Ladies and gentlemen, thank you for standing by, welcome to the Yara's fourth quarter results 2018 conference call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question- and- answer session, at which time, if you wish to ask a question, you will need to press star and one on your telephone and wait for your name to be announced. I also must advise you that this conference is being recorded today, Friday the February 8th, 2019. I would now like to hand the conference over to your speaker today, Thor Giæver, Head of Investor Relations. Thank you. Please go ahead, sir.
Thank you very much, welcome to everyone on this quarter conference call for Yara. My name is Thor Giæver, I'm the Head of Investor Relations, I will shortly hand you over to our CFO, Lars Røsæg. Also on the call, we have our EVP of Sales and Marketing, Terje Knutsen, also our Head of Market Intelligence, Dag Tore Mo. With that, it's my pleasure to hand over to our CFO, Lars Røsæg.
Thank you very much, Thor. Good morning, good afternoon, ladies and gentlemen. I'm sure most of you or all of you have seen our report and the presentation from this morning, I will limit my opening comments and making sure we have time for sufficient Q&A. Yara delivered improved results in the fourth quarter with our EBITDA excluding special items up 21% year-over-year. We saw improved margins but also had operational challenges and a slow off-season market in the fourth quarter. Our improvement program continued to deliver. You will recall that we increased the target for 2018 from $300 million-$350 million. At year-end, we were at $355 million. We will expand that program during the first half of 2019 in both scope, amount, and timeframe.
While 2018 saw improved profitability, our returns are still below cost of capital and fixing that is a top priority for us. Consequently, our focus in 2019 is on ramping our current growth projects, continue our focus on operational improvements, and maintaining a strong capital discipline. Lastly, I would like to highlight that we will be hosting a capital markets day on the June 26th in London, we indeed hope to see as many as possible of you there. I think for introductory remarks, I will pause there and looking forward to a Q&A session. Thank you all.
Okay, operator, we are ready to receive questions.
Yes, sir. Thank you. Ladies and gentlemen, we will now begin the question- and-a nswer session. As a reminder, if you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, you may press the hash key. Once again, star and one if you have questions. We have a couple of questions that came through, sir. Your first question comes from the line of Joel Jackson. Your line is now open. Please go ahead.
Hi, good afternoon. Thanks for taking my questions. I have a number of questions on Brazil that I'd like to go through, maybe one by one. First, you had some commentary that you made a conscious decision to lower deliveries in Brazil in Q4. Can you comment on that? Then in general, talk about the Brazilian market demand, inventory build or lack thereof, how the season is shaping up. Thank you.
Yeah. As mentioned this morning, we had a conscious decision, actually not only related to fourth quarter, but progressively, I would say, during 2018, to really look deeply into some of our commodity sales, and to scale down and lower our exposure on some of the least profitable sales of the commodities. With that action, we can see that actually the profitability as such, the average, in 2018 improved from 2017. This is also linked to a very clear focus on capital discipline, making sure that we allocate our working capital to the more profitable use of that capital. Some of that in Brazil has had limited profitability and therefore being scaled down. To some extent, you could say that that maybe has led to a focus more on delivering profitability rather than being sort of on the point of percentage on our market share.
The Brazilian market in general, how you're seeing the market shaping up this season?
We have seen a situation in Brazil where there has been growth, and I think we have basically seen a strengthening, and we have, I would say, quite strong fourth quarter in Brazil. We continue to be expecting that Brazil will be a stable market with relatively good conditions. Obviously, follow very carefully the. The whole situation around trade and limitations there, which generally has benefited Brazil during 2018.
Okay. Just had a couple more questions on Brazil. We see that Heringer looks like they have filed for bankruptcy this week, one of your competitors in distribution. How do you think that's going to change the market? Might there be some share gains for Yara, or what do you think?
Yeah, well, this is obviously a fairly new situation. I would just generally say that consolidation is positive. We have seen during many years a strong consolidation of number of players in Brazil, and it's too early to say exactly what this will mean when it comes to the situation now about Heringer. Generally, I would say consolidation is positive, and we see that situation also for us giving opportunities going forward.
