Yara International ASA · OSL:YAR

Yara International ASA — Non-Deal Roadshow (October 2014)

39 slides from Yara International ASA's roadshow presentation, Oct 28, 2014

  1. Slide 1: Yara International ASA Roadshow presentation October 2014

    0 Yara International ASA Roadshow presentation October 2014 Torgeir Kvidal – Acting CEO IR-date: October 2014

  2. Slide 2: Integrated business model provides scale, flexibility and end-to-end presence

    Integrated business model provides scale, 1 flexibility and end-to-end presence Downstream Upstream Industrial Supply & Trade Scale advantages + Unique flexibility + Unrivalled presence IR-date: October 2014

  3. Slide 3: Earnings per share

    2 Earnings per share* 12.42 11.84 EPS excluding currency and special items 10.54 10.02 9.82 9.25 8.04 8.26 7.73 7.67 6.69 6.40 6.18 5.66 0.23 2011 2012 2013 2014 Annual NOK 41.99 37.31 20.67 20.84 * Average number of shares for 3Q 2014: 276.2 million (3Q 2013: 277.6 million). IR-date: October 2014

  4. Slide 4: EBITDA development

    3 EBITDA development NOK millions 132 3,964 222 151 891 3,318 68 109 EBITDA Volume & mix Price/margin Gas & oil Special Other Currency EBITDA 3Q13 costs in items 3Q14 Europe IR-date: October 2014

  5. Slide 5: Improved earnings for all segments

    4 Improved earnings for all segments EBITDA (NOK millions) 2,293 EBITDA excluding special items 1,797 1,463 1,094 420 304 Downstream Industrial Upstream 3Q13 3Q14 IR-date: October 2014

  6. Slide 6: Improved European nitrogen margins; nitrate premium in line

    Improved European nitrogen margins; nitrate 5 premium in line Nitrogen upgrading margins1 European nitrate premium2 USD/t (monthly publication prices) (quarterly Yara realized) 700 180 160 600 Nitrate premium 140 500 above urea 120 Value above 400 ammonia 100 Value 300 above gas 80 60 200 40 100 Yar

  7. Slide 7: Solid commodity phosphate margins and NPK premiums

    Solid commodity phosphate margins 6 and NPK premiums Phosphate upgrading margins NPK premium over blend1 USD/t USD/t 700 700 600 600 500 500 Value above raw material Weighted average global 400 400 premium above blend cost 300 NH3, fob Black Sea *0.22 300 Nitrate premium Urea, fob Black sea 200 200

  8. Slide 8: Lower natural gas cost in Europe

    7 Lower natural gas cost in Europe Yara European gas & oil cost Change in European energy cost USD/ NOK MMBtu millions 13.0 0 12.0 (100) (51) (36) 11.0 (200) (300) 10.0 (400) 9.0 (500) 8.0 (500) (600) 7.0 (700) (660) (650) 6.0 (800) 5.0 (900) (891) 4.0 (1,000) 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15

  9. Slide 9: Food prices below 5-year average

    8 Food prices below 5-year average FAO price index Index 300 250 200 150 100 50 0 1/2004 1/2005 1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012 1/2013 1/2014 Cereals Price Index Cereals 5 year avg. Food Price Index Food 5 year avg. Source: FAO IR-date: October 2014

  10. Slide 10: Nitrogen deliveries in Europe and USA close to normal

    Nitrogen deliveries in Europe 9 and USA close to normal USA West Europe Million tons N Million tons N 2.5 5.0 4.5 +12% 4.0 2.0 +5% 3.5 3.0 1.5 2.5 2.0 1.0 1.5 1.0 0.5 0.5 0.0 0.0 3Q10 3Q11 3Q12 3Q13 3Q14 3Q10 3Q11 3Q12 3Q13 3Q14 Production Net imports Domestic Imports Source: Yara estimate for ferti

  11. Slide 11: Chinese urea: production decline despite significant capacity increase

    Chinese urea: production decline despite 10 significant capacity increase Chinese production Chinese exports Black Sea (kilotons) (kilotons) USD/t Jul-Sep 3.9 mt 7.0 2,400 (4.2 mt Jul-Sep last year) 550 12/13 13/14 2,200 Year-to-date 8.1 mt 500 (5.5 mt year-to-date last year) 6.0 2,000 450 14/15 1,8

  12. Slide 12: Multiple growth options; de-bottlenecking and regional M&A currently most attractive

    Multiple growth options; de-bottlenecking and 11 regional M&A currently most attractive Reconfiguration/expansion at existing sites, potential for 1 increased NPKs, nitrates and CN Pursue medium-size/regional M&A, likely highest probability 2 of success in current environment Secure longer term part

  13. Slide 13: Brazil: Yara benefiting from Bunge acquisition and increase in industry deliveries

    Brazil: Yara benefiting both from Bunge 12 acquisition and increase in industry deliveries Brazil fertilizer industry deliveries (Jan-Sep) Yara Brazil fertilizer deliveries1 (Jan-Sep) Kilotons Kilotons +7% 25,000 6,000 Thousands 5,000 20,000 4,000 15,000 3,000 10,000 2,000 5,000 1,000 0 0 2011 2012

