Good day, and welcome to Yara's Fourth Quarter Results 2024 Conference Call. [Operator Instructions]. I will now turn the call over to Maria Gabrielsen, Head of Investor Relations in Yara. Please, go ahead.

Hello, and welcome to everyone. I'm here together with the representatives from Yara management, including our CEO, Svein Tore Holsether; CFO, Thor Giæver; EVP, Corporate Development, Magnus Ankarstrand; and our Head of Market Intelligence, Dag Tore. We hope everyone watched today's presentation. So, we plan to go straight into questions. So, operator, you may please open the first line.

[Operator Instructions]. Your first question comes from Lisa De Neve from Morgan Stanley. Your line is now open.

Good morning, and thank you for taking my question. I have two questions, please. The first question is -- I mean can you please share on why you have decided to perform the FID on the Clean Ammonia projects, the ones in the U.S.? And more importantly, what are the variables that are still pending in that process to moving towards FID. And is it uncertainty with CBAM. Is it the uncertainty around of what required CapEx or potential subsidies that may have now become a little bit less likely in the U.S. It just would be helpful to understand the variables that are still at play. And then alongside that question, can you also share why it's so important to have partners in some of these projects when your initial objective is to essentially solve that potential U.S. ammonia production to yourself in Europe? I'll stop here and jump back into the queue. Thank you.

Yes, Magnus Ankarstrand here. I think the reason we have now said first half 2026 is mostly technical. I mean it's natural project development. I think our plans are moving at both the pace and -- as we want them to progress. So, there's nothing dramatic as such in that. Of course, being around a year away from TFID is, of course, also beneficial in the sense that we will be how things develop also politically for the time, et cetera. But as of now, we don't see any change to the fundamentals for why we believe those will be very profitable projects. And as we've stated before, we will only execute the project if they are profitable and that still sort of remains. So, the variables, I think, remains very much the same, and it's the basic fundamentals that are important for profitable growth within ammonia. It's low-cost gas. It's scale, not the least. And obviously, finding your building on the right side and 45Q, of course, is a very welcome addition to any business case as well. When it comes to the questions on partners, I think building at scale, it makes sense to have partners. We have strong experience with that, all our ammonia Yara Growth have been joint ventures. Freeport from 2018, which was a significant success with BSS. Bill Borough started out as a joint venture, and we had the same in Trinidad and in Qatar as well. So, we're really accustomed to that. And I think it's is a very good way to bring in different parties with complementary interest and that goes at capital and ROIC and is mutually beneficial. So that why -- well, that is important.

Okay. Thank you, very much.

Your next question comes from Christian Faitz from Kepler Cheuvreux. Your line is now open.

Good morning, everyone. First of all, in terms of your cost plan -- cost reductions, are you still sticking USD150 million for 2025? And then second question would be -- what measures have you taken to make sure that your Belle Plaine plant can deliver product into the U.S. given the potential tariff threat? Do you see any customers rushing to secure product at this point? Thanks very much. Hello? Hello?

Can you not hear us?

No. Can you?

Operator, any issues?

I suppose now, there are no issues.

Christian, can you hear us?

I can hear you now, yes. Yes. Can you not hear us, Maria?

Can you hear me Christian?

Yes, I can.

Yes, the $150 million cost reduction target is very much valid. So that's where we -- our target is to be $150 million by the end of 2025, lower fixed costs compared to the last 12 months as of second quarter 2024. And as we commented in the report, the savings we've seen so far are really the first wave where we've reduced external costs and also implemented a hiring freeze, but the bulk of the savings come in 2025 as we will then have the bulk of FTE reductions there. And we expect the main phasing to be during the second half of this year. And of course, it won't be a straight line either. It sort of depends on inflation, currency developments, et cetera. But that's -- the target is very much rallies. And it's also important to say that this is -- we are continuing to looking at further ways to increase returns within Yara. So, expect us to come back with more there, for instance, on our portfolio of plants and markets. In terms of Belle Plaine, Magnus, maybe may add to this. But the -- below 10% of the deliveries and Belle Plaine are to the U.S. So -- and of course, at this time, there are no implemented tariffs. So of course, we are watching the situation closely. I don't know, you want to add?

Just maybe to add to that on urea, the imports, I mean, cross-border both way more or less cancel each other up. So, the net import of urea from that part of Canada, from Western Canada to the U.S. is close to zero. So -- and urea is, of course, the main output from our Belle Plaine's facility. As Thor said, we today say we sell most of our production in Saskatoon, Alberta.

