Yara International Asa · OSL:YAR
Yara International Asa — Q2 2024 Earnings Presentation
31 slides from Yara International Asa's earnings presentation, Jul 19, 2024
Slide 1: Yara International ASA 2024 second-quarter results
Yara International ASA 2024 second-quarter results 19 July 2024
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 by
Slide 3: Our ambition is zero injuries
Our ambition is zero injuries TRI1 (12-month rolling) 5.0 4.0 3.0 2.0 1.0 1.0 0.0 1Q16 2Q24 1) Total Recordable Injuries per 1 million working hours 3
Slide 4: Improved results and cost action initiated
Improved results and cost action initiated 2Q 2024 EBITDA excl. special items1 of 513 MUSD, reflecting improved margins Strong cash conversion with 500 MUSD operating capital release 150 MUSD cost reduction1,2 and 150 MUSD capex reduction initiated Financial position set to improve with cost reducti
Slide 5: 2Q EBITDA reflects improved margins
2Q EBITDA reflects improved margins EBITDA excl. special items (MUSD)1 ROIC2 Price/margin +75 -2 9 Energy cost4 +110 185 Portfolio Currency +7 optimization +10 Other +2 70 513 252 2Q23 Volume/Mix 3 Margin Fixed Costs Other 2Q24 -5.6% 6.1% 1) EBITDA excl. special items. For definition and reconciliat
Slide 6: Taking action to strengthen financial performance
Taking action to strengthen financial performance Cost optimization Fixed cost1 reduction: Focus on core business and key strategic priorities Increase free cash flow 150 MUSD end 20252 Tail-return activities to be scaled down Drive sustainable profitability Strengthen balance sheet Improve funding
Slide 7: Financial performance
Financial performance EBITDA excl. special items1 EPS excl. currency and special items1 ROIC1 (MUSD) (USD per share) (12-month rolling, %) 0.43 513 10.5% 252 -0.36 5.6% 2Q23 2Q24 2Q23 2Q24 2Q23 2Q24 Change in net operating capital2 Cash from operations Investments (net)3 (MUSD) (MUSD) (MUSD) 732 822
Slide 8: Increased deliveries
Increased deliveries External deliveries 2Q 2023 vs 2Q 2024, in kt 2Q23 2Q24 Comments Europe deliveries are up 7%, +4% reflecting a late spring and successful launch of the new 6,096 5,864 season price Increased deliveries in Africa & Commodity Asia and Clean Ammonia due to -1% +7% higher produc
Slide 9: Reduced net debt reflecting strong cash conversion
Reduced net debt reflecting strong cash conversion Net interest-bearing debt: 2Q development (MUSD) -366 3,953 316 3,587 114 77 499 258 Net debt end Cash earnings1 Net operating Investments (net) Dividends Other2 Net debt end of of last quarter capital change current quarter 1) Operating income plus
Slide 10: Reduced cost base through focus on core activities
Reduced cost base through focus on core activities Fixed cost1 reduction: 150 MUSD Targeted structural actions under development in 2024, main -6% > impact expected in 2025 with targeted 150 MUSD run-rate ~2 500 ~2 550 2 533 achieved by end 2025 ~2 400 2 380 Prioritize core business and key strategi
Slide 11: Reducing capex through portfolio restructuring, and prioritizing only high-return growth projects
Reducing capex through portfolio restructuring, and prioritizing only high-return growth projects 2024 capex guidance reduced by 100 MUSD 2025 capex guidance reduced by 150 MUSD Growth Maintenance -8% -11% 1 3001 1 3501 1,200 1 200 1,200 1 200 100 150 ~400 ~300 ~450 Inflation ~400 Inflation ~900 ~ 9
Slide 12: Driving sustainable performance with an integrated scorecard
Driving sustainable performance with an integrated scorecard People Planet Profit 2025 2025 2025 Yara KPI 2021 2023 L12M Yara KPI 2021 2023 L12M Yara KPI 2021 2023 L12M target target target Strive towards zero GHG emissions, Ammonia 1.0 1.1 1.0 <1.0 3.0 3.0 2.9 2.7 7.8 7.8 7.9 8.6 accidents, TRI int
Slide 13: Financial performance set to improve, enabling value-accretive growth and shareholder returns
Financial performance set to improve, enabling value- accretive growth and shareholder returns Increasing cash flow through strict fixed cost Nitrogen supply expected to tighten Improving financial performance enabling value- and capex prioritization accretive growth and shareholder returns Global u
Slide 14: Unrivalled ammonia system is Yara's core competitive edge
Unrivalled ammonia system is Yara’s core competitive edge Yara’s global ammonia system World’s largest ammonia system, highly scalable Balance between asset-backed and third-party sourcing provides unique flexibility, market insight, and competitive supply Unique ability to optimize offtake ba
Slide 15: Ammonia system and EU set-up positions Yara for increased nitrate and NPK margins
Ammonia system and EU set-up positions Yara for increased nitrate and NPK margins European nitrate upgrade position USD/t, Urea equivalents illustrative n- margin above ammonia cost3 ~500 Premium NPK and nitrate capacity are well aligned ~100 with lower carbon future as: ~400 With CBAM, NPK and Ni