  14. Slide 14: Galvani acquisition (Brazil) improves raw material and production integration

    Galvani acquisition (Brazil) improves raw 13 material and production integration  Current assets: – Three mining operations with a total production of ~500kt phosphate rock – Two industrial sites with a total granulation capacity ~1,000kt  Future additions (partly replacement): – ~2 million tons p

  15. Slide 15: 250 kt NPK and Calcium Nitrate expansion in Porsgrunn, Norway

    250 kt NPK and Calcium Nitrate expansion in 14 Porsgrunn, Norway  Strong Downstream demand for additional value-added fertilizer volumes  Brownfield investment of NOK 2,250 million  Project adds 200 kt calcium nitrate and 50 kt compound NPK annual capacity  Enables further 150 kt NPK and 35 kt c

  16. Slide 16: YaraLiva benefits cash crops in particular

    15 YaraLiva benefits cash crops in particular  YaraLiva provides soluble and strength-building calcium, alongside nitrate-N (15.5%)  Products containing calcium nitrate as the key component are sold under YaraLiva brand  Calcium used for good rooting, stress-free growth, strong cell walls, improv

  17. Slide 17: Increased dividend payout ratio improves capital efficiency

    Increased dividend payout ratio improves 16 capital efficiency 37% 28% 48% Overall target 40-45% 10% 3% Minimum 30% dividend 34% 34% 10% 7% 9% 11% 25% 23% 19% 3% 18% 18% 16% 17% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Numbers reflect cash returns executed in a calendar year relative to net

  18. Slide 18: Additional information

    17 Additional information IR-date: October 2014

  19. Slide 19: Fertilizer deliveries

    18 Fertilizer deliveries Kilotons 7,000 6,848 6,496 6,342 6,389 6,284 6,104 6,146 6,017 5,884 6,000 5,474 5,296 5,437 5,2565,179 5,253 5,297 5,2105,216 5,129 4,970 5,0135,044 4,882 4,914 5,000 4,763 4,742 4,791 4,759 4,834 4,239 4,000 3,496 3,000 2,000 1,000 0 2007 2008 2009 2010 2011 2012 2013 2014

  20. Slide 20: Yara 3Q fertilizer sales by market and product

    19 Yara 3Q fertilizer sales by market and product Kilotons 3Q13 3Q14 3,120 2,377 2,138 2,195 544 573 673 515 252 345 Europe Latin America Asia North America Africa 1,713 1,402 1,305 1,390 1,296 1,009 1,009 1,112 941 569 258 274 229 225 NPK compounds NPK blends Nitrate Urea Other products UAN CN IR-d

  21. Slide 21: Fertilizer deliveries by product and source

    20 Fertilizer deliveries by product and source Kilotons 1,713 1,390 1,402 1,305 1,296 1,112 1,009 1,009 941 569 258 274 3Q13 3Q14 3Q13 3Q14 3Q13 3Q14 3Q13 3Q14 3Q13 3Q14 3Q13 3Q14 Nitrate NPK compounds NPK blends Urea UAN Other Yara-produced deliveries Joint venture & third party sourced Total IR-da

  22. Slide 22: Yara production volume

    21 Yara production volume* Finished fertilizer and industrial products Ammonia Kilotons Kilotons 5,000 2,500 4,500 4,000 2,000 3,500 3,000 1,500 2,500 2,000 1,000 1,500 1,000 500 500 0 0 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Urea Nitrates NPK CN UAN SSP - based fertilizer * Including sha

  23. Slide 23: Gas & oil cost

    22 Gas & oil cost Yearly averages 2009 – 2010, quarterly averages for 2011-15 with forward prices* for 4Q14 and 1Q15 USD per MMBtu 14 11.9 12 11.1 11.4 11.5 10.9 10.8 11.0 11.0 10.8 10.8 11.2 11.3 10.1 10.3 9.5 10 9.5 11.1 10.3 10.1 10.7 9.7 9.2 9.0 9.3 9.1 8.7 9.1 9.2 7.6 9.0 7.5 8 8.1 8.99 8.6 8.5

  24. Slide 24: Yara stocks: normal level, adjusted for Bunge

    23 Yara stocks: normal level, adjusted for Bunge Kilotons Bunge Fertilizer Finished fertilizer included from 3Q 2013 6,000 5,000 4,000 3,000 2,000 1,000 - Urea Nitrates Compound NPK Other IR-date: October 2014

  25. Slide 25: Debt/equity ratio

    24 Debt/equity ratio Net interest-bearing debt / equity ratio (end of period) 0.75 0.63 0.570.56 0.49 0.38 0.32 0.27 0.20 0.22 0.12 0.12 0.08 0.08 0.07 0.06 0.06 0.06 0.05 0.06 0.02 0.01 -0.04 2009 2010 2011 2012 2013 2014 IR-date: October 2014