Okay. Finally, as all the stories breaking on some of the upstream tailings dams and tailings dams in general in Brazil, you have some exposure in Brazil on phosphate rock, has there been work by Yara and Galvani to go and assess what you have? Then you can comment on some of the risks there. Thank you.
Yeah, I think we are, of course, following that situation. We have a vast majority of the measures when it comes to the way we pull our HSEQ practices around that situation, and feel that we have the measures in place that is needed there. Seeing the differences in design and a few other elements between our structures and these structures.
Thank you.
Thank you. We will now take our next question, and this comes from the line of Thomas Wrigglesworth. Your line is now open. Please go ahead.
Good afternoon, gentlemen. Thanks very much for the opportunity to ask questions. Firstly, just going back to what we were discussing on the third quarter call with regards to the nitrate realized price evolution, can you give us a bit of an update as to what we should expect in the first quarter? Is there still a discount to benchmark prices embedded in your realized nitrate prices? That's my first question. Second question, you've obviously talked about the shift of about $100 million on 2015 prices in terms of your incremental volumes from 2019 to 2020, can you help me understand what that might be in today's prices?
Thirdly, just interested to get a bit more color on outside of Brazil, what you think the key levers are in terms of the current market conditions and what we might expect as the price evolution through the rest of the season in urea prices. Thank you.
Okay. Maybe I can start with the nitrate situation in Europe. As we have pointed out in our quarterly report, the consumption or deliveries in Europe were down 17% versus fourth quarter 2017. On a season basis, season to date, the consumption or delivery has been 10% down from previous seasons. At the same time, we as Yara, we have actually increased, at least according to our evaluation, slightly our market share, which means that basically Europe has been in a very slow situation during fourth quarter. That means that there is a lot of still business to be done in Europe coming into Q1 and continuing into Q2. What that now means in terms of price forecast is, of course, to be seen. Very much depends whether this will be an early spring or late spring. Right now in Norway, we have lots of snow.
In Chicago, I think last week you have more than 40 degrees below zero, but in three weeks it might be sunshine and the spring is on. Very much depends whether you get two quite distinct application seasons, or you will kind of see a season that merge more and more into. Hello there. Hello?
Hi.
Hello there. Operator, is it intentional that we have more voices on here?
Let me take a look on that, sir. One moment.
Yeah. Maybe we wait. Please let us know, operator, when we can carry on. I think we'll carry on with the answers once you give us the green light.
Yes, sir. You may go ahead. Thank you.
Just a few general comments on urea and then I can hand over again to our CFO on the middle question. We had an increasing price tendency during fourth quarter, as I'm sure you follow the publications, you have seen that is coming down again. At the same time, northern hemisphere is coming into full swing and application very soon. We are, as Yara, relatively more, let's say, exposed or engaged in the nitrates. Obviously our target will try to be to keep that momentum into Q1 and Q2. There is no doubt that right now there is a softening of the urea market, as seen in all the publications.
As to your question on the growth projects, we don't have the 2019 of estimate of 330 at today's prices. The growth project in 2020 at 2018 prices would be $450 million versus the 600 stated in the program. On sensitivity level, if you look at the impact of +$100 / ton price change, then on the growth side, that would be $0.1 per share on ammonia, $0.19 per share on urea, and $0.3 per share on DAP.
Okay, thank you. Just as a follow-up. There's no disconnect anymore between Yara's realized nitrate prices and the benchmark nitrate prices that we see on the screen or in the markets, because that was the issue, right, as I understand it in the third quarter.
I think we have said that, during third quarter and actually also during fourth quarter, we have seen a somewhat longer time lag, up to three months. We see that normalizing and coming clearly down. I would expect in Q1, during Q1, that gap will come down to the normal in season, which would be around one month.
Okay. Thank you very much. Thank you all.
Thank you. We will now take our next question. This comes from the line of Ben Isaacson. Your line is now open. Please go ahead.
Hi, it's Oliver Rowe for Ben. Thanks for taking my question. With a lot of capacity growth behind you, it sounds like the focus is on ramping up and operating plants. As cash generation ramps, does this mean we might see a change to your capital allocation priorities? Maybe to frame that in the context of the new business segment that you're bringing to the forefront, with the re-segmenting. Is there an opportunity to invest a substantial amount of capital into some of these lesser-known business lines?