Maybe one other comment on the sort of near term as we commented in the report as well, we've seen a tightening in global nitrogen markets. One of the key factors there is that the U.S. is quite far behind in its imports season to date. As of December, they reported less than 250 million tonnes, and we estimate they need about 3 million tonnes. So, I think tariffs or not, it looks -- it's shaping up to a tight application season in the U.S.

Very helpful. Thanks, very much.

Next question comes from Alexander Jones from Bank of America.

Thanks for taking my questions. Two as well, please. The first on the dividend. I think in the past, you talked about your leverage range is a medium-term target, that you're trying to hit 1 years or 2 years out. You also talked about an upbeat view on the nitrogen market. So, I guess your base case is for leverage to decrease in the coming year. Is there anything I'm missing there that makes reducing your leverage a bit more pressing at the moment? Or how do we otherwise explain the Board's decision to lower the dividend payout for 2024? And then the second question, you talked in the presentation about different equity funding structures for the Clean Ammonia projects. Could you discuss a little bit about what the different structures you're considering are and how you evaluate them against each other? Thank you.

Yes. I can -- Alex, this is Thor. On the dividend, I think the, one of the key points is that we are -- we have been tracking towards the higher end and in some cases, even above the range we -- the policy remains for net debt to EBITDA. As you've also seen in the current quarter, the free cash flow is quite low. And I mean, of course, you're right. This is for good reasons and linked to our positive market comments, prices are increasing and that does increase operating capital, and it tends to -- that's the normal trend for us and indeed in the industry that when prices and margins rise, you tie up more operating capital. It's fundamentally positive, but you get -- at least for the initial phase, a lower free cash flow. But of course, the financial policy is based on cash flow, which directly impacts our debt. So, I think really, it's just on the one hand, exercising a bit of caution in near term to ensure that we stay on the right side of those ranges. But as you've seen, we also had in that context, too, that we have a positive outlook going forward and that we will evaluate the opportunity for further returns as we go forward. Yes. And in terms of the equity funding, Magnus?

Yes. No, I think -- I mean, it starts a bit with the projects and what we're looking at, right? And of course, Yara being the largest pneumonia shipper in the world, but also with a significant uptake into our own production system, combined with our ammonia experience, obviously, helps making good project even event. So, I think with very strong fundamentals, there's I mean we have -- there's significant interest, and I think I recognized by different players and different capital that these are very interesting and profitable investments. And in that way, I mean, we are in discussions with several different opportunities to have the partnerships and raise equity than into the project, but also in structures around it. And also, as you know, we have our -- Yara to ammonia business or our midstream business. That in itself also is that we regard as a very attractive investment case and so do many others. So, I think that opens up a range of opportunities that we are discussing and exploring and trying to produce here.

Your next question comes from Aron Ceccarelli from Berenberg. Your line is now open. We will be moving on to our next question, Angelina Glazova from JPMorgan. Your line is now open.

Thank you for taking my question. I hope you can hear me well. I had a follow-up on the Clean Ammonia question, please. So, you have discussed in prepared remarks at length, but one of the key reasons that you are looking at clean ammonia is to ensure that you have a lower cost ammonia coming to European assets for upgrading it in the nitrate production facilities. But could you confirm if you are also looking at Clean Ammonia projects in the context of maybe providing clean ammonia to companies that may be sources of demand for clean ammonia from new applications, such as shipping fuel or hydrogen carrier. And is the timeline of demand emerging in these subsectors affecting your thinking on the FID on this project?

Yes, I can answer that as well. I think today as well, Yara clean ammonia, I mean, obviously, have also a lot of ammonia from our own production and to our own upgrading facilities, but they also source significant ammonia from third parties and sell to third parties. So that's a value creation logic of that business, and that's what we see in the future as well. So obviously, with the new projects, a lot of that would be to fuel our own production, but also for other buyers of ammonia, including new demand, as you mentioned. And we see both on the shipping segment, but also, I would say, on the regulatory-driven segment, particularly in Europe, such as refineries, we see quite a lot of firm demand, basically driven by irrigations like Redtree, ETS, CBAM and so on. But I think our projects are also profitable and stand on our own seat simply by Yara's own stack, as we're not dependent on any external demand as such, but we certainly believe it's there.

Thank you.

There was a question on whether this has impacted the FID timing, which the answer is no.

No, absolutely not. No, I think that's -- I mean, we simply take time we need to trade test the project.

Your next question comes from Tristan Lamotte from Deutsche Bank. Your line is now open.