  26. Slide 26: Currency exposure affecting Profit & Loss

    25 Currency exposure affecting Profit & Loss At the beginning of the fourth quarter 2014 1. The US dollar debt generating profit & loss exposure was USD 1,400 million • Kept as hedge of future earnings and to finance inventories in emerging markets • Around 60% towards BRL with the rest towards othe

  27. Slide 27: Fertilizer portfolio is being driven towards greater product differentiation and profit

    Fertilizer portfolio is being driven towards 26 greater product differentiation and profit Product portfolio (2013/14 season volume)  Differentiation improves margins and reduces exposure to 20% commodity price volatility 34%  On-going efforts to further increase differentiation through: 25% – Add

  28. Slide 28: Value-added upgrading and distribution make up larger part of Yara's contribution

    27 Value-added upgrading and distribution make up larger part of Yara’s contribution Total Yara contribution NOK millions 9,000 8,000 Trade 7,000 6,000 5,000 Upgrade & distribution 4,000 3,000 2,000 Commodity overseas 1,000 Commodity Europe 0 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 IR-date

  29. Slide 29: 24 million tons of fertilizer sold in 2013, and further growth in Latin America

    24 million tons of fertilizer sold in 2013, and 28 further growth in Latin America in 2014  Bunge (Brazil): – Blending & distribution 43% business, closed 3Q13 – USD 50 million annual synergies effective 2014 Europe 10.2 mill. tons  OFD (Colombia): North-America 14% 3.3 mill. tons – Distribution &

  30. Slide 30: Increased investments in 2014 drive continued value-added product growth outside Europe

    Increased investments in 2014 drive continued 29 value-added product growth outside Europe Total • Smaller growth initiatives:  Hurdle rate for all NOK 13 billion - Largest category is plant expansions; e.g. investments is 7% Norway & Finland approx. 500kt NPK & CN real after tax - Also Downstream

  31. Slide 31: Value-added products drive commercial synergies through increased footprint

    Value-added products drive commercial 30 synergies through increased footprint Yara Brazil value-added product deliveries (Jan-Sep) (kilotons) 600  Significant growth track record for Yara value-added fertilizer 500 products exported from our European production facilities 400 to Brazil 300  The e

  32. Slide 32: For 2014/15, global grain production expected to moderately exceed consumption

    For 2014/15, global grain production expected 31 to moderately exceed consumption Grain consumption and production Days of consumption in stocks Million tons Days 2,500 85 2,450 2,400 80 2,350 75 2,300 2,250 70 2,200 2,150 65 2,100 2,050 60 2,000 1,950 55 06 07 08 09 10 11 12 13 14E 15F 06 07 08 09

  33. Slide 33: Projected nitrogen capacity additions outside China

    Projected nitrogen capacity additions outside 32 China Urea capacity growth relative Year Driving regions to nitrogen capacity Excluding China Excluding China Algeria 16% 2014 1.5% Egypt 15% Saudi Arabia 20% 2015 2.1% USA 19% USA 42% 2016 2.3% India 11% Nigeria 32% 2017 2.2% USA 24% Nigeria 55% 2018

  34. Slide 34: European producer nitrate stocks ending the season close to average

    European producer nitrate stocks ending the 33 season close to average Index June 2007=1 1.8 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 13/14 08/09 09/10 10/11 11/12 12/13 14/15 Source: Fertilizers Europe, Yara estimate for September IR-date: October 2014

  35. Slide 35: Key value drivers – quarterly averages

    34 Key value drivers – quarterly averages Zeebrugge day ahead (USD/MMBtu) Urea prilled fob Black Sea (USD/t)/Urea CAN cif Germany (USD/t) granular fob Egypt (USD/t) 10.7 345 354 10.1 9.7 414 294 309 354 358 358 291 336 338 320 7.6 308 314 299 7.0 3Q13 4Q13 1Q14 2Q14 3Q14 3Q13 4Q13 1Q14 2Q14 3Q14 3Q1

  36. Slide 36: 10-year fertilizer prices – monthly averages

    35 10-year fertilizer prices – monthly averages Ammonia fob Black Sea CAN cif Germany USD/t USD/t 1,000 500 800 400 600 300 400 200 200 100 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Urea prilled fob Black Sea/Urea granular fob E

  37. Slide 37: Farm economics supportive, despite grain price decline

    Farm economics supportive, despite grain price 36 decline Source: FAO IR-date: October 2014

  38. Slide 38: Strong growth in Air1 deliveries

    37 Strong growth in Air1 deliveries Kilotons 350 20% > 1 million tons of product sold L12M 18% 300 16% 250 14% 12% 200 10% 150 8% 100 6% 4% 50 2% 0 0% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 Europe North America ROW % of total Industrial deliver

  39. Slide 39: Industrial deliveries

    38 Industrial deliveries Kilotons 896 876 860 867 837 843 816 455 438 432 368 374 382 356 343 342 346 337 342 304 313 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 Industrial N-chemicals Environmental products Other IR-date: October 2014

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