Ladies and gentlemen, thank you for standing by and welcome to the Yaris 4th 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. And wait for your name to be announced. I also must advise you that this conference is being recorded today, Friday, February 8, 2019.
And I would now like to hand the conference over to your speaker today, Flor Geber, Head of Investor Relations. Thank you. Please go ahead, sir.
Thank you very much, and welcome to everyone on this quarter conference call for Yara. My name is Tor Ull Jeberl. I'm the Head of Investor Relations, and I will shortly hand you over to our CFO, Lars Roethjeck. Also on the call, we have our EVP Sales and Marketing, Ted Liek Knutsen And also our Head of Market Intelligence, Dag Toor Desmois. So with that, it's my pleasure to hand over to our CFO, Lars Erdosik.
Thank you very much, Thor. Good morning, good afternoon, ladies and gentlemen. I'm sure most of you or all of you have And Yara delivered improved results in the 4th 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 4th quarter. Our improvement program continued to deliver.
You will recall that we increased the target for 2018 from €300,000,000 to 3 And at year end, we were at $365,000,000 and we will expand that program during the first half of twenty nineteen in both scope, amount and time frame. And 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 Carricko projects, continued focus on operational agreements and maintaining a strong capital discipline. Lastly, I would like to highlight that we will be hosting a Capital Markets Day on the 26th June in London, and 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 and 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 And 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 1 by 1. First, you had some commentary that you made a conscious decision to lower deliveries in Brazil in Q4. Can you comment on that?
And then in general, talk about the Brazilian market demand, inventory build or lack thereof, how the season is shaping up? Thank you.
Yes. So as mentioned this morning, We had a conscious decision, actually not only related to Q4, 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. So 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 and some of that in Brazil has had limited profitability and therefore being scale 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.
And the Brazilian market in general, how you're seeing the market shaping up pad 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 Q4 in Brazil. So we continue to be expecting that Brazil will A stable market with relatively good conditions. Obviously, follow very carefully The whole situation around trade and limitations there, which channel has benefited Brazil during 2018.
Okay. Just had a couple more questions on Brazil. We see that Herringer looks 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?
Yes. Well, this is obviously a fairly new situation. Supreme. 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, but generally, I would say consolidation is positive, We see that situation also for us, giving opportunities going forward.
Okay. And finally, as all the stories breaking on some of the upstream tailings dams and tailings dams in general in Brazil and you have some exposure in Brazil On Fossrock, is there as it's been worked by Yara and Galvani to go and assess what you have? And then you can comment on some of the risks there. Thank you.
Yes. I think we are, of course, following that situation, but we have a vast majority of measures When it comes to the way we poll our HQ practices around that situation and feel that we have the measures in place That is needed. Also then seeing the differences in design and a few other elements between our structures and these structures.
Thank you.
Call. Thank you. And 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 the what we were discussing in the 3rd 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 Q1? 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 $100,000,000 on 2015 prices in terms of your incremental volumes from 2019 to 2020. But can you help me understand what that might be In today's prices. And then thirdly, just interested to get a bit more color 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. So maybe I can start with the nitrate situation in Europe. As we have Pointed out in our quarterly report, the consumption in or deliveries in Europe We're down 17% versus Q4 2017. On a season basis, season to date. The consumption or delivery has been 10% down from previous season.
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 Q4. 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 a Early spring or late spring. Right now in Norway, we have lots of snow.
In Chicago, I think last week, you had more than 40 degrees below 0. But in 3 weeks, it might Sunshine and the spring is on. So very much depends whether you get 2 quite distinct application seasons, or you will kind of see a season that merge more and more into maybe
Operator, is it intentional that we have more voices on here? Yes. Maybe we wait. Please let us know, operator, when we can carry on. I think there's we'll carry on with the answers once you give us the green light.
Yes, sir, you may go ahead. Thank you.
Yes. Just a few general comments on the Eurea, and then I I can hand over again to our CFO on the middle question. We had an increasing price conference. During the Q4, as I'm sure you follow the publications, you have seen that, 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. So obviously, our target will try to be to keep that momentum into Q1 and Q2. But there is no doubt that right now, there is a softening of the urea market as seen in all the publications.
