On 25th March 2004, as a result of the de-merger from Norsk Hydro, Yara International ASA became an independent company listed on the Oslo stock exchange.
The new name promised a new start and signified land, soil and harvest and a ‘good year’. So, four months on and following the second quarter results, we asked Yara whether the industrial segment is promising to harvest a healthy yield?
Q: Following the 2nd Quarter results, is Yara pleased with the performance of the Industrial segment of the business?
A: Yes, the Industrial segment delivered a 30% increase in EBITDA compared with the same quarter last year, with volume growth for most products. Industrial has performed well for years based on a combination of economy of scale in production and a strong commercial drive in the organisation.
Q: Are there any areas that need to be worked upon?
A: Yara's mineral fertiliser production plants also produce industrial gases/nitrogen chemicals. This joint production platform and a number of other shared resources are ensuring good margins. But there are still more benefits to harvest by increasing the level of integration, thereby enhancing overall efficiency to strengthen performance further.
Q: You recently announced the opening of your new CO2 plant in Germany, this obviously acts to strengthen your position in Europe, do you believe this is the main growth area for Yara in the long term or do you have plans to focus your expansion in other markets in the future?
A: CO2 is one of Yara's industrial core markets with production integrated with ammonia, one of Yara's overall core areas. The new plant will be linked to Yara's unique CO2 distribution system featuring dedicated ships and terminals around Europe. Yara intends to be a leading supplier to end user markets and to maintain the position as the leading supplier of liquid CO2 to the industry.
Q: In light of Yara selling it's Malaysian CO2 business, does this mean that Yara has no ambitions in the Far East other than to divest its Thai business?
A: The strategy remains unchanged. The Malaysian unit was a standalone operation unable to reach critical size.
Q: There are a number of organisational changes occurring at Yara, what is the rationale behind this?
A: Yara is a leading player in the global fertilizer industry and has a unique structure with three business segments of which two, downstream fertilizer and industrial, are showing stable good margins over time whereas the third, the ammonia and urea part is more volatile. In order to improve further as a company,
Yara is seeking more integration across these segments to improve efficiency and ensure long-term stable high performance. The organization is changed and people moved to facilitate the flow of knowledge and experience across geographical and organizational boundaries.
Q: Could you provide a brief background to Terje Bakken, the new head of Yara\\'s industrial segment?
A: Terje Bakken has an MBA from Bath in England and has worked in Yara (Hydro) since 1988 of which 12 years have been spent in positions abroad. After a couple of years in overseas fertilizer operations in Yara North America, he started trading ammonia. In 1993 he moved to Asia and spent 8 years in the fertilizer business, based in Hong Kong and Singapore. In 2000 he moved to Brussels where he took up his present position as head of Yara's business unit Ammonia Trade and Shipping.
Q: Does Terje have any particular changes planned for this segment?
A: That is too early to say, but the entrepreneurial culture typical of Industrial that has been at the base of a successful development so far, is likely to be an important element of any new strategy.
Q: Do these organisational changes mark a move away from the old Hydro culture?
A: Yara will continue to build on its history as part of Hydro and maintain much of the Hydro culture. But some adjustments will be made to address the opportunities and challenges posed by Yara's new situation as an independent company with ambitious aims for the future.
Q: Four months on from the demerger from Hydro and with the benefit of hindsight, do you feel the move to Yara has been a positive one?
A: The move to Yara has been very well received both externally and internally. Yara now has the benefit of dedicated owners taking a genuine interest in the fertilizer business and future opportunities in that field, making Yara an interesting company for all stakeholders.