other comprehensive income(loss) that may be reclassified to statement of income in subsequent periods net of tax (204) 112 (208) 151 273
Other comprehensive income that will not be reclassified to statement of income in subsequent periods (net of tax) Currency translation adjustments 1) (107) 30 15 33 85
Net gain(loss) on equity instruments at fair value through other comprehensive income (1) (0) (3) (0) (1)
Remeasurement gains(losses) on defined benefit plans - - - - 64
Net other comprehensive income that will not be reclassified to statement of income in subsequent periods net of tax (108) 29 12 33 148
Reclassification adjustments of the period Cash flow hedges 0 0 0 0 1
Total other comprehensive income net of tax (312) 141 (196) 184 421
Total comprehensive income net of tax (528) 222 (298) 461 903
Total comprehensive income attributable to Shareholders of the parent (496) 232 (265) 469 900
Non-controlling interests (32) (10) (33) (7) 3
Total (528) 222 (298) 461 903
1) Currency translation adjustments that will not be reclassified to statement of income are related to entities with functional currency NOK as these are not classified as foreign operations to Yara International ASA
Yara second quarter 2018 15
Condensed consolidated interim statement of changes in equity
USD millions
Balance at 31 December 2016
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Share capital increase in subsidiary non-controlling interest
Dividends distributed Balance at 30 June 2017
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Balance at 31 December 2017
IFRS 9 and IFRS 15 implementation effect 3)
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Dividends distributed Balance at 30 June 2018
1) Par value 170
Share Capital1)
66
-
-
-
-
-
-
-
-
66
-
-
-
-
-
66
-
-
-
-
-
-
-
66
Premium paid-in capital
(49)
-
-
-
-
-
-
-
-
(49)
-
-
-
-
-
(49)
-
-
-
-
-
-
-
(49)
Currency translation
adjustments
(1321)
-
168
-
168
-
-
-
-
(1154)
-
154
-
154
-
(1000)
-
(170)
(0)
(170)
-
-
-
(1169)
Fair value reserve of financial assets at FVOCI 2)
2
-
-
-
-
-
-
-
-
1
-
(1)
-
(1)
-
-
-
(3)
-
(3)
-
-
-
(3)
Hedge Attributable Cash of net Total to share- Non-flow invest- other Retained holders of controlling Total
hedges ments reserves earnings the parent interests equity
(8) (192) (1520) 10150 8647 270 8917
- - - 283 283 (5) 277
- 16 184 - 184 (2) 182
2 - 2 - 2 - 2
2 16 186 - 186 (2) 184
- - - 1 1 - 1
- - - (1) (1) (2) (3)
- - - - - 9 9
- - - (321) (321) (0) (322)
(6) (176) (1334) 10112 8795 269 9064
- - - 194 194 10 205
1 17 171 64 235 - 235
2 - 2 - 2 - 2
2 17 173 64 237 - 237
- - - (1) (1) - (1)
(3) (159) (1161) 10369 9225 280 9505
(4) (4) (4)
- - - (96) (96) (7) (103)
- 3 (169) - (169) (27) (195)
- - (0) - (0) - (0)
- 3 (169) - (169) (27) (196)
- - - 1 1 - 1
- - - - - (1) (2)
- - - (219) (219) (2) (221)
(3) (155) (1330) 10050 8737 243 8980
2) Gains or losses on investments in equity instruments for which the Group has elected to present changes in fair value in OCI will no longer be transferred to profit or loss
upon derecognition of the equity instrument 3) Please see Accounting Policies page 19 and 20 for further information
16 Yara second quarter 2018
Condensed consolidated interim statement of financial position
USD millions Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Assets Non-current assets Deferred tax assets Intangible assets Property plant and equipment Equity-accounted investees Other non-current assets Total non-current assets
5
567
410
1134
8322
1030
472
11369
355
1091
7432
1051
368
10298
371
1106
7967
1096
460
11000
300
1067
6939
1067
377
9750
Prepaid expenses and other current assets Cash and cash equivalents Non-current assets and disposal group classified as held-for-sale Total current assets
Current assets Inventories Trade receivables
8
5
2376
1638
638
998
4
5653
2263
1264
604
274
10
4415
2229
1398
607
544
4
4783
2042
1200
559
436
11
4247
Total assets 17022 14713 15783 13997
30 Jun 2018
Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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HEB 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HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL ltFEFF0055007300740061007700690065006e0069006100200064006f002000740077006f0072007a0065006e0069006100200064006f006b0075006d0065006e007400f300770020005000440046002000700072007a0065007a006e00610063007a006f006e00790063006800200064006f002000770079006400720075006b00f30077002000770020007700790073006f006b00690065006a0020006a0061006b006f015b00630069002e002000200044006f006b0075006d0065006e0074007900200050004400460020006d006f017c006e00610020006f007400770069006500720061010700200077002000700072006f006700720061006d006900650020004100630072006f00620061007400200069002000410064006f00620065002000520065006100640065007200200035002e0030002000690020006e006f00770073007a0079006d002egt13 PTB 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 RUM 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 RUS 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ltFEFF0054006900650074006f0020006e006100730074006100760065006e0069006100200070006f0075017e0069007400650020006e00610020007600790074007600e100720061006e0069006500200064006f006b0075006d0065006e0074006f0076002000410064006f006200650020005000440046002c0020006b0074006f007200e90020007300610020006e0061006a006c0065007001610069006500200068006f0064006900610020006e00610020006b00760061006c00690074006e00fa00200074006c0061010d00200061002000700072006500700072006500730073002e00200056007900740076006f00720065006e00e900200064006f006b0075006d0065006e007400790020005000440046002000620075006400650020006d006f017e006e00e90020006f00740076006f00720069016500200076002000700072006f006700720061006d006f006300680020004100630072006f00620061007400200061002000410064006f00620065002000520065006100640065007200200035002e0030002000610020006e006f0076016100ed00630068002egt13 SLV 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 SUO 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 SVE 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 TUR ltFEFF005900fc006b00730065006b0020006b0061006c006900740065006c0069002000f6006e002000790061007a006401310072006d00610020006200610073006b013100730131006e006100200065006e0020006900790069002000750079006100620069006c006500630065006b002000410064006f006200650020005000440046002000620065006c00670065006c0065007200690020006f006c0075015f007400750072006d0061006b0020006900e70069006e00200062007500200061007900610072006c0061007201310020006b0075006c006c0061006e0131006e002e00200020004f006c0075015f0074007500720075006c0061006e0020005000440046002000620065006c00670065006c0065007200690020004100630072006f006200610074002000760065002000410064006f00620065002000520065006100640065007200200035002e003000200076006500200073006f006e0072006100730131006e00640061006b00690020007300fc007200fc006d006c00650072006c00650020006100e70131006c006100620069006c00690072002egt13 UKR 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 ENU (Use these settings to create Adobe PDF documents best suited for high-quality prepress printing Created PDF documents can be opened with Acrobat and Adobe Reader 50 and later)13 gtgt13 Namespace [13 (Adobe)13 (Common)13 (10)13 ]13 OtherNamespaces [13 ltlt13 AsReaderSpreads false13 CropImagesToFrames true13 ErrorControl WarnAndContinue13 FlattenerIgnoreSpreadOverrides false13 IncludeGuidesGrids false13 IncludeNonPrinting false13 IncludeSlug false13 Namespace [13 (Adobe)13 (InDesign)13 (40)13 ]13 OmitPlacedBitmaps false13 OmitPlacedEPS false13 OmitPlacedPDF false13 SimulateOverprint Legacy13 gtgt13 ltlt13 AddBleedMarks false13 AddColorBars false13 AddCropMarks false13 AddPageInfo false13 AddRegMarks false13 ConvertColors ConvertToCMYK13 DestinationProfileName ()13 DestinationProfileSelector DocumentCMYK13 Downsample16BitImages true13 FlattenerPreset ltlt13 PresetSelector MediumResolution13 gtgt13 FormElements false13 GenerateStructure false13 IncludeBookmarks false13 IncludeHyperlinks false13 IncludeInteractive false13 IncludeLayers false13 IncludeProfiles false13 MultimediaHandling UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13
8 Yara second quarter 2018
Net interest-bearing debt
USD millions 2Q 2018 1H 2018
Net interest-bearing debt at beginning of period (2879) (2367)
Cash earnings 1) 159 455
Dividends received from equity-accounted investees 26 98
Net operating capital change 388 213
Acquisition of Cubatatildeo (278) (278)
Acquisition of Babrala - (435)
Other investments (net) (353) (654)
Yara dividend (219) (219)
Other including foreign currency translation gain(loss) 3 33
Net interest-bearing debt at end of period (3153) (3153)
1) Operating income plus depreciation and amortization minus tax paid net gain(loss) on disposals net interest expense and bank charges
Working capital decreased during the quarter reflecting seasonal accumulation of customer prepayments in Brazil
The debtequity ratio at the end of second quarter 2018 calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests was 035 compared with 030 at the end of first quarter 2018
As a supplement to the consolidated statement of cash flows (page 18) this table highlights the key factors behind the development in net interest-bearing debt
Net interest-bearing debt at the end of second quarter was USD 3153 million up from USD 2879 million at the end of the first quarter 2018 The increase reflects the acquisition of Cubatatildeo in addition to other investments of USD 353 million of which Rio Grande plant modernization and the Salitre mining project in Brazil amounted to around USD 120 million
9 Yara second quarter 2018
Outlook Although prices have increased recently global urea supply increases are strong in 2018 and gas cost has increased in many regions including Europe Based on current forward markets for natural gas (10 July) Yararsquos spot-priced gas costs for third and fourth quarter 2018 are expected to be respectively USD 100 million higher and USD 70 million higher than a year earlier The estimates may change depending on future spot gas prices
Although global new capacity additions are almost halved compared with last year higher utilization of existing capacity (eg in North Africa) contributes to an overall projected production increase for 2018 well above trend demand growth Also nitrogen demand growth has been muted during the recent 3 years and food prices remain at low levels The FAO cereal and dairy price indices are higher than a year ago but the overall food price index is slightly lower
Yararsquos near-term strategic focus is on delivering its onshygoing improvement and growth pipeline Applying average 2015 market prices the Improvement program has to date delivered approximately USD 310 million of the targeted minimum USD 500 million of annual EBITDA improvement (USD 125 net income per share) within 2020
Yararsquos growth investments reach their peak this year with strong earnings contribution from 2019 onwards as a total of
7 plant expansions and MampA come on stream in 2018 with an annualized 14 million tonnes of new ammonia production and 31 million tonnes of new finished fertilizer production Applying average 2015 market prices the growth pipeline is expected in 2018 to deliver approximately USD 150 million of the targeted USD 600 million of annual EBITDA improvement (USD 090 net income per share)
Beyond 2018 the global urea supply-demand balance looks set to gradually improve Nitrogen supply growth is forecast to reduce significantly after 2018 and current nitrogen price levels do not provide economic incentives for new investment Also demand growth is likely to pick up compared with the last 3 years as global grain stocks are relatively low particularly excluding China and increased production is needed to keep pace with growing consumption
Yararsquos longer-term strategic focus will be on crop nutrition leadership growing sustainable solutions to farmers and industry while delivering a superior return on capital with a strong focus on capital discipline and active portfolio management As part of this focus solution selling including digital farming tools and services will be important growth vehicles for Yara to reach more farmers
10 Yara second quarter 2018
Risk and uncertainty As described in Yararsquos Annual Report for 2017 Yararsquos total risk exposure is analyzed and evaluated at group level Risk evaluations are integrated in all business activities both at group and business unit level increasing Yararsquos ability to take advantage of business opportunities Yararsquos most important market risk is related to the margin between nitrogen fertilizer prices and natural gas prices Although there is a positive long-term correlation between these prices margins are influenced by the supplydemand balance for food relative to energy Yara has in place a system for credit and currency risk management with
defined limits for exposure both at country customer and currency level Yararsquos geographically diversified portfolio reduces the overall credit and currency risk of the Group As the fertilizer business is essentially a US dollar business with both revenues and raw material costs mainly priced in US dollars Yara seeks to keep most of its debt in US dollars to reduce its overall US dollar currency exposure There has not been any significant change in the risk exposures The risks and uncertainties for the remaining six months of the year are described in Outlook
Related parties Note 35 in the annual report for 2017 provides details of related parties During the first half of 2018 there have not been any changes or transactions that significantly impact the grouprsquos financial position or result for the period
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Board member
Trond Berger Board member
Rune Bratteberg Board member
Kjersti Aass Board member
Svein Tore Holsether President and CEO
11 Yara second quarter 2018
Definitions and variance analysis Several of Yararsquos purchase and sales contracts for commodities are or have embedded terms and conditions which under IFRS are accounted for as derivatives The derivative elements of these contracts are presented under ldquoCommodity-based derivatives gain(loss)rdquo in the condensed consolidated interim statement of income and are referenced in the variance analysis (see below) as ldquoSpecial itemsrdquo
In the segment information ldquoOther and eliminationsrdquo consists mainly of cross-segment eliminations in addition to Yararsquos headquarter costs Profits on sales from Production to Crop Nutrition and Industrial are not recognized in the consolidated Yara condensed consolidated interim statement of income before the products are sold to external customers These internal profits are eliminated in ldquoOther and eliminationsrdquo Changes in ldquoOther and eliminationsrdquo EBITDA therefore usually reflect changes in Production-sourced stock (volumes) held by Crop Nutrition and Industrial but can also be affected by changes in Production margins on products sold to Crop Nutrition and Industrial as transfer prices move in line with arms-length market prices With all other variables held constant higher stocks would result in a higher (negative) elimination effect in Yararsquos results as would higher Production margins Over time these effects tend to even out to the extent that stock levels and margins normalize
In the discussion of historical operating results Yara refers to certain non-GAAP financial measures including operating income EBITDA and CROGI Yararsquos management makes regular use of these measures to evaluate the performance both in absolute terms and comparatively from period to period Yara manages long-term debt and taxes on a group basis Therefore net income is discussed only for the Group as a whole
Operating income include all activities which normally are to be considered as ldquooperatingrdquo Share of net income in equity-accounted investees is however not included
EBITDA is presented because Yara believe that it is frequently used by securities analysts investors and other interested parties as a measure of a companyrsquos operating performance and debt servicing ability It assists in comparing performance on a consistent basis without regard to depreciation and amortization which can vary
significantly depending on accounting methods or non-operating factors and provides a more complete and comprehensive analysis of our operating performance relative to other companies EBITDA as defined by Yara includes operating income interest income other financial income and share of net income in equity-accounted investees It excludes depreciation amortization and impairment loss as well as amortization of excess values in equity-accounted investees Yararsquos definition of EBITDA may differ from that of other companies
EBITDA should not be considered as an alternative to operating income and income before tax as an indicator of the companyrsquos operations in accordance with generally accepted accounting principles Nor is EBITDA an alternative to cash flow from operating activities in accordance with generally accepted accounting principles
Yara management uses CROGI (Cash Return On Gross Investment) to measure financial performance of Yararsquos segments as well as the whole of the business CROGI is defined as gross cash flow divided by average gross investment and is calculated on a 12-month rolling basis ldquoGross cash flowrdquo is defined as EBITDA less total tax expense excluding tax on net foreign currency translation gainloss On Yara level actual tax expense is used for the calculation while a standardized tax rate of 25 is used on segment level ldquoGross Investmentrdquo is defined as total assets (exclusive of deferred tax assets cash and cash equivalents other liquid assets and fair value adjustment recognized in equity) plus accumulated depreciation and amortization less all short-term interest-free liabilities except deferred tax liabilities On segment level cash and other liquid assets are not excluded from ldquoGross Investmentrdquo
ROCE (Return on capital employed) is presented as an additional performance measure to CROGI to simplify benchmarking with other companies ROCE is defined as EBIT minus tax (less tax on net foreign currency translation gainloss) divided by average capital employed and is calculated on a 12-month rolling average basis Capital employed is defined as total assets adjusted for cash and cash equivalents other liquid assets deferred tax assets fair value adjustment recognized in equity minus other current liabilities
12 Yara second quarter 2018
In order to track underlying business developments from period to period Yararsquos management also uses a variance analysis methodology developed within the Company (ldquoVariance Analysisrdquo) that involves the extraction of financial information from the accounting system as well as statistical and other data from internal management information systems Management considers the estimates produced by the Variance Analysis and the identification of trends based on such analysis sufficiently precise to provide useful data to monitor our business However these estimates should be understood to be less than an exact quantification of the changes and trends indicated by such analysis
The variance analysis presented in Yara quarterly and annual financial reports is prepared on a Yara EBITDA basis including net income from equity-accounted investees The volume margin and other variances presented therefore include effects generated by performance in equity-accounted investees
Yara defines ldquospecial itemsrdquo as items in the results which are not regarded as part of underlying business performance for the period These comprise restructuring-related items contract derivatives impairments and other items which are not primarily related to the period in which they are recognized subject to a minimum value of USD 5 million per item within a 12 month period ldquoContract
Special items
derivativesrdquo are commodity-based derivative gains or losses (see above) which are not the result of active exposure or position management by Yara These are defined as special items regardless of amount
Net interest-bearing debt is defined by Yara as cash and cash equivalents and other liquid assets reduced for bank loans other short-term interest bearing debt and long-term interest-bearing debt including current portion The debtequity ratio is calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests
Earnings per share excluding currency and special items represent net income after non-controlling interests excluding foreign currency translation gainloss and special items after tax divided by average number of shares outstanding in the period Tax effect on foreign currency and special items is calculated based on relevant statutory tax rate for the sake of simplicity
Net operating capital is calculated as trade receivables net of impairments plus inventories net of write-downs less trade payables and prepayments from customers
Reconciliations of alternative performance measures are provided on page 34 to 36
EBITDA effect Operating income effect
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
(0) - (9) -
- - - -
(10) - (10) -
(10) - (19) -
(9) - (9) -
(9) - (9) -
1 2 2 (12)
- 12 - 12
- - - -
(7) (7) -
(6) 14 (4) -
(24) 14 (32) -
2Q 2017 2Q 2018 1H 2017 1H 2018
Stamp duty on purchase of Babrala (India) Asset impairment write-down Restructuring costs Total Crop Nutrition
Restructuring costs Total Industrial
Contract derivatives gain(loss) Refund of energy intensive tax Asset impairment write-down QAFCO tax adjustment Total Production
Total Yara
1 2 2 (12)
- 12 - 12
(6) (12) (6) (12)
- - - -
(5) (3) (12)
(37) (3) (44) (17)
(0) - (9) -
(14) (5) (14) (6)
(10) - (10) -
(24) (5) (33) (6)
(9) - (9) -
(9) - (9) -
2
Yara second quarter 2018 13
Condensed consolidated interim statement of income
USD millions except share information
Revenue Other income Commodity based derivatives gain(loss) Revenue and other income
Raw materials energy costs and freight expenses Payroll and related costs Depreciation and amortization Impairment loss Other operating expenses Operating costs and expenses
Operating income
Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax
Income tax Net income
Net income attributable to Shareholders of the parent Non-controlling interests Net income
Basic earnings per share 1)
Weighted average number of shares outstanding
Notes
3
6
6
67
2
2Q 2018
3185
6
1
3192
(2489)
(312)
(199)
(20)
(133)
(3154)
38
17
22
77
(302)
(36)
(261)
45
(216)
(211)
(5)
(216)
(077)
273217830
2Q 2017
2744
12
2
2759
(2070)
(257)
(178)
(18)
(106)
(2629)
130
7
19
156
(18)
(22)
115
(35)
80
82
(2)
80
030
273217830
1) Yara currently has no share-based compensation program resulting in a dilutive effect on earnings per share
1H 2018
6023
23
3
6048
(4596)
(613)
(401)
(23)
(244)
(5877)
171
27
43
242
(294)
(63)
(115)
12
(103)
(96)
(7)
(103)
(035)
273217830
1H 2017 2017
5440 11358
14 55
(12) (13)
5442 11400
(4055) (8547)
(518) (1090)
(348) (724)
(19) (60)
(193) (521)
(5132) (10942)
310 457
16 29
40 77
366 563
51 99
(43) (82)
374 581
(97) (99)
277 482
283 477
(5) 5
277 482
103 175
273217830 273217830
14 Yara second quarter 2018
Condensed consolidated interim statement of comprehensive income
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Net income (216) 80 (103) 277 482
Other comprehensive income that may be reclassified to statement of income (net of tax) Currency translation adjustments (174) 95 (211) 133 235
Hedge of net investments (30) 15 3 16 33 Share of other comprehensive income of equity-accounted investees excluding remeasurements (0) 2 (0) 2 4
Net other comprehensive income(loss) that may be reclassified to statement of income in subsequent periods net of tax (204) 112 (208) 151 273