Yes. And as to your question on the growth projects. We don't have the 2019 of estimate of $3.30 at today's prices, But the growth project in 2020 at 2018 prices would be 460,000,000 dollars versus the $600,000,000 stated in the program. And on sensitivity level, if you look at the impact of plus $100 per ton price change. Then on the growth side, that would be $0.1 per share on ammonia, dollars 0.19 per share on urea and $0.3 per share on BAP.
Okay. Thank you. So just as a follow-up. So there's no disconnect anymore between Yara's realized nitrate prices and the benchmark nitrate prices that we see on the screen or on in the markets because that was the issue, right, as I understand it, in the Q3?
I think we have said that during Q3 and actually also during Q4, we have seen a somewhat longer time lag up to 3 months. We see that normalizing and coming clearly down, And I would expect in Q1 during Q1, that gap will come down to and normal in season, which would be around 1 month.
Okay. Thank you very much. Thank you.
Thank you. And we will now take our next question. And this comes from the line of Ben Isaacson. Your line is now open. Please go ahead.
Hi, it's Oliver Rowe on for Ben. Thanks for taking my question. So with a lot of capacity growth behind you, it sounds like the focus is on ramping up and operating plants. So as cash generation ramps, does this mean we might see a change Capital Allocation Priorities and maybe to frame that in the context of the new business segment that you're bringing to the forefront with the resegmenting. Is There's an opportunity to invest a substantial amount of capital into some of these lesser known business lines?
Well, I think that Yaris 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 between within new business, within decarbonization within circular economy that we, of course, think are important levers to explore. But I mean, 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 Yaris. And delivering on those growth projects.
Right. Makes sense. And 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 the 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. So we have established a business unit within my area of sales and marketing, called digital farming. We have established 4 geographical hubs, 1 in Berlin, 1 in Sao Paulo, 1 in San Francisco and one in Singapore with some smaller satellites, among them, India. We have 2 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 sensing Technologies now converted more into, for instance, saprolite technologies, basically securing a more accurate application of Nutrien's. We are also approaching the smallhold farmer segments. And we have there, obviously, an opportunity To expand significantly on the contacts we have with farmers. Today, we meet face to face around 1,000,000 farmers As Yara, every year with digital, of course, that could become a much, much higher number. So this is more an enabler to communicate and launch various apps to the small hole segments.
It's clearly an area which has gotten a lot of attention, and we see also many, 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. And we will now take our next question. And this comes from the line of Neil Tyler. Your line is now open. Please go ahead.
Yes, good afternoon. Three questions from me, please. Firstly, on the production outages that you've 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. And 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 you your best estimate of that? And then secondly, have you A broader question. Have you identified why these outages have come about? And do you think perhaps the resources required to implement both the improvement program and the start of all of these new growth assets It's perhaps stretching resources to Finley across the group. That's the first question.
The second one is more 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 EUR 9,000,000 positive. And then the combined acquisitions and start ups add about €86,000,000 So it's EUR 95,000,000 positive in total. But in the EBITDA bridge, there's a EUR 25,000,000 positive.
So the net negative of EUR 70,000,000 How much of this is the cost step up relating to that digital program? Is that all of 70? Is that
Sorry, Neil, just hi, this is Thor. Could you just on that last question, could you just specify exactly where you are referring to in the reports.
Yes. So in the EBITDA bridge in the 4th quarter, The full year figure for 2018 under other is EUR 25,000,000.
Pardon?
Yes. And in the presentation that for the Q4, in the bridge of the Yara Improvement Program costs, So I think there's a €34,000,000 positive and a €25,000,000 negative. So that's another €9,000,000 positive.
So which slide are you on in the presentation? Is it number 15?
Is it number 15? One second. Correct. Yes, sorry, 33 and 24, yes. And then the other in the report itself, you mentioned, I think it's 86,000,000 Is within that €25,000,000 figure and that €86,000,000 contributed from Freeport, from Brabala and from So if I add the EUR 86,000,000 and the EUR 9,000,000, I get EUR 95,000,000 and then EUR 25,000,000 showing, so there's EUR 70,000,000 difference.
