Yara Mulls IPO for Industrial Nitrogen Business

Norwegian chemicals and fertilizers company Yara is considering an initial public offering of its industrial nitrogen business, a move it said would create the first integrated industrial nitrogen company.

Announcing the proposal at its Capital Markets Day in London on Jun. 26, Yara said 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 Oslo-headquartered group expects that a final ipo scope will be concluded in early 2020.

As part of the evaluation process, the business units Mining Applications, Transport Reagents and Industrial Nitrates will be organized into a separate entity with effect from the beginning of July. Yves Bonte, previously executive vice president of new business, has been appointed as CEO of the new entity – consequently, he will no longer be a member of Yara’s corporate management team.

“Yara is well underway to becoming a focused crop nutrition company, and the evaluation of an IPO is an important step in that direction,” said CEO Svein Tore Holsether. “This would create significant growth opportunities, strategic focus and flexibility, for both a carved out business and for Yara. A new ownership structure would allow these businesses to continue to thrive and grow profitably, while continuing to provide healthy returns to Yara.”

The company added that it is extending its improvement program from 2020 to 2023, noting that it has already achieved a 70% increase in targeted in earnings improvements. Holsether said these “significant” savings have provided important support to Yara’s bottom line in challenging market conditions. “This gives us confidence that we will reach also the expanded targets.”

Key levers to achieve the targets include higher production volumes and energy efficiency, a leaner cost base with clear fixed cost targets and improved working capital management.