Well, I think that Yara's strategy, as we stated last summer, is to be the crop nutrition company for the future, which of course, reflects our overall priorities. At the same time, we have some engagements within new business, within decarbonization, within circular economy, that we of course, think are important levers to explore. I think the overall message from our end is that we're coming out of a period of significant investments, coming into a period of focusing on improved underlying operations and delivering on those growth projects.
Right. Makes sense. I know some of your peers and some new companies as well have started to embrace the digital world, I guess, and bring a lot of their customers on board in that regard. Is that something that you're trying to do as well?
Yes, clearly so. We embarked on a strategy to become the leading player in the crop nutrition part of digital. We have established a business unit within my area of sales and marketing, called Digital Farming. We have established four geographical hubs, one in Berlin, one in São Paulo, one in San Francisco, and one in Singapore, with some smaller satellites, among them India. We have two distinct targets there. It's to target the more professional segment of farmers, where typically that is within the area of precision farming, where we use a lot of the knowledge we have built during the years on sensor technologies, now converted more into, for instance, satellite technologies. Basically securing a more accurate application of nutrients. We are also approaching the smallholder farmer segments. We have there obviously an opportunity to expand significantly on the contacts we have with farmers.
Today, we meet face to face around 1 million farmers as Yara every year. With digital, of course, that could become a much, much higher number. This is more an enabler to communicate and launch various apps to the smallholder segment. It's clearly an area which has gotten a lot of attention. We see also many players approaching us wanting to engage with us because they know that we have a very strong presence in 60 countries around the world, which means that we should be in a position to create scale quickly.
Great. Thank you.
Thank you. We will now take our next question. This comes from the line of Neil Tyler. Your line is now open. Please go ahead.
Good afternoon. Three questions from me, please. Firstly, on the production outages that you mentioned that took place during the end of last year. It seems to me that since the beginning of the Improvement Program and the commencement of the Growth Program, there's been quite a few of these production outages. Firstly, can you quantify what the EBITDA impact was over the course of 2018 from those outages, as your best estimate of that? Then secondly, a broader question, have you identified why these outages have come about? Do you think perhaps, the resources required to implement both the Improvement Program and the start of all of these new growth assets is perhaps stretching resources too thinly across the group? That's the first question. The second one is just more a bit of financial clarity really.
In the bridge, in 2018 EBITDA bridge, the others line, you mentioned that the net effect of the improvement program is about $9 million positive. The combined acquisitions and startups add about $ 86 million. It's a $ 95 million positive in total, but in the EBITDA bridge, there's a $ 25 million positive, the net negative of $ 70. How much of this is the cost step up relating to that digital program? If that's all of the $ 70, is that the annual run rate to think about?
Sorry, Neil, hi, this is Thor. On that last question, could you just specify exactly where you are referring to in the report?
In the EBITDA bridge, in the fourth quarter, the full year figure for 2018 under other is $ 25 million.
Right.
In the presentation for the fourth quarter, in the bridge of the Yara Improvement Program costs, I think there's a $ 34 million positive and a $ 25 million negative. That's another $9 million positive.
Which slide are you on in the presentation? Is it number 15?
Is it number 15? One second. Correct. Sorry, 33 and 24. Yes. Then in the report itself, you mentioned, I think it's $ 86 million, is within that $ 25 million figure, and that $ 86 million contributed from Freeport, from Babrala, and from Cubatão. If I add the $86 million and the nine, I get to $95 million, and there's a $ 25 million showing, there's $ 70 million difference. I'm trying to understand how much of that $ 70 million is a step up in cost related to digital, and is that $ 70 the right run rate to think about for next year?
Okay. Sorry, Neil, was there one final question?
Well, there was one more, but I'll leave it at two for now because those two have taken a bit of time.
Okay. Thank you. If I start by the first question, no, I do not believe that our improvement program is taking away focus from running our operations. I think that from time to time, we will have outages, and from time to time, we will have stops and effects from turnarounds at our plants, which is a little bit of an effect of the network we are running. I, on the opposite side, actually believe that the improvement program contributes to improving reliability and driving a more efficient system, as it is about improving the way we are working, not sort of doing something in addition to running our plants. I think that to me is the general answer.