And I'm trying to understand how much of that EUR 70,000,000 is a step up in cost related to digital? And is that EUR 70,000,000 the right run rate to think about
Sorry, Nick, was there one final question?
I'll leave it at 2 for now because those two have taken a bit of time.
Okay. Thank you. So if I start by the first question, 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 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 doing something in addition to running our plants. So I think that to me is the general answer. But having said that, we were clear that we have had downtime in the 4th quarter, And we've also had some delays in some of our turnarounds and projects, which we are working team. And then you asked a little bit whether that is sort of influencing the way we think going forward. Stepping up the improvement program is to me a very natural part of the continue to improve our operations.
And at the same time, as we are taking down investments, we are now focusing on successfully ramping up the projects that we have. Then on to your other question, yes, the bridge for the full year is at 25 plus And you are correct that there is a full year impact EBITDA from those three investments of around $86,000,000 And I think on digital, we have said that there is a run rate of around 10 $1,000,000 a quarter, which is then also the case for 20 eighteen. And 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, but we obviously also have a very clear trajectory to increase the revenues Sanddak business.
Okay. Just going back to the first part of that question. It might be the wrong impression, but the impression, as I say, I had there is that the interruptions, outages were slightly were higher this year than they have been of late. And 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. But
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 $10,000,000
And I could add, Neil, this is Thor again. It is correct to observe that in 2018, we have had a higher than normal number of turnarounds And that adds to complexity for the for our organization and if you like, scope for issues when you have large turnarounds. And of course, as you know, it's been the peak year for bringing new expansions and plants online. So 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, Bill.
Thank you. And we will now take our next question. And this comes from the line of Andrew Stott. Your line is now open. Please go ahead.
Good afternoon, everybody. Thanks for the opportunity. It was mainly one question just on Europe. I'm just trying to understand The scale of that European industry delivery number, so I think you said minus 17% for the industry. And of course, your number was deleted as well by your answer, so I get that.
But can you just walk through the rationale for The comp maybe the comp we're up against, the phasing that you sort of, I guess, alluded to some weather events. And just how we think then about that snap back into Q1. I know that's sort of been asked already, but I just really don't understand the scale of that decline in Q4. So anything would help. Thank you.
I think it's Ericsson. There is a number of factors. I mean, the season started quite strongly in the Q3 as last season did. I mean, and that's relatively normal as buyers want to hedge part of their need relatively early. That has been profitable many seasons, And then they also have then what they need for first application, etcetera, in house.
And then of course, what happens in the Q4 is very depending on the kind of the sentiment and expectations. And as Tari was saying earlier, I mean, the urea price got quite expensive there at the peak in October and then It started to slide a bit, so 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 November that hampered
Movement of Products.
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. So I mean, it's I find it quite Recall that given that backdrop that there is not maybe a massive interest in continuing, let's say, buying for storage into the Q4. And of course, what happens then normally is that imports take the strongest hit, and That was also the fact in the Q4. And also, if you add to that, that there were some supply issues And we talked about ours, but our other European producers have also produced somewhat less this season. So there could also be, at least through the first half of the quarter, some supply limitations also even.
So I mean, The ending stocks for the industry is not much up if you compare the demand you can expect to get to Johan then into the when you get closer to the spring. So those are some of the factors that I think So you can kind of explain why the term so low relative risk, particularly towards the end of the Q4.
Okay. And just a follow on, I guess it's definitely logical 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. So when we think about the Q4, Q1 dynamic, we're now back at 2.50, 2.60 So granular then, you would assume that Q1 is somewhat better on volume. But what I'm puzzled by is it doesn't seem to be what you say.
Andrew, this is Tore. I think to just reference back to Thaddeus' comments just a few minutes ago, I think it's probably important To think about this as first half, probably more than Q1, at least if you want to think about Q1, You need to have good insights into weather patterns.
So that's the weather comment you made. Yes, perfect. Okay. I got it. Thank you very much.