Other comprehensive income that will not be reclassified to statement of income in subsequent periods (net of tax) Currency translation adjustments 1) (107) 30 15 33 85
Net gain(loss) on equity instruments at fair value through other comprehensive income (1) (0) (3) (0) (1)
Remeasurement gains(losses) on defined benefit plans - - - - 64
Net other comprehensive income that will not be reclassified to statement of income in subsequent periods net of tax (108) 29 12 33 148
Reclassification adjustments of the period Cash flow hedges 0 0 0 0 1
Total other comprehensive income net of tax (312) 141 (196) 184 421
Total comprehensive income net of tax (528) 222 (298) 461 903
Total comprehensive income attributable to Shareholders of the parent (496) 232 (265) 469 900
Non-controlling interests (32) (10) (33) (7) 3
Total (528) 222 (298) 461 903
1) Currency translation adjustments that will not be reclassified to statement of income are related to entities with functional currency NOK as these are not classified as foreign operations to Yara International ASA
Yara second quarter 2018 15
Condensed consolidated interim statement of changes in equity
USD millions
Balance at 31 December 2016
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Share capital increase in subsidiary non-controlling interest
Dividends distributed Balance at 30 June 2017
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Balance at 31 December 2017
IFRS 9 and IFRS 15 implementation effect 3)
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Dividends distributed Balance at 30 June 2018
1) Par value 170
Share Capital1)
66
-
-
-
-
-
-
-
-
66
-
-
-
-
-
66
-
-
-
-
-
-
-
66
Premium paid-in capital
(49)
-
-
-
-
-
-
-
-
(49)
-
-
-
-
-
(49)
-
-
-
-
-
-
-
(49)
Currency translation
adjustments
(1321)
-
168
-
168
-
-
-
-
(1154)
-
154
-
154
-
(1000)
-
(170)
(0)
(170)
-
-
-
(1169)
Fair value reserve of financial assets at FVOCI 2)
2
-
-
-
-
-
-
-
-
1
-
(1)
-
(1)
-
-
-
(3)
-
(3)
-
-
-
(3)
Hedge Attributable Cash of net Total to share- Non-flow invest- other Retained holders of controlling Total
hedges ments reserves earnings the parent interests equity
(8) (192) (1520) 10150 8647 270 8917
- - - 283 283 (5) 277
- 16 184 - 184 (2) 182
2 - 2 - 2 - 2
2 16 186 - 186 (2) 184
- - - 1 1 - 1
- - - (1) (1) (2) (3)
- - - - - 9 9
- - - (321) (321) (0) (322)
(6) (176) (1334) 10112 8795 269 9064
- - - 194 194 10 205
1 17 171 64 235 - 235
2 - 2 - 2 - 2
2 17 173 64 237 - 237
- - - (1) (1) - (1)
(3) (159) (1161) 10369 9225 280 9505
(4) (4) (4)
- - - (96) (96) (7) (103)
- 3 (169) - (169) (27) (195)
- - (0) - (0) - (0)
- 3 (169) - (169) (27) (196)
- - - 1 1 - 1
- - - - - (1) (2)
- - - (219) (219) (2) (221)
(3) (155) (1330) 10050 8737 243 8980
2) Gains or losses on investments in equity instruments for which the Group has elected to present changes in fair value in OCI will no longer be transferred to profit or loss
upon derecognition of the equity instrument 3) Please see Accounting Policies page 19 and 20 for further information
16 Yara second quarter 2018
Condensed consolidated interim statement of financial position
USD millions Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Assets Non-current assets Deferred tax assets Intangible assets Property plant and equipment Equity-accounted investees Other non-current assets Total non-current assets
5
567
410
1134
8322
1030
472
11369
355
1091
7432
1051
368
10298
371
1106
7967
1096
460
11000
300
1067
6939
1067
377
9750
Prepaid expenses and other current assets Cash and cash equivalents Non-current assets and disposal group classified as held-for-sale Total current assets
Current assets Inventories Trade receivables
8
5
2376
1638
638
998
4
5653
2263
1264
604
274
10
4415
2229
1398
607
544
4
4783
2042
1200
559
436
11
4247
Total assets 17022 14713 15783 13997
30 Jun 2018
Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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 PTB 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 RUM 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 RUS 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 SKY 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 SLV 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 SUO 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 SVE ltFEFF0041006e007600e4006e00640020006400650020006800e4007200200069006e0073007400e4006c006c006e0069006e006700610072006e00610020006f006d002000640075002000760069006c006c00200073006b006100700061002000410064006f006200650020005000440046002d0064006f006b0075006d0065006e007400200073006f006d002000e400720020006c00e4006d0070006c0069006700610020006600f60072002000700072006500700072006500730073002d007500740073006b00720069006600740020006d006500640020006800f600670020006b00760061006c0069007400650074002e002000200053006b006100700061006400650020005000440046002d0064006f006b0075006d0065006e00740020006b0061006e002000f600700070006e00610073002000690020004100630072006f0062006100740020006f00630068002000410064006f00620065002000520065006100640065007200200035002e00300020006f00630068002000730065006e006100720065002egt13 TUR 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 UKR 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documents can be opened with Acrobat and Adobe Reader 50 and later)13 gtgt13 Namespace [13 (Adobe)13 (Common)13 (10)13 ]13 OtherNamespaces [13 ltlt13 AsReaderSpreads false13 CropImagesToFrames true13 ErrorControl WarnAndContinue13 FlattenerIgnoreSpreadOverrides false13 IncludeGuidesGrids false13 IncludeNonPrinting false13 IncludeSlug false13 Namespace [13 (Adobe)13 (InDesign)13 (40)13 ]13 OmitPlacedBitmaps false13 OmitPlacedEPS false13 OmitPlacedPDF false13 SimulateOverprint Legacy13 gtgt13 ltlt13 AddBleedMarks false13 AddColorBars false13 AddCropMarks false13 AddPageInfo false13 AddRegMarks false13 ConvertColors ConvertToCMYK13 DestinationProfileName ()13 DestinationProfileSelector DocumentCMYK13 Downsample16BitImages true13 FlattenerPreset ltlt13 PresetSelector MediumResolution13 gtgt13 FormElements false13 GenerateStructure false13 IncludeBookmarks false13 IncludeHyperlinks false13 IncludeInteractive false13 IncludeLayers false13 IncludeProfiles false13 MultimediaHandling UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13
9 Yara second quarter 2018
Outlook Although prices have increased recently global urea supply increases are strong in 2018 and gas cost has increased in many regions including Europe Based on current forward markets for natural gas (10 July) Yararsquos spot-priced gas costs for third and fourth quarter 2018 are expected to be respectively USD 100 million higher and USD 70 million higher than a year earlier The estimates may change depending on future spot gas prices
Although global new capacity additions are almost halved compared with last year higher utilization of existing capacity (eg in North Africa) contributes to an overall projected production increase for 2018 well above trend demand growth Also nitrogen demand growth has been muted during the recent 3 years and food prices remain at low levels The FAO cereal and dairy price indices are higher than a year ago but the overall food price index is slightly lower
Yararsquos near-term strategic focus is on delivering its onshygoing improvement and growth pipeline Applying average 2015 market prices the Improvement program has to date delivered approximately USD 310 million of the targeted minimum USD 500 million of annual EBITDA improvement (USD 125 net income per share) within 2020
Yararsquos growth investments reach their peak this year with strong earnings contribution from 2019 onwards as a total of
7 plant expansions and MampA come on stream in 2018 with an annualized 14 million tonnes of new ammonia production and 31 million tonnes of new finished fertilizer production Applying average 2015 market prices the growth pipeline is expected in 2018 to deliver approximately USD 150 million of the targeted USD 600 million of annual EBITDA improvement (USD 090 net income per share)
Beyond 2018 the global urea supply-demand balance looks set to gradually improve Nitrogen supply growth is forecast to reduce significantly after 2018 and current nitrogen price levels do not provide economic incentives for new investment Also demand growth is likely to pick up compared with the last 3 years as global grain stocks are relatively low particularly excluding China and increased production is needed to keep pace with growing consumption
Yararsquos longer-term strategic focus will be on crop nutrition leadership growing sustainable solutions to farmers and industry while delivering a superior return on capital with a strong focus on capital discipline and active portfolio management As part of this focus solution selling including digital farming tools and services will be important growth vehicles for Yara to reach more farmers
10 Yara second quarter 2018
Risk and uncertainty As described in Yararsquos Annual Report for 2017 Yararsquos total risk exposure is analyzed and evaluated at group level Risk evaluations are integrated in all business activities both at group and business unit level increasing Yararsquos ability to take advantage of business opportunities Yararsquos most important market risk is related to the margin between nitrogen fertilizer prices and natural gas prices Although there is a positive long-term correlation between these prices margins are influenced by the supplydemand balance for food relative to energy Yara has in place a system for credit and currency risk management with
defined limits for exposure both at country customer and currency level Yararsquos geographically diversified portfolio reduces the overall credit and currency risk of the Group As the fertilizer business is essentially a US dollar business with both revenues and raw material costs mainly priced in US dollars Yara seeks to keep most of its debt in US dollars to reduce its overall US dollar currency exposure There has not been any significant change in the risk exposures The risks and uncertainties for the remaining six months of the year are described in Outlook
Related parties Note 35 in the annual report for 2017 provides details of related parties During the first half of 2018 there have not been any changes or transactions that significantly impact the grouprsquos financial position or result for the period
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Board member
Trond Berger Board member
Rune Bratteberg Board member
Kjersti Aass Board member
Svein Tore Holsether President and CEO
11 Yara second quarter 2018
Definitions and variance analysis Several of Yararsquos purchase and sales contracts for commodities are or have embedded terms and conditions which under IFRS are accounted for as derivatives The derivative elements of these contracts are presented under ldquoCommodity-based derivatives gain(loss)rdquo in the condensed consolidated interim statement of income and are referenced in the variance analysis (see below) as ldquoSpecial itemsrdquo
In the segment information ldquoOther and eliminationsrdquo consists mainly of cross-segment eliminations in addition to Yararsquos headquarter costs Profits on sales from Production to Crop Nutrition and Industrial are not recognized in the consolidated Yara condensed consolidated interim statement of income before the products are sold to external customers These internal profits are eliminated in ldquoOther and eliminationsrdquo Changes in ldquoOther and eliminationsrdquo EBITDA therefore usually reflect changes in Production-sourced stock (volumes) held by Crop Nutrition and Industrial but can also be affected by changes in Production margins on products sold to Crop Nutrition and Industrial as transfer prices move in line with arms-length market prices With all other variables held constant higher stocks would result in a higher (negative) elimination effect in Yararsquos results as would higher Production margins Over time these effects tend to even out to the extent that stock levels and margins normalize
In the discussion of historical operating results Yara refers to certain non-GAAP financial measures including operating income EBITDA and CROGI Yararsquos management makes regular use of these measures to evaluate the performance both in absolute terms and comparatively from period to period Yara manages long-term debt and taxes on a group basis Therefore net income is discussed only for the Group as a whole
Operating income include all activities which normally are to be considered as ldquooperatingrdquo Share of net income in equity-accounted investees is however not included
EBITDA is presented because Yara believe that it is frequently used by securities analysts investors and other interested parties as a measure of a companyrsquos operating performance and debt servicing ability It assists in comparing performance on a consistent basis without regard to depreciation and amortization which can vary
significantly depending on accounting methods or non-operating factors and provides a more complete and comprehensive analysis of our operating performance relative to other companies EBITDA as defined by Yara includes operating income interest income other financial income and share of net income in equity-accounted investees It excludes depreciation amortization and impairment loss as well as amortization of excess values in equity-accounted investees Yararsquos definition of EBITDA may differ from that of other companies
EBITDA should not be considered as an alternative to operating income and income before tax as an indicator of the companyrsquos operations in accordance with generally accepted accounting principles Nor is EBITDA an alternative to cash flow from operating activities in accordance with generally accepted accounting principles
Yara management uses CROGI (Cash Return On Gross Investment) to measure financial performance of Yararsquos segments as well as the whole of the business CROGI is defined as gross cash flow divided by average gross investment and is calculated on a 12-month rolling basis ldquoGross cash flowrdquo is defined as EBITDA less total tax expense excluding tax on net foreign currency translation gainloss On Yara level actual tax expense is used for the calculation while a standardized tax rate of 25 is used on segment level ldquoGross Investmentrdquo is defined as total assets (exclusive of deferred tax assets cash and cash equivalents other liquid assets and fair value adjustment recognized in equity) plus accumulated depreciation and amortization less all short-term interest-free liabilities except deferred tax liabilities On segment level cash and other liquid assets are not excluded from ldquoGross Investmentrdquo
ROCE (Return on capital employed) is presented as an additional performance measure to CROGI to simplify benchmarking with other companies ROCE is defined as EBIT minus tax (less tax on net foreign currency translation gainloss) divided by average capital employed and is calculated on a 12-month rolling average basis Capital employed is defined as total assets adjusted for cash and cash equivalents other liquid assets deferred tax assets fair value adjustment recognized in equity minus other current liabilities
12 Yara second quarter 2018
In order to track underlying business developments from period to period Yararsquos management also uses a variance analysis methodology developed within the Company (ldquoVariance Analysisrdquo) that involves the extraction of financial information from the accounting system as well as statistical and other data from internal management information systems Management considers the estimates produced by the Variance Analysis and the identification of trends based on such analysis sufficiently precise to provide useful data to monitor our business However these estimates should be understood to be less than an exact quantification of the changes and trends indicated by such analysis
The variance analysis presented in Yara quarterly and annual financial reports is prepared on a Yara EBITDA basis including net income from equity-accounted investees The volume margin and other variances presented therefore include effects generated by performance in equity-accounted investees
Yara defines ldquospecial itemsrdquo as items in the results which are not regarded as part of underlying business performance for the period These comprise restructuring-related items contract derivatives impairments and other items which are not primarily related to the period in which they are recognized subject to a minimum value of USD 5 million per item within a 12 month period ldquoContract
Special items
derivativesrdquo are commodity-based derivative gains or losses (see above) which are not the result of active exposure or position management by Yara These are defined as special items regardless of amount
Net interest-bearing debt is defined by Yara as cash and cash equivalents and other liquid assets reduced for bank loans other short-term interest bearing debt and long-term interest-bearing debt including current portion The debtequity ratio is calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests
Earnings per share excluding currency and special items represent net income after non-controlling interests excluding foreign currency translation gainloss and special items after tax divided by average number of shares outstanding in the period Tax effect on foreign currency and special items is calculated based on relevant statutory tax rate for the sake of simplicity
Net operating capital is calculated as trade receivables net of impairments plus inventories net of write-downs less trade payables and prepayments from customers
Reconciliations of alternative performance measures are provided on page 34 to 36
EBITDA effect Operating income effect
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
(0) - (9) -
- - - -
(10) - (10) -
(10) - (19) -
(9) - (9) -
(9) - (9) -
1 2 2 (12)
- 12 - 12
- - - -
(7) (7) -
(6) 14 (4) -
(24) 14 (32) -
2Q 2017 2Q 2018 1H 2017 1H 2018
Stamp duty on purchase of Babrala (India) Asset impairment write-down Restructuring costs Total Crop Nutrition
Restructuring costs Total Industrial
Contract derivatives gain(loss) Refund of energy intensive tax Asset impairment write-down QAFCO tax adjustment Total Production
Total Yara
1 2 2 (12)
- 12 - 12
(6) (12) (6) (12)
- - - -
(5) (3) (12)
(37) (3) (44) (17)
(0) - (9) -
(14) (5) (14) (6)
(10) - (10) -
(24) (5) (33) (6)
(9) - (9) -
(9) - (9) -
2
Yara second quarter 2018 13
Condensed consolidated interim statement of income
USD millions except share information
Revenue Other income Commodity based derivatives gain(loss) Revenue and other income
Raw materials energy costs and freight expenses Payroll and related costs Depreciation and amortization Impairment loss Other operating expenses Operating costs and expenses
Operating income
Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax
Income tax Net income
Net income attributable to Shareholders of the parent Non-controlling interests Net income
Basic earnings per share 1)
Weighted average number of shares outstanding
Notes
3
6
6
67
2
2Q 2018
3185
6
1
3192
(2489)
(312)
(199)
(20)
(133)
(3154)
38
17
22
77
(302)
(36)
(261)
45
(216)
(211)
(5)
(216)
(077)
273217830
2Q 2017
2744
12
2
2759
(2070)
(257)
(178)
(18)
(106)
(2629)
130
7
19
156
(18)
(22)
115
(35)
80
82
(2)
80
030
273217830
1) Yara currently has no share-based compensation program resulting in a dilutive effect on earnings per share
1H 2018
6023
23
3
6048
(4596)
(613)
(401)
(23)
(244)
(5877)
171
27
43
242
(294)
(63)
(115)
12
(103)
(96)
(7)
(103)
(035)
273217830
1H 2017 2017
5440 11358
14 55
(12) (13)
5442 11400
(4055) (8547)
(518) (1090)
(348) (724)
(19) (60)
(193) (521)
(5132) (10942)
310 457
16 29
40 77
366 563
51 99
(43) (82)
374 581
(97) (99)
277 482
283 477
(5) 5
277 482
103 175
273217830 273217830
14 Yara second quarter 2018
Condensed consolidated interim statement of comprehensive income
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Net income (216) 80 (103) 277 482
Other comprehensive income that may be reclassified to statement of income (net of tax) Currency translation adjustments (174) 95 (211) 133 235
Hedge of net investments (30) 15 3 16 33 Share of other comprehensive income of equity-accounted investees excluding remeasurements (0) 2 (0) 2 4
Net other comprehensive income(loss) that may be reclassified to statement of income in subsequent periods net of tax (204) 112 (208) 151 273
Other comprehensive income that will not be reclassified to statement of income in subsequent periods (net of tax) Currency translation adjustments 1) (107) 30 15 33 85
Net gain(loss) on equity instruments at fair value through other comprehensive income (1) (0) (3) (0) (1)
Remeasurement gains(losses) on defined benefit plans - - - - 64
Net other comprehensive income that will not be reclassified to statement of income in subsequent periods net of tax (108) 29 12 33 148
Reclassification adjustments of the period Cash flow hedges 0 0 0 0 1
Total other comprehensive income net of tax (312) 141 (196) 184 421
Total comprehensive income net of tax (528) 222 (298) 461 903
Total comprehensive income attributable to Shareholders of the parent (496) 232 (265) 469 900
Non-controlling interests (32) (10) (33) (7) 3
Total (528) 222 (298) 461 903
1) Currency translation adjustments that will not be reclassified to statement of income are related to entities with functional currency NOK as these are not classified as foreign operations to Yara International ASA
Yara second quarter 2018 15
Condensed consolidated interim statement of changes in equity
USD millions
Balance at 31 December 2016
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Share capital increase in subsidiary non-controlling interest
Dividends distributed Balance at 30 June 2017
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Balance at 31 December 2017
IFRS 9 and IFRS 15 implementation effect 3)
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Dividends distributed Balance at 30 June 2018
1) Par value 170
Share Capital1)
66
-
-
-
-
-
-
-
-
66
-
-
-
-
-
66
-
-
-
-
-
-
-
66
Premium paid-in capital
(49)
-
-
-
-
-
-
-
-
(49)
-
-
-
-
-
(49)
-
-
-
-
-
-
-
(49)
Currency translation
adjustments
(1321)
-
168
-
168
-
-
-
-
(1154)
-
154
-
154
-
(1000)
-
(170)
(0)
(170)
-
-
-
(1169)
Fair value reserve of financial assets at FVOCI 2)
2
-
-
-
-
-
-
-
-
1
-
(1)
-
(1)
-
-
-
(3)
-
(3)
-
-
-
(3)
Hedge Attributable Cash of net Total to share- Non-flow invest- other Retained holders of controlling Total
hedges ments reserves earnings the parent interests equity
(8) (192) (1520) 10150 8647 270 8917
- - - 283 283 (5) 277
- 16 184 - 184 (2) 182
2 - 2 - 2 - 2
2 16 186 - 186 (2) 184
- - - 1 1 - 1
- - - (1) (1) (2) (3)
- - - - - 9 9
- - - (321) (321) (0) (322)
(6) (176) (1334) 10112 8795 269 9064
- - - 194 194 10 205
1 17 171 64 235 - 235
2 - 2 - 2 - 2
2 17 173 64 237 - 237
- - - (1) (1) - (1)
(3) (159) (1161) 10369 9225 280 9505
(4) (4) (4)
- - - (96) (96) (7) (103)
- 3 (169) - (169) (27) (195)
- - (0) - (0) - (0)
- 3 (169) - (169) (27) (196)
- - - 1 1 - 1
- - - - - (1) (2)
- - - (219) (219) (2) (221)
(3) (155) (1330) 10050 8737 243 8980
2) Gains or losses on investments in equity instruments for which the Group has elected to present changes in fair value in OCI will no longer be transferred to profit or loss
upon derecognition of the equity instrument 3) Please see Accounting Policies page 19 and 20 for further information
16 Yara second quarter 2018
Condensed consolidated interim statement of financial position
USD millions Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Assets Non-current assets Deferred tax assets Intangible assets Property plant and equipment Equity-accounted investees Other non-current assets Total non-current assets
5
567
410
1134
8322
1030
472
11369
355
1091
7432
1051
368
10298
371
1106
7967
1096
460
11000
300
1067
6939
1067