Having said that, we were clear that we have had downtime in the fourth quarter, and we've also had some delays in some of our turnarounds and projects, which we are working to mend. You asked a little bit whether that is sort of influencing the way we think going forward. I think stepping up the improvement program is, to me, a very natural part of the continue to improve our operations. At the same time, as we are taking down investments, we are now focusing on successfully wrapping up the projects that we have. On to your other question, yes, the bridge for the full year is at 25+, and you are correct that there is a full year impact, EBITDA, from those three investments of around $ 86 million.
I think on digital, we have said that there is a run rate of around $ 10 million a quarter, which is then also the case for 2018. I think we're not expecting significant changes to the cost base for digital. As you know, we are focusing now on improving and increasing hectares under management to scale up that model. We obviously also have a very clear trajectory to increase the revenues from that business.
Okay, thank you. Just going back to the first part of that question. It might be the wrong impression, but the impression, as I say I had, is that the interruptions and outages were higher this year than they have been of late. If that is the right impression, can you give me any indication of what the overall EBITDA impact of those lost volumes or higher costs might have been during the year, please?
Yes. I do not see any general headline of us having that change year-over-year when it comes to reliability and outages. Of course, if you look at those specific projects we have highlighted on the growth side, we do have an EBITDA impact also in 2018 of being somewhat behind. I think that was $10 million.
I could add, Neil. Hi, this is Thor again.
Hi.
It is correct to observe that in 2018, we have had a higher than normal number of turnarounds, and that adds to complexity for our organization and, if you like, scope for issues when you have a lot of turnarounds. Of course, as you know, it's been the peak year for bringing new expansions and plants online. There is, on the growth, there is clearly a higher activity or was a higher activity level in 2018.
Okay. Thank you. I'll jump back in the queue just in case I'm holding anybody else up. Thanks.
Thank you, Neil.
Thank you. We will now take our next question, and this comes from the line of Andrew Stott. Your line is now open. Please go ahead.
Hello. Good afternoon, everybody. Thanks for the opportunity. It was mainly one question just on Europe. I am just trying to understand the scale of that European industry delivery number. I think you said minus 17% for the industry, and of course, your number was diluted as well by your outages, so I get that. Can you just walk through the rationale for or maybe it is the comp we are up against, the phasing that you sort of, I guess, alluded to some weather in a sense, and just how we think then about that snapback into Q1. I know that is sort of been asked already, but I just really do not understand the scale of that decline in Q4, anything would help. Thank you.
I think there is a number of factors. The season started quite strongly in the third quarter as last season did. That is relatively normal as buyers want to hedge part of their need relatively early. That has been profitable many seasons, majority of the seasons. They also have then what they need for first application, et cetera, in-house. Of course, what happens in the fourth quarter is very dependent on the kind of the sentiment and the expectations. As Terje was saying earlier, the urea price got quite expensive there at the peak in October and then started to slide a bit. Maybe many buyers felt like the risk of waiting is probably not that high, possibly. There were some other factors as well.
There were some very low water levels on some other rivers during October and November that hampered the movement of product. Some farmers may also have had some liquidity issues with relatively poor harvest last year because of the drought in the northern part of Europe. I find it quite logical that given that backdrop, that there is not maybe a massive interest in continuing with a buying for storage into the fourth quarter. Of course, what happens then normally is that imports take the strongest hit, and that was also the fact in the fourth quarter. Also, if you add to that there were some supply issues when we talked about ours, that our other European producers have also produced somewhat less this season. There could also be, at least through the first half of the quarter, some supply limitations also even.
The ending stocks for the industry is not much up if you compare it with what the demand you can expect to have then when you get closer to the spring. Those are some of the factors that I think you can kind of explain why it turned so relatively slow, particularly towards the end of the fourth quarter.