I mean, if you look at history, the consumption over a season is actually Very stable in Europe. So 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 call. The condition is not there that it has started yet. It's to some extent started in the very south, But we had to wait now a few weeks more to say what comes in Q1 and what comes in Q2.
Thank you. Thank you.
And we'll now take our next question. And this comes from the line of David Simmons. 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. And it seems your realized gas cost in Europe in Q4 was much higher than the average cost or at least $1 per tonne higher.
So can you
explain Why was that the case in Q4? That's number 1. Number 2 question is, can you Maybe just help us understand why the projects have been delayed or the contribution at least has been delayed in 29 degrees. Is it just sort of technical glitches or you are proactively managing the supply during this period where as you said, the demand has been some sort of there has been a pause in demand. And just last question, Just on the returns in the business, you still if I look at your cash return or your ROCE number, it's still like 4%.
So Like how do you think about that in context of peak CapEx behind us? And how should we sort of expecting what is the sort of 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 spots Like the bigger price and Yara's price? Because there is there will always be I mean, the Yara cost per unit will be higher because then we have transport costs. We're not buying anything.
Just looking at your European gas average PTF price of $8,200,000 in Q4 for the market in terms of the average PTF, but your realized cost was 9.4. And I do appreciate
the results Yes. Okay. So there's a lag factor as well. And unlike the First of all, the pricing, this is quite stable. So it's just that when we book the cost of sales, when we produce and sell the product, It's typically about a month after we've bought the gas.
So if you take TTF And at some transport cost and the like of the month, you should be To track our price very well.
So I guess the September peak in the spot market hit our 4th quarter results and write, but it's not in the spot price for the Q4 that we referenced it to. So I guess there must be some of those lines effect because there's nothing structural that will increase that differential in the Q4.
Maybe a little bit of mix because we know the turnaround in slow scale, which has a very limited transport cost because it's very close to the hub. So you have some mix effects too, but yes, they're normally not big.
Yes. And if I may comment on the 2 other questions. So you asked about the delays. That is a combination of several factors. It is about technical issues in terms like Sherfin and Freeport.
And also in some instances, It is linked to an optimization of product flows in our integrated system. But it is, of course, our full focus to ramp that up and get those in with full effects. 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 EUR 460,000,000 is sort of the total benefit from the was it for from ramp up of new projects?
Hub. Yes. We've set that the 600 yes, the 600 growth target by 2020, if you apply 2018 prices to that, it's equivalent About EUR 450,000,000
Okay. And what about the fact that the gas price has since then come down quite aggressively? Fleet. 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.
Yes, you can do that and you can use sensitivities that are included in the appendix and the presentation.
Okay, okay, fine. Makes sense. Thank you.
Thank you. And we will now take our next question and this comes from the line of Sea buyer.
We'll just add one comment on that. So the last answer, we just want to I like that actually our growth portfolio does not include any European ammonia And that means that the gas price sensitivity is on European gas is 0. Operator, please carry on with the next question.
Space, 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? And if it does, do you see any potential risk Group.
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, so I'm not sure we are the right player to I'll answer that question. Peter, I'll answer some of the figures 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's a very small part of the market, I think, probably closer to 0.1% than 1% of the market. But there is a discussion now about the use of microplastics in those products, which is potentially challenging for those who produce
And 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 utilization and both ammonia emission as well as efficiency of the Nutrient is improved with the use of nitrates. So this is obviously a part of our story behind why we believe Nitrous is both economically and environmentally a good solution.
And 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's regions around the Great Lakes where the regulators are really focused on nitrate. Is this a potential driver for you?
Well, I would say the whole knowledge part and driving advice towards a Optimal application of nutrients is definitely within the core of our business. And 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 reduced end application by up to 30%, 40%, proving that we can achieve productivity at farm level with a more adequate application level. And 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.
So Physician Farming will be, I think, a main contributor to avoid some of the negatives that we that you are referring to.
Okay. Thank you.
Thank you. And we will now take another question from Neil Tyler. Your line is now open. Please go ahead.