377
9750
Prepaid expenses and other current assets Cash and cash equivalents Non-current assets and disposal group classified as held-for-sale Total current assets
Current assets Inventories Trade receivables
8
5
2376
1638
638
998
4
5653
2263
1264
604
274
10
4415
2229
1398
607
544
4
4783
2042
1200
559
436
11
4247
Total assets 17022 14713 15783 13997
30 Jun 2018
Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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 DEU 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 ESP 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 ETI 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 FRA 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 GRE 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 HEB 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 HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA 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 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 LVI 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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 RUM 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 RUS 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 SKY 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 SLV 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 SUO 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 SVE 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 TUR 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 UKR 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 ENU (Use these settings to create Adobe PDF documents best suited for high-quality prepress printing Created PDF documents can be opened with Acrobat and Adobe Reader 50 and later)13 gtgt13 Namespace [13 (Adobe)13 (Common)13 (10)13 ]13 OtherNamespaces [13 ltlt13 AsReaderSpreads false13 CropImagesToFrames true13 ErrorControl WarnAndContinue13 FlattenerIgnoreSpreadOverrides false13 IncludeGuidesGrids false13 IncludeNonPrinting false13 IncludeSlug false13 Namespace [13 (Adobe)13 (InDesign)13 (40)13 ]13 OmitPlacedBitmaps false13 OmitPlacedEPS false13 OmitPlacedPDF false13 SimulateOverprint Legacy13 gtgt13 ltlt13 AddBleedMarks false13 AddColorBars false13 AddCropMarks false13 AddPageInfo false13 AddRegMarks false13 ConvertColors ConvertToCMYK13 DestinationProfileName ()13 DestinationProfileSelector DocumentCMYK13 Downsample16BitImages true13 FlattenerPreset ltlt13 PresetSelector MediumResolution13 gtgt13 FormElements false13 GenerateStructure false13 IncludeBookmarks false13 IncludeHyperlinks false13 IncludeInteractive false13 IncludeLayers false13 IncludeProfiles false13 MultimediaHandling 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10 Yara second quarter 2018
Risk and uncertainty As described in Yararsquos Annual Report for 2017 Yararsquos total risk exposure is analyzed and evaluated at group level Risk evaluations are integrated in all business activities both at group and business unit level increasing Yararsquos ability to take advantage of business opportunities Yararsquos most important market risk is related to the margin between nitrogen fertilizer prices and natural gas prices Although there is a positive long-term correlation between these prices margins are influenced by the supplydemand balance for food relative to energy Yara has in place a system for credit and currency risk management with
defined limits for exposure both at country customer and currency level Yararsquos geographically diversified portfolio reduces the overall credit and currency risk of the Group As the fertilizer business is essentially a US dollar business with both revenues and raw material costs mainly priced in US dollars Yara seeks to keep most of its debt in US dollars to reduce its overall US dollar currency exposure There has not been any significant change in the risk exposures The risks and uncertainties for the remaining six months of the year are described in Outlook
Related parties Note 35 in the annual report for 2017 provides details of related parties During the first half of 2018 there have not been any changes or transactions that significantly impact the grouprsquos financial position or result for the period
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Board member
Trond Berger Board member
Rune Bratteberg Board member
Kjersti Aass Board member
Svein Tore Holsether President and CEO
11 Yara second quarter 2018
Definitions and variance analysis Several of Yararsquos purchase and sales contracts for commodities are or have embedded terms and conditions which under IFRS are accounted for as derivatives The derivative elements of these contracts are presented under ldquoCommodity-based derivatives gain(loss)rdquo in the condensed consolidated interim statement of income and are referenced in the variance analysis (see below) as ldquoSpecial itemsrdquo
In the segment information ldquoOther and eliminationsrdquo consists mainly of cross-segment eliminations in addition to Yararsquos headquarter costs Profits on sales from Production to Crop Nutrition and Industrial are not recognized in the consolidated Yara condensed consolidated interim statement of income before the products are sold to external customers These internal profits are eliminated in ldquoOther and eliminationsrdquo Changes in ldquoOther and eliminationsrdquo EBITDA therefore usually reflect changes in Production-sourced stock (volumes) held by Crop Nutrition and Industrial but can also be affected by changes in Production margins on products sold to Crop Nutrition and Industrial as transfer prices move in line with arms-length market prices With all other variables held constant higher stocks would result in a higher (negative) elimination effect in Yararsquos results as would higher Production margins Over time these effects tend to even out to the extent that stock levels and margins normalize
In the discussion of historical operating results Yara refers to certain non-GAAP financial measures including operating income EBITDA and CROGI Yararsquos management makes regular use of these measures to evaluate the performance both in absolute terms and comparatively from period to period Yara manages long-term debt and taxes on a group basis Therefore net income is discussed only for the Group as a whole
Operating income include all activities which normally are to be considered as ldquooperatingrdquo Share of net income in equity-accounted investees is however not included
EBITDA is presented because Yara believe that it is frequently used by securities analysts investors and other interested parties as a measure of a companyrsquos operating performance and debt servicing ability It assists in comparing performance on a consistent basis without regard to depreciation and amortization which can vary
significantly depending on accounting methods or non-operating factors and provides a more complete and comprehensive analysis of our operating performance relative to other companies EBITDA as defined by Yara includes operating income interest income other financial income and share of net income in equity-accounted investees It excludes depreciation amortization and impairment loss as well as amortization of excess values in equity-accounted investees Yararsquos definition of EBITDA may differ from that of other companies
EBITDA should not be considered as an alternative to operating income and income before tax as an indicator of the companyrsquos operations in accordance with generally accepted accounting principles Nor is EBITDA an alternative to cash flow from operating activities in accordance with generally accepted accounting principles
Yara management uses CROGI (Cash Return On Gross Investment) to measure financial performance of Yararsquos segments as well as the whole of the business CROGI is defined as gross cash flow divided by average gross investment and is calculated on a 12-month rolling basis ldquoGross cash flowrdquo is defined as EBITDA less total tax expense excluding tax on net foreign currency translation gainloss On Yara level actual tax expense is used for the calculation while a standardized tax rate of 25 is used on segment level ldquoGross Investmentrdquo is defined as total assets (exclusive of deferred tax assets cash and cash equivalents other liquid assets and fair value adjustment recognized in equity) plus accumulated depreciation and amortization less all short-term interest-free liabilities except deferred tax liabilities On segment level cash and other liquid assets are not excluded from ldquoGross Investmentrdquo
ROCE (Return on capital employed) is presented as an additional performance measure to CROGI to simplify benchmarking with other companies ROCE is defined as EBIT minus tax (less tax on net foreign currency translation gainloss) divided by average capital employed and is calculated on a 12-month rolling average basis Capital employed is defined as total assets adjusted for cash and cash equivalents other liquid assets deferred tax assets fair value adjustment recognized in equity minus other current liabilities
12 Yara second quarter 2018
In order to track underlying business developments from period to period Yararsquos management also uses a variance analysis methodology developed within the Company (ldquoVariance Analysisrdquo) that involves the extraction of financial information from the accounting system as well as statistical and other data from internal management information systems Management considers the estimates produced by the Variance Analysis and the identification of trends based on such analysis sufficiently precise to provide useful data to monitor our business However these estimates should be understood to be less than an exact quantification of the changes and trends indicated by such analysis
The variance analysis presented in Yara quarterly and annual financial reports is prepared on a Yara EBITDA basis including net income from equity-accounted investees The volume margin and other variances presented therefore include effects generated by performance in equity-accounted investees
Yara defines ldquospecial itemsrdquo as items in the results which are not regarded as part of underlying business performance for the period These comprise restructuring-related items contract derivatives impairments and other items which are not primarily related to the period in which they are recognized subject to a minimum value of USD 5 million per item within a 12 month period ldquoContract
Special items
derivativesrdquo are commodity-based derivative gains or losses (see above) which are not the result of active exposure or position management by Yara These are defined as special items regardless of amount
Net interest-bearing debt is defined by Yara as cash and cash equivalents and other liquid assets reduced for bank loans other short-term interest bearing debt and long-term interest-bearing debt including current portion The debtequity ratio is calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests
Earnings per share excluding currency and special items represent net income after non-controlling interests excluding foreign currency translation gainloss and special items after tax divided by average number of shares outstanding in the period Tax effect on foreign currency and special items is calculated based on relevant statutory tax rate for the sake of simplicity
Net operating capital is calculated as trade receivables net of impairments plus inventories net of write-downs less trade payables and prepayments from customers
Reconciliations of alternative performance measures are provided on page 34 to 36
EBITDA effect Operating income effect
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
(0) - (9) -
- - - -
(10) - (10) -
(10) - (19) -
(9) - (9) -
(9) - (9) -
1 2 2 (12)
- 12 - 12
- - - -
(7) (7) -
(6) 14 (4) -
(24) 14 (32) -
2Q 2017 2Q 2018 1H 2017 1H 2018
Stamp duty on purchase of Babrala (India) Asset impairment write-down Restructuring costs Total Crop Nutrition
Restructuring costs Total Industrial
Contract derivatives gain(loss) Refund of energy intensive tax Asset impairment write-down QAFCO tax adjustment Total Production
Total Yara
1 2 2 (12)
- 12 - 12
(6) (12) (6) (12)
- - - -
(5) (3) (12)
(37) (3) (44) (17)
(0) - (9) -
(14) (5) (14) (6)
(10) - (10) -
(24) (5) (33) (6)
(9) - (9) -
(9) - (9) -
2
Yara second quarter 2018 13
Condensed consolidated interim statement of income
USD millions except share information
Revenue Other income Commodity based derivatives gain(loss) Revenue and other income
Raw materials energy costs and freight expenses Payroll and related costs Depreciation and amortization Impairment loss Other operating expenses Operating costs and expenses
Operating income
Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax
Income tax Net income
Net income attributable to Shareholders of the parent Non-controlling interests Net income
Basic earnings per share 1)
Weighted average number of shares outstanding
Notes
3
6
6
67
2
2Q 2018
3185
6
1
3192
(2489)
(312)
(199)
(20)
(133)
(3154)
38
17
22
77
(302)
(36)
(261)
45
(216)
(211)
(5)
(216)
(077)
273217830
2Q 2017
2744
12
2
2759
(2070)
(257)
(178)
(18)
(106)
(2629)
130
7
19
156
(18)
(22)
115
(35)
80
82
(2)
80
030
273217830
1) Yara currently has no share-based compensation program resulting in a dilutive effect on earnings per share
1H 2018
6023
23
3
6048
(4596)
(613)
(401)
(23)
(244)
(5877)
171
27
43
242
(294)
(63)
(115)
12
(103)
(96)
(7)
(103)
(035)
273217830
1H 2017 2017
5440 11358
14 55
(12) (13)
5442 11400
(4055) (8547)
(518) (1090)
(348) (724)
(19) (60)
(193) (521)
(5132) (10942)
310 457
16 29
40 77
366 563
51 99
(43) (82)
374 581
(97) (99)
277 482
283 477
(5) 5
277 482
103 175
273217830 273217830
14 Yara second quarter 2018
Condensed consolidated interim statement of comprehensive income
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Net income (216) 80 (103) 277 482
Other comprehensive income that may be reclassified to statement of income (net of tax) Currency translation adjustments (174) 95 (211) 133 235
Hedge of net investments (30) 15 3 16 33 Share of other comprehensive income of equity-accounted investees excluding remeasurements (0) 2 (0) 2 4
Net other comprehensive income(loss) that may be reclassified to statement of income in subsequent periods net of tax (204) 112 (208) 151 273
Other comprehensive income that will not be reclassified to statement of income in subsequent periods (net of tax) Currency translation adjustments 1) (107) 30 15 33 85
Net gain(loss) on equity instruments at fair value through other comprehensive income (1) (0) (3) (0) (1)
Remeasurement gains(losses) on defined benefit plans - - - - 64
Net other comprehensive income that will not be reclassified to statement of income in subsequent periods net of tax (108) 29 12 33 148
Reclassification adjustments of the period Cash flow hedges 0 0 0 0 1
Total other comprehensive income net of tax (312) 141 (196) 184 421
Total comprehensive income net of tax (528) 222 (298) 461 903
Total comprehensive income attributable to Shareholders of the parent (496) 232 (265) 469 900
Non-controlling interests (32) (10) (33) (7) 3
Total (528) 222 (298) 461 903
1) Currency translation adjustments that will not be reclassified to statement of income are related to entities with functional currency NOK as these are not classified as foreign operations to Yara International ASA
Yara second quarter 2018 15
Condensed consolidated interim statement of changes in equity
USD millions
Balance at 31 December 2016
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Share capital increase in subsidiary non-controlling interest
Dividends distributed Balance at 30 June 2017
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Balance at 31 December 2017
IFRS 9 and IFRS 15 implementation effect 3)
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Dividends distributed Balance at 30 June 2018
1) Par value 170
Share Capital1)
66
-
-
-
-
-
-
-
-
66
-
-
-
-
-
66
-
-
-
-
-
-
-
66
Premium paid-in capital
(49)
-
-
-
-
-
-
-
-
(49)
-
-
-
-
-
(49)
-
-
-
-
-
-
-
(49)
Currency translation
adjustments
(1321)
-
168
-
168
-
-
-
-
(1154)
-
154
-
154
-
(1000)
-
(170)
(0)
(170)
-
-
-
(1169)
Fair value reserve of financial assets at FVOCI 2)
2
-
-
-
-
-
-
-
-
1
-
(1)
-
(1)
-
-
-
(3)
-
(3)
-
-
-
(3)
Hedge Attributable Cash of net Total to share- Non-flow invest- other Retained holders of controlling Total
hedges ments reserves earnings the parent interests equity
(8) (192) (1520) 10150 8647 270 8917
- - - 283 283 (5) 277
- 16 184 - 184 (2) 182
2 - 2 - 2 - 2
2 16 186 - 186 (2) 184
- - - 1 1 - 1
- - - (1) (1) (2) (3)
- - - - - 9 9
- - - (321) (321) (0) (322)
(6) (176) (1334) 10112 8795 269 9064
- - - 194 194 10 205
1 17 171 64 235 - 235
2 - 2 - 2 - 2
2 17 173 64 237 - 237
- - - (1) (1) - (1)
(3) (159) (1161) 10369 9225 280 9505
(4) (4) (4)
- - - (96) (96) (7) (103)
- 3 (169) - (169) (27) (195)
- - (0) - (0) - (0)
- 3 (169) - (169) (27) (196)
- - - 1 1 - 1
- - - - - (1) (2)
- - - (219) (219) (2) (221)
(3) (155) (1330) 10050 8737 243 8980
2) Gains or losses on investments in equity instruments for which the Group has elected to present changes in fair value in OCI will no longer be transferred to profit or loss
upon derecognition of the equity instrument 3) Please see Accounting Policies page 19 and 20 for further information
16 Yara second quarter 2018
Condensed consolidated interim statement of financial position
USD millions Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Assets Non-current assets Deferred tax assets Intangible assets Property plant and equipment Equity-accounted investees Other non-current assets Total non-current assets
5
567
410
1134
8322
1030
472
11369
355
1091
7432
1051
368
10298
371
1106
7967
1096
460
11000
300
1067
6939
1067
377
9750
Prepaid expenses and other current assets Cash and cash equivalents Non-current assets and disposal group classified as held-for-sale Total current assets
Current assets Inventories Trade receivables
8
5
2376
1638
638
998
4
5653
2263
1264
604
274
10
4415
2229
1398
607
544
4
4783
2042
1200
559
436
11
4247
Total assets 17022 14713 15783 13997
30 Jun 2018
Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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11 Yara second quarter 2018
Definitions and variance analysis Several of Yararsquos purchase and sales contracts for commodities are or have embedded terms and conditions which under IFRS are accounted for as derivatives The derivative elements of these contracts are presented under ldquoCommodity-based derivatives gain(loss)rdquo in the condensed consolidated interim statement of income and are referenced in the variance analysis (see below) as ldquoSpecial itemsrdquo
In the segment information ldquoOther and eliminationsrdquo consists mainly of cross-segment eliminations in addition to Yararsquos headquarter costs Profits on sales from Production to Crop Nutrition and Industrial are not recognized in the consolidated Yara condensed consolidated interim statement of income before the products are sold to external customers These internal profits are eliminated in ldquoOther and eliminationsrdquo Changes in ldquoOther and eliminationsrdquo EBITDA therefore usually reflect changes in Production-sourced stock (volumes) held by Crop Nutrition and Industrial but can also be affected by changes in Production margins on products sold to Crop Nutrition and Industrial as transfer prices move in line with arms-length market prices With all other variables held constant higher stocks would result in a higher (negative) elimination effect in Yararsquos results as would higher Production margins Over time these effects tend to even out to the extent that stock levels and margins normalize
In the discussion of historical operating results Yara refers to certain non-GAAP financial measures including operating income EBITDA and CROGI Yararsquos management makes regular use of these measures to evaluate the performance both in absolute terms and comparatively from period to period Yara manages long-term debt and taxes on a group basis Therefore net income is discussed only for the Group as a whole
Operating income include all activities which normally are to be considered as ldquooperatingrdquo Share of net income in equity-accounted investees is however not included
EBITDA is presented because Yara believe that it is frequently used by securities analysts investors and other interested parties as a measure of a companyrsquos operating performance and debt servicing ability It assists in comparing performance on a consistent basis without regard to depreciation and amortization which can vary
significantly depending on accounting methods or non-operating factors and provides a more complete and comprehensive analysis of our operating performance relative to other companies EBITDA as defined by Yara includes operating income interest income other financial income and share of net income in equity-accounted investees It excludes depreciation amortization and impairment loss as well as amortization of excess values in equity-accounted investees Yararsquos definition of EBITDA may differ from that of other companies
EBITDA should not be considered as an alternative to operating income and income before tax as an indicator of the companyrsquos operations in accordance with generally accepted accounting principles Nor is EBITDA an alternative to cash flow from operating activities in accordance with generally accepted accounting principles
Yara management uses CROGI (Cash Return On Gross Investment) to measure financial performance of Yararsquos segments as well as the whole of the business CROGI is defined as gross cash flow divided by average gross investment and is calculated on a 12-month rolling basis ldquoGross cash flowrdquo is defined as EBITDA less total tax expense excluding tax on net foreign currency translation gainloss On Yara level actual tax expense is used for the calculation while a standardized tax rate of 25 is used on segment level ldquoGross Investmentrdquo is defined as total assets (exclusive of deferred tax assets cash and cash equivalents other liquid assets and fair value adjustment recognized in equity) plus accumulated depreciation and amortization less all short-term interest-free liabilities except deferred tax liabilities On segment level cash and other liquid assets are not excluded from ldquoGross Investmentrdquo
ROCE (Return on capital employed) is presented as an additional performance measure to CROGI to simplify benchmarking with other companies ROCE is defined as EBIT minus tax (less tax on net foreign currency translation gainloss) divided by average capital employed and is calculated on a 12-month rolling average basis Capital employed is defined as total assets adjusted for cash and cash equivalents other liquid assets deferred tax assets fair value adjustment recognized in equity minus other current liabilities
12 Yara second quarter 2018
In order to track underlying business developments from period to period Yararsquos management also uses a variance analysis methodology developed within the Company (ldquoVariance Analysisrdquo) that involves the extraction of financial information from the accounting system as well as statistical and other data from internal management information systems Management considers the estimates produced by the Variance Analysis and the identification of trends based on such analysis sufficiently precise to provide useful data to monitor our business However these estimates should be understood to be less than an exact quantification of the changes and trends indicated by such analysis
The variance analysis presented in Yara quarterly and annual financial reports is prepared on a Yara EBITDA basis including net income from equity-accounted investees The volume margin and other variances presented therefore include effects generated by performance in equity-accounted investees