Thanks. I've got two questions, please. They're both kind of on market fundamentals. And the first one is on fertilizer market fundamentals. So, at the moment prices have risen. But I'm just wondering to what extent you think that is driven by kind of temporary factors like Iran outages, high India demand, elevated gas costs? And to what extent you see that being retained in H1? And therefore, do you see 2025 margins higher than 2024 in that respect? And the second question is on ag fundamentals. I guess a number in the market have been getting more excited about fundamentals there. And I was just wondering on your view on ag fundamentals by region and whether they are improving and what that could do to crop prices?

Yes. Whether they are temporary. I mean this is a difficult question whether the supply issues from 2024. As you mentioned, some of them are temporary. I mean, you've seen us to say that Egyptians are curtailed production in the third quarter, in particular, because of gas supply issues Will those gas supply issues go away. That's an open question because the production of gas in Egypt is in a declining trend, and it was quite surprising to see even this week that we will talk about new curtailments in Egypt now because of cold weather at this time of year, which is also the case in Iran because of the cold weather, then you have the Chinese curtailments that's open or export curtailments, not so much production curtailment, but export curtailments, also a kind of uncertain picture. So, I don't think that we have the answer to that. That will be Interesting to observe that the industry has been struggling in 2024 to run that very high rates of various reasons. Some of the reasons behind do not necessarily look very temporary. But who knows. On the India situation, India actually built a lot of inventories ahead of their general election second quarter last year, which has been a drag on the market in 2024. So, I think what we see now in 2025, a more normal situation when it comes to Indian buying and sales. There have been also very strong recently to the farmers. So yes, so that's a reason why we say that in the absence of substantial capacity additions in the years to come. Market fundamentals looks quite supportive. And of course, then particularly, the Chinese export policy remains, of course, while card in this balance, but nobody knows really what will happen to that balance. On the ag fundamentals, yes, particularly corn prices have improved quite a bit wheat and other policies as well. Some of the software commodities, cocoa, coffee, are extremely strong, actually. But rice and wheat so far, not that strong. So -- but we observe also that the inventories are going down according to USDA's latest estimate, grain stocks are reducing by 20 million, 30 million tonnes this year down to a level not seen in at least not the last 10 years. So, I agree with you that picture seems to be changing a little bit. And it's also interesting that -- but you guys, financial investors are now taking a much more positive outlook on corn, for instance, by having a substantial long position on corn in the U.S. market rather than the opposite that was the case earlier.

Your next question comes from Bengt Jonassen from ABG Sundal. Your line is now open.

Thank you, for taking my question. I have three questions, if I may. Last quarter, you commented a little bit about the distribution margins in Brazil. Maybe you can give a little color on that first quarter as well? The second question would be on your working capital. You are currently at 108 days according to your quarterly report, whereas the target is 90 days. So what kind of actions are you taking to get down to 90 days? And the final question would be on your current press releases on the blue ammonia CapEx, you're talking more in the region of around NOK2.8 billion for a full-scale blue ammonia plant. What -- where will that number be now if there is any indication you can give on that? Thank you.

Hi, Bengt, this is Thor. Distribution margins in Brazil, somewhat lower, around $30 per tonne this quarter compared to a year earlier. So somewhat weaker commission there this quarter. Working capital, absolutely right. We are some way off the target that we've set for the end of the year. So, this is part of -- when we talk about looking for further opportunities beyond the current cost program, operating capital is very much part of that. And I think probably the only thing I would add that operating capital is also a commercial tool in this business. So, we are certainly aiming to get a positive cash contribution from it, but have to be selective on where we do that. But I think you can -- I think a key example of where that will be included as we evaluate that, particularly on the market side because profitability for our market. It's important to include operating capital and currency hedging costs and so on. So, we will revert with more on that plan to anticipate further out in time. I will start on the final question. We are mid-process in our evaluation of the concrete ammonia opportunity. So, we don't have an updated cost at this time. I guess that would be my main comments. I don't know if you also add to that.

Yes. No, no, I agree. And I think -- I mean, obviously, we are for an ammonia project, very comfortable with the I mean, with the gas ammonia exposure and evaluating that. And of course, CapEx is always a very important element of making such a project profitable. And so, we are optimizing that and both as we mentioned in terms of partnerships and in terms of scale to get to a [indiscernible] per ton is competitive. But I think that's what we can say at this point, but then people will revert on that later.

Your next question comes from Magnus Rasmussen from SEB. Your line is now open.