Yes. Hi, again. So 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. And I wondered whether there's any metrics 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 report to find I know you've printed them.
I just wondered if you might be able to help me I understand how you think about it? How you are measuring the success?
I think and Sergey will jump in and elaborate as appropriate. But we are certainly we will take note of the question And then see if there is whether we can come back with a metric on this going forward. But It's very clear. I mean the premium part of the business has grown successfully and profitably for Yara and It's the commodity side within Brazil that has been both for Yara and I think everyone else in Brazil, a very competitive increasingly competitive environment in recent years.
Okay. I'd appreciate anything you can share on that, yes.
Yes. I'll tidy up, Alex, comment.
No, I mean, just to say, we are 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. And 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. So this is ongoing.
It's by no means finished in 2018, but we did improve and we did manage to deliver on some of the, as I said, by Time reductions of commodity and by that, increasing our return on capital in Brazil.
Okay. That's helpful. Thank you.
Thank you. And we'll now take our next question and 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 for me. First, the Freeport incident. And I heard this morning was mostly technical, but could you give us a sense of how much actually Freeport contributed in 20 2018 in terms of either sales or EBITDA. And 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. But I still struggle with comparing offering from competitors. And if you could Help me out on what really distinguish Yara's offering and which group You think we'll favor Yara's offering going forward versus the peer group?
And last one, a very general one. Is there anywhere in the world demand for 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, as you indeed highlight, a result of technical challenges.
But they are related 2 more traditional technical challenges in the ramp up and not linked to the hydrogen setup of that cloud as such. And that will impact the ramp up in 2019. We stated the overall 3.30 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.
And we can expect that in the second half, right, of twenty nineteen, the true start?
Yes, we are expecting it to do yes, we're 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. So then we will go more in-depth on where we are and what to expect on the digital side. But where we focus is really to, If you like, focus on the field. And where I think we make a difference is that we contribute to driving the productivity on that field. It means that we are in with analytical services.
We are in with Precise application. If you go on the net, you can look at atfarm.com, which is one of our solutions that we launched in 2018. And 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. So yes, this becomes a bit general, but I think we are Launching now, as we speak, many new applications, which are all centered about around field optimization when it comes to the Professional segment and which are centered more about analytical services and giving easy available health in the smallholder segment.
And it's a crop agnostic or you're focusing on Certain Corps where you think you have an age geographically or analytically?
Yes. But it's also correct to say that obviously, we are focusing in some of the markets where we already are strong with the presence. But we are going beyond the customer base of Fertilizer. We basically approach these markets and target all farmers, It's 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.
But 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. Yes, basically the areas where we are active with our smallholder approach.
Thank you. And the CO2, the clean ammonia, any interest anywhere in the world?
Yes. I mean, we certainly see it. As you're probably aware, we have some pilot activities in Australia on this, But it's a bit early to have a more detailed discussion about that
today, I think.
Okay, Luki. Thanks.
Thank you. And 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. I mean, the last official number we have is December where more, maybe almost 650,000 tonnes was exported. So who knows exactly how much it's going to be Shipped out in January. That was sold earlier in the tenders in India and elsewhere. But I mean, what you see, So they are still today kind of maintaining asking prices in the 2.80s for total metal B, which is now getting quite expensive, right, compared to order or origins.
So 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 There are netbacks from domestic sales. But I mean, all the parties are keen point exactly how much, but At least to me, it seems like they are withdrawing basically in today's market conditions.
Okay, great. Thanks, Satoro. And 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.
Yes. There could be a little bit of that. I mean from France, we have heard, for instance, that the great seed area. Winter winter seeding has been lower and that there will be more volume, maybe some other crops for spring instead and so forth. So you're right that there could be some areas where the drought was extended just to such an extent that the winter seating was hampered, but that could be it.
Okay, great. Thanks, Doctor. Robert.
Thank you. And no further questions have came 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 Yara and we'll look forward to hopefully having more interesting updates for you going forward. Thanks very much. Call.
Thank you. And that concludes our conference for today. Thank you all for participating. You may now disconnect.