Okay. Just to follow on, I guess it's perfectly logical, therefore, given the very quick descent in the urea price in the last few weeks to think that there is therefore going to be a stimulus to those volumes for Q1. When we think about the Q4, Q1 dynamic, given we're now back at $ 250, $260 granular, then you would assume that Q1 is somewhat better on volume. What I'm puzzled by is it doesn't seem to be what you say.
Andrew, this is Thor. I think to just reference back to Terje, his comments just a few minutes ago, I think it's probably important to think about this as first half, probably more than first quarter.
Right.
To think about first quarter, you need to have good insight into weather patterns.
That's the weather comment you made. Yeah, perfect. Okay, got it. Thank you very much.
If you look at history, the consumption over a season is actually very stable in Europe.
Yep.
Exactly when that backlog is going to come, I think is more dependent on weather than on actions that we actually can take. Right now, Europe is cold and the condition is not there that it has started yet. It's to some extent started in the very south. We had to wait now a few weeks more to say what comes in Q1 and what comes in Q2.
Thank you.
Thank you. We'll now take our next question, and this comes from the line of David Silver. Your line is now open. Please go ahead.
Hi, this is actually Chetan Udeshi from JPMorgan. Just a few questions. I was just going through your release, it seems your realized gas cost in Europe in Q4 was much higher than the average cost, or at least $ 1/ ton higher. Can you explain why was that the case in Q4? That's number one. Number two question is, can you maybe just help us understand why the projects have been delayed, or the contribution at least has been delayed in 2019? Is it just a sort of technical glitches or you are proactively managing the supply during this period where, as you said, there has been a pause in demand? Just last question, is just on the returns in the business. If I look at your cash return or your ROC number, it's still 4%.
How do you think about that in context of peak CapEx behind us, and how should we sort of expecting, what is the target for the company in terms of return profile over the next few years?
Starting with the first one on gas. Are you looking at the difference versus spot, like the Brygger price and Yara's price? There will always be The Yara cost per unit will be higher because then we have transport costs.
I'm just looking at your European gas average TTF price of 8.2 in Q4 for the market in terms of the average TTF, your realized cost was 9.4.
Yeah. Okay. There's the lag factors. There's a lag factor as well, unlike the fertilizer pricing, this is quite stable. It's just that when we book the cost of sales, when we produce and sell the product, is typically about a month after we've bought the gas. If you take TTF, add some transport cost and the lag of a month, you should be able to track our price fairly well.
I guess the September peak in the spot market hit our fourth quarter results, right that it's not in the spot price for the fourth quarter that we referenced it to. I guess there must be some of those lag effects because there is nothing structural that should increase that differential in the fourth quarter.
Maybe a little bit of mix because we had a turnaround in Sløvåg, which has a very limited transport cost because it's very close to the hub. You have some mix effects too, but yeah, they're normally not big.
Yeah, if I may comment on the two other questions. You ask about the delays. That is a combination of several factors. It is about technical issues in plants like Köping and Freeport, and also in some instances, it is linked to an optimization of product flows in our integrated system. It is, of course, our full focus to ramp that up and to get those in with full effect. When it comes to the return on capital, I think we stated quite clearly this morning, as you also highlight, that we are not satisfied with our return levels. We are now, as you also allude to, taking down investments coming out of the peak, and our focus is indeed on increasing our capital returns going forward without having guided on specific levels or numbers as such.
Can I just follow up on your comments? I think the previous question that if you mark to market for the current prices, I heard a figure of $ 460 million is the total benefit from the Was it from ramp-up of new projects?
Yeah, we've said that the $6 00 growth target by 2020, if you apply 2018 prices to that, it's equivalent to about $ 450 million.
Okay. What about the fact that the gas price has since then come down quite aggressively? On a current gas price basis, would that number not be higher? Just if you mark-to-market for the current gas price as well.
Yeah, you can do that, you can use sensitivities that are included in the appendix in the presentation.
Okay. Okay, fine. Makes sense. Thank you.
Thank you. We will now take our next question, this comes from the line of Steve Byrne.
We just had one comment on that, the last answer. We just want to highlight that actually our growth portfolio does not include any European ammonia. That means that the gas price sensitivity on European gas is zero. Operator, please carry on with the next question.