Yara defines ldquospecial itemsrdquo as items in the results which are not regarded as part of underlying business performance for the period These comprise restructuring-related items contract derivatives impairments and other items which are not primarily related to the period in which they are recognized subject to a minimum value of USD 5 million per item within a 12 month period ldquoContract
Special items
derivativesrdquo are commodity-based derivative gains or losses (see above) which are not the result of active exposure or position management by Yara These are defined as special items regardless of amount
Net interest-bearing debt is defined by Yara as cash and cash equivalents and other liquid assets reduced for bank loans other short-term interest bearing debt and long-term interest-bearing debt including current portion The debtequity ratio is calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests
Earnings per share excluding currency and special items represent net income after non-controlling interests excluding foreign currency translation gainloss and special items after tax divided by average number of shares outstanding in the period Tax effect on foreign currency and special items is calculated based on relevant statutory tax rate for the sake of simplicity
Net operating capital is calculated as trade receivables net of impairments plus inventories net of write-downs less trade payables and prepayments from customers
Reconciliations of alternative performance measures are provided on page 34 to 36
EBITDA effect Operating income effect
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
(0) - (9) -
- - - -
(10) - (10) -
(10) - (19) -
(9) - (9) -
(9) - (9) -
1 2 2 (12)
- 12 - 12
- - - -
(7) (7) -
(6) 14 (4) -
(24) 14 (32) -
2Q 2017 2Q 2018 1H 2017 1H 2018
Stamp duty on purchase of Babrala (India) Asset impairment write-down Restructuring costs Total Crop Nutrition
Restructuring costs Total Industrial
Contract derivatives gain(loss) Refund of energy intensive tax Asset impairment write-down QAFCO tax adjustment Total Production
Total Yara
1 2 2 (12)
- 12 - 12
(6) (12) (6) (12)
- - - -
(5) (3) (12)
(37) (3) (44) (17)
(0) - (9) -
(14) (5) (14) (6)
(10) - (10) -
(24) (5) (33) (6)
(9) - (9) -
(9) - (9) -
2
Yara second quarter 2018 13
Condensed consolidated interim statement of income
USD millions except share information
Revenue Other income Commodity based derivatives gain(loss) Revenue and other income
Raw materials energy costs and freight expenses Payroll and related costs Depreciation and amortization Impairment loss Other operating expenses Operating costs and expenses
Operating income
Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax
Income tax Net income
Net income attributable to Shareholders of the parent Non-controlling interests Net income
Basic earnings per share 1)
Weighted average number of shares outstanding
Notes
3
6
6
67
2
2Q 2018
3185
6
1
3192
(2489)
(312)
(199)
(20)
(133)
(3154)
38
17
22
77
(302)
(36)
(261)
45
(216)
(211)
(5)
(216)
(077)
273217830
2Q 2017
2744
12
2
2759
(2070)
(257)
(178)
(18)
(106)
(2629)
130
7
19
156
(18)
(22)
115
(35)
80
82
(2)
80
030
273217830
1) Yara currently has no share-based compensation program resulting in a dilutive effect on earnings per share
1H 2018
6023
23
3
6048
(4596)
(613)
(401)
(23)
(244)
(5877)
171
27
43
242
(294)
(63)
(115)
12
(103)
(96)
(7)
(103)
(035)
273217830
1H 2017 2017
5440 11358
14 55
(12) (13)
5442 11400
(4055) (8547)
(518) (1090)
(348) (724)
(19) (60)
(193) (521)
(5132) (10942)
310 457
16 29
40 77
366 563
51 99
(43) (82)
374 581
(97) (99)
277 482
283 477
(5) 5
277 482
103 175
273217830 273217830
14 Yara second quarter 2018
Condensed consolidated interim statement of comprehensive income
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Net income (216) 80 (103) 277 482
Other comprehensive income that may be reclassified to statement of income (net of tax) Currency translation adjustments (174) 95 (211) 133 235
Hedge of net investments (30) 15 3 16 33 Share of other comprehensive income of equity-accounted investees excluding remeasurements (0) 2 (0) 2 4
Net other comprehensive income(loss) that may be reclassified to statement of income in subsequent periods net of tax (204) 112 (208) 151 273
Other comprehensive income that will not be reclassified to statement of income in subsequent periods (net of tax) Currency translation adjustments 1) (107) 30 15 33 85
Net gain(loss) on equity instruments at fair value through other comprehensive income (1) (0) (3) (0) (1)
Remeasurement gains(losses) on defined benefit plans - - - - 64
Net other comprehensive income that will not be reclassified to statement of income in subsequent periods net of tax (108) 29 12 33 148
Reclassification adjustments of the period Cash flow hedges 0 0 0 0 1
Total other comprehensive income net of tax (312) 141 (196) 184 421
Total comprehensive income net of tax (528) 222 (298) 461 903
Total comprehensive income attributable to Shareholders of the parent (496) 232 (265) 469 900
Non-controlling interests (32) (10) (33) (7) 3
Total (528) 222 (298) 461 903
1) Currency translation adjustments that will not be reclassified to statement of income are related to entities with functional currency NOK as these are not classified as foreign operations to Yara International ASA
Yara second quarter 2018 15
Condensed consolidated interim statement of changes in equity
USD millions
Balance at 31 December 2016
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Share capital increase in subsidiary non-controlling interest
Dividends distributed Balance at 30 June 2017
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Balance at 31 December 2017
IFRS 9 and IFRS 15 implementation effect 3)
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Dividends distributed Balance at 30 June 2018
1) Par value 170
Share Capital1)
66
-
-
-
-
-
-
-
-
66
-
-
-
-
-
66
-
-
-
-
-
-
-
66
Premium paid-in capital
(49)
-
-
-
-
-
-
-
-
(49)
-
-
-
-
-
(49)
-
-
-
-
-
-
-
(49)
Currency translation
adjustments
(1321)
-
168
-
168
-
-
-
-
(1154)
-
154
-
154
-
(1000)
-
(170)
(0)
(170)
-
-
-
(1169)
Fair value reserve of financial assets at FVOCI 2)
2
-
-
-
-
-
-
-
-
1
-
(1)
-
(1)
-
-
-
(3)
-
(3)
-
-
-
(3)
Hedge Attributable Cash of net Total to share- Non-flow invest- other Retained holders of controlling Total
hedges ments reserves earnings the parent interests equity
(8) (192) (1520) 10150 8647 270 8917
- - - 283 283 (5) 277
- 16 184 - 184 (2) 182
2 - 2 - 2 - 2
2 16 186 - 186 (2) 184
- - - 1 1 - 1
- - - (1) (1) (2) (3)
- - - - - 9 9
- - - (321) (321) (0) (322)
(6) (176) (1334) 10112 8795 269 9064
- - - 194 194 10 205
1 17 171 64 235 - 235
2 - 2 - 2 - 2
2 17 173 64 237 - 237
- - - (1) (1) - (1)
(3) (159) (1161) 10369 9225 280 9505
(4) (4) (4)
- - - (96) (96) (7) (103)
- 3 (169) - (169) (27) (195)
- - (0) - (0) - (0)
- 3 (169) - (169) (27) (196)
- - - 1 1 - 1
- - - - - (1) (2)
- - - (219) (219) (2) (221)
(3) (155) (1330) 10050 8737 243 8980
2) Gains or losses on investments in equity instruments for which the Group has elected to present changes in fair value in OCI will no longer be transferred to profit or loss
upon derecognition of the equity instrument 3) Please see Accounting Policies page 19 and 20 for further information
16 Yara second quarter 2018
Condensed consolidated interim statement of financial position
USD millions Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Assets Non-current assets Deferred tax assets Intangible assets Property plant and equipment Equity-accounted investees Other non-current assets Total non-current assets
5
567
410
1134
8322
1030
472
11369
355
1091
7432
1051
368
10298
371
1106
7967
1096
460
11000
300
1067
6939
1067
377
9750
Prepaid expenses and other current assets Cash and cash equivalents Non-current assets and disposal group classified as held-for-sale Total current assets
Current assets Inventories Trade receivables
8
5
2376
1638
638
998
4
5653
2263
1264
604
274
10
4415
2229
1398
607
544
4
4783
2042
1200
559
436
11
4247
Total assets 17022 14713 15783 13997
30 Jun 2018
Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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 CHS ltFEFF4f7f75288fd94e9b8bbe5b9a521b5efa7684002000410064006f006200650020005000440046002065876863900275284e8e9ad88d2891cf76845370524d53705237300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c676562535f00521b5efa768400200050004400460020658768633002gt13 CHT ltFEFF4f7f752890194e9b8a2d7f6e5efa7acb7684002000410064006f006200650020005000440046002065874ef69069752865bc9ad854c18cea76845370524d5370523786557406300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c4f86958b555f5df25efa7acb76840020005000440046002065874ef63002gt13 CZE 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 DAN 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 DEU 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 ESP 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 ETI 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 FRA 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 GRE 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HEB ltFEFF05D405E905EA05DE05E905D5002005D105D405D205D305E805D505EA002005D005DC05D4002005DB05D305D9002005DC05D905E605D505E8002005DE05E105DE05DB05D9002000410064006F006200650020005000440046002005D405DE05D505EA05D005DE05D905DD002005DC05D405D305E405E105EA002005E705D305DD002D05D305E405D505E1002005D005D905DB05D505EA05D905EA002E002005DE05E105DE05DB05D90020005000440046002005E905E005D505E605E805D5002005E005D905EA05E005D905DD002005DC05E405EA05D905D705D4002005D105D005DE05E605E205D505EA0020004100630072006F006200610074002005D5002D00410064006F00620065002000520065006100640065007200200035002E0030002005D505D205E805E105D005D505EA002005DE05EA05E705D305DE05D505EA002005D905D505EA05E8002E05D005DE05D905DD002005DC002D005000440046002F0058002D0033002C002005E205D905D905E005D5002005D105DE05D305E805D905DA002005DC05DE05E905EA05DE05E9002005E905DC0020004100630072006F006200610074002E002005DE05E105DE05DB05D90020005000440046002005E905E005D505E605E805D5002005E005D905EA05E005D905DD002005DC05E405EA05D905D705D4002005D105D005DE05E605E205D505EA0020004100630072006F006200610074002005D5002D00410064006F00620065002000520065006100640065007200200035002E0030002005D505D205E805E105D005D505EA002005DE05EA05E705D305DE05D505EA002005D905D505EA05E8002Egt13 HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA 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 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 LVI 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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 RUM 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 RUS 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 SKY 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 SLV 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 SUO 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 TUR 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12 Yara second quarter 2018
In order to track underlying business developments from period to period Yararsquos management also uses a variance analysis methodology developed within the Company (ldquoVariance Analysisrdquo) that involves the extraction of financial information from the accounting system as well as statistical and other data from internal management information systems Management considers the estimates produced by the Variance Analysis and the identification of trends based on such analysis sufficiently precise to provide useful data to monitor our business However these estimates should be understood to be less than an exact quantification of the changes and trends indicated by such analysis
The variance analysis presented in Yara quarterly and annual financial reports is prepared on a Yara EBITDA basis including net income from equity-accounted investees The volume margin and other variances presented therefore include effects generated by performance in equity-accounted investees
Yara defines ldquospecial itemsrdquo as items in the results which are not regarded as part of underlying business performance for the period These comprise restructuring-related items contract derivatives impairments and other items which are not primarily related to the period in which they are recognized subject to a minimum value of USD 5 million per item within a 12 month period ldquoContract
Special items
derivativesrdquo are commodity-based derivative gains or losses (see above) which are not the result of active exposure or position management by Yara These are defined as special items regardless of amount
Net interest-bearing debt is defined by Yara as cash and cash equivalents and other liquid assets reduced for bank loans other short-term interest bearing debt and long-term interest-bearing debt including current portion The debtequity ratio is calculated as net interest-bearing debt divided by shareholdersrsquo equity plus non-controlling interests
Earnings per share excluding currency and special items represent net income after non-controlling interests excluding foreign currency translation gainloss and special items after tax divided by average number of shares outstanding in the period Tax effect on foreign currency and special items is calculated based on relevant statutory tax rate for the sake of simplicity
Net operating capital is calculated as trade receivables net of impairments plus inventories net of write-downs less trade payables and prepayments from customers
Reconciliations of alternative performance measures are provided on page 34 to 36
EBITDA effect Operating income effect
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
(0) - (9) -
- - - -
(10) - (10) -
(10) - (19) -
(9) - (9) -
(9) - (9) -
1 2 2 (12)
- 12 - 12
- - - -
(7) (7) -
(6) 14 (4) -
(24) 14 (32) -
2Q 2017 2Q 2018 1H 2017 1H 2018
Stamp duty on purchase of Babrala (India) Asset impairment write-down Restructuring costs Total Crop Nutrition
Restructuring costs Total Industrial
Contract derivatives gain(loss) Refund of energy intensive tax Asset impairment write-down QAFCO tax adjustment Total Production
Total Yara
1 2 2 (12)
- 12 - 12
(6) (12) (6) (12)
- - - -
(5) (3) (12)
(37) (3) (44) (17)
(0) - (9) -
(14) (5) (14) (6)
(10) - (10) -
(24) (5) (33) (6)
(9) - (9) -
(9) - (9) -
2
Yara second quarter 2018 13
Condensed consolidated interim statement of income
USD millions except share information
Revenue Other income Commodity based derivatives gain(loss) Revenue and other income
Raw materials energy costs and freight expenses Payroll and related costs Depreciation and amortization Impairment loss Other operating expenses Operating costs and expenses
Operating income
Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax
Income tax Net income
Net income attributable to Shareholders of the parent Non-controlling interests Net income
Basic earnings per share 1)
Weighted average number of shares outstanding
Notes
3
6
6
67
2
2Q 2018
3185
6
1
3192
(2489)
(312)
(199)
(20)
(133)
(3154)
38
17
22
77
(302)
(36)
(261)
45
(216)
(211)
(5)
(216)
(077)
273217830
2Q 2017
2744
12
2
2759
(2070)
(257)
(178)
(18)
(106)
(2629)
130
7
19
156
(18)
(22)
115
(35)
80
82
(2)
80
030
273217830
1) Yara currently has no share-based compensation program resulting in a dilutive effect on earnings per share
1H 2018
6023
23
3
6048
(4596)
(613)
(401)
(23)
(244)
(5877)
171
27
43
242
(294)
(63)
(115)
12
(103)
(96)
(7)
(103)
(035)
273217830
1H 2017 2017
5440 11358
14 55
(12) (13)
5442 11400
(4055) (8547)
(518) (1090)
(348) (724)
(19) (60)
(193) (521)
(5132) (10942)
310 457
16 29
40 77
366 563
51 99
(43) (82)
374 581
(97) (99)
277 482
283 477
(5) 5
277 482
103 175
273217830 273217830
14 Yara second quarter 2018
Condensed consolidated interim statement of comprehensive income
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Net income (216) 80 (103) 277 482
Other comprehensive income that may be reclassified to statement of income (net of tax) Currency translation adjustments (174) 95 (211) 133 235
Hedge of net investments (30) 15 3 16 33 Share of other comprehensive income of equity-accounted investees excluding remeasurements (0) 2 (0) 2 4
Net other comprehensive income(loss) that may be reclassified to statement of income in subsequent periods net of tax (204) 112 (208) 151 273
Other comprehensive income that will not be reclassified to statement of income in subsequent periods (net of tax) Currency translation adjustments 1) (107) 30 15 33 85
Net gain(loss) on equity instruments at fair value through other comprehensive income (1) (0) (3) (0) (1)
Remeasurement gains(losses) on defined benefit plans - - - - 64
Net other comprehensive income that will not be reclassified to statement of income in subsequent periods net of tax (108) 29 12 33 148
Reclassification adjustments of the period Cash flow hedges 0 0 0 0 1
Total other comprehensive income net of tax (312) 141 (196) 184 421
Total comprehensive income net of tax (528) 222 (298) 461 903
Total comprehensive income attributable to Shareholders of the parent (496) 232 (265) 469 900
Non-controlling interests (32) (10) (33) (7) 3
Total (528) 222 (298) 461 903
1) Currency translation adjustments that will not be reclassified to statement of income are related to entities with functional currency NOK as these are not classified as foreign operations to Yara International ASA
Yara second quarter 2018 15
Condensed consolidated interim statement of changes in equity
USD millions
Balance at 31 December 2016
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Share capital increase in subsidiary non-controlling interest
Dividends distributed Balance at 30 June 2017
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Balance at 31 December 2017
IFRS 9 and IFRS 15 implementation effect 3)
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Dividends distributed Balance at 30 June 2018
1) Par value 170
Share Capital1)
66
-
-
-
-
-
-
-
-
66
-
-
-
-
-
66
-
-
-
-
-
-
-
66
Premium paid-in capital
(49)
-
-
-
-
-
-
-
-
(49)
-
-
-
-
-
(49)
-
-
-
-
-
-
-
(49)
Currency translation
adjustments
(1321)
-
168
-
168
-
-
-
-
(1154)
-
154
-
154
-
(1000)
-
(170)
(0)
(170)
-
-
-
(1169)
Fair value reserve of financial assets at FVOCI 2)
2
-
-
-
-
-
-
-
-
1
-
(1)
-
(1)
-
-
-
(3)
-
(3)
-
-
-
(3)
Hedge Attributable Cash of net Total to share- Non-flow invest- other Retained holders of controlling Total
hedges ments reserves earnings the parent interests equity
(8) (192) (1520) 10150 8647 270 8917
- - - 283 283 (5) 277
- 16 184 - 184 (2) 182
2 - 2 - 2 - 2
2 16 186 - 186 (2) 184
- - - 1 1 - 1
- - - (1) (1) (2) (3)
- - - - - 9 9
- - - (321) (321) (0) (322)
(6) (176) (1334) 10112 8795 269 9064
- - - 194 194 10 205
1 17 171 64 235 - 235
2 - 2 - 2 - 2
2 17 173 64 237 - 237
- - - (1) (1) - (1)
(3) (159) (1161) 10369 9225 280 9505
(4) (4) (4)
- - - (96) (96) (7) (103)
- 3 (169) - (169) (27) (195)
- - (0) - (0) - (0)
- 3 (169) - (169) (27) (196)
- - - 1 1 - 1
- - - - - (1) (2)
- - - (219) (219) (2) (221)
(3) (155) (1330) 10050 8737 243 8980
2) Gains or losses on investments in equity instruments for which the Group has elected to present changes in fair value in OCI will no longer be transferred to profit or loss
upon derecognition of the equity instrument 3) Please see Accounting Policies page 19 and 20 for further information
16 Yara second quarter 2018
Condensed consolidated interim statement of financial position
USD millions Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Assets Non-current assets Deferred tax assets Intangible assets Property plant and equipment Equity-accounted investees Other non-current assets Total non-current assets
5
567
410
1134
8322
1030
472
11369
355
1091
7432
1051
368
10298
371
1106
7967
1096
460
11000
300
1067
6939
1067
377
9750
Prepaid expenses and other current assets Cash and cash equivalents Non-current assets and disposal group classified as held-for-sale Total current assets
Current assets Inventories Trade receivables
8
5
2376
1638
638
998
4
5653
2263
1264
604
274
10
4415
2229
1398
607
544
4
4783
2042
1200
559
436
11
4247
Total assets 17022 14713 15783 13997
30 Jun 2018
Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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Yara second quarter 2018 13
Condensed consolidated interim statement of income
USD millions except share information
Revenue Other income Commodity based derivatives gain(loss) Revenue and other income
Raw materials energy costs and freight expenses Payroll and related costs Depreciation and amortization Impairment loss Other operating expenses Operating costs and expenses
Operating income
Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax
Income tax Net income
Net income attributable to Shareholders of the parent Non-controlling interests Net income
Basic earnings per share 1)
Weighted average number of shares outstanding
Notes
3
6
6
67
2
2Q 2018
3185
6
1
3192
(2489)
(312)
(199)
(20)
(133)
(3154)
38
17
22
77
(302)
(36)
(261)
45
(216)
(211)
(5)
(216)
(077)
273217830
2Q 2017
2744
12
2
2759
(2070)
(257)
(178)
(18)
(106)
(2629)
130
7
19
156
(18)
(22)
115
(35)
80
82
(2)
80
030
273217830
1) Yara currently has no share-based compensation program resulting in a dilutive effect on earnings per share
1H 2018
6023
23
3
6048
(4596)
(613)
(401)
(23)
(244)
(5877)
171
27
43
242
(294)
(63)
(115)
12
(103)
(96)
(7)
(103)
(035)
273217830
1H 2017 2017
5440 11358
14 55
(12) (13)
5442 11400
(4055) (8547)
(518) (1090)
(348) (724)
(19) (60)
(193) (521)
(5132) (10942)
310 457
16 29
40 77
366 563
51 99
(43) (82)
374 581
(97) (99)
277 482
283 477
(5) 5
277 482
103 175
273217830 273217830
14 Yara second quarter 2018
Condensed consolidated interim statement of comprehensive income
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Net income (216) 80 (103) 277 482
Other comprehensive income that may be reclassified to statement of income (net of tax) Currency translation adjustments (174) 95 (211) 133 235
Hedge of net investments (30) 15 3 16 33 Share of other comprehensive income of equity-accounted investees excluding remeasurements (0) 2 (0) 2 4
Net other comprehensive income(loss) that may be reclassified to statement of income in subsequent periods net of tax (204) 112 (208) 151 273
Other comprehensive income that will not be reclassified to statement of income in subsequent periods (net of tax) Currency translation adjustments 1) (107) 30 15 33 85
Net gain(loss) on equity instruments at fair value through other comprehensive income (1) (0) (3) (0) (1)
Remeasurement gains(losses) on defined benefit plans - - - - 64
Net other comprehensive income that will not be reclassified to statement of income in subsequent periods net of tax (108) 29 12 33 148
Reclassification adjustments of the period Cash flow hedges 0 0 0 0 1
Total other comprehensive income net of tax (312) 141 (196) 184 421
Total comprehensive income net of tax (528) 222 (298) 461 903
Total comprehensive income attributable to Shareholders of the parent (496) 232 (265) 469 900
Non-controlling interests (32) (10) (33) (7) 3
Total (528) 222 (298) 461 903
1) Currency translation adjustments that will not be reclassified to statement of income are related to entities with functional currency NOK as these are not classified as foreign operations to Yara International ASA
Yara second quarter 2018 15
Condensed consolidated interim statement of changes in equity
USD millions
Balance at 31 December 2016
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Share capital increase in subsidiary non-controlling interest
Dividends distributed Balance at 30 June 2017
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Balance at 31 December 2017
IFRS 9 and IFRS 15 implementation effect 3)
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Dividends distributed Balance at 30 June 2018