Thank you, for taking my question. I have one question on the tax rate in the fourth quarter. So also, when looking to your adjusted EPS versus adjusted EBITDA, it seems like you've had a very high tax rate also on adjusted figures. You mentioned that you are unable to book tax loss carryforward in certain regions or countries. Can you explain about what's going on here and whether we will see that continuing into 2025?

Yes. Maybe this is -- it's -- the situation in the fourth quarter with a significant extent, a negative income in the quarter [indiscernible] NOK292 million and a close to 0% effective tax rate. That means our adjusted EPS compared to last year when we had a net income with a 20% effective tax rate, you get to a large decline. It's important to say a couple of things on the special items that are driving this. One is that they are mostly noncash and then also on the currency loss, that is an effect of a deliberate and natural head tradition that we take that we say we have a U.S. dollar margin business. And so, it's natural to keep most of our debt in U.S. dollars. So, a strong U.S. dollar is fundamentally for positive for Yara going forward, but the immediate impact we get when the dollar strengthens is the negative mark-to-market on the debt.

I understand how that drives sort of, let's say, a special one-off effect. But how does that also -- in adjusted figures, shouldn't that be adjusted in adjusted tax rate?

Yes. So, the -- I'm sorry, there's one more element that I should have mentioned, and that is that we have not recognized deferred tax assets in all subsidiaries in this situation. So that's what's driving the -- should we say, yes, low tax rate on a loss, which also creates a big year-over-year variance. These tax losses are still on our balance, but we are not taking a tax effect in the quarter due to the -- due to uncertainty of recoverability.

And these, let's call it, negative results in certain regions, resulting in this effect. Is that driven by restructure costs or own impairment? Or is that sort of underlying business not doing great in certain regions?

Yes. A significant part of this is driven by those very write-downs and currency losses.

Your next question comes from Aron Ceccarelli from Berenberg. Your line is now open.

Thank you. Let's go again, sorry, I had some problems with the line before. I have three questions. My first one is on your FID, which has been moved today to 2026. I was wondering, does Yara need to go ahead with its FID in order to play a major role in blue ammonia or more asset-light approach via JP or using your import terminal capacity can guarantee success using this kind of approach? My second question is on YCA. You talked about the different equity structure. But with the corn price is higher now, the sentiment in the market improving in nitrogen. Would you say the -- an IPO for YCA is completely out of the table today? And finally, on Chinese exports. Clearly, this was a major positive last year because China didn't come back to the market. It looks like now that domestic demand will be satisfied. And so, what would you say is the risk of seeing China coming back in the export market in the second quarter?

Yes. Again, I can start on the project related question. I think -- I mean, no, we don't have to make any FID, we were not making FID unless projects are profitable. But I think -- and also, I mean, given our global position in our ammonia import capacity and our fleet capacity, we are, of course, that gives us several different options and opportunities as well. However, I think Yara has demonstrated many times before that when it comes to creating shareholder value through upstream ammonia on investments, we've done that very successfully, Freeport from 2018 being in the last one. So obviously, we are evaluating these different options based on what we think will provide the best value creation for the shareholders, and we will make our decisions accordingly. But I think as mentioned, looking at those, not only Freeport but others before that, I think that's one reason why we think that come and also, of course, that, that plays very well into our competitive engines and our global scale as well. In terms of the IPO, I would say it's not off the table. I think I mean we communicated, I guess, 1.5 years ago that we considered the timing, not to be right. And I think, as I alluded to in my previous questions, we see both the projects, but also YCA that there is this capital out there that is fees to care business case and also see the clear value perhaps more clearly than what the general market and not do as well. So -- and that also makes opportunities.

On the China, on your China question, I think we don't have kind of an opinion about exactly what China is going to export. I think that's very clear and nobody really knows that. But I think I can say that the consensus in [indiscernible] among the publishers of market information in this space, there is the kind of expectation that there will be resumed Chinese exports following the peak season, as you mentioned. So am I talking about April, May. So, I'm not expecting anything before July, August. So, who knows. But I think there's a general expectation that there will be some exports from China again.

Your next question comes from Lizzie Lancaster from Argus Media. Your line is now open.

Thank you, for taking my question. Hope you can hear me okay. I was just wondering if you could maybe share a little bit more color on the decision to mothball your whole plant in the U.K. I mean, is it principally related to gas cost? Or are there any other factors? And I was wondering, is that a permanent closure because the presentation seemed to imply that it's already been mothballed. So, I was also wondering when exactly it was shut down. And if that now means you'll be looking to import those tonnes a year into the U.K.