Slide 16: Partnership with PepsiCo Europe proves Yara's nitrate-based fertilizers role in low-carbon future
Partnership with PepsiCo Europe proves Yara’s nitrate- based fertilizers role in low-carbon future Partnership to help farmers adopt low-carbon agricultural practices: ‒ Low-carbon footprint fertilizers – Yara will deliver up to 165 kt per year by 2030 ‒ Precision farming digital tools ‒ Best-prac
Slide 17: Equity investment in US ammonia can create significant shareholder value
Equity investment in US ammonia can create significant shareholder value, given Yara’s unique position Illustrative ammonia cash cost USD/t -310 ~400 Competitive gas and well-advanced onshore CCS Yara’s unique capability for value-creation: - Off-take security through own consumption 190 - Highe
Slide 18: Focus on high-return core operations and growth, future-proofing
Focus on high-return core operations and growth, future-proofing to increase profitability and value creation Value- Current Reduce cost Portfolio accretive Premium Market baseline and capex optimization ammonia growth conditions growth Focus on core operations Asset portfolio review Low-cost & low-
Slide 19: Appendix
Appendix
Slide 20: Results by segment
Results by segment 2Q23 2Q24 EBITDA excl. special items1 (MUSD) ROIC1 2Q ROIC1 L12M -71 -33.5% 1.1% Europe 89 2.0% -0.4% 172 9.7% 10.7% Americas2 168 8.9% 10.3% 6 -3.2% 11.4% Asia & Africa 78 7.9% 5.8% 6 -9.7% 6.5% Global Plants2 76 2.9% 6.1% 31 -1.5% 13.4% Industrial Solutions 46 2.8% 7.3% 19 3.2%
Slide 21: Yara Improvement Program
Yara Improvement Program Ammonia production1 (mt) Finished product production1 (mt) GHG emission intensity (t CO2e/tN) Improved performance across several plants Negative impact from reliability issues at key sites and Montoir not Reduced GHG emission intensity following successful project producing
Slide 22: Free cash flow
Free cash flow Free cash flow before financing activities1,2 Divestment proceeds Investments Operations Free cash flow adjusted for divestment proceeds 2,104 1,669 1,973 1,560 1,091 863 1,442 1,298 1,246 777 532 619 1,142 284 288 105 -1,242 2018 2019 2020 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23
Slide 23: Nitrate and NPK premiums
Nitrate and NPK premiums Nitrate premium above urea1 NPK premium above commodity blend2 USD/t (CAN27 equivalents) USD/t (NPK average grade equivalents) 1000 1000 Yara's realized European nitrate price Urea Egypt CFR proxy 1M lag Yara's realized NPK price Commodity Blend 2M lag 500 500 0 0 1Q21 2Q21
Slide 24: Key product price development
Key product price development 2Q23 2Q24 Urea price development1 (USD/t) Spot gas prices1 (USD/MMBtu) Yara realized CAN2 and NPK price3 (USD/t) -16% -10% -14% 368 356 688 322 -26% 308 591 12.5 -11% 9.3 328 291 -23% 2.2 1.7 Urea granular Urea inland Europe (TTF) US (Henry Hub) CAN 27 Compound NPK FOB
Slide 25: Energy cost
Energy cost Quarterly averages for 2020 – 2Q 2024 with forward prices1 for 3Q and 4Q 2024 US gas price (Henry Hub) TTF day ahead Yara Global Yara Europe2 10.9 11.0 9.7 10.0 10.1 11.3 7.9 8.8 8.9 2.0 2.2 2.8 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q2
Slide 26: Details of energy cost actuals and estimate 3Q and 4Q 2024
Details of energy cost actuals and estimate 3Q and 4Q 2024 Europe 3Q24 estimations based on 4Q24 estimations based on 3Q23 4Q23 1Q24 2Q24 forward prices forward prices Average gas cost USD/MMbtu 10.8 13.0 11.7 9.7 10.9 11.0 Gas consumption1 Million MMBtu 34.8 37.5 29.2 34.0 34.8 37.5 European gas co
Slide 27: Yara inventories
Yara inventories Fertilizer - finished products inventory development in mt 8 7 6 5 4 Other 3 Compound 2 NPK 1 Nitrates Urea 0 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 27
Slide 28: Peak of urea capacity additions is behind us
Peak of urea capacity additions is behind us Global urea capacity additions ex. China 1,2 (mt) India Russia Iran Algeria USA Nigeria Australia Others 6.7 6.2 5.5 4.9 4.5 4.8 4.5 4.2 3.2 2.2 1.9% average 1.5 1.4 historical 1.0 consumption growth3 0.2 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Slide 29: Farmer incentives: wheat example
Farmer incentives: wheat example Optimal nitrogen application1,2 kg/ha 0% 211 212 213 197 22/23 23/24 1 year ago current 22/23 23/24 1 year ago3 current3 Wheat price4 (USD/t) 309 242 256 242 CAN price5 (USD/t) 561 315 316 294 Optimal nitrogen application (kg/ha) 197 211 212 213 Grain yield (t/ha) 9.
Slide 30: Alternative performance measures
Alternative performance measures Alternative performance measures are defined, explained and reconciled to the Financial statements in the APM section of the 2Q report on pages 28-37
Slide 31: Knowledge grows
Knowledge grows ; ae ee es : :