Yara International Asa · OSL:YAR
Yara International Asa — Q3 2022 Earnings Presentation
30 slides from Yara International Asa's earnings presentation, Oct 20, 2022
Slide 1: Yara International ASA 2022 Third-quarter results
Yara International ASA 2022 Third-quarter results 20 October 2022
Slide 2: Cautionary note
Cautionary note This presentation contains forward-looking information and statements relating to the business, financial performance and results of Yara and/or industry and markets in which it operates. Forward- looking statements are statements that are not historical facts and may be identified b
Slide 3: People: Our ambition is zero injuries
People Our ambition is zero injuries TRI1 (12-month rolling) 5.0 4.0 3.0 2.0 1.2 1.0 0.0 1Q16 3Q22 1) Total Recordable Injuries per 1 million working hours 3
Slide 4: Resilient Yara business model
Resilient Yara business model 3Q 2022 Strong performance, optimizing Yara operations amid supply disruptions and gas price volatility Strong margins with improved returns across all commercial segments, more than offsetting lower deliveries Production impacted by gas-related curtailments and reliabi
Slide 5: Global and flexible business model with strong returns in challenging markets
Global and flexible business model with strong returns in challenging markets Challenging European energy markets (TTF USD/MMBTU) Solid shareholder returns (Share price with dividends reinvested – NOK2) 54,8 518 740 262 271 311 271 459 10,4 8,3 10,5 6,6 5,1 5,9 4,4 3,6 152 440 07 08 09 10 11 12 13 1
Slide 6: Improved margins more than offset lower deliveries
Improved margins more than offset lower deliveries EBITDA ex. special items (MUSD)1 ROIC2 Fixed costs: -60 1200 43 -37 900 438 -209 600 1,001 765 Price/margin: +1,321 Energy cost3: -883 300 0 3Q21 Volume/Mix Margin Currency Other 3Q22 4.1% 21.5% 1) EBITDA ex. special items. For definition and reconc
Slide 7: Lower European ammonia production as Yara optimized operations amid gas price volatility
Lower European ammonia production as Yara optimized operations amid gas price volatility Yara European ammonia capacity vs production overview 1,200 60 European Ammonia production (kt) 1,000 50 800 40 TTF (USD/MMBtu) 600 30 86% 88% 88% 86% 91% 90% 83% 82% 85% 81% 75% 77% 77% 400 70% 20 57% 200 10 0
Slide 8: Proposed additional dividend of NOK 10 per share
Proposed additional dividend of 10 NOK per share Dividend and buy back1 per share Comments Buy-back and Improved returns result in payout capacity redemption beyond ordinary dividend, in line with Yara’s Ordinary dividend 58 capital allocation policy Additional dividend 52 8 The Yara Board propo
Slide 9: Yara's portfolio composition is strong and well-positioned for future growth
Yara’s portfolio composition is strong and well-positioned for future growth Yara operating segments Yara Europe Yara portfolio development USD 7.0 bn revenues1 USD 1,142m EBITDA2 Yara Industrial Solutions Europe 24% ROIC2 USD 4.7bn revenues1 Establish Field ID as a global standard, USD 525m EBITDA2
Slide 10: Yara Clean Ammonia: strong results in a turbulent ammonia market
Yara Clean Ammonia: strong results in a turbulent ammonia market Volume commitments maintained Record EBITDA1 Quarterly volumes in kt including deliveries to Yara entities Quarterly EBITDA in USD million Deliveries to Yara entities 0% +61% 1,003 1,005 66 41 532 548 3Q21 3Q22 3Q21 3Q22 Resilience o
Slide 11: Financial performance
Financial performance EBITDA ex. special items1 EPS ex. currency and special items1 ROIC1 (MUSD) (USD per share) (12-month rolling) 1,001 2.00 22.0 765 1.33 8.3 3Q21 3Q22 3Q21 3Q22 3Q21 3Q22 Prosperity Change in net operating capital2 Investments (net)3 Cash from operations (MUSD) (MUSD) (MUSD) 103
Slide 12: Improved returns across all regions, more than offsetting European ammonia production losses
Improved returns across all regions, more than offsetting European ammonia production losses EBITDA ex. special items1 (MUSD) 386 308 285 156 145 148 103 122 65 66 38 -95 3Q21 3Q22 3Q21 3Q22 3Q21 3Q22 3Q21 3Q22 3Q21 3Q22 3Q21 3Q22 ROIC 12M rolling2 (%) 27 % 24 % 24 % 24 % 26 % 16 % 15 % 14 % 10 % 5%
Slide 13: Lower deliveries mainly within commodity products outside Europe
Lower deliveries mainly within commodity products outside Europe External deliveries 3Q 2021 vs 3Q 2022, in kt 3Q21 -26% 3Q22 7,588 5,629 -35% Commodity 4,149 -6% -4% 2,688 -28% 2,104 1,979 1,919 1,851 Premium1 1,336 -3% 963 471 457 Total crop Americas Europe Asia & Africa Industrial Clean nutrition
Slide 14: Optimization of operations impacts Yara Improvement Program (YIP)
Optimization of operations impacts Yara Improvement Program (YIP) Ammonia production1 (mt) Finished product production1 (mt) Ammonia energy consumption (GJ/ton) Reliability issues at a few key sites offsetting improved Lower ammonia and nitric acid availability linked to reliability Increase in ener