1) Par value 170
Share Capital1)
66
-
-
-
-
-
-
-
-
66
-
-
-
-
-
66
-
-
-
-
-
-
-
66
Premium paid-in capital
(49)
-
-
-
-
-
-
-
-
(49)
-
-
-
-
-
(49)
-
-
-
-
-
-
-
(49)
Currency translation
adjustments
(1321)
-
168
-
168
-
-
-
-
(1154)
-
154
-
154
-
(1000)
-
(170)
(0)
(170)
-
-
-
(1169)
Fair value reserve of financial assets at FVOCI 2)
2
-
-
-
-
-
-
-
-
1
-
(1)
-
(1)
-
-
-
(3)
-
(3)
-
-
-
(3)
Hedge Attributable Cash of net Total to share- Non-flow invest- other Retained holders of controlling Total
hedges ments reserves earnings the parent interests equity
(8) (192) (1520) 10150 8647 270 8917
- - - 283 283 (5) 277
- 16 184 - 184 (2) 182
2 - 2 - 2 - 2
2 16 186 - 186 (2) 184
- - - 1 1 - 1
- - - (1) (1) (2) (3)
- - - - - 9 9
- - - (321) (321) (0) (322)
(6) (176) (1334) 10112 8795 269 9064
- - - 194 194 10 205
1 17 171 64 235 - 235
2 - 2 - 2 - 2
2 17 173 64 237 - 237
- - - (1) (1) - (1)
(3) (159) (1161) 10369 9225 280 9505
(4) (4) (4)
- - - (96) (96) (7) (103)
- 3 (169) - (169) (27) (195)
- - (0) - (0) - (0)
- 3 (169) - (169) (27) (196)
- - - 1 1 - 1
- - - - - (1) (2)
- - - (219) (219) (2) (221)
(3) (155) (1330) 10050 8737 243 8980
2) Gains or losses on investments in equity instruments for which the Group has elected to present changes in fair value in OCI will no longer be transferred to profit or loss
upon derecognition of the equity instrument 3) Please see Accounting Policies page 19 and 20 for further information
16 Yara second quarter 2018
Condensed consolidated interim statement of financial position
USD millions Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Assets Non-current assets Deferred tax assets Intangible assets Property plant and equipment Equity-accounted investees Other non-current assets Total non-current assets
5
567
410
1134
8322
1030
472
11369
355
1091
7432
1051
368
10298
371
1106
7967
1096
460
11000
300
1067
6939
1067
377
9750
Prepaid expenses and other current assets Cash and cash equivalents Non-current assets and disposal group classified as held-for-sale Total current assets
Current assets Inventories Trade receivables
8
5
2376
1638
638
998
4
5653
2263
1264
604
274
10
4415
2229
1398
607
544
4
4783
2042
1200
559
436
11
4247
Total assets 17022 14713 15783 13997
30 Jun 2018
Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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 GRE 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 HEB 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 HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA 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 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 LVI 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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 RUM 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 RUS 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 SKY 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 SLV 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 SUO ltFEFF004b00e40079007400e40020006e00e40069007400e4002000610073006500740075006b007300690061002c0020006b0075006e0020006c0075006f00740020006c00e400680069006e006e00e4002000760061006100740069007600610061006e0020007000610069006e006100740075006b00730065006e002000760061006c006d0069007300740065006c00750074007900f6006800f6006e00200073006f00700069007600690061002000410064006f0062006500200050004400460020002d0064006f006b0075006d0065006e007400740065006a0061002e0020004c0075006f0064007500740020005000440046002d0064006f006b0075006d0065006e00740069007400200076006f0069006400610061006e0020006100760061007400610020004100630072006f0062006100740069006c006c00610020006a0061002000410064006f00620065002000520065006100640065007200200035002e0030003a006c006c00610020006a006100200075007500640065006d006d0069006c006c0061002egt13 SVE ltFEFF0041006e007600e4006e00640020006400650020006800e4007200200069006e0073007400e4006c006c006e0069006e006700610072006e00610020006f006d002000640075002000760069006c006c00200073006b006100700061002000410064006f006200650020005000440046002d0064006f006b0075006d0065006e007400200073006f006d002000e400720020006c00e4006d0070006c0069006700610020006600f60072002000700072006500700072006500730073002d007500740073006b00720069006600740020006d006500640020006800f600670020006b00760061006c0069007400650074002e002000200053006b006100700061006400650020005000440046002d0064006f006b0075006d0065006e00740020006b0061006e002000f600700070006e00610073002000690020004100630072006f0062006100740020006f00630068002000410064006f00620065002000520065006100640065007200200035002e00300020006f00630068002000730065006e006100720065002egt13 TUR ltFEFF005900fc006b00730065006b0020006b0061006c006900740065006c0069002000f6006e002000790061007a006401310072006d00610020006200610073006b013100730131006e006100200065006e0020006900790069002000750079006100620069006c006500630065006b002000410064006f006200650020005000440046002000620065006c00670065006c0065007200690020006f006c0075015f007400750072006d0061006b0020006900e70069006e00200062007500200061007900610072006c0061007201310020006b0075006c006c0061006e0131006e002e00200020004f006c0075015f0074007500720075006c0061006e0020005000440046002000620065006c00670065006c0065007200690020004100630072006f006200610074002000760065002000410064006f00620065002000520065006100640065007200200035002e003000200076006500200073006f006e0072006100730131006e00640061006b00690020007300fc007200fc006d006c00650072006c00650020006100e70131006c006100620069006c00690072002egt13 UKR 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 ENU (Use these settings to create Adobe PDF documents best suited for high-quality prepress printing Created PDF 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14 Yara second quarter 2018
Condensed consolidated interim statement of comprehensive income
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Net income (216) 80 (103) 277 482
Other comprehensive income that may be reclassified to statement of income (net of tax) Currency translation adjustments (174) 95 (211) 133 235
Hedge of net investments (30) 15 3 16 33 Share of other comprehensive income of equity-accounted investees excluding remeasurements (0) 2 (0) 2 4
Net other comprehensive income(loss) that may be reclassified to statement of income in subsequent periods net of tax (204) 112 (208) 151 273
Other comprehensive income that will not be reclassified to statement of income in subsequent periods (net of tax) Currency translation adjustments 1) (107) 30 15 33 85
Net gain(loss) on equity instruments at fair value through other comprehensive income (1) (0) (3) (0) (1)
Remeasurement gains(losses) on defined benefit plans - - - - 64
Net other comprehensive income that will not be reclassified to statement of income in subsequent periods net of tax (108) 29 12 33 148
Reclassification adjustments of the period Cash flow hedges 0 0 0 0 1
Total other comprehensive income net of tax (312) 141 (196) 184 421
Total comprehensive income net of tax (528) 222 (298) 461 903
Total comprehensive income attributable to Shareholders of the parent (496) 232 (265) 469 900
Non-controlling interests (32) (10) (33) (7) 3
Total (528) 222 (298) 461 903
1) Currency translation adjustments that will not be reclassified to statement of income are related to entities with functional currency NOK as these are not classified as foreign operations to Yara International ASA
Yara second quarter 2018 15
Condensed consolidated interim statement of changes in equity
USD millions
Balance at 31 December 2016
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Share capital increase in subsidiary non-controlling interest
Dividends distributed Balance at 30 June 2017
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Balance at 31 December 2017
IFRS 9 and IFRS 15 implementation effect 3)
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Dividends distributed Balance at 30 June 2018
1) Par value 170
Share Capital1)
66
-
-
-
-
-
-
-
-
66
-
-
-
-
-
66
-
-
-
-
-
-
-
66
Premium paid-in capital
(49)
-
-
-
-
-
-
-
-
(49)
-
-
-
-
-
(49)
-
-
-
-
-
-
-
(49)
Currency translation
adjustments
(1321)
-
168
-
168
-
-
-
-
(1154)
-
154
-
154
-
(1000)
-
(170)
(0)
(170)
-
-
-
(1169)
Fair value reserve of financial assets at FVOCI 2)
2
-
-
-
-
-
-
-
-
1
-
(1)
-
(1)
-
-
-
(3)
-
(3)
-
-
-
(3)
Hedge Attributable Cash of net Total to share- Non-flow invest- other Retained holders of controlling Total
hedges ments reserves earnings the parent interests equity
(8) (192) (1520) 10150 8647 270 8917
- - - 283 283 (5) 277
- 16 184 - 184 (2) 182
2 - 2 - 2 - 2
2 16 186 - 186 (2) 184
- - - 1 1 - 1
- - - (1) (1) (2) (3)
- - - - - 9 9
- - - (321) (321) (0) (322)
(6) (176) (1334) 10112 8795 269 9064
- - - 194 194 10 205
1 17 171 64 235 - 235
2 - 2 - 2 - 2
2 17 173 64 237 - 237
- - - (1) (1) - (1)
(3) (159) (1161) 10369 9225 280 9505
(4) (4) (4)
- - - (96) (96) (7) (103)
- 3 (169) - (169) (27) (195)
- - (0) - (0) - (0)
- 3 (169) - (169) (27) (196)
- - - 1 1 - 1
- - - - - (1) (2)
- - - (219) (219) (2) (221)
(3) (155) (1330) 10050 8737 243 8980
2) Gains or losses on investments in equity instruments for which the Group has elected to present changes in fair value in OCI will no longer be transferred to profit or loss
upon derecognition of the equity instrument 3) Please see Accounting Policies page 19 and 20 for further information
16 Yara second quarter 2018
Condensed consolidated interim statement of financial position
USD millions Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Assets Non-current assets Deferred tax assets Intangible assets Property plant and equipment Equity-accounted investees Other non-current assets Total non-current assets
5
567
410
1134
8322
1030
472
11369
355
1091
7432
1051
368
10298
371
1106
7967
1096
460
11000
300
1067
6939
1067
377
9750
Prepaid expenses and other current assets Cash and cash equivalents Non-current assets and disposal group classified as held-for-sale Total current assets
Current assets Inventories Trade receivables
8
5
2376
1638
638
998
4
5653
2263
1264
604
274
10
4415
2229
1398
607
544
4
4783
2042
1200
559
436
11
4247
Total assets 17022 14713 15783 13997
30 Jun 2018
Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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 CHS ltFEFF4f7f75288fd94e9b8bbe5b9a521b5efa7684002000410064006f006200650020005000440046002065876863900275284e8e9ad88d2891cf76845370524d53705237300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c676562535f00521b5efa768400200050004400460020658768633002gt13 CHT ltFEFF4f7f752890194e9b8a2d7f6e5efa7acb7684002000410064006f006200650020005000440046002065874ef69069752865bc9ad854c18cea76845370524d5370523786557406300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c4f86958b555f5df25efa7acb76840020005000440046002065874ef63002gt13 CZE 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 DAN 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 DEU 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 ESP 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 ETI 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 FRA 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 GRE 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HEB 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 HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA 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 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 LVI 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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 RUS 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Yara second quarter 2018 15
Condensed consolidated interim statement of changes in equity
USD millions
Balance at 31 December 2016
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Share capital increase in subsidiary non-controlling interest
Dividends distributed Balance at 30 June 2017
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Balance at 31 December 2017
IFRS 9 and IFRS 15 implementation effect 3)
Net income
Other comprehensive income net of tax Share of other comprehensive income of equity-accounted investees Total other comprehensive income net of tax
Long term incentive plan Transactions with non-controlling interests Dividends distributed Balance at 30 June 2018
1) Par value 170
Share Capital1)
66
-
-
-
-
-
-
-
-
66
-
-
-
-
-
66
-
-
-
-
-
-
-
66
Premium paid-in capital
(49)
-
-
-
-
-
-
-
-
(49)
-
-
-
-
-
(49)
-
-
-
-
-
-
-
(49)
Currency translation
adjustments
(1321)
-
168
-
168
-
-
-
-
(1154)
-
154
-
154
-
(1000)
-
(170)
(0)
(170)
-
-
-
(1169)
Fair value reserve of financial assets at FVOCI 2)
2
-
-
-
-
-
-
-
-
1
-
(1)
-
(1)
-
-
-
(3)
-
(3)
-
-
-
(3)
Hedge Attributable Cash of net Total to share- Non-flow invest- other Retained holders of controlling Total
hedges ments reserves earnings the parent interests equity
(8) (192) (1520) 10150 8647 270 8917
- - - 283 283 (5) 277
- 16 184 - 184 (2) 182
2 - 2 - 2 - 2
2 16 186 - 186 (2) 184
- - - 1 1 - 1
- - - (1) (1) (2) (3)
- - - - - 9 9
- - - (321) (321) (0) (322)
(6) (176) (1334) 10112 8795 269 9064
- - - 194 194 10 205
1 17 171 64 235 - 235
2 - 2 - 2 - 2
2 17 173 64 237 - 237
- - - (1) (1) - (1)
(3) (159) (1161) 10369 9225 280 9505
(4) (4) (4)
- - - (96) (96) (7) (103)
- 3 (169) - (169) (27) (195)
- - (0) - (0) - (0)
- 3 (169) - (169) (27) (196)
- - - 1 1 - 1
- - - - - (1) (2)
- - - (219) (219) (2) (221)
(3) (155) (1330) 10050 8737 243 8980
2) Gains or losses on investments in equity instruments for which the Group has elected to present changes in fair value in OCI will no longer be transferred to profit or loss
upon derecognition of the equity instrument 3) Please see Accounting Policies page 19 and 20 for further information
16 Yara second quarter 2018
Condensed consolidated interim statement of financial position
USD millions Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Assets Non-current assets Deferred tax assets Intangible assets Property plant and equipment Equity-accounted investees Other non-current assets Total non-current assets
5
567
410
1134
8322
1030
472
11369
355
1091
7432
1051
368
10298
371
1106
7967
1096
460
11000
300
1067
6939
1067
377
9750
Prepaid expenses and other current assets Cash and cash equivalents Non-current assets and disposal group classified as held-for-sale Total current assets
Current assets Inventories Trade receivables
8
5
2376
1638
638
998
4
5653
2263
1264
604
274
10
4415
2229
1398
607
544
4
4783
2042
1200
559
436
11
4247
Total assets 17022 14713 15783 13997
30 Jun 2018
Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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16 Yara second quarter 2018
Condensed consolidated interim statement of financial position
USD millions Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Assets Non-current assets Deferred tax assets Intangible assets Property plant and equipment Equity-accounted investees Other non-current assets Total non-current assets
5
567
410
1134
8322
1030
472
11369
355
1091
7432
1051
368
10298
371
1106
7967
1096
460
11000
300
1067
6939
1067
377
9750
Prepaid expenses and other current assets Cash and cash equivalents Non-current assets and disposal group classified as held-for-sale Total current assets
Current assets Inventories Trade receivables
8
5
2376
1638
638
998
4
5653
2263
1264
604
274
10
4415
2229
1398
607
544
4
4783
2042
1200
559
436
11
4247
Total assets 17022 14713 15783 13997
30 Jun 2018
Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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Yara second quarter 2018 17
Condensed consolidated interim statement of financial position
USD millions except share information Notes 30 Jun 2017 31 Dec 2017 31 Dec 2016
Total paid-in capital
Equity and liabilities Equity Share capital reduced for treasury stock Premium paid-in capital
66
(49)
17
66
(49)
17
66
(49)
17
66
(49)
17
Other reserves Retained earnings Total equity attributable to shareholders of the parent
(1330)
10050
8737
(1334)
10112
8795
(1161)
10369
9225
(1520)
10150
8647
Non-controlling interests Total equity 2
243
8980
269
9064
280
9505
270
8917
Total non-current liabilities
Employee benefits Deferred tax liabilities Other long-term liabilities Long-term provisions Long-term interest-bearing debt
Non-current liabilities
510
9
436
481
161
179
3119
4376
461
575
168
104
1752
3060
439
502
169
115
2429
3654
473
511
163
97
1625
2869
Total current liabilities
Current tax liabilities Short-term provisions Other short-term liabilities Bank loans and other interest-bearing short-term debt Current portion of long-term debt
Current liabilities Trade and other payables Prepayments from customers
10
1815
640
22
84
71
462
570
3665
1465
447
39
39
68
491
40
2589
1652
265
62
90
75
439
43
2625
1414
300
62
38
100
270
28
2211
Total equity and liabilities 17022 14713 15783 13997
Number of shares outstanding 2 273217830 273217830 273217830 273217830
30 Jun 2018
18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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18 Yara second quarter 2018
Condensed consolidated interim statement of cash flows
USD millions Notes 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Operating activities Operating income 38 130 171 310 457
Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 199 178 401 348 724
Impairment loss 20 18 23 19 60
Write-down and reversals net 6 1 (5) 0 24
Tax paid (48) (33) (70) (135) (196)
Dividend from equity-accounted investees 26 5 98 7 8
Change in net operating capital 1) 383 142 218 4 (127)
Interest and bank charges received(paid) (53) (30) (60) (26) (63)
Other (48) (98) (21) (102) (96)
Net cash provided by operating activities 523 312 757 426 791
Investing activities Purchases of property plant and equipment (345) (312) (652) (611) (1341)
Cash outflow on business combinations 5 (237) (8) (661) (8) (23)
Purchases of other long-term investments (12) (13) (34) (21) (55)
Proceeds from sales of property plant and equipment 1 6 4 7 13
Proceeds from sales of other long-term investments 3 6 17 8 56
Net cash used in investing activities (589) (322) (1325) (625) (1350)
Financing activities Loan proceeds(repayments) net 9 779 276 1235 347 966
Dividend 2 (219) (321) (219) (321) (321)
Other cash transfers (to)from non-controlling interests (2) 4 (2) 6 6
Net cash from(used in) financing activities 558 (41) 1014 31 651
Foreign currency effects on cash and cash equivalents (14) 2 8 6 16
Net increase(decrease) in cash and cash equivalents 476 (49) 454 (161) 109
Cash and cash equivalents at beginning of period 521 323 544 436 436
Cash and cash equivalents at end of period 998 274 998 274 544
Bank deposits not available for the use of other group companies - - 16 22 24
1) Operating capital consists of trade receivables inventories trade payables and prepayments from customers
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson Vice chair Board member Board member
Geir O Sundboslash Trond Berger Rune Bratteberg Kjersti Aass Board member Board member Board member Board member
Svein Tore Holsether President and CEO
Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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HEB 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HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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Yara second quarter 2018 19
Notes to the condensed consolidated interim financial statements
GENERAL AND ACCOUNTING POLICIES Yara (the Group) consists of Yara International ASA and its subsidiaries Yara International ASA is a public limited company incorporated in Norway The address of its registered office is Drammensveien 131 Oslo Norway
These unaudited condensed consolidated interim financial statements consist of the Group and the Grouprsquos interests in associated companies and joint arrangements They are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and should be read in conjunction with the annual consolidated financial statements in Yararsquos Annual Report for 2017 Except for the changes and additions described below the accounting policies applied are the same as those applied in the annual consolidated financial statements 2017
As a result of rounding differences numbers or percentages may not add up to the total
Change of presentation currency Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Please see note 10 for more information
Implementation of IFRS 9 Financial Instruments The Yara Group has adopted IFRS 9 Financial Instruments for reporting periods beginning on and after 1 January 2018 IFRS 9 has replaced IAS 39 Financial Instruments Recognition and Measurement The new standard sets out new requirements for the accounting of financial instruments including classification measurement impairment and hedge accounting
Under IFRS 9 Yara classifies financial assets based on the business model in which they are managed and their contractual cash flows The principal categories of financial assets under IFRS 9 are amortized cost fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL) In accordance with the expected loss impairment model introduced by IFRS 9 Yara records lifetime expected credit losses on all trade and lease receivables (the simplified approach) On other receivables loans and deposits Yara records 12 months expected credit losses and lifetime expected credit losses only if there has
been a significant increase in credit risk since initial recognition (the general approach) Yara has further applied the hedge accounting requirements of IFRS 9 which aim to reflect risk management activities and allow more hedging instruments and hedged items to qualify for hedge accounting
Yara has not identified a significant impact on the Groups statement of financial position and equity as a result of implementation of the new standard However the adoption of an expected loss impairment model has increased the loss allowance to some extent Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
Yara has taken advantage of the practical expedient under IFRS 9 which allows to only adjust the opening balance of equity at the date of initial application 1 January 2018 Hence no comparative information is restated
Implementation of IFRS 15 Revenue from Contracts with customers The Yara Group has adopted IFRS 15 Revenue from Contracts with Customers for reporting periods beginning on and after 1 January 2018 IFRS 15 has replaced IAS 18 Revenue IAS 11 Construction contracts and related interpretations The new Standard establishes a new set of principles that shall be applied to report information about the nature amount timing and uncertainty of revenue and cash flows arising from contracts with customers
Under IFRS 15 Yara measures revenue based on the consideration specified in the contract with the customer and recognizes revenue when the Group transfers control of a product or service to a customer
Yara has not identified a significant impact to the Groups statement of financial position and equity as a result of implementation of the new standard As a result these interim financial statements do not include detailed disclosures of the amounts by which line items are affected by the application of IFRS 15 compared to revenue standards no longer in effect Please see note 38 New Accounting Standards in Yararsquos annual consolidated financial statements 2017 for more information
