Yara International Asa · OSL:YAR
Yara International Asa — Q4 2022 Earnings Presentation
33 slides from Yara International Asa's earnings presentation, Feb 8, 2023
Slide 1: Yara International ASA 2022 fourth-quarter results
Yara International ASA 2022 fourth-quarter results 8 February 2023
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: Our ambition is zero injuries
Our ambition is zero injuries TRI1 (12-month rolling) 1.1 People 1) Total Recordable Injuries per 1 million working hours 3
Slide 4: Resilient Yara business model
Resilient Yara business model 4Q 2022 Improved results with strong cash flow and increased returns across all commercial segments Improved ammonia production reliability and continued optimization of production amid margin volatility Lower deliveries, however improved farmer affordability and profit
Slide 5: Improved margins more than offset lower deliveries
Improved margins more than offset lower deliveries EBITDA ex. special items (MUSD)1 Fixed costs: -47 ROIC2 Price/margin: + 744 Energy cost3: - 268 5.0% 20.4% 1) EBITDA ex. special items. For definition and reconciliation see APM section of 4Q report, page 33 2) Quarterly ROIC, annualized. For defini
Slide 6: Proposed dividend of NOK 55 per share
Proposed dividend of 55 NOK per share, thanks to resilient business model and strong organizational performance Dividend and buy back1 per share Comments NOK 175 per share cash ▪ The Yara Board proposes an ordinary dividend distribution last 3 years2 of NOK 55 per share Buy-back and Proposed, to ▪ N
Slide 7: Financial performance
Financial performance EBITDA ex. special items1 EPS ex. currency and special items1 ROIC1 (MUSD) (USD per share) (12-month rolling) Prosperity Change in net operating capital2 Investments (net)3 Cash from operations (MUSD) (MUSD) (MUSD) 1) Alternative performance measures are defined, explained and
Slide 8: Improved returns in all commercial segments
Improved returns in all commercial segments EBITDA ex. special items1 (MUSD) Europe Americas Africa and Asia Industrial Global Plants Clean Ammonia Solutions ROIC 12M rolling2 (%) Europe Americas Africa and Asia Industrial Global Plants Clean Ammonia Solutions 1) For definition and reconciliation of
Slide 9: Lower deliveries reflect delayed purchasing amid recent price declines
Lower deliveries reflect delayed purchasing amid recent price declines External deliveries 4Q 2021 vs 4Q 2022, in kt 4Q21 -25% 4Q22 6,823 5,113 -34% Commodity 3,657 -23% -13% 2,413 2,167 4% 1,907 1,661 1,653 Premium1 -5% 998 1,039 489 467 Total crop Americas Europe Asia & Africa Industrial Clean nut
Slide 10: Yara Improvement Program (YIP): unchanged capex guidance, focus on optimization and cost discipline
Yara Improvement Program (YIP): unchanged capex guidance, focus on optimization and cost discipline Ammonia production1 (mt) Finished product production1 (mt) Ammonia energy consumption (GJ/ton) Reliability issues and turnaround delay at a few key sites leads Lower ammonia and nitric acid availabili
Slide 11: Strong cash earnings and release of operating capital funded dividend and investments
Strong cash earnings and release of operating capital more than funded dividend payment and investments Net interest-bearing debt: 4Q development (MUSD) 1 2 1) Operating income plus depreciation and amortization, minus tax paid, net gain/(loss) on disposals, net interest expense and bank charges 12
Slide 12: Continued progress towards ambitious 2030 emissions target
Continued progress towards ambitious 2030 emissions target; 2022 figures impacted by lower production Yara’s climate roadmap from 2005 to 2022 Absolute emissions (scope 1+2)1,2, Mton CO2e 32.0 Planet 13.0 18.5 0.5 17.7 17.3 15.9 13.0 2005 Catalyst Energy 2019 2020 2021 2022 2030 target 1 installatio
Slide 13: GHG reduction investments on track; emission intensity impacted
GHG reduction investments on track; emission intensity impacted by production optimization and reliability performance Emissions intensity GHG reducing investments GHG intensity, kg Co2e/kg N Capex, MUSD Planet 14
Slide 14: Top-quartile employee engagement sustained in 2022
Top-quartile employee engagement People sustained in 2022 Employee engagement1 Diversity, Equity & Inclusion Share of female leaders3 index2 Index Index Percent 1) Measured annually. Employee engagement index is measured through a third-party survey, providing data-driven analysis against internatio
Slide 15: Full year condensed statement of income
Full year condensed statement of income Comments - Increased revenues and variable costs reflecting higher prices for both finished products and raw materials - 2021 impairments of Salitre and Dallol projects (~ USD 570 million) - Foreign currency loss of USD 61 million reflects loss on US debt posi
