Yara International ASA · OSL:YAR
Yara International ASA — Debt Investor Presentation (November 2021)
35 slides from Yara International ASA's debt investor presentation, Nov 1, 2021
Slide 1: Yara International ASA Credit Investor Presentation
Yara International ASA Credit Investor Presentation 1 November 2021
Slide 2: Disclaimer (1/2)
Disclaimer (1/2) • This presentation, together with its enclosures and any related oral presentations (the "Presentation"), are confidential and have been prepared by Yara International ASA (the "Company") with assistance of Danske Bank, Norwegian Branch (the "Manager") solely for use in connection
Slide 3: Disclaimer (2/2)
Disclaimer (2/2) • Neither the Company nor the Manager has authorised any offer to the public of securities or has undertaken or plans to undertake any action to make an offer of securities to the public requiring the publication of an offering prospectus, in any member state of the European Economi
Slide 4: Forward looking statements
Forward looking statements • Certain statements in this Presentation are forward-looking. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", "expects", "predicts", "intends", "projects"
Slide 5: Summary of Risk Factors
Summary of Risk Factors Investing in bonds issued by Yara International ASA (the "Issuer") involves inherent risks. The risk factors below are a non-exhaustive summary of the risk factors included on pages 32-35 of this presentation. RISKS RELATED TO THE ISSUER 1.1 Strategic risks 1.3 Financial risk
Slide 6: Agenda
Agenda 1. Yara’s core and market outlook 2. Sustainable strategy 3. Financial policy and performance 4. Appendix 6
Slide 7: Yara is the world's leading crop nutrition company
Yara is the world’s leading crop nutrition company Key facts 241 million Global market position: people our products help to feed • Established as Norsk Hydro in 1905 • • Demerged as Yara International ASA in 2004 Consolidated revenues of USD 11.7b in 2020 20 million Global #1 in The number of farme
Slide 8: We are the global leader in premium crop nutrition
We are the global leader in premium crop nutrition Premium fertilizers offer superior performance Physical product offering complemented by global downstream presence and leading crop nutrition knowledge: 12 days after harvest 3 days after harvest Agronomic knowledge Traditional program Working clos
Slide 9: Our business model is flexible and resilient
Our business model is flexible and resilient Our diversified asset footprint and global reach provides resilience High operational flexibility: Flexible production set-up Europe • Norway • Netherlands A significant portion of finished fertilizer Canada • Finland production is flexible on ammonia sou
Slide 10: Fertilizer demand is driven by world food consumption
Fertilizer demand is driven by world food consumption Stable global nitrogen consumption pattern Annual nitrogen application is critical for crops Million tonnes of nitrogen Grain yield2 from nitrogen fertilizer consumption1 Ton per hectare 120 -43% 9.6 100 80 5.5 60 40 1.8 20 0 2000 2004 2008 2012
Slide 11: Global supply additions mainly within commodity products
Global supply additions mainly within commodity products Global urea production growth1 ex. China (mill. tonnes) New capacity is typically delayed and with 9.0 significant uncertainty Production growth Forecast Constructing a urea plant on average take ~5 years, only ~ 1/3 is realized on time 4.3 CR
Slide 12: Agenda
Agenda 1. Yara’s core and market outlook 2. Sustainable strategy 3. Financial policy and performance 4. Appendix 12
Slide 13: Our evolution: from pure producer to solutions provider
Our evolution: from pure producer to solutions provider Producer Company Crop Nutrition Company Commodity Margin Knowledge Margin Climate-neutral solutions Food Solutions Using our Crop competitive edge Scalable farmer to unlock food Product centric solutions Product chain potential Crop focused Ass
Slide 14: Yara is broadening its business model
Yara is broadening its business model People Knowledge Broadening our core Our Enabling the towards food solutions competitive Hydrogen economy edge Ramping up business within Clean Ammonia Connection to Farm Global footprint Driving Sustainable Performance Diverse and Active portfolio Clear capital
Slide 15: Sustainability is integrated in our business model and strategy
Sustainability is integrated in our business model and strategy Fundamental trends affecting the agricultural sector: Yara response: CC impacts how and where crops Yara’s premium products, knowledge and solutions Climate Change can be grown, and demands reduce emissions, preserve resources and addre
Slide 16: Ambitious targets for absolute CO2 emission reductions by 2030
Ambitious targets for absolute CO2 emission reductions by 2030 Historic reductions Planned reductions Our climate roadmap 32 2025 Intensity target: 10% reduction in CO2e per 13 tonne N Scope 1 & 2 <1 2 Roughly equivalent to O&G emission 4 from Norwegian continental shelf 2030 Reduce scope 1+2 18 abs
Slide 17: Yara is taking steps to enable the hydrogen economy
Yara is taking steps to enable the hydrogen economy • Energy distribution is the key challenge for the hydrogen economy • Ammonia is the best suited long-distance hydrogen carrier • Hydrogen production in existing ammonia plants can be made carbon-free, at significantly lower cost than greenfield pr
Slide 18: HEGRA – Norway's largest climate initiative to enable the hydrogen economy
HEGRA – Norway’s largest climate initiative to enable the hydrogen economy • Full electrification of ~500 kt ammonia unit in Porsgrunn possible, removing ~800 kt CO2 with limited infrastructure investments required • Renewable power from Norwegian grid can provide 100 % hydrogen asset utilization •