20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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 CHS ltFEFF4f7f75288fd94e9b8bbe5b9a521b5efa7684002000410064006f006200650020005000440046002065876863900275284e8e9ad88d2891cf76845370524d53705237300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c676562535f00521b5efa768400200050004400460020658768633002gt13 CHT ltFEFF4f7f752890194e9b8a2d7f6e5efa7acb7684002000410064006f006200650020005000440046002065874ef69069752865bc9ad854c18cea76845370524d5370523786557406300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c4f86958b555f5df25efa7acb76840020005000440046002065874ef63002gt13 CZE 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 DAN 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 DEU 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 ESP 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 ETI 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 FRA 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 GRE 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HEB 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 HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA 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 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 LVI 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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 RUM 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 RUS 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20 Yara second quarter 2018
Yara has applied the cumulative effect implementation approach and adjusted the opening balance of equity at the date of initial application 1 January 2018 with the effect of implementation Hence no comparative information is restated
The nature of Yara revenues is categorized as follows
Sale of fertilizer and chemical products Yara sells fertilizer and chemical products to customers worldwide Please see note 5 Segment information in the annual consolidated financial statements 2017 for more information Revenue is recognized when the control of the products is transferred to the customer This is normally determined by the incoterm used in the sales transactions The use of incoterms varies between regions markets and customers but products are typically sold ex-warehouse
Contracts with larger customers often include sales incentives Volume discounts are the dominant sales incentives used by Yara The discounts may have prospective or retrospective effect Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer If the discount cannot be reliably estimated revenue is reduced by the maximum potential discount
Products are normally sold with standard warranties which provide protection to the customers that the product have the agreed-upon specifications These standard warranties are accounted for using IAS 37 Provisions contingent Liabilities and Contingent Assets The Group does not have any other significant obligations for returns or refunds
The majority of sales in the Group have credit terms of less than 90 days
Freightinsurance services Yara arranges delivery to the customers location using different incoterms When the Group uses incoterms which transfer the responsibility for the goods to the customer before the freightinsurance service is delivered (C-incoterms) Yara normally considers the freight insurance service to be a distinct service which shall be accounted for as a separate performance obligation based on stand-alone selling prices The corresponding revenue is recognized over time to the extent the freight insurance service is performed However the timing effects are limited since the majority of deliveries to the customerrsquos location are done within days Shipping and
handling activities that occur before customers take control of the goods are considered to be part of fulfilling the sale of the goods
Other products and services Other products and services include a number of different offerings including equipment and services to store and handle product and technology offerings in Yararsquos Environmental Solutions Business Revenues from sale of equipment are recognized upon delivery to the customer Revenues from sale of services are recognized over time as the service is performed Revenues from technology offerings in Yararsquos Environmental Solutions Business are recognized over time using the percentage of completion method if they meet the criteria for over time recognition in IFRS 15 If offerings represent multiple element arrangements they are analyzed to identify distinct goods or services that shall be accounted for as separate performance obligations
Urea sales in India The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business manufactures and sells urea to dealers who in turn sell to farmers and retailers Yara sells urea under a pricing scheme policy issued by the Government of India (ldquoGoIrdquo) This policy aims to promote balanced nutrient application and sustained agricultural growth by making urea available to farmers across India at affordable prices on a timely basis
The price at which Yara can sell urea to registered dealers under the pricing scheme policy is regulated and determined by GoI This price is generally less than the cost of production and GoI provides a compensation based on a predefined method considering the sales price set by GoI to be charged registered dealers the cost for natural gas other variable cost (including cost of bags water electricity and freight) and fixed cost
Control of goods transfers at the time the registered dealer receives the goods The consideration received is based on the dealers receipt of goods and constitutes of the fixed sales price to be paid by the registered dealer and the estimated compensation to be paid by GoI As Yara has the inventory risk and controls the goods until they are delivered to the registered dealers the compensation from GoI is presented gross in the consolidated statement of income
Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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 ESP ltFEFF005500740069006c0069006300650020006500730074006100200063006f006e0066006900670075007200610063006900f3006e0020007000610072006100200063007200650061007200200064006f00630075006d0065006e0074006f00730020005000440046002000640065002000410064006f0062006500200061006400650063007500610064006f00730020007000610072006100200069006d0070007200650073006900f3006e0020007000720065002d0065006400690074006f007200690061006c00200064006500200061006c00740061002000630061006c0069006400610064002e002000530065002000700075006500640065006e00200061006200720069007200200064006f00630075006d0065006e0074006f00730020005000440046002000630072006500610064006f007300200063006f006e0020004100630072006f006200610074002c002000410064006f00620065002000520065006100640065007200200035002e003000200079002000760065007200730069006f006e0065007300200070006f00730074006500720069006f007200650073002egt13 ETI 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 FRA 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 GRE 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 HEB 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 HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA 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 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 LVI 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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 RUM 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 RUS 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 SKY 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 SLV 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 SUO ltFEFF004b00e40079007400e40020006e00e40069007400e4002000610073006500740075006b007300690061002c0020006b0075006e0020006c0075006f00740020006c00e400680069006e006e00e4002000760061006100740069007600610061006e0020007000610069006e006100740075006b00730065006e002000760061006c006d0069007300740065006c00750074007900f6006800f6006e00200073006f00700069007600690061002000410064006f0062006500200050004400460020002d0064006f006b0075006d0065006e007400740065006a0061002e0020004c0075006f0064007500740020005000440046002d0064006f006b0075006d0065006e00740069007400200076006f0069006400610061006e0020006100760061007400610020004100630072006f0062006100740069006c006c00610020006a0061002000410064006f00620065002000520065006100640065007200200035002e0030003a006c006c00610020006a006100200075007500640065006d006d0069006c006c0061002egt13 SVE 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Note 1
Yara second quarter 2018 21
Judgments estimates and assumptions
The preparation of condensed consolidated interim financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments estimates and assumptions that affect the reported amounts of assets liabilities income and expenses The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances Actual results may differ from these estimates The estimates and the underlying assumptions are reviewed on an ongoing basis Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods When preparing these condensed consolidated interim financial statements the significant judgments made by management in applying the Grouprsquos accounting policies and the key sources of estimation uncertainty were mainly the same as those that applied to the consolidated financial statements as of the period ended 31 December 2017
Note 2 Shares dividend and share buy-back program
The Annual General Meeting in May 2018 approved a dividend for 2017 of NOK 1776 million (NOK 650 per share) which has been paid out during second quarter 2018 (USD 2194 million)
On 11 May 2017 the Annual General Meeting authorized the Board of Directors to acquire up to 13660891 shares in the open market and from the Norwegian State The purchase price shall not be less than NOK 10 nor more than NOK 1000 The shares acquired pursuant to this authorization shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the Statersquos shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back Yara did not purchase own shares under the 2017 buy-back program
On 8 May 2018 the Annual General Meeting approved that the existing buy-back program is replaced by a new program authorizing the Board to acquire up to 5 (13660891 shares) of Yararsquos shares before the next Annual General Meeting Shares may be purchased within a price range from NOK 10 to NOK 1000 The shares shall be subsequently cancelled Yara has renewed its agreement with the Norwegian State according to which the States shares will be redeemed on a pro-rata basis to ensure the Statersquos ownership is unchanged in the event of a cancellation of shares bought back
Yara has not purchased own shares under the 2018 buyshyback program
Ordinary shares Own shares
Total at 31 December 2016 273217830 -
Total at 31 December 2017 273217830 -
Total at 30 June 2018 273217830 -
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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HEB 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 UKR 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documents can be opened with Acrobat and Adobe Reader 50 and later)13 gtgt13 Namespace [13 (Adobe)13 (Common)13 (10)13 ]13 OtherNamespaces [13 ltlt13 AsReaderSpreads false13 CropImagesToFrames true13 ErrorControl WarnAndContinue13 FlattenerIgnoreSpreadOverrides false13 IncludeGuidesGrids false13 IncludeNonPrinting false13 IncludeSlug false13 Namespace [13 (Adobe)13 (InDesign)13 (40)13 ]13 OmitPlacedBitmaps false13 OmitPlacedEPS false13 OmitPlacedPDF false13 SimulateOverprint Legacy13 gtgt13 ltlt13 AddBleedMarks false13 AddColorBars false13 AddCropMarks false13 AddPageInfo false13 AddRegMarks false13 ConvertColors ConvertToCMYK13 DestinationProfileName ()13 DestinationProfileSelector DocumentCMYK13 Downsample16BitImages true13 FlattenerPreset ltlt13 PresetSelector MediumResolution13 gtgt13 FormElements false13 GenerateStructure false13 IncludeBookmarks false13 IncludeHyperlinks false13 IncludeInteractive false13 IncludeLayers false13 IncludeProfiles false13 MultimediaHandling UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13
22 Yara second quarter 2018
Note 3 Operating segment information
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
External revenue and other income Crop Nutrition 2361 2046 4474 4109 8670
Industrial 522 445 1006 912 1846
Production 308 270 567 422 891
Other and eliminations 1 (2) 1 (1) (7)
Total 3192 2759 6048 5442 11400
Internal revenue and other income Crop Nutrition 32 43 64 92 191
Industrial 4 4 8 6 16
Production 1116 979 2252 2097 4136
Other and eliminations (1152) (1026) (2324) (2195) (4342)
Total - - - - -
Revenue and other income Crop Nutrition 2393 2089 4538 4201 8861
Industrial 526 449 1014 918 1862
Production 1424 1249 2819 2519 5026
Other and eliminations (1151) (1028) (2323) (2196) (4349)
Total 3192 2759 6048 5442 11400
Operating income Crop Nutrition 88 69 180 153 306
Industrial 47 39 95 79 118
Production (82) 18 (101) 103 77
Other and eliminations (15) 4 (3) (25) (44)
Total 38 130 171 310 457
EBITDA Crop Nutrition 153 118 295 243 492
Industrial 54 44 107 89 158
Production 95 180 252 416 722
Other and eliminations (6) 10 13 (15) (23)
Total 296 352 666 733 1348
Investments 1)
Crop Nutrition 100 49 446 93 272
Industrial 2 10 5 16 35
Production 558 319 733 527 1165
Other and eliminations 13 6 20 16 33
Total 673 384 1204 652 1505
Total Assets 2)
Crop Nutrition 4797 4126 4223
Industrial 644 609 596
Production 10636 9771 10484
Other and eliminations 945 207 480
Total 17022 14713 15783
1) Investments comprise property plant and equipment intangible assets equity-accounted investees and other equity investments The figures presented are capitalized amounts and may deviate from cash flow from investing activities due to timing of cash outflows
2) Assets exclude internal cash accounts and accounts receivables related to group relief
-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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HEB 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HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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-
Yara second quarter 2018 23
1H 2018 1H 2017 2017
CROGI (12-month rolling average) Yara 1) 64 68 70
Crop Nutrition 120 131 119
Industrial 283 315 262
Production 38 45 49
ROCE (12-month rolling average) Yara 1) 30 36 40
Crop Nutrition 95 111 96
Industrial 267 345 235
Production (08) 01 10
1) Cash and other liquid assets are included in gross investments and capital employed when calculating CROGI and ROCE respectively for the segments but not included for total Yara In addition actual Yara tax is used for calculating CROGI and ROCE for Yara while a standardized tax rate of 25 is used for the segments These two effects explain the variance in CROGI and ROCE between Yara and the segments See page 11 Definitions and variance analysis for more information
Reconciliation of operating income to EBITDA
USD millions Operating
income
Equity accounted investees
Interest income and other
financial income EBIT
Depreciation and
amortization1) Impairment
loss 2) EBITDA
2Q 2018 Crop Nutrition 88 5 14 108 32 14 153
Industrial 47 0 3 51 3 0 54
Production (82) 11 1 (70) 158 6 95
Other and eliminations (15) - 4 (11) 6 - (6)
Total 38 17 22 77 199 20 296
2Q 2017 Crop Nutrition 69 4 12 86 26 6 118
Industrial 39 2 0 41 3 - 44
Production 18 1 5 23 145 12 180
Other and eliminations 4 - 2 6 4 - 10
Total 130 7 19 156 178 18 352
1H 2018 Crop Nutrition 180 4 30 214 65 15 295
Industrial 95 0 5 100 6 0 107
Production (101) 24 3 (74) 317 8 252
Other and eliminations (3) - 4 1 12 - 13
Total 171 27 43 242 401 24 666
1H 2017 Crop Nutrition 153 3 28 184 52 7 243
Industrial 79 3 1 83 6 0 89
Production 103 10 9 122 283 12 416
Other and eliminations (25) - 2 (22) 8 - (15)
Total 310 16 40 366 348 19 733
2017 Crop Nutrition 306 3 56 365 107 20 492
Industrial 118 6 3 127 12 19 158
Production 77 20 15 112 588 22 722
Other and eliminations (44) - 4 (40) 17 - (23)
Total 457 29 77 563 724 60 1348
1) Including amortization on excess value in equity-accounted investees
2) Including impairment loss on excess value in equity-accounted investees
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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HEB 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HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA 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ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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 RUM 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 RUS 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 SKY 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 SLV 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 SUO 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 SVE ltFEFF0041006e007600e4006e00640020006400650020006800e4007200200069006e0073007400e4006c006c006e0069006e006700610072006e00610020006f006d002000640075002000760069006c006c00200073006b006100700061002000410064006f006200650020005000440046002d0064006f006b0075006d0065006e007400200073006f006d002000e400720020006c00e4006d0070006c0069006700610020006600f60072002000700072006500700072006500730073002d007500740073006b00720069006600740020006d006500640020006800f600670020006b00760061006c0069007400650074002e002000200053006b006100700061006400650020005000440046002d0064006f006b0075006d0065006e00740020006b0061006e002000f600700070006e00610073002000690020004100630072006f0062006100740020006f00630068002000410064006f00620065002000520065006100640065007200200035002e00300020006f00630068002000730065006e006100720065002egt13 TUR 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 UKR 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 ENU (Use these settings to create Adobe PDF documents best suited for high-quality prepress printing Created PDF documents can be opened with Acrobat and Adobe Reader 50 and later)13 gtgt13 Namespace [13 (Adobe)13 (Common)13 (10)13 ]13 OtherNamespaces [13 ltlt13 AsReaderSpreads false13 CropImagesToFrames true13 ErrorControl WarnAndContinue13 FlattenerIgnoreSpreadOverrides false13 IncludeGuidesGrids false13 IncludeNonPrinting false13 IncludeSlug false13 Namespace [13 (Adobe)13 (InDesign)13 (40)13 ]13 OmitPlacedBitmaps false13 OmitPlacedEPS false13 OmitPlacedPDF false13 SimulateOverprint Legacy13 gtgt13 ltlt13 AddBleedMarks false13 AddColorBars false13 AddCropMarks false13 AddPageInfo false13 AddRegMarks false13 ConvertColors ConvertToCMYK13 DestinationProfileName ()13 DestinationProfileSelector DocumentCMYK13 Downsample16BitImages true13 FlattenerPreset ltlt13 PresetSelector MediumResolution13 gtgt13 FormElements false13 GenerateStructure false13 IncludeBookmarks false13 IncludeHyperlinks false13 IncludeInteractive false13 IncludeLayers false13 IncludeProfiles false13 MultimediaHandling UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13
24 Yara second quarter 2018
Disaggregation of external revenues by nature
USD millions
Fertilizer and chemical products
Freight insurance
services Other products
and services Total
2Q 2018 2277 75 7 2359
456 44 23 522
258 28 16 303
0 - 1 1
2991 147 47 3185
1H 2018 4324 136 11 4471
904 65 37 1006
468 41 35 544
0 - 2 2
5696 243 84 6023 Total
Crop Nutrition Industrial Production Other and eliminations
Total
Crop Nutrition Industrial Production Other and eliminations
Disaggregation of external revenues by geographical area
USD millions Europe Brazil Latin America
ex Brazil Asia North America Africa Total
2Q 2018 Crop Nutrition 737 497 281 385 314 144 2359
Industrial 315 54 28 32 61 32 522
Production 28 96 8 90 80 - 303
Other and eliminations 1 - - - - - 1
Total 1081 648 318 507 456 176 3185
2Q 2017 Crop Nutrition 562 620 262 225 259 115 2043
Industrial 305 14 27 18 48 32 445
Production 23 60 6 81 74 14 258
Other and eliminations (2) - - - - - (2)
Total 889 694 295 324 380 162 2744
1H 2018 Crop Nutrition 1505 986 464 710 545 261 4471
Industrial 628 77 54 57 125 65 1006
Production 59 143 18 162 163 - 544
Other and eliminations 2 - - - - - 2
Total 2194 1206 535 929 833 326 6023
1H 2017 Crop Nutrition 1331 1163 450 449 476 238 4106
Industrial 597 33 58 43 122 59 912
Production 49 84 14 138 114 23 422
Other and eliminations 1 - - - - - 1
Total 1979 1280 521 629 712 319 5440
2017 Crop Nutrition 2562 2945 940 892 820 494 8653
Industrial 1199 76 106 95 242 127 1846
Production 100 236 26 269 200 23 854
Other and eliminations 5 - - - - - 5
Total 3867 3257 1072 1256 1262 644 11358
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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 CHS ltFEFF4f7f75288fd94e9b8bbe5b9a521b5efa7684002000410064006f006200650020005000440046002065876863900275284e8e9ad88d2891cf76845370524d53705237300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c676562535f00521b5efa768400200050004400460020658768633002gt13 CHT ltFEFF4f7f752890194e9b8a2d7f6e5efa7acb7684002000410064006f006200650020005000440046002065874ef69069752865bc9ad854c18cea76845370524d5370523786557406300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c4f86958b555f5df25efa7acb76840020005000440046002065874ef63002gt13 CZE 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 DAN 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 DEU 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 ESP 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 ETI 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 FRA ltFEFF005500740069006c006900730065007a00200063006500730020006f007000740069006f006e00730020006100660069006e00200064006500200063007200e900650072002000640065007300200064006f00630075006d0065006e00740073002000410064006f00620065002000500044004600200070006f0075007200200075006e00650020007100750061006c0069007400e90020006400270069006d007000720065007300730069006f006e00200070007200e9007000720065007300730065002e0020004c0065007300200064006f00630075006d0065006e00740073002000500044004600200063007200e900e90073002000700065007500760065006e0074002000ea0074007200650020006f007500760065007200740073002000640061006e00730020004100630072006f006200610074002c002000610069006e00730069002000710075002700410064006f00620065002000520065006100640065007200200035002e0030002000650074002000760065007200730069006f006e007300200075006c007400e90072006900650075007200650073002egt13 GRE 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HEB 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HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA 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 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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 TUR 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UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13
Yara second quarter 2018 25
Note 4 Business initiatives
Acquisitions The acquisitions of Babrala and Cubatatildeo were closed on 12 January 2018 and 15 May 2018 respectively see note 5 for further information
Other business initiatives Yara and Arab Potash Company (APC) the Jordan-based potash producer have in 2018 signed a Memorandum of Understanding (MoU) for mutual cooperation in the field of potassium nitrate production and sales The parties will explore and evaluate the possibility of doubling the
Note 5 Business combinations
The business combination of Tata Chemicals Limiteds urea business in India was closed 12 January 2018 The acquired business comprises the Babrala urea plant and distribution business in Uttar Pradesh The plant has an annual production of 07 million tonnes ammonia and 12 million tonnes urea The plant was commissioned in 1994 and is the most energy efficient plant in India The primary reason for the business combination is to further accelerate Yaras growth in India by creating an integrated position in the worlds second-largest fertilizer market The acquisition is reported in the Crop Nutrition segment
Consideration
production capacity of Kemapco the potassium nitrate producing subsidiary of APC Yara is targeting a minority position (30 percent) in Kemapco with a 100 percent distribution and marketing agreement for Yara Potassium nitrate is a key product in solutions for fertigation a fast growing segment that Yara and Kemapco aim to develop further through this collaboration Kemapco is a subsidiary of the Arab Potash Company and operates a single potassium nitrate plant in Aqaba Jordan Production in 2017 amounted to 130 kilotonnes potassium nitrate with sales amounting to about USD 105 million