Slide 15: Strong cash earnings fund investments and seasonal operating capital increase
Strong cash earnings fund investments and seasonal operating capital increase Net interest-bearing debt: 3Q development (MUSD) -59 238 -909 810 3,448 3,529 Net debt end of last Cash earnings 1 Net operating capital Investments (net) Other 2 Net debt end current quarter change quarter 1) Operating in
Slide 16: Yara calls for urgent action to reduce food and fertilizer dependency on Russia
Yara calls for urgent action to reduce food and fertilizer dependency on Russia European ammonia curtailments Call for action Annual nitrogen application is critical represent a significant share of global Europe needs to strengthen its own for maintaining global food production nitrogen production
Slide 17: Yara is playing a leading role in the transformation of agriculture and the broader hydrogen economy
Yara is playing a leading role in the transformation of agriculture and the broader hydrogen economy Unique opportunities: Focused strategy: Strong shareholder returns: • Resource and environmental • Crop nutrition leader; #1 premium • Strict capital discipline challenges require strong agri- produc
Slide 18: Appendix
Appendix
Slide 19: Nitrate and NPK premiums
Nitrate and NPK premiums Nitrogen upgrading margins1 NPK premium over blend2 USD/t CAN27 equivalents (weekly publication prices) USD/t 1000 1000 Yara realized NPK price 19 261 800 Weighted average global 800 premium above blend cost3 600 600 69 400 17 400 Nitrate premium, CIF inland Germany CAN CIF
Slide 20: Key product price development
Key product price development 3Q21 3Q22 Urea price development1 (USD/t) Spot gas prices1 (USD/Mmbtu) Yara realized CAN2 and NPK price3 (USD/t) +61% +57% 773 885 +109% 650 481 -1% 564 411 406 +248% 58.1 311 +82% 16.7 4.4 8.0 Urea granular Urea inland Europe (TTF) US (Henry Hub) CAN 27 Compound NPK FO
Slide 21: Free cash flow
Free cash flow Free cash flow before financing activities1,2 Divestment proceeds Operations Investments Free cash flow adjusted for divestment proceeds 1,973 1,669 1,491 1,298 1,142 1,008 863 845 532 284 288 14 105 -230 -859 -730 -916 -1,098 -1,243 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3
Slide 22: Energy cost
Energy cost Quarterly averages for 2018-2022 with forward prices* for Q4 2022 US gas price (Henry Hub) Yara Global** TTF day ahead Yara Europe 57.9 41.9 38.8 30.8 31.4 34.5 29.8 23.9 24.9 22.7 22.6 16.4 20.9 15.4 8.8 11.5 8.0 7.4 7.2 6.7 9.5 4.7 4.6 2.9 4.3 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q
Slide 23: Details of energy cost actuals and estimate 4Q 2022
Details of energy cost actuals and estimate 4Q 2022 3Q21 actual 3Q22 actual 4Q21 actual 4Q22 estimate based on forward prices Europe - average gas price USD/MMBtu 11.5 34.5 22.7 38.8 Europe - gas consumption1 MMBtu 36.4 30.3 31.1 31.1 European gas cost USD million 420 1,047 707 1,208 Yara global - a
Slide 24: Yara inventories
Yara inventories Finished products inventory development in mt 8 7 6 5 Other 4 3 Compound 2 NPK 1 Nitrates Urea 0 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 24
Slide 25: European producers' nitrate stocks
European producers’ nitrate stocks Nitrate stock potential development In Europe in mt Index June 2007 = 1 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 22/23 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 Source: Fertilizers Europe, Yara estimates 25
Slide 26: Urea capacity additions: phasing changes only, no new projects added
Urea capacity additions: phasing changes only, no new projects added Global urea capacity additions ex. China 1 (mt) 6.7 5.5 5.6 5.2 4.5 4.7 4.2 2.6% consumption growth 3.2 2.0 1.9 1.0 -0.1 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 India Russia Iran Algeria USA Nigeria Others Produ
Slide 27: Capex guidance
Capex guidance Annual investments (BUSD) Phasing Other Maintenance 2.2 1.6 1.5 0.4 1.1 0.9 0.8 0.7 0.8 0.7 0.6 0.6 2017 2018 2019 2020 2021 2022 27 2022 guidance of 1.5 BUSD consists of an annual average of 1.2 BUSD less 0.1 BUSD reduction offset by fixed cost increase and phasing of 0.4 BUSD from 2
Slide 28: Driving sustainable performance with an integrated scorecard
Driving sustainable performance with an integrated scorecard People Planet Prosperity 2025 2025 2025 Yara KPI 2020 L12M Measure Yara KPI 2020 L12M Measure Yara KPI 2020 L12M Measure Target Target Target Strive towards Energy efficiency2 33.2 33.7 32.7 Gj/t NH3 Ammonia Production 6 7.7 7.6 8.6 Mt 1.3
Slide 29: Alternative performance measures
Alternative performance measures Alternative performance measures are defined, explained and reconciled to the Financial statements in the APM section of the Quarterly report on pages 32-39
Slide 30: Slide 30