Yara International ASA · OSL:YAR
Yara International ASA — Q1 2021 Earnings Presentation
33 slides from Yara International ASA's earnings presentation, Apr 23, 2021
Slide 1: Yara International ASA 2021 First-quarter results
Yara International ASA 2021 First-quarter results 23 April 2021
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) People 1) Total Recordable Injuries per 1 million working hours 3
Slide 4: 11th consecutive quarter of improved returns
11th consecutive quarter of improved returns ROIC1 12M rolling • 8.6% ROIC1, up from 6.9% a year earlier • Improved pricing more than offset higher natural gas cost • Continued premium product growth • USD 2.7 billion free cash flow2 rolling 4 quarters 1) For definition and reconciliation of ROIC, s
Slide 5: Continued premium product growth
Continued premium product growth Premium product deliveries Mill. tonnes +3% 4.0 4.1 • Africa & Asia +15%, 3.3 3.3 Americas +10%, Europe -4% • Compound NPKs +98kt, CN +82kt nitrates -94kt 1Q 2018 1Q 2019 1Q 2020 1Q 2021 YaraVita deliveries Mill. units +19% • Growth in Asia & Africa 42%, 13.4 America
Slide 6: USD 2.7 billion free cash flow rolling 4 quarters
USD 2.7 billion free cash flow1 rolling 4 quarters Free cash flow before financing activities1 1) Net cash provided by operating activities minus net cash used in investment activities (see cash flow statement page 14 in Yara 1Q report) 6
Slide 7: Financial performance
Financial performance Prosperity 1) Change in net operating capital as presented in the cash flow statement, page 14 of 1Q report, and consists of trade receivables, inventories, and trade and other payables 2) Net cash used in investing activities as presented in the cash flow statement, page 14 of
Slide 8: Improved margins more than offset temporary cost increase communicated at 4Q
Improved margins more than offset temporary cost increase communicated at 4Q 1) EBITDA ex. special items. For definition and reconciliation see APM section of 1Q report, page 28 8 2) Quarterly ROIC, annualized. For definition and reconciliation see APM section of 1Q report, page 30
Slide 9: Improved results and returns in all regions
Improved results and returns in all regions, reflecting improved pricing, capital discipline and operational improvement 1) EBITDA ex. special items. For definition and reconciliation see APM section of 1Q report, page 28 9 2) For definition and reconciliation of ROIC, see APM section in 1Q report,
Slide 10: Short-term impact on premiums from increasing commodity nitrogen prices
Short-term impact on premiums from increasing commodity nitrogen prices Nitrogen upgrading margins1 NPK premium over blend2 USD/t CAN27 equivalents (monthly publication prices) USD/t 300 450 Yara realized NPK price CAN CIF 21 78 128 Weighted average global premium above blend cost Urea Egypt CFR pro
Slide 11: Positive improvement program trend
Positive improvement program trend Ammonia production Finished product production Ammonia energy consumption Fixed costs1 Operating capital2 Comments: • Continued positive production volume trend • Covid-19 impacts Salitre project schedule • 2020 energy efficiency improvement driven by closure of Tr
Slide 12: Unchanged capex guidance
Unchanged capex guidance Investments1 (BUSD) 1) 2021 onwards represents committed maximum frame 12
Slide 13: Strong cash earnings more than fund investments
Strong cash earnings more than fund investments Net interest-bearing debt: 1Q development End 1Q net debt/EBITDA3 at 1.26 • End 1Q net debt/EBITDA of 1.54 including proposed 625 MUSD dividend payment in May Continued strong focus on capital discipline in line with capital allocation policy of ma
Slide 14: Top quartile 2020 performance in employee engagement, diversity and inclusion
Top quartile 2020 performance in employee engagement, diversity and inclusion Diversity & Inclusion Share of female Employee engagement1 index2 leaders3 People 1 Measured annually. Employee engagement index is measured through a third-party survey, providing data-driven analysis against internationa
Slide 15: Europe
Europe >40 sales countries Key figures 2020 Financials 2020 Farmers Plants 3,380 employees ~2.9 BUSD - Mainly smaller - 12 production revenue family farms, but sites ~10.1 million tonnes also significant deliveries ~477 MUSD segment of large - Annual capacity EBITDA professional 1 million tonnes far
Slide 16: Europe: improved prices more than offset energy cost increase and lower deliveries
Europe: improved prices more than offset energy cost increase and lower deliveries Revenues (MUSD) • Improved prices globally compared with a year earlier • Deliveries down 5% compared with record 1Q20 with early spring • YaraVita deliveries up 10% EBITDA ex SI (MUSD) • Improved prices more than off
Slide 17: Yara Europe is well positioned to capture new opportunities in sustainable food production