Okay, sir. Thank you. Next question comes from the line of Steve Byrne. Your line is now open. Please go ahead.
Hi. Yes, thank you. I wanted to ask your view about the general efficacy that you see in nitrogen stabilizers. Does it provide a meaningful value proposition to farmers? If it does, do you see any potential risk globally in nitrogen demand if various governments drive the use of these stabilizers on belief it will reduce some of the environmental runoff impacts?
I think we have a very limited use and exposure to inhibitors, I am not sure we are the right player to answer that question.
Okay.
Better off some of the distributors that are much involved in the inhibitors.
If I could just for interest add here that in Europe at least, there is some discussion around this. It is a very small part of the market, I think probably closer to 0.1% than 1% of the market. There is a discussion now about the use of microplastics in those products, which is potentially challenging for those who produce them.
Of course, we could add to make it more relevant to Yara that this is one of the main benefits of nitrates, which obviously we also clearly promote that the whole issue of the fertilization and both ammonia emission as well as efficiency of the nutrients is improved with the use of nitrates. This is obviously a part of our story behind why we believe nitrates is both economically and environmentally a good solution.
To that end, do you see increased opportunity in that capacity in regions where you have environmental and regulatory focus on nitrate levels in groundwater, such as your key region in California is a key market for you? There is regions around the Great Lakes where the regulators are really focused on nitrate. Is this a potential driver for you?
I would say the whole knowledge part and driving advice towards an optimal application of nutrients is definitely within the core of our business. This is also why we focus significantly on development of digital tools. We bought, for instance, Adapt-N in the U.S. last year, where we reduce N application by up to 30%, 40%, proving that we can achieve productivity at farm level with a more adequate application level. This is at the heart of our business, where we think we are all about finding the optimal to drive productivity and quality, but at the same time doing this in a sustainable and environmentally friendly way. Precision farming will be, I think, a main contributor to avoid some of the negatives that you are referring to.
Okay, thank you.
Thank you. We will now take another question from Neil Tyler. Your line is now open. Please go ahead.
Yeah, hi again. My follow-up question was back to Brazil, and you mentioned that you're happy with the success of the value over volume strategy that you've been pursuing over the course of the year. I wondered whether there's any financial metrics that you're able to share with us, even in a sort of qualitative term, be it profit per ton or return on capital, that demonstrate where you are today versus where you were 12 months ago in the Brazilian region, please.
I guess that's a challenging one to answer, Neil, because you've no doubt looked through our reports to find such a metric.
I know they're in print. I just wondered if you might be able to help me understand how you think about it, how you are measuring the success.
I think, Terje will jump in and elaborate as appropriate, but we will take note of the question and see whether we can come back with a metric on this going forward. But it's Very clear. The premium part of the business has grown successfully and profitably for Yara, it's the commodity side within Brazil that has been, both for Yara and I think everyone else in Brazil, a very increasingly competitive environment in recent years.
Okay. I'd appreciate anything you can share on that.
I'll tell you, I'll go comment.
Just to say I'm measured on return on capital, so obviously there is a lot of focus on that in Brazil. I think it has been one of our major improvement areas, where also we can say that we have acquired, over many years now, different businesses in Brazil. We are obviously right now working very hard to consolidate this position and make sure that we correct where there are areas where we can improve on the capital part. This is ongoing. It's by no means finished in 2018. We did improve and we did manage to deliver on some of the, as I said, by design, reductions of commodity, and by that, increasing our return on capital in Brazil.
Okay. That's helpful. Thank you.
Thank you. We'll now take our next question. This comes from the line of Patrick Lambert. Your line is now open. Please go ahead.
Hi. Good afternoon. Can you hear me?
Yes. Loud and clear.
Okay, good. Three questions from me. First, the Freeport incident. I heard this morning was mostly technical, but could you give us a sense of how much actually Freeport contributed in 2018 in terms of either sales or EBITDA? What do you expect for 2019? That's the first question. The second question, again, on digital strategy. We've discussed that in large at the capital markets day last one. I still struggle with comparing offering from competitors. If you could help me out on what really distinguish Yara's offering, and which crop you think will favor Yara's offering going forward versus the peer group. Last one, a very general one. Is there anywhere in the world a demand for a cleaner ammonia or urea, meaning, less CO2 impact on fertilizers?