So, this is a plant that's owned by Yara, but it's been operated by Indas [ph], meaning we [indiscernible] there. And we've known for a while that we were planning to use that hydrogen sourcing that we use in hold for their own production. This is nothing new as such, so we're not pulling it now basically the key optionality if we get competitive hydrogen feedstock in the future.

Your next question comes from Elliott Jones from Danske Bank. Your line is now open.

Thanks. My question. It's basically focused around the restructuring costs that you announced in the presentation around hundreds million dollars, I think. So just wondering if and how that number has kind of developed or changed versus when you initiated the program in Q2? And then also, if you could provide any color to the make of that number and also when you could see these costs throughout 2025, that would be helpful.

Yes. First question. No, I would say this is roughly in line with expectations. I think I'm right in saying as you look broadly across industries. I mean it varies by country, but to sort of -- to have a start point that FTE reductions that can be a factor of anywhere upwards from one to one upwards in terms of your one-off costs versus in relation to annual savings. So, this is -- of course, it's still an estimate at this stage. We need to go through the process in a number of countries. It -- as we comment on the savings will come more in the second half than the first half. But I think it's natural to think of the one-off costs to come at the start of the savings. I mean, that's the typical format that you will have you -- make redundancies, you get that cost immediately and then the savings come thereafter.

Your next question comes from Matt Hoch [ph] from S&P Global. Your line is now open.

Thanks for taking my question. I have two. They're both about European production. On the 1 million metric ton reduction figure you cited, I know the actions at Hull and Tertre should reduce things by around 700,000 metric tons. I'm curious if you can discuss the added 300,000-ton reduction you're seeing from other plants. What are the planned reductions you're aiming to do there, and do the aim to reach that 1 million-ton reduction figure by the end of 2025. And then my final question is just around whether there are plans to revive clean ammonia development in Europe in light of the change in U.S. administration?

Yes. Matt, so I can take the first one. You're correct in terms of the Tertre and whole effect here. The remainder of the 1 million tonne we mentioned is reducing excess ammonia in our industrial plants. And this is partly related to optimizing our -- should we say profitability also in the context of emissions under ETS that given how the quota system works, if you have a depending on what your margins, I like you -- it's worth paying attention to total production level. So just to summarize, I mean, these are not actually. As opposed to the other two, these are not identified plant restructuring or closure actions but it's optimization of plants that we -- that are keeping in operation. I think on your same question was maybe along the lines of whether -- yes, sorry, I'll hand over to Svein.

Yes, Svein here. Just on your question regards to the administration looking at the U.S. and Europe in combination. And the message is, at least the interpretation of the message is already given when it comes to the U.S. first and the products we're looking into, ammonia. But it's a project built on energy. It's about investments in the U.S. It's about jobs in the U.S. and exports as well. So, from that point of view, it takes a lot of the boxes on the already established communication. And when it comes to the European side, Europe is a net importer of energy, whether it's gas or ammonia and the project would help to support that and to deliver on the energy import need. And just looking at the dialogue now with regards to tariffs and the trade deficit, it will also help to reduce the deficit. So, the product itself, yes, there's a lot of discussions and so on, but if you take the high-level view, I think a project and we're looking into would be supportive of the agenda in both regions. When it comes to clean ammonia in Europe, we are already producing some when it comes to green hydrogen. We have our pilot plant in Norway and then progressing well with the carbon capture and storage project in Sluiskil as well. So, we are progressing that, but that was already planned in most ahead of this.

So, there's no new plans in Europe?

When it comes to carbon capture and storage, we're doing a lot of carbon capture already, but we're selling it into the, amongst others, the food industry. So, I mean you can do minor tweaks or some, but nothing large scale. So, the large scale that we're working on is the one in Sluiskil.

Okay. And just the 1 million ton reduction, the aim is to achieve that by the end of 2025 to clarify?

Yes, you're talking -- you're back to the European ammonia balance. I wouldn't say this is a target. It's rather a consequence of, as we described partly restructuring actions and partly optimization of profitability in existing plants.

Okay. So, by the end of the year?

Yes. But more -- don't think about it as a target to more consequence of the actions we're taking and needed consequences of that.

We've also subject to process, for example, for the Tertre is an intention to transform during the process, but that doesn't mean it is decided or implemented or necessarily will be in 2025.

Okay. Thank you.

That concludes our question-and-answer session. I'd now like to hand back over to the Yara's management for final remarks.

Just thank you for everyone for joining and wishing you a good day. Bye.

Thank you so much for attending today's call. You may now disconnect. Have a wonderful day, everyone.