Yara Europe is well positioned to capture new opportunities in sustainable food production Selected EU Green Deal 2030 targets Yara Europe to capture new opportunities in sustainable food production Reduce nutrient losses by Climate-smart food Develop solutions that improve sustainability & profitab
Slide 18: Driving sustainable performance
Driving sustainable performance Planet 2025 target 1) Energy efficiency target is for 2023 2) Measured and reported annually. GHG absolute emissions scope 1+2 target is for 2030 with a 2019 baseline 18 3) Hectares under active management: cropland with digital farming user activity at least twice du
Slide 19: Farming Solutions update: growing user base and validation of value creation potential
Farming Solutions update: growing user base and validation of value creation potential Integrated digital offering launched in Europe, the next First growers signed up for generation of AtFarm, the Agoro Alliance carbon integrating several standalone credit program in the US solutions into one digit
Slide 20: Attractive Yara prospects
Attractive Yara prospects Attractive opportunities Focused strategy Strong shareholder returns • Resource and environment • Crop nutrition leader; #1 premium • Strict capital discipline with clear challenges require strong agri product and market presence capital allocation policy productivity impro
Slide 21: Appendix
Appendix 21
Slide 22: Americas: improved margins and premium deliveries
Americas: improved margins and premium deliveries External revenues (MUSD) EBITDA ex SI (MUSD) ROIC (12-month rolling) • 1Q deliveries up 4% driven by 12% • Strong margin improvement • Improved earnings and lower higher premium fertilizer deliveries • Cost increases offset by BRL and invested capit
Slide 23: Africa & Asia: improved production, product mix and pricing
Africa & Asia: improved production, product mix and pricing External revenues (MUSD) EBITDA ex SI (MUSD) ROIC (12-month rolling) • Revenues up due to higher prices • Improved prices and product mix • Increased revenues and earnings • 1Q deliveries in line with a year earlier • Production volumes up
Slide 24: Global Plants: improved reliability and higher margins
Global Plants: improved reliability and higher margins Production (thousand tonnes) EBITDA ex SI (MUSD) ROIC (12-month rolling) • 3% underlying production increase • Higher product prices more than • Improved margins and production • Improved operational reliability offset increased gas costs volu
Slide 25: Industrial Solutions: improved deliveries and prices offset by higher gas cost
Industrial Solutions: improved deliveries and prices offset by higher gas cost and lower Maritime activity External revenues (MUSD) EBITDA ex SI (MUSD) ROIC (12-month rolling) • Deliveries up 7% with all growth in all • Higher nitrogen prices offset by • 12-month rolling ROIC improvement units excep
Slide 26: Clean Ammonia: increased revenue but stable earnings due to timing effects
Clean Ammonia: increased revenue but stable earnings due to timing effects Total revenues1 (MUSD) EBITDA ex SI (MUSD) ROIC (12-month rolling) • Revenue increase driven by higher • Increased commission income from • 12-month rolling ROIC improvement trade volumes and prices higher ammonia prices, off
Slide 27: Key product price developments
Key product price developments Urea price development1 (USD/t) Spot gas prices1 (USD/Mmbtu) Yara realized CAN2 and NPK price3 (USD/t) +38% +77% +8% +21% 331 449 6.4 415 295 239 244 +15% +68% 3.6 3.4 232 202 2.0 Urea granular Urea inland Europe US CAN 27 Compound NPK FOB Egypt China proxy 1Q20 1Q21 1
Slide 28: Regional fertilizer deliveries
Regional fertilizer deliveries Million tonnes -5% 1Q20 1Q21 3.1 2.9 Commodity -1% 1.5 1.5 +11% +2% 1.0 +9% 0.8 0.8 0.9 +1% Premium* 0.4 0.5 0.2 0.2 Europe Brazil Asia North Latin Africa America America 1) Premium defined as Differentiated N, NPK, CN, fertigation products and YaraVita 28
Slide 29: Energy cost
Energy cost Quarterly averages for 2018-2021 with forward prices* for 2Q21 and 3Q21 9.4 8.4 8.2 7.8 8.2 7.4 7.1 6.9 6.8 6.6 6.3 6.9 6.1 6.0 6.5 6.4 6.5 5.5 6.0 4.8 4.5 4.6 4.3 4.0 4.3 4.1 4.0 3.8 3.9 4.3 3.5 3.3 3.4 3.1 3.1 3.1 2.9 2.9 2.8 2.5 2.7 2.6 2.3 2.3 2.4 2.5 1.9 1.9 1.7 1.7 3Q18 4Q18 1Q19 2
Slide 30: Yara stocks
Yara stocks Finished fertilizer Mill. tonnes 8 Other Compound NPK Nitrates Urea 0 Q1-17 Q1-18 Q1-19 Q1-20 Q1-21 30
Slide 31: European producers' nitrate stocks
European producers’ nitrate stocks 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 20/21 14/15 15/16 16/17 17/18 18/19 19/20 Source: Fertilizers Europe, Yara estimate for March 31
Slide 32: Higher nitrogen supply growth forecast in 2021, however higher than normal risk of project delays
Higher nitrogen supply growth forecast in 2021, however higher than normal risk of project delays Global urea capacity additions ex. China (mill. tonnes) India Algeria Others Russia USA Production 6.7 Iran Nigeria 5.5 5.0 4.5 4.2 4.1 3.4 2.6% consumption growth 3.2 1.7 1.3 1.2 1.0 2014 2015 2016 201
Slide 33: 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 28-33 33