Slide 16: Condensed statement of financial position
Condensed statement of financial position Comments - Increased equity reflects strong earnings, partly offset by USD 1 billion dividend payment - Non-current liabilities increased with USD 600 million bond issued in November - Lower current liabilities mainly due to lower trade payables with less TP
Slide 17: Driving sustainable performance with an integrated scorecard
Driving sustainable performance with an integrated scorecard People Planet Prosperity 1) Measured annually 2) Energy efficiency target is for 2023 3) GHG absolute emissions scope 1+2 target is for 2030 with a 2019 baseline 4) Cropland with digital farming user activity within defined frequency param
Slide 18: 2022: Yara delivered strong returns and strategic progress
2022: In a challenging operating environment, Yara delivered strong returns and strategic progress Increased return on capital Continuing innovation efforts and Decarbonizing food through Progress towards a potential IPO of ROIC 12M rolling1 expanding the portfolio of growth strategic partnerships a
Slide 19: US policies create decarbonization momentum, and growth opportunities for Yara
US policies create much needed decarbonization momentum, and present growth opportunities for Yara Illustration: Cash cost blue ammonia • US is a highly attractive location for clean ammonia: – Low natural gas prices US Europe – Competitive access to CO2 storage and EU ETS CO2 transportation tax: 85
Slide 20: Strong farmer incentives ahead of application season in Europe
Strong farmer incentives ahead of application season in Europe Improved farmer affordability and profitability metrics Comments Cereal index / urea index, 2014-2016 = 1 ratio Fertilizer more affordable Average ▪ During 2022, higher prices saw farmers and 2008-2021: 0.98 Fertilizer less affordable 0.
Slide 21: Yara is playing a leading role in tackling the food crisis and climate change
Yara is playing a leading role in tackling the food crisis and climate change while enabling the energy transition Unique opportunities: Focused strategy: Strong shareholder returns: • Resource and environmental • Driving toward a nature-positive • Strict capital discipline challenges require strong
Slide 22: Save the date: Yara Capital Markets Day June 2023
Save the date: Yara Capital Markets Day 26 June 2023 24
Slide 23: Appendix
Appendix
Slide 24: Nitrate and NPK premiums
Nitrate and NPK premiums Nitrogen upgrading margins1 NPK premium over blend2 USD/t CAN27 equivalents (weekly publication prices) USD/t 1) Nitrate premium in CIF Germany terms, above Urea Granular FOB Egypt, in 27% N (USD/t): All prices in CAN27 equivalents, with 1 month time lag Source: Fertilizer M
Slide 25: Key product price development
Key product price development 4Q21 4Q22 Urea price development1 (USD/t) Spot gas prices1 (USD/Mmbtu) Yara realized CAN2 and NPK price3 (USD/t) -5% +37% 755 714 874 +56% 684 -16% 639 424 +31% 357 438 34.8 26.5 +21% 5.2 6.3 Urea granular Urea inland Europe (TTF) US (Henry Hub) CAN 27 Compound NPK FOB
Slide 26: 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 1,442 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
Slide 27: Energy cost
Energy cost Quarterly averages for 2018 - Q1 2023 with forward prices* for Q1 2023 US gas price (Henry Hub) Yara Global** TTF day ahead Yara Europe 57.9 34.5 30.8 31.4 31.5 29.8 28.4 22.4 22.7 23.9 20.1 22.6 16.4 18.9 20.9 15.4 15.6 8.8 11.5 8.0 7.4 6.7 9.5 4.7 4.6 5.5 2.9 3Q18 4Q18 1Q19 2Q19 3Q19 4
Slide 28: Details of energy cost actuals and estimate 1Q 2023
Details of energy cost actuals and estimate 1Q 2023 1Q23 estimations based on Europe 1Q22 2Q22 3Q22 4Q22 forward prices Average gas cost USD/MMbtu 30.4 31.1 34.5 31.5 22.4 Gas consumption1 MMBtu 34.8 34.7 30.3 26.6 34.8 European gas cost USD millon 1,058 1,079 1,045 836 780 1Q23 estimations based on
Slide 29: 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 Q4-22 31
Slide 30: Peak of capacity additions is now
Peak of capacity additions is now Global urea capacity additions ex. China 1 (mt) India Russia Iran Algeria USA Nigeria Australia Others Production 6.7 6.1 5.5 5.1 4.5 4.4 4.2 3.2 2.6% consumption growth 1.9 1.4 1.0 0.4 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 1) Urea projects ass
Slide 31: Farmer incentives: wheat example
Farmer incentives: wheat example Optimal nitrogen application kg/ha +9% 196 200 188 183 3 3 21/22 2H22 1 year ago current Wheat price 345 337 294 308 USD / mt CAN271 price USD/ton 638 727 685 520 Grain yield2 t/ha 9.49 9.43 9.39 9.52 Farmer revenue above nitrogen cost 2,810 2,669 2,295 2,550 USD/ha
Slide 32: 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 33-40
Slide 33: Slide 33