Slide 19: We take a broad approach to drive sustainability
We take a broad approach to drive sustainability in our own operations and the food value chain Climate • We are committed to set Science Based Targets and are working together with Nutrien and WBCSD1 to develop a Sectorial Decarbonization approach change for our industry • Preserving biodiversity a
Slide 20: Safe and responsible operations are the backbone of our business
Safe and responsible operations are the backbone of our business Safety Responsible business conduct Diversity, inclusion and engagement Ensuring a safe and compliant • Respect for human rights is integrated • A diverse and inclusive culture is a key workplace for employees and in our Compliance Pro
Slide 21: Integrated and holistic performance management and governance
Integrated and holistic performance management and governance Performance management Governance structures integrate sustainability and drive holistic thinking Transparency - Dimensions: initiatives: - Board Audit and Sustainability Committee established, reinforcing Board oversight Integrated - Exe
Slide 22: Agenda
Agenda 1. Yara’s core and market outlook 2. Sustainable strategy 3. Financial policy and performance 4. Appendix 22
Slide 23: Stable capital structure and credit rating targets
Stable capital structure and credit rating targets Credit Rating history • Maintain strong credit ratings in line with Yara’s strategy: BBB+/Baa1 o Mid investment-grade credit ratings: BBB (S&P) / Baa2 (Moody’s) o Mid to long-term target FFO1 / net debt of 0.40-0.50 and floor of 0.30 BBB/Baa2 • Targ
Slide 24: Improved financial performance driven by internal improvements, capital discipline and market conditions
Improved financial performance driven by internal improvements, capital discipline and market conditions Revenues (MUSD) EBITDA ex special items1 (MUSD) 2,637 14,442 2,165 2,161 13,054 12,936 11,400 11,728 1,525 1,430 2017 2018 2019 2020 L12M Sept 2017 2018 2019 2020 L12M Sept 2021 2021 Net debt1 (M
Slide 25: Yara's operating segments
Yara’s operating segments Regions Industrial Solutions Global Plants Clean Ammonia Nitrogen-based Operates Yara’s Ammonia trade & Fully integrated segments comprising solutions and services largest and export- shipping, green and blue production, supply chain and commercial across industries oriente
Slide 26: Yara Improvement Program (YIP) performance as of 3Q21
Yara Improvement Program (YIP) performance as of 3Q21 Ammonia production Finished product production Ammonia energy consumption Million tonnes Portfolio adjustment3 30 Million tonnes Portfolio adjustment3 GJ/ton 8.9 23.9 34.1 33.7 33.2 33.2 32.7 7.9 7.8 7.7 7.8 20.9 21.1 21.3 21.7 20 10 0 2018 2019
Slide 27: Yara has access to a broad range of debt financing
Yara has access to a broad range of debt financing Yara’s interest-bearing debt1 per end 3Q21 Debt Maturity Profile (MUSD)1 MUSD MUSD 4000 1,200 3,522 3500 3,032 1,000 3000 800 2500 2000 600 1500 400 1000 200 500 0 0 Other Bank NOK SEK USD Gross Cash Net 2021 2022 2023 2024 2025 2026 2027 2028 2029
Slide 28: Our key credit highlights
Our key credit highlights Globally diversified with production Resilient market position anchored in Sustainability integrated in strategy and distribution in all major regions global food demand and business model Clear long-term commitment to Stable and long-term Norwegian Improving cash flows and
Slide 29: Agenda
Agenda 1. Yara’s core and market outlook 2. Sustainable strategy 3. Financial policy and performance 4. Appendix 29
Slide 30: Driving sustainable performance with an integrated scorecard
Driving sustainable performance with an integrated scorecard People People Planet Planet Prosperity 2025 2025 2025 Yara KPI 2020 L12M Measure Yara KPI 2020 L12M Measure Yara KPI 2020 L12M Measure Target Target Target 6 Strive towards zero Energy efficiency2 33.2 33.2 32.7 Gj/t NH3 Ammonia Production
Slide 31: Natural gas spike in Europe has driven up global nitrogen prices
Natural gas spike in Europe has driven up global nitrogen prices Natural gas prices, TTF, USD/MMBtu Urea price development, USD per ton, key references 2017 2018 2019 2020 2021 850 800 750 700 650 600 550 500 450 400 350 300 250 200 150 100 Urea inland proxy China Urea prilled fob China 50 Urea fob
Slide 32: Risk Factors (I/IV)
Risk Factors (I/IV) Risk Factors Investing in bonds issued by Yara International ASA (the "Issuer") involves inherent risks. This summary is intended to highlight some of those risks, but is not intended to be exhaustive. The risk factors included in this section are presented in a limited number of
Slide 33: Risk Factors (II/IV)
Risk Factors (II/IV) Investments and integration The Issuer has an ambition to grow profitably, both organically and through step growth initiatives. The profitability of future growth initiatives relies on long-term price assumptions and future operational performance. Integration of new companies
Slide 34: Risk Factors (III/IV)
Risk Factors (III/IV) COVID-19 There is still significant uncertainty to the breadth and duration of business disruptions related to the COVID-19 outbreak, including store and plant closures, as well as its long- and short-time impact on the global economy and consumer confidence. The extent to whic
Slide 35: Risk Factors (IV/IV)
Risk Factors (IV/IV) 1.4 Sanctions and regulatory risks Business activities in various countries The Issuer currently conducts business, and could in the future decide to take part in new business activities, in locations where certain parties are or may become subject to trade sanctions imposed by
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