Yara evaluating IPO of industrial nitrogen business


At its Capital Markets Day in London 26 June 2019, Yara announced it is evaluating an IPO of its industrial nitrogen businesses, expanding its improvement program by 70 per cent and setting out clear principles for capital allocation.

YARALogo KnowledgeGrows“Yara has an unrivalled position in the fertilizer industry based on 114 years of crop nutrition experience. Going forward, our focus will be on growing value through continuous improvement and through our sustainable crop nutrition solutions including premium products and digital farming tools,” says president and CEO of Yara International ASA, Svein Tore Holsether.

According to a company news release, an IPO of Yara’s industrial nitrogen businesses would create the first integrated industrial nitrogen company. Such a company would take an industry-leading position, with the highest value proposition in core markets, a solid European platform and an attractive market portfolio balancing stability and growth.

The conclusion of a final IPO scope is expected early 2020. As part of the evaluation process, the business units Mining Applications (TAN), Transport Reagents and Industrial Nitrates will effective 1 July 2019 be organized in a separate entity. Yves Bonte, previously EVP New Business, will take up the role as CEO of this entity, reporting to an internal board of directors chaired by Yara’s President and CEO. Consequently, Bonte will no longer be a member of the Yara corporate management team.

Following a period of several significant investments, Yara’s focus is on strict capital discipline and capturing the full value of recent investments. Yara announced a targeted capital structure to maintain a mid-investment grade credit rating, targeting 1.5x-2.0x net debt/EBITDA and net debt/equity <0.60. The target for ordinary dividends is lifted to 50 per cent of net income, subject to maintaining a mid-investment credit rating.

Yara also announced a 70 per cent increase in targeted earnings improvements from the Yara Improvement Program, expanding the program from 2020 to 2023. Key levers to achieve these targets will be higher production volumes and energy efficiency, a leaner cost base with clear fixed cost targets and improved working capital management. The improvement program is on track to meet its original end 2020 target, representing an important milestone towards realizing the expanded targets by end 2023.

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