The business combination of the Vale Cubatatildeo Fertilizantes complex in Brazil was closed 15 May 2018 The Cubatatildeo asset is a nitrogen and phosphate complex with an annual production capacity of approximately 200 kilotonnes of ammonia 500 kilotonnes of nitrates and 700 kilotonnes of phosphate fertilizer The acquisition brings nitrogen production assets into Yaras growing portfolio in Brazil strengthening and growing Yaras integrated position within both industrial and fertilizer markets The production assets are reported in the Production segment while sales are reported in Industrial and Production segments
USD millions Babrala Cubatatildeo
Cash transferred at closing 421 255
Net working capital adjustment (9) (12)
Total consideration 412 243
Net working capital adjustments for both the Babrala acquisition and the Cubatatildeo acquisition have been preliminarily determined and may be subject to changes
Acquisition costs of USD 08 million for the Vale Cubatatildeo acquisition and USD 87 million for the Babrala acquisition have been excluded from the consideration transferred and
recognized as an expense within Other operating expenses in the consolidated interim statement of income Transaction costs related to the Babrala acquisition is mainly stamp duties and may be subject to change Integration and acquisition-related costs for the Babrala acquisition of USD 22 million have been recognized in previous years
26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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26 Yara second quarter 2018
Identifiable assets acquired and liabilities recognized at the date of acquisition (fair value)
The purchase price allocation is preliminarily determined and may be subject to changes
Assets Deferred tax asset - 2
Distribution network 31 -
Patents and technologies part of intangible assets - 4
Property plant and equipment 213 269
Inventories 4 67
Trade receivables 1) 119 34
Prepaid expenses and other current assets 15 5
Cash and cash equivalents - 18
Total assets 383 399
Liabilities
Employee benefits - 5
Long-term provisions - 48
Trade and other payables 17 37
Prepayments from external customers deferred revenue - 22
Other short-term liabilities 6 -
Short-term provisions - 3
Bank loans and other interest-bearing short-term debt - 41
Total liabilities 23 156
Total identifiable net assets at fair value 360 243
USD millions Babrala 12 January 2018 Cubatatildeo 15 May 2018
1) For Babrala acquisition the amount consists mainly of receivables under the pricing scheme policy of Government of India see Accounting Policies on page 19
The receivables acquired in the business combination of Babrala have a fair value of USD 4 million lower than the gross contractual amount of USD 123 million The receivables acquired in the business combination of Vale Cubatatildeo have a gross contractual amount approximately equal to their fair value
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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 GRE 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 HEB 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 HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA 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 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 LVI 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL ltFEFF0055007300740061007700690065006e0069006100200064006f002000740077006f0072007a0065006e0069006100200064006f006b0075006d0065006e007400f300770020005000440046002000700072007a0065007a006e00610063007a006f006e00790063006800200064006f002000770079006400720075006b00f30077002000770020007700790073006f006b00690065006a0020006a0061006b006f015b00630069002e002000200044006f006b0075006d0065006e0074007900200050004400460020006d006f017c006e00610020006f007400770069006500720061010700200077002000700072006f006700720061006d006900650020004100630072006f00620061007400200069002000410064006f00620065002000520065006100640065007200200035002e0030002000690020006e006f00770073007a0079006d002egt13 PTB 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 RUM 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 RUS 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 SKY ltFEFF0054006900650074006f0020006e006100730074006100760065006e0069006100200070006f0075017e0069007400650020006e00610020007600790074007600e100720061006e0069006500200064006f006b0075006d0065006e0074006f0076002000410064006f006200650020005000440046002c0020006b0074006f007200e90020007300610020006e0061006a006c0065007001610069006500200068006f0064006900610020006e00610020006b00760061006c00690074006e00fa00200074006c0061010d00200061002000700072006500700072006500730073002e00200056007900740076006f00720065006e00e900200064006f006b0075006d0065006e007400790020005000440046002000620075006400650020006d006f017e006e00e90020006f00740076006f00720069016500200076002000700072006f006700720061006d006f006300680020004100630072006f00620061007400200061002000410064006f00620065002000520065006100640065007200200035002e0030002000610020006e006f0076016100ed00630068002egt13 SLV 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 SUO 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 SVE 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 TUR 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 UKR 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 ENU (Use these settings to create Adobe PDF documents best suited for high-quality prepress printing Created PDF 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UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13
Yara second quarter 2018 27
Goodwill arising on acquisition
USD millions Babrala Cubatatildeo
Total consideration 412 243
Fair value of net identifiable assets acquired 360 243
Goodwill arising on acquisition 52 -
Goodwill of the Babrala acquisition consists of Yara specific synergies and future benefits from the assembled workforce in addition to a willingness to pay to get an integrated position in the worlds second-largest fertilizer market The goodwill will be deductible for tax purposes
Net cash outflow on acquisition
USD millions Babrala Cubatatildeo
Consideration paid in cash at date of acquisition (421) (255)
Paid stamp duties (3) -
Cash and cash equivalent balances acquired - 18
Net cash outflow on acquisition of subsidiaries (424) (237)
Net cash outflow is presented as part of Cash outflow on business combinations in the consolidated interim statement of cash flows
Impact of the acquisition on total assets of the Group
USD millions Babrala Cubatatildeo
Consolidated identifiable assets 383 399
Goodwill arising on the acquisition 52 -
Total impact on the total assets of the Group 435 399
Impact of the acquisition on the results of the Group
USD millions Babrala Cubatatildeo
Included in year-to-date consolidated figures Revenues 169 55
of which internal revenues - 4
EBITDA 12 9
Net income(loss) before tax (5) 5
The Babrala result is negatively impacted by USD 87 million in stamp duties directly related to the business combination
Pro forma figures
If the Babrala acquisition had taken place at the beginning of the year rather than on 12 January 2018 the effect on Yaras pro-forma year-to-date consolidated income before tax would not be material
If the Vale Cubatatildeo acquisition had taken place at the beginning of the year Yaras pro-forma year-to-date revenues and consolidated income before tax would have increased(decreased) with
Cubatatildeo 1)
Revenues 117
Consolidated income before tax (13)
USD millions
1) The pro forma figures are preliminary determined
In determining the pro forma revenues and net income before tax the following adjustments have been made
calculated depreciation of tangible and intangible assets acquired on the basis of fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements
calculated increased interest expense on debt used for financing the acquisition of shares calculated unwinding expense of decommissioning
liabilities based on liabilities recognized at acquisition rather than on decommissioning liabilities recognized in the pre-acquisition financial statements eliminating sales from Vale Cubatatildeo to Yara Brazil during
the period 1 January to 15 May 2018
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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 CHS ltFEFF4f7f75288fd94e9b8bbe5b9a521b5efa7684002000410064006f006200650020005000440046002065876863900275284e8e9ad88d2891cf76845370524d53705237300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c676562535f00521b5efa768400200050004400460020658768633002gt13 CHT ltFEFF4f7f752890194e9b8a2d7f6e5efa7acb7684002000410064006f006200650020005000440046002065874ef69069752865bc9ad854c18cea76845370524d5370523786557406300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c4f86958b555f5df25efa7acb76840020005000440046002065874ef63002gt13 CZE ltFEFF005400610074006f0020006e006100730074006100760065006e00ed00200070006f0075017e0069006a007400650020006b0020007600790074007600e101590065006e00ed00200064006f006b0075006d0065006e0074016f002000410064006f006200650020005000440046002c0020006b00740065007200e90020007300650020006e0065006a006c00e90070006500200068006f006400ed002000700072006f0020006b00760061006c00690074006e00ed0020007400690073006b00200061002000700072006500700072006500730073002e002000200056007900740076006f01590065006e00e900200064006f006b0075006d0065006e007400790020005000440046002000620075006400650020006d006f017e006e00e90020006f007400650076015900ed007400200076002000700072006f006700720061006d0065006300680020004100630072006f00620061007400200061002000410064006f00620065002000520065006100640065007200200035002e0030002000610020006e006f0076011b006a016100ed00630068002egt13 DAN 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 DEU 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 ESP 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 ETI 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 FRA 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 GRE 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HEB 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HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA 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 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR ltFEFF004200720075006b00200064006900730073006500200069006e006e007300740069006c006c0069006e00670065006e0065002000740069006c002000e50020006f0070007000720065007400740065002000410064006f006200650020005000440046002d0064006f006b0075006d0065006e00740065007200200073006f006d00200065007200200062006500730074002000650067006e0065007400200066006f00720020006600f80072007400720079006b006b0073007500740073006b00720069006600740020006100760020006800f800790020006b00760061006c0069007400650074002e0020005000440046002d0064006f006b0075006d0065006e00740065006e00650020006b0061006e002000e50070006e00650073002000690020004100630072006f00620061007400200065006c006c00650072002000410064006f00620065002000520065006100640065007200200035002e003000200065006c006c00650072002000730065006e006500720065002egt13 POL 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 PTB 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 RUM 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 RUS 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ltFEFF0041006e007600e4006e00640020006400650020006800e4007200200069006e0073007400e4006c006c006e0069006e006700610072006e00610020006f006d002000640075002000760069006c006c00200073006b006100700061002000410064006f006200650020005000440046002d0064006f006b0075006d0065006e007400200073006f006d002000e400720020006c00e4006d0070006c0069006700610020006600f60072002000700072006500700072006500730073002d007500740073006b00720069006600740020006d006500640020006800f600670020006b00760061006c0069007400650074002e002000200053006b006100700061006400650020005000440046002d0064006f006b0075006d0065006e00740020006b0061006e002000f600700070006e00610073002000690020004100630072006f0062006100740020006f00630068002000410064006f00620065002000520065006100640065007200200035002e00300020006f00630068002000730065006e006100720065002egt13 TUR 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 ENU (Use these settings to create Adobe PDF documents best suited for high-quality prepress printing Created PDF documents can be opened with Acrobat and Adobe Reader 50 and later)13 gtgt13 Namespace [13 (Adobe)13 (Common)13 (10)13 ]13 OtherNamespaces [13 ltlt13 AsReaderSpreads false13 CropImagesToFrames true13 ErrorControl WarnAndContinue13 FlattenerIgnoreSpreadOverrides false13 IncludeGuidesGrids false13 IncludeNonPrinting false13 IncludeSlug false13 Namespace [13 (Adobe)13 (InDesign)13 (40)13 ]13 OmitPlacedBitmaps false13 OmitPlacedEPS false13 OmitPlacedPDF false13 SimulateOverprint Legacy13 gtgt13 ltlt13 AddBleedMarks false13 AddColorBars false13 AddCropMarks false13 AddPageInfo false13 AddRegMarks false13 ConvertColors ConvertToCMYK13 DestinationProfileName ()13 DestinationProfileSelector DocumentCMYK13 Downsample16BitImages true13 FlattenerPreset ltlt13 PresetSelector MediumResolution13 gtgt13 FormElements false13 GenerateStructure false13 IncludeBookmarks false13 IncludeHyperlinks false13 IncludeInteractive false13 IncludeLayers false13 IncludeProfiles false13 MultimediaHandling UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13
2017
28 Yara second quarter 2018
Note 6 Specifications to the condensed consolidated interim statement of income
Other income
USD millions 2Q 2017 1H 2017 2Q 2018 1H 2018
Carbon tax refund - 7 - 7 7
Sale of white certificates 3 1 18 1 14
Sale of land - - - - 10
Insurance compensations - - - - 14
Other 2 5 4 7 10
Total 6 12 23 14 55
Depreciation and amortization
USD millions 1H 2018 1H 2017 2Q 2018 2Q 2017
Depreciation of property plant and equipment (186) (167) (375) (326) (678)
Amortization of intangible assets (13) (11) (25) (22) (46)
Total depreciation and amortization (199) (178) (401) (348) (724)
Impairment loss
USD millions 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Impairment loss tangible assetssup1⁾ (20) (13) (25) (14) (43) Impairment loss goodwill and intangible assets - (6) - (6) (19) Reversal of impairment loss 0 1 1 1 2 Total impairment loss (20) (18) (23) (19) (60)
1) See Note 7 for more information
Note 7 Impairment of non-current assets In second quarter 2018 Yara recognized impairment losses of USD 20 million Of this amount approximately USD 14 million is related to logistical assets in Crop Nutrition and reflects lower than expected return in certain local markets The remaining impairment is related to plant assets in Production
Impairment sensitivity disclosures were included in note 17 to the annual report for 2017 There are no major changes to this information except that the sensitive units Yara Pilbara
Note 8 Inventories
Nitrates and Production Italy show reduced headroom at the end of second quarter 2018 Yara Pilbara Nitratesrsquo newly built TAN plant with a carrying value of approximately USD 400 million (Yararsquos 50) is currently not producing and repair work is ongoing The company is still assessing the extent of necessary repairs to be carried out before the plant is able to operate at full capacity and the related financial impact With a limited headroom any unfavorable new information may reduce the value-in-use of the plant and trigger an impairment charge
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Finished goods 1256 1115 1246
Work in progress 46 78 66
Raw materials 1074 1070 918
Total 2376 2263 2229
Write-down Balance at 1 January (27) (16) (16)
Reversal(write-down) net 8 1 (9)
Foreign currency translation gain(loss) 1 (1) (2)
Closing balance (18) (16) (27)
2017
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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documents can be opened with Acrobat and Adobe Reader 50 and later)13 gtgt13 Namespace [13 (Adobe)13 (Common)13 (10)13 ]13 OtherNamespaces [13 ltlt13 AsReaderSpreads false13 CropImagesToFrames true13 ErrorControl WarnAndContinue13 FlattenerIgnoreSpreadOverrides false13 IncludeGuidesGrids false13 IncludeNonPrinting false13 IncludeSlug false13 Namespace [13 (Adobe)13 (InDesign)13 (40)13 ]13 OmitPlacedBitmaps false13 OmitPlacedEPS false13 OmitPlacedPDF false13 SimulateOverprint Legacy13 gtgt13 ltlt13 AddBleedMarks false13 AddColorBars false13 AddCropMarks false13 AddPageInfo false13 AddRegMarks false13 ConvertColors ConvertToCMYK13 DestinationProfileName ()13 DestinationProfileSelector DocumentCMYK13 Downsample16BitImages true13 FlattenerPreset ltlt13 PresetSelector MediumResolution13 gtgt13 FormElements false13 GenerateStructure false13 IncludeBookmarks false13 IncludeHyperlinks false13 IncludeInteractive false13 IncludeLayers false13 IncludeProfiles false13 MultimediaHandling UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13
-
-
-
Yara second quarter 2018 29
Note 9 Long-term debt
Contractual payments on long-term debt
USD millions Debentures Bank Loans Capital lease and
other LT loans Total
2019 270 32 5 307
2020 - 46 6 52
2021 87 46 6 138
2022 293 199 3 494
2023 - 44 22 66
Thereafter 1808 250 4 2062
Total 2457 618 45 3119
In June Yara completed a USD 1000 million bond issue due 2028 with a coupon rate of 4750 pursuant to rule 144A Regulation S Net proceeds will be used for general corporate purposes thereby increasing the financial flexibility and strengthening Yaras maturity profile
Reconciliation of liabilities arising from financing activities
USD millions
Debt assumed as
part of acquisition
Foreign exchange
movement Fair value
changes Amorti zation 1)
Reclassi fication 2)
Long-term interest-bearing debt 2429 1234 (9) 1 (5) (530) 3119 Bank loans and other interest-bearing short-term debt 439 1 41 (19) - - - 462 Current portion of long-term debt 43 - (4) - - 530 570 Total liabilities from financing activities 2911 1235 41 (32) 1 (5) - 4151
30 Jun 2018
1) Amortization of transaction cost
31 Dec 2017 Cash flows
Non cash changes
2) Reclassification between long-term and short-term debt
Note 10 Provisions and contingencies
Contingencies Yara is party to a number of lawsuits related to laws and regulations in various jurisdictions arising out of the conduct of its business While acknowledging the uncertainties of litigation Yara is of the opinion that based on the information currently available these matters will be solved without material adverse effect In addition several subsidiaries are engaged in juridical and administrative proceedings related to various disputed tax matters where the probability of cash outflow is not considered probable Yararsquos contingent assets consist of expected proceeds from insurance claims and a take-or-pay compensation in a sales contract which has been disputed by the customer
There are no significant changes to Yararsquos contingent liabilities and contingent assets compared with year end 2017
Provisions During second quarter 2018 Yara recognized a provision for restructuring costs of USD 19 million related to centralization of certain supply chain functions in Europe Of this amount USD 10 million is reported in the Crop Nutrition segment and USD 9 million is reported in the Industrial segment
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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HEB 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documents can be opened with Acrobat and Adobe Reader 50 and later)13 gtgt13 Namespace [13 (Adobe)13 (Common)13 (10)13 ]13 OtherNamespaces [13 ltlt13 AsReaderSpreads false13 CropImagesToFrames true13 ErrorControl WarnAndContinue13 FlattenerIgnoreSpreadOverrides false13 IncludeGuidesGrids false13 IncludeNonPrinting false13 IncludeSlug false13 Namespace [13 (Adobe)13 (InDesign)13 (40)13 ]13 OmitPlacedBitmaps false13 OmitPlacedEPS false13 OmitPlacedPDF false13 SimulateOverprint Legacy13 gtgt13 ltlt13 AddBleedMarks false13 AddColorBars false13 AddCropMarks false13 AddPageInfo false13 AddRegMarks false13 ConvertColors ConvertToCMYK13 DestinationProfileName ()13 DestinationProfileSelector DocumentCMYK13 Downsample16BitImages true13 FlattenerPreset ltlt13 PresetSelector MediumResolution13 gtgt13 FormElements false13 GenerateStructure false13 IncludeBookmarks false13 IncludeHyperlinks false13 IncludeInteractive false13 IncludeLayers false13 IncludeProfiles false13 MultimediaHandling UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13
30 Yara second quarter 2018
Note 11 Change of presentation currency
Yara has from 2018 changed the presentation currency of the consolidated financial statements from Norwegian kroner (NOK) to US dollars (USD) The change in presentation currency is accounted for retrospectively as a change in accounting policy Comparative information for 2017 has been restated on the following basis
Assets and liabilities in non-USD currencies are translated into USD at the closing rates of exchange on the relevant balance sheet date Non-USD income and expenditure are translated at the
average rates of exchange prevailing for the relevant month The cumulative hedging and translation reserves were set
to nil at the date of Yararsquos transition to IFRS 1 January 2004 and then restated on the basis that Yara has reported in USD since that date Share capital premium paid-in capital and other reserves
were translated at the historic rates prevailing at the shyHydroYara demerger date 25 March 2004 and
Effects of changes in reported net income
subsequent rates prevailing on the date of each transaction Upon the disposal of a foreign operation accumulated
translation adjustments arising from currency movements between the Grouprsquos presentation currency and the functional currency of the foreign operation are reclassified from equity to the income statement With the change in presentation currency these accumulated currency gains or losses are being calculated based on USD rather than NOK However no currency movements are reclassified upon disposal of NOK operations since the functional currency of Yara International ASA is NOK Net investment hedge relationships are not impacted
since neither the parent nor the related foreign operation have changed their functional currencies
A separate appendix containing all restated historical figures was issued 1 March 2018 This appendix is available in the Investor Relations section on wwwyaracom
Historical Restated Consolidated consolidated Reshy consolidated net income in net income in presentation net income in
NOK million USD million 1) in USD million USD million 1Q 2017 1692 201 (0) 201 2Q 2017 699 82 (0) 82 3Q 2017 709 90 0 90 4Q 2017 846 104 0 104 2017 3948 477 0 477
1) USD numbers calculated monthly based on average NOKUSD per month
Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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HEB 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Yara second quarter 2018 31
Effects of changes in reported equity
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2016 NOK million USD million 1)
Share capital reduced for treasury stock 464 54 Premium paid-in capital 117 14 Total paid-in capital 582 68 Other reserves 12947 1504 Retained earnings 60916 7076 Total equity attributable to shareholders of the parent 74444 8647 Non-controlling interests 2326 270 Total equity 76770 8917
1) Translated at exchange rate NOK 86091 USD 1 as of 31 December 2016
Historical consolidated Consolidated
financial financial statements in statements in
31 December 2017 NOK million USD million 1)
Share capital reduced for treasury stock 464 57 Premium paid-in capital 117 14 Total paid-in capital 582 71 Other reserves 12299 1502 Retained earnings 62660 7652 Total equity attributable to shareholders of the parent 75540 9225 Non-controlling interests 2290 280 Total equity 77831 9505
1) Translated at exchange rate NOK 81887 USD 1 as of 31 December 2017
Restated consolidated
Re- financial presentation statements in
in USD million USD million
12 66
(62) (49)
(50) 17