Yes. Thank you for those questions. If I may start with the first one. When it comes to Freeport, that is indeed highlight a result of technical challenges. They are related to more traditional technical challenges in the ramp-up and not linked to the hydrogen setup of that plant as such. That will impact the ramp-up in 2019. We stated the overall $ 330 estimate for growth projects in 2019 and the reduction in that number from previous guiding is a significant impact from Freeport. Yes. I think the contribution from Freeport in Q4 was quite limited.
We can expect that in the second half, right, of 2019?
Yeah, we are expecting Freeport to reach full production in the course of the second quarter.
Okay.
To Digital Farming, I think I would open by saying that this will be a topic at the capital markets day in June. Then we will go more in depth on where we are and what to expect on the digital side. Where we focus is really to, if you like, focus on the field. Where I think we make a difference is that we contribute to driving the productivity on that field. That means that we are in with analytical services. We are in with precise application. If you go on the net, you can look at farm.com, which is one of our solutions that we launched in 2018. I think we are rather focused on this issue about driving a benefit for the farmer. At the end, it won't happen if, in a way, we just create excitement. We need to create value.
Value for the farmer, which will again drive value for us. This becomes a bit general, but I think we are launching now as we speak, many new applications, which are all centered around field optimization when it comes to the professional segment, and which are centered more about analytical services and giving easy available help in the smallholder segment.
It's crop agnostic, or you're focusing on certain crops where you think you have an edge geographically or analytically?
Yes, it's also correct to say that obviously we are focusing in some of the markets where we already are strong with the presence. We are going beyond the customer base of fertilizer. We basically approach these markets and target all farmers, not only the farmers that are presently customers of Yara. That means that we have a much bigger, let's say, market to approach than our present market share in some of these geographies. Obviously, we are focusing on markets like Brazil, where we are strong. On the smallholder segment, we are focusing on basically Latin America. India is a key focus area. Africa is coming as a key focus. Basically, the areas where we are active with our smallholder approach.
Thank you. The CO2, the clean ammonia. Any interest anywhere in the world or?
Yes. We certainly see it. As you're probably aware, we have some pilot activities in Australia on this. It's a bit early to have a more detailed discussion about that today, I think.
Okay, Terje. Thanks.
Thank you. We will now take our next question, and this comes from the line of Christian Faitz. Your line is now open. Please go ahead.
Yes. Hi, good afternoon, gentlemen. Just one quick question remaining. Can you talk a bit about what you see in terms of fertilizer exports coming out of China at this point in time? Thank you.
It seems to me like it's scaling down. The last official number we have is December, where almost 650,000 tons was exported. Who knows exactly how much is going to be shipped out in January that was sold earlier in December in India and elsewhere. What you see, they are still today kind of maintaining asking prices in the $ 280s for ton FOB, which is now getting quite expensive, right, compared to other origins. At least for now, it's a kind of a sign that they are scaling back and are not selling much for exports and rather seeing better net backs from domestic sales. It's always hard to kind of pinpoint exactly how much, but at least to me, it seems like they are withdrawing basically in today's market conditions.
Okay, great. Thanks, Dag Tore. One follow-up question on your remarks regarding the European volumes being down in Q4. Could also be one reason that simply many winter crops didn't emerge because of the drought into December, that's why demand is low, and there could be pent-up demand into 2019?
Yeah, there could be a little bit of that. From France, we have heard, for instance, that the rapeseed area, winter seeding has been lower and that there will be more barley and maybe some other crops for spring instead and so forth. You're right that there could be some areas where the drought was extended to such an extent that the winter seeding was hampered. That could be, yeah.
Okay, great. Thanks, Dag Tore.
Thank you. No further questions have come through, sir. Please continue.
Okay, thank you. If there are no further questions, we just remain to say thanks to all of you for your participation and interest in Yara, and we'll look forward to hopefully having more interesting updates for you going forward. Thanks very much.
Thank you. That concludes our conference for today. Thank you all for participating. You may now disconnect.