Annual report 2017 In collaboration with customers and partners, Yara grows knowledge to responsibly feed the world and protect the planet, to fulfill its vision of a collaborative society, a world without hunger and a planet respected. Our crop nutrition solutions and precision farming offerings allow farmers to increase yields and improve product quality while reducing environmental impact. Our environmental and industrial solutions improve air quality and reduce emissions, and are key ingredients in the production of a wide range of products. We foster an open culture of diversity and inclusion that promotes the safety and integrity of our employees, contractors, business partners, and society at large. Founded in 1905 to solve emerging famine in Europe, Yara has a worldwide presence with more than 16,000 employees and operations in over 60 countries. In 2017, Yara reported revenues of USD 11.4 billion. www.yara.com We make a difference Our Mission Responsibly feed the world and protect the planet Our mission is our reason to exist. It defines our company’s purpose and role in the world and is balanced between three core ideas. Feeding the world embodies knowledge, economic empowerment and new innovative ideas. Protecting the planet represents our commitment to emission abatement and sustainable agricultural practices. At Yara we believe that success can be celebrated only when it is achieved in the right way. We believe knowledge grows and has the power to create positive global change. We understand that knowledge helps feed the world, creates profitable businesses, and protects the planet at a time when the popula- tion is expanding and our resources are increasingly challenged. Our Vision A collaborative society; a world without hunger; a planet respected. Our founders faced and overcame the greatest food challenge of their time. With collaboration and curiosity, they combined and grew their knowledge to help save the lives of millions of people. Our vision for the world is based upon ensuring a sustainable future. A collaborating community that overcomes cultural, environmental and economic barriers to create solutions that will lead to a world free from hunger and a planet respected. Our Values Ambition Performing above expectations, taking initiative and constantly working in line with Yara´s ambitions and personal goals. Curiosity Asking bold, brave questions; curiosity is the lifeblood of our culture. It is curiosity that builds knowledge and it’s the power of inquiry that led Yara’s three remarkable founders to head off an impending famine in the early 20th century. Collaboration Working together with mutual respect, partnership, and appreciation of all perspectives and approaches. The art of collaboration - both internally within Yara and externally with the rest of the world - amplifies our collective knowledge. Accountability Being reliable, taking responsibility and always having Yara´s and society´s interests in mind when faced with tough decisions. Through accountability trust is earned. Where we are As the industry’s only global player, we have production facilities on six continents, operations in more than 60 countries – and sales to about 160 countries. Countries with sales Sales offices and R&D sites Yara Plants Smaller sites 1) Phosphate mines Joint ventures Head office 1) Yara operated terminals and logistical production sites 2017 numbers Number of employees 1) Total sales Revenues 15,527 36.3 93.8 Globally Million tonnes NOK billion Employees by region Sales by product Revenues by region Share of employees Share of sales volume (thousand tonnes) Share of revenues (NOK million) Europe , % Fertilizer , % Europe , % Brazil , % Industrial products , % Brazil , % Latin-America , % Ammonia trade , % North-America , % Asia & Oceania % Asia & Oceania , % North-America % Latin-America , % Africa % Africa , % 1) Includes permanent, temporary, interns and apprentices. 1 Our DNA Annual report 2017 Content At Yara we work to improve livelihoods and peoples’ lives. We apply knowledge to address global challenges Introduction and when we succeed, society is better off. 02 Leveraging scale and knowledge 04 How we performed Our company was founded in 1905 as a solution for the 06 CEO message European famine that swept over the continent in the 09 Segment introduction early part of the 20th century. Since then, we have con- 10 Crop Nutrition tinuously developed solutions that improve and increase 10 Industrial global food production in a sustainable way. Through this 11 Production expertise, we have also managed to create additional 11 Supply Chain environmental solutions that reduce harmful emissions. Chapter 01 Global challenges are real and will not vanish 12 Report of the Board of Directors on their own. Climate change is affecting our way of life. The world’s population continues to Chapter 02 increase. We have more mouths to feed, limited 25 Governance and risk management land to farm and less resources to draw upon. Chapter 03 At Yara, we believe in meeting these challenges 47 Financial review head on. There is no trade-off between building a profitable business and solving global challenges. Financial statements But both companies and governments must do their 60 Consolidated financial statements part. Together we make a difference, and our mission, 137 Financial statements for vision and values embody Yara’s spirit and DNA. Yara International ASA 2 Performance overview Yara Annual report 2017 Leveraging scale and knowledge Yara has defined a mission that states our purpose, why we exist. Our strategy details how we deliver on our mission and how we contribute to achieving our vision. Our Business model FLEXIBILITY Hydrocarbons OPTIMIZATION Supply Chain Production Supply Chain Minerals SCALE Our strategy Yara believes that by offering a to delivering better productivity and margin improvements within both crop positive value proposition to our quality, also contribute to sustainable nutrition and industrial products. customers, we can deliver attractive farming through lowering carbon returns to our shareholders while emissions and optimizing water usage. The Industrial segment contributes to creating value for society, contributing At the same time, our environmental stabilizing margins through the com- to the Sustainable Development product offerings contribute to the modity cycle. For Yara Crop Nutrition, Goals and the Paris agreement. reduction of harmful emissions to the value chain extends beyond the the air. Our ability to translate global farmer, through partnerships with the Yara’s business model is uniquely challenges into value-creating business food industry in response to consumer positioned to address some of the major opportunities is the reason we exist, trends. The value we create through global challenges of our time, particu- and the foundation of our strategy. this integrated business model sustains larly within food and resource scarcity, our global presence and differentiation, and climate change. The world’s need Yara’s integrated business model delivers and strengthens our competitive edge. for food and clean air are long- term scale advantages, extensive flexibility drivers for our business. Yara has and value chain presence to create a developed solutions which, in addition platform for business expansion and Yara Annual report 2017 Performance overview 3 Crop Nutrition value chain PUSH PULL Crop nutrition Distribution Farmer Food industry Consumer Industrial and environmental customers PUSH PULL Industrial Industrial applications Environmental solutions Our competitive edge comes from four sources Knowledge Margin Global Optimization and Scale Competitive Raw Material Cost Knowledge gathered over a Our global downstream presence Yara leverages our scale in order to century helps farmers and combined with our large production source gas and other raw materials industrial customers improve their footprint allow Yara to optimize in at the lowest possible price. We pur- profits. Through our farmer centric which markets we place products sue acquisition opportunities pro- approach and our knowledge, we through the year, accounting for viding access to low-cost resources. help farmers increase their profit- changes in seasons and regional ability, which entitles us to realize a demand. The flexibility enables higher margin on our products than Yara to run on higher plant utili- we otherwise would. The same zation, reduces logistical costs, and applies within Industrial, where we ensures higher reliability of supply. Operational Excellence apply our knowledge in order to Yara is the world’s largest operator identify and develop very profitable Our production scale allows us of fertilizer plants. We apply niche applications for our products. to reduce costs and optimize global processes, knowledge raw material efficiency. We and best practice to ensure our leverage our scale to achieve productivity system and production efficient logistics and high technologies are second to none. production asset utilization. 4 Performance overview Yara Annual report 2017 How we performed 2017 2017 2016 Financial performance Revenue and other Income NOK million 93,812 9 7,17 0 Operating income NOK million 3,777 8,771 EBITDA 1) NOK million 11,120 15,563 Net income after non-controlling interests NOK million 3,948 6,360 Investments 2) NOK million 11,105 13,450 Debt/Equity ratio 3) 0.25 0.17 Cash flow from operations NOK million 6,478 14,084 CROGI 4) % 7.0 9.5 ROCE 5) % 4.0 7.5 Earnings