(3023) (1520)
3074 10150
- 8647
- 270
- 8917
Restated consolidated
Re- financial presentation statements in
in USD million USD million
9 66
(63) (49)
(54) 17
(2663) (1161)
2717 10369
- 9225
- 280
- 9505
Total equity is equal to the previously reported NOK equity translated at the closing rate at the end of each reporting period The different components are restated to reflect the change in presentation currency from the implementation of IFRS in 2004
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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HEB 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UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13
32 Yara second quarter 2018
Responsibility statement We confirm to the best of our knowledge that the Norwegian Securities Trading Act section 5-6 fourth condensed set of interim consolidated financial statements paragraph includes a fair review of any significant events at 30 June 2018 and for the six-month period 1 January to 30 that arose during the six-month period and their effect on June 2018 have been prepared in accordance with IAS 34 the half-year financial report any significant related parties ldquoInterim Financial Reportingrdquo and give a true and fair view transactions and a description of the principal risks and of the Grouprsquos assets liabilities financial position and the uncertainties for the remaining six months this year result for the period viewed in their entirety and that the interim management report in accordance with the
The Board of Directors and Chief Executive Officer Yara International ASA
Oslo 16 July 2018
Geir Isaksen Maria Moraeligus Hanssen John Thuestad Hilde Bakken Chairperson
Geir O Sundboslash Board member
Vice chair
Trond Berger Board member
Svein Tore Holsether President and CEO
Board member
Rune Bratteberg Board member
Board member
Kjersti Aass Board member
Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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HEB 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Yara second quarter 2018 33
Quarterly historical information
EBITDA
USD millions
Crop Nutrition 153 141 103 147 118 124 Industrial 54 53 17 52 44 45 Production 95 157 224 81 180 237 Other and eliminations (6) 18 (32) 23 10 (25) Total 296 370 312 303 352 381
Results
USD millions except per share information
Revenue and other income 3192 2856 2936 3021 2759 2683 Operating income 38 134 59 88 130 181
EBITDA 296 370 312 303 352 381 Net income after non-controlling interests (211) 116 104 90 82 201
Basic earnings per share (077) 042 038 033 030 073
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
2Q 2018 1Q 2018 4Q 2017 3Q 2017 2Q 2017 1Q 2017
ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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HEB 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HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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ndash
ndash
34 Yara second quarter 2018
Reconciliation of alternative performance measures Please see page 11 and 12 for definitions of alternative performance measures
Reconciliation of operating income to EBITDA and gross cash flow
USD millions
Operating income Share of net income in equity-accounted investees Interest income and other financial income Earnings before interest expense and tax (EBIT) Depreciation and amortization 1)
Impairment loss 2)
Earnings before interest tax and depreciationamortization (EBITDA) Income tax after tax on net foreign currency translation gain(loss) Gross cash flow
3-month rolling
2Q 2018
38
17
22
77
199
20
296
(33)
A 263
2Q 2017
130
7
19
156
178
18
352
(43)
308
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of net income after non-controlling interests to gross cash flow
3-month rolling
USD millions
Net income attributable to shareholders of the parent Non-controlling interests Financial expense and foreign currency translation Depreciation and amortization 1)
Impairment loss 2)
Tax effect on foreign currency translation Gross cash flow A
Annualized gross cash flow B=Ax4 12-month rolling B
2Q 2018
(211)
(5)
338
199
20
(78)
263
1054
2Q 2017
82
(2)
40
178
18
(8)
308
1233
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of total assets to gross investments and CROGI calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Accumulated depreciation and amortization Accumulated impairment loss Gross investment 3-month average Gross investment 12-month average
CROGI (Cash Return on Gross Investment)
C C
D=BC
2Q 2018
16626
(614)
(0)
(388)
(2453)
6666
40
19876
53
2Q 2017
14646
(302)
(0)
(351)
(2091)
5773
38
17712
70
12-month rolling Jul 2016ndashJun
2017 2017
318 535 457
41 (35) 29
81 82 77
439 583 563
777 700 724
65 55 60
1281 1338 1348
(52) (169) (76)
1229 1170 1272
12-month rolling Jul 2016ndashJun
2017 2017
98 342 477
4 (6) 5
348 78 (17)
777 700 724
65 55 60
(63) (1) 23
1229 1170 1272
1229 1170 1272
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
6423 5702 5984
40 27 39
19206 17230 18136
64 68 70
Jul 2017ndashJun 2018
Jul 2017 Jun 2018
Jul 2017 Jun 2018
ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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 CHS ltFEFF4f7f75288fd94e9b8bbe5b9a521b5efa7684002000410064006f006200650020005000440046002065876863900275284e8e9ad88d2891cf76845370524d53705237300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c676562535f00521b5efa768400200050004400460020658768633002gt13 CHT ltFEFF4f7f752890194e9b8a2d7f6e5efa7acb7684002000410064006f006200650020005000440046002065874ef69069752865bc9ad854c18cea76845370524d5370523786557406300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c4f86958b555f5df25efa7acb76840020005000440046002065874ef63002gt13 CZE 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 DAN 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 DEU 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 ESP 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 ETI 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 FRA 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 GRE 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HEB 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HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN ltFEFF004b0069007600e1006c00f30020006d0069006e0151007300e9006701710020006e0079006f006d00640061006900200065006c0151006b00e90073007a00ed007401510020006e0079006f006d00740061007400e100730068006f007a0020006c006500670069006e006b00e1006200620020006d0065006700660065006c0065006c0151002000410064006f00620065002000500044004600200064006f006b0075006d0065006e00740075006d006f006b0061007400200065007a0065006b006b0065006c0020006100200062006500e1006c006c00ed007400e10073006f006b006b0061006c0020006b00e90073007a00ed0074006800650074002e0020002000410020006c00e90074007200650068006f007a006f00740074002000500044004600200064006f006b0075006d0065006e00740075006d006f006b00200061007a0020004100630072006f006200610074002000e9007300200061007a002000410064006f00620065002000520065006100640065007200200035002e0030002c0020007600610067007900200061007a002000610074007400f3006c0020006b00e9007301510062006200690020007600650072007a006900f3006b006b0061006c0020006e00790069007400680061007400f3006b0020006d00650067002egt13 ITA ltFEFF005500740069006c0069007a007a006100720065002000710075006500730074006500200069006d0070006f007300740061007a0069006f006e00690020007000650072002000630072006500610072006500200064006f00630075006d0065006e00740069002000410064006f00620065002000500044004600200070006900f900200061006400610074007400690020006100200075006e00610020007000720065007300740061006d0070006100200064006900200061006c007400610020007100750061006c0069007400e0002e0020004900200064006f00630075006d0065006e007400690020005000440046002000630072006500610074006900200070006f00730073006f006e006f0020006500730073006500720065002000610070006500720074006900200063006f006e0020004100630072006f00620061007400200065002000410064006f00620065002000520065006100640065007200200035002e003000200065002000760065007200730069006f006e006900200073007500630063006500730073006900760065002egt13 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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ndash
ndash
Yara second quarter 2018 35
Reconciliation of EBIT to EBIT after tax
USD millions
Earnings before interest expense and tax (EBIT) Income tax after tax on net foreign currency translation gain(loss) EBIT after tax
Annualized quarter EBIT after tax 12-month rolling EBIT after tax
3-month average
2Q 2017
77 156
E (33)
44
(43)
112
F=Ex4 F
177 450
2Q 2018
Reconciliation of total assets to capital employed and ROCE calculation
3-month average
USD millions
Total assets Cash and cash equivalents Other liquid assets Deferred tax assets Other current liabilities Capital employed 3-month average Capital employed 12-month average
ROCE (Return on Capital Employed)
G G
H=FG
2Q 2018
16626
(614)
(0)
(388)
(2453)
13171
13
Reconciliation of EBITDA to income before tax and non-controlling interests
USD millions
EBITDA Depreciation and amortization 1)
Impairment loss 2)
Foreign currency translation gain(loss) Interest expense and other financial items Income before tax and non-controlling interests I
2Q 2018
296
(199)
(20)
(302)
(36)
(261)
1) Including amortization of excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees
Reconciliation of operating income to EBITDA excluding special items
USD millions
Operating income Share of net income in equity-accounted investees Interest income Dividends and net gain(loss) on securities EBIT Depreciation and amortization 1)
Impairment loss 2)
EBITDA Special items included in EBITDA 3)
EBITDA excluding special items
1) Including amortization on excess value in equity-accounted investees 2) Including impairment loss on excess value in equity-accounted investees 3) See page 12 for details on special items
2Q 2018
38
17
20
3
77
199
20
296
24
321
2Q 2017
14646
(302)
(0)
(351)
(2091)
11901
38
2Q 2017
352
(178)
(18)
(18)
(22)
115
2Q 2017
130
7
18
2
156
178
18
352
(14)
338
12-month average Jul 2016ndashJun
2017 2017
439 583 563
(52) (169) (76)
387 414 488
387 414 488
12-month average Jul 2016ndashJun
2017 2017
15755 14369 14847
(434) (529) (327)
(1) (0) (0)
(372) (340) (349)
(2206) (2000) (2057)
12742 11501 12113
30 36 40
1H 2017 2017
666 733 1348
(401) (348) (724)
(24) (19) (60)
(294) 51 99
(63) (43) (82)
(115) 374 581
1H 2017 2017
171 310 457
27 16 29
40 38 75
3 2 2
242 366 563
401 348 724
24 19 60
666 733 1348
32 (0) 82
698 733 1430
Jul 2017 Jun 2018
Jul 2017 Jun 2018
1H 2018
1H 2018
36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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 ESP 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 ETI 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 FRA 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 GRE ltFEFF03a703c103b703c303b903bc03bf03c003bf03b903ae03c303c403b5002003b103c503c403ad03c2002003c403b903c2002003c103c503b803bc03af03c303b503b903c2002003b303b903b1002003bd03b1002003b403b703bc03b903bf03c503c103b303ae03c303b503c403b5002003ad03b303b303c103b103c603b1002000410064006f006200650020005000440046002003c003bf03c5002003b503af03bd03b103b9002003ba03b103c42019002003b503be03bf03c703ae03bd002003ba03b103c403ac03bb03bb03b703bb03b1002003b303b903b1002003c003c103bf002d03b503ba03c403c503c003c903c403b903ba03ad03c2002003b503c103b303b103c303af03b503c2002003c503c803b703bb03ae03c2002003c003bf03b903cc03c403b703c403b103c2002e0020002003a403b10020005000440046002003ad03b303b303c103b103c603b1002003c003bf03c5002003ad03c703b503c403b5002003b403b703bc03b903bf03c503c103b303ae03c303b503b9002003bc03c003bf03c103bf03cd03bd002003bd03b1002003b103bd03bf03b903c703c403bf03cd03bd002003bc03b5002003c403bf0020004100630072006f006200610074002c002003c403bf002000410064006f00620065002000520065006100640065007200200035002e0030002003ba03b103b9002003bc03b503c403b103b303b503bd03ad03c303c403b503c103b503c2002003b503ba03b403cc03c303b503b903c2002egt13 HEB 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 HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA 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 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 LVI 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL ltFEFF0055007300740061007700690065006e0069006100200064006f002000740077006f0072007a0065006e0069006100200064006f006b0075006d0065006e007400f300770020005000440046002000700072007a0065007a006e00610063007a006f006e00790063006800200064006f002000770079006400720075006b00f30077002000770020007700790073006f006b00690065006a0020006a0061006b006f015b00630069002e002000200044006f006b0075006d0065006e0074007900200050004400460020006d006f017c006e00610020006f007400770069006500720061010700200077002000700072006f006700720061006d006900650020004100630072006f00620061007400200069002000410064006f00620065002000520065006100640065007200200035002e0030002000690020006e006f00770073007a0079006d002egt13 PTB 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 RUM ltFEFF005500740069006c0069007a00610163006900200061006300650073007400650020007300650074010300720069002000700065006e007400720075002000610020006300720065006100200064006f00630075006d0065006e00740065002000410064006f006200650020005000440046002000610064006500630076006100740065002000700065006e0074007200750020007400690070010300720069007200650061002000700072006500700072006500730073002000640065002000630061006c006900740061007400650020007300750070006500720069006f006100720103002e002000200044006f00630075006d0065006e00740065006c00650020005000440046002000630072006500610074006500200070006f00740020006600690020006400650073006300680069007300650020006300750020004100630072006f006200610074002c002000410064006f00620065002000520065006100640065007200200035002e00300020015f00690020007600650072007300690075006e0069006c006500200075006c0074006500720069006f006100720065002egt13 RUS 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 SKY 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 SLV 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36 Yara second quarter 2018
Net operating capital
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Trade receivables 1638 1264 1398
Inventories 2376 2263 2229
Trade payables 1) (1454) (1162) (1340)
Prepayments from customers (640) (447) (265)
Net operating capital 1919 1918 2023
1) Trade and other payables in the statement of financial position also includes payables related to payroll and value added taxes which is not included in the calculation of net operating capital above
Net interest-bearing debt
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Cash and cash equivalents 998 274 544
Other liquid assets 1) 0 0 0
Bank loans and other short-term interest-bearing debt (462) (491) (439)
Current portion of long-term debt (570) (40) (43)
Long-term interest-bearing debt (3119) (1752) (2429)
Net interest-bearing debt (3153) (2008) (2367) J
1) Other liquid assets is included in Prepaid expenses and other current assets in statement of financial position
Debtequity ratio
USD millions 30 Jun 2018 30 Jun 2017 31 Dec 2017
Net interest-bearing debt (3153) (2008) (2367)
Total equity (8980) (9064) (9505)
Debtequity ratio 035 022 025 M=KL
K L
Earnings per share
USD millions except earnings per share and number of shares 2Q 2018 2Q 2017 1H 2018 1H 2017 2017
Weighted average number of shares outstanding N 273217830 273217830 273217830 273217830 273217830
Net income O (211) 82 (96) 283 477
Foreign currency translation gain(loss) P (302) (18) (294) 51 99 Tax effect on foreign currency translation Q 78 8 74 (12) (23) Non-controlling interest share of foreign currency (gain)loss net after tax
R (1) (1) (2)
(2) (4)
Special items within EBIT 1) S (44) (3) (51) (17) (134)
Tax effect on special items T 10 1 12 5 33
Special items within EBIT net of tax U=S+T (34) (2) (39) (12) (101) Non-controlling interest share of special items net after tax V - - - - 2
Basic earnings per share W=ON (077) 030 (035) 103 175
Basic earnings per share excluding foreign currency X=(O-P-Q+R)N 004 033 045 088 145 Basic earnings per share excluding foreign currency amp special items
Y=(O-P-Q+R-UshyV)N 017 034 059 093 181
1) See page 12 for details on special items
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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HEB 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HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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 RUM 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 RUS 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 SKY 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 SLV 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 SUO 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 SVE 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 TUR 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 UKR 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 ENU (Use these settings to create Adobe PDF documents best suited for high-quality prepress printing Created PDF documents can be opened with Acrobat and Adobe Reader 50 and later)13 gtgt13 Namespace [13 (Adobe)13 (Common)13 (10)13 ]13 OtherNamespaces [13 ltlt13 AsReaderSpreads false13 CropImagesToFrames true13 ErrorControl WarnAndContinue13 FlattenerIgnoreSpreadOverrides false13 IncludeGuidesGrids false13 IncludeNonPrinting false13 IncludeSlug false13 Namespace [13 (Adobe)13 (InDesign)13 (40)13 ]13 OmitPlacedBitmaps false13 OmitPlacedEPS false13 OmitPlacedPDF false13 SimulateOverprint Legacy13 gtgt13 ltlt13 AddBleedMarks false13 AddColorBars false13 AddCropMarks false13 AddPageInfo false13 AddRegMarks false13 ConvertColors ConvertToCMYK13 DestinationProfileName ()13 DestinationProfileSelector DocumentCMYK13 Downsample16BitImages true13 FlattenerPreset ltlt13 PresetSelector MediumResolution13 gtgt13 FormElements false13 GenerateStructure false13 IncludeBookmarks false13 IncludeHyperlinks false13 IncludeInteractive false13 IncludeLayers false13 IncludeProfiles false13 MultimediaHandling UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13
37 Yara second quarter 2018
Notes
Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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MonoImageDownsampleThreshold 15000013 EncodeMonoImages true13 MonoImageFilter CCITTFaxEncode13 MonoImageDict ltlt13 K -113 gtgt13 AllowPSXObjects false13 CheckCompliance [13 None13 ]13 PDFX1aCheck false13 PDFX3Check false13 PDFXCompliantPDFOnly false13 PDFXNoTrimBoxError true13 PDFXTrimBoxToMediaBoxOffset [13 00000013 00000013 00000013 00000013 ]13 PDFXSetBleedBoxToMediaBox true13 PDFXBleedBoxToTrimBoxOffset [13 00000013 00000013 00000013 00000013 ]13 PDFXOutputIntentProfile ()13 PDFXOutputConditionIdentifier ()13 PDFXOutputCondition ()13 PDFXRegistryName ()13 PDFXTrapped False1313 CreateJDFFile false13 Description ltlt13 ARA 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 CHS ltFEFF4f7f75288fd94e9b8bbe5b9a521b5efa7684002000410064006f006200650020005000440046002065876863900275284e8e9ad88d2891cf76845370524d53705237300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c676562535f00521b5efa768400200050004400460020658768633002gt13 CHT ltFEFF4f7f752890194e9b8a2d7f6e5efa7acb7684002000410064006f006200650020005000440046002065874ef69069752865bc9ad854c18cea76845370524d5370523786557406300260a853ef4ee54f7f75280020004100630072006f0062006100740020548c002000410064006f00620065002000520065006100640065007200200035002e003000204ee553ca66f49ad87248672c4f86958b555f5df25efa7acb76840020005000440046002065874ef63002gt13 CZE 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 DAN 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 DEU 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 ESP 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 ETI 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 FRA 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 GRE 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HEB 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HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 ITA 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 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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Yara International ASA Drammensveien 131 NOndash0277 Oslo Norway Tel +47 24 15 70 00 Fax +47 24 15 70 01
wwwyaracom
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HEB 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HRV (Za stvaranje Adobe PDF dokumenata najpogodnijih za visokokvalitetni ispis prije tiskanja koristite ove postavke Stvoreni PDF dokumenti mogu se otvoriti Acrobat i Adobe Reader 50 i kasnijim verzijama)13 HUN 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 JPN ltFEFF9ad854c18cea306a30d730ea30d730ec30b951fa529b7528002000410064006f0062006500200050004400460020658766f8306e4f5c6210306b4f7f75283057307e305930023053306e8a2d5b9a30674f5c62103055308c305f0020005000440046002030d530a130a430eb306f3001004100630072006f0062006100740020304a30883073002000410064006f00620065002000520065006100640065007200200035002e003000204ee5964d3067958b304f30533068304c3067304d307e305930023053306e8a2d5b9a306b306f30d530a930f330c8306e57cb30818fbc307f304c5fc59808306730593002gt13 KOR ltFEFFc7740020c124c815c7440020c0acc6a9d558c5ec0020ace0d488c9c80020c2dcd5d80020c778c1c4c5d00020ac00c7a50020c801d569d55c002000410064006f0062006500200050004400460020bb38c11cb97c0020c791c131d569b2c8b2e4002e0020c774b807ac8c0020c791c131b41c00200050004400460020bb38c11cb2940020004100630072006f0062006100740020bc0f002000410064006f00620065002000520065006100640065007200200035002e00300020c774c0c1c5d0c11c0020c5f40020c2180020c788c2b5b2c8b2e4002egt13 LTH 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 NLD (Gebruik deze instellingen om Adobe PDF-documenten te maken die zijn geoptimaliseerd voor prepress-afdrukken van hoge kwaliteit De gemaakte PDF-documenten kunnen worden geopend met Acrobat en Adobe Reader 50 en hoger)13 NOR 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 POL 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 PTB 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 RUM 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 RUS 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 SLV 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 SUO 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 SVE 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 TUR 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 UKR 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 ENU (Use these settings to create Adobe PDF documents best suited for high-quality prepress printing Created PDF documents can be opened with Acrobat and Adobe Reader 50 and later)13 gtgt13 Namespace [13 (Adobe)13 (Common)13 (10)13 ]13 OtherNamespaces [13 ltlt13 AsReaderSpreads false13 CropImagesToFrames true13 ErrorControl WarnAndContinue13 FlattenerIgnoreSpreadOverrides false13 IncludeGuidesGrids false13 IncludeNonPrinting false13 IncludeSlug false13 Namespace [13 (Adobe)13 (InDesign)13 (40)13 ]13 OmitPlacedBitmaps false13 OmitPlacedEPS false13 OmitPlacedPDF false13 SimulateOverprint Legacy13 gtgt13 ltlt13 AddBleedMarks false13 AddColorBars false13 AddCropMarks false13 AddPageInfo false13 AddRegMarks false13 ConvertColors ConvertToCMYK13 DestinationProfileName ()13 DestinationProfileSelector DocumentCMYK13 Downsample16BitImages true13 FlattenerPreset ltlt13 PresetSelector MediumResolution13 gtgt13 FormElements false13 GenerateStructure false13 IncludeBookmarks false13 IncludeHyperlinks false13 IncludeInteractive false13 IncludeLayers false13 IncludeProfiles false13 MultimediaHandling UseObjectSettings13 Namespace [13 (Adobe)13 (CreativeSuite)13 (20)13 ]13 PDFXOutputIntentProfileSelector DocumentCMYK13 PreserveEditing true13 UntaggedCMYKHandling LeaveUntagged13 UntaggedRGBHandling UseDocumentProfile13 UseDocumentBleed false13 gtgt13 ]13gtgt setdistillerparams13ltlt13 HWResolution [2400 2400]13 PageSize [612000 792000]13gtgt setpagedevice13