Yara International Asa · OSL:YAR
Yara International Asa — Shareholder Meeting (May 2007)
30 slides from Yara International Asa's shareholder meeting presentation, May 10, 2007
Slide 1: Strong position in an attractive market
Strong position in an attractive market Annual General Meeting, Oslo 10 May 2007 President and CEO Thorleif Enger
Slide 2: Who we are and what we do
2 Who we are and what we do We are a chemical company with fertilizer application as our biggest market Nitric Fertilizer Acid Energy Ammonia Urea Industrial We convert energy and nitrogen from the air into useful products for farmers and industrial customers IR - Date: 2007-05-10
Slide 3: Yara share with 59% return p.a. since IPO
3 Yara share with 59%* return p.a. since IPO Index (25.03.2004 = 100) Shareholders as of 2 May 2006 400 14,2 % 350 Other 300 Yara 8,8 % 36,2 % US Norwegian 250 state 200 UK 15,7 % 150 Norway Oslo Stock 100 Exchange 25,1 % 50 04 04 05 05 06 06 07 .20 .20 .20 .20 .20 .20 .20 .03 .09 .03 .09 .03 .09 .0
Slide 4: Net income after minority interest
4 Net income after minority interest NOK millions 1,600 1,403 1,400 1,200 1,041 1,085 1,000 917 846 846 853 891 800 588 600 400 200 0 2005 2006 2007 Accumulated NOK mill 3,198 4,188 1,085 USD mill 500 657 175 IR - Date: 2007-05-10
Slide 5: Strong balance sheet to achieve growth objectives
5 Strong balance sheet to achieve growth objectives Net interest-bearing debt-to-equity ratio at end of first quarter 2007 0.80 0.69 0.70 0.60 0.50 0.45 0.46 0.38 0.37 0.39 0.40 0.36 0.35 0.34 0.34 0.31 0.33 0.30 0.27 0.20 0.10 0.00 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2004 2004 2004 2004 2005 200
Slide 6: Strong earnings – significantly above cost of capital
6 Strong earnings – significantly above cost of capital CROGI = (EBITDA – tax) / Gross Investment Cash Return On Gross Investment Percent 16 14.1% 14.4% 14.1% 14 12 Average = 12% 10.6% 10 9.4% 9.2% 8 6 4 2 0 2001 2002 2003 2004 2005 2006 IR - Date: 2007-05-10
Slide 7: Yara earnings volatility below fertilizer peers
7 Yara earnings volatility below fertilizer peers EBITDA volatility* 60 53 50 50 44 40 36 36 38 35 Average = 34 30 26 20 13 10 10 0 ra ta ira al m S nt S s SF ct K+ PC ic en Ya riu o m du BA uP m ng Ke Ag he ro D Sy rP C ow Ai D *Standard deviation divided by average EBITDA 2000 – 2005 (excl. specia
Slide 8: Operational improvements and safety go hand in hand
8 Operational improvements and safety go hand in hand LTI-rate for employees and contractors 0 2 4 6 8 Shell (05) 0.9 Yara (06) 1.3 BASF* (06) 1.7 PCS* (05) 1.8 Kemira Growhow* (05) 2.0 Hydro* (05) 2.7 Total (05) 3.6 EFMA snitt (06) 3.7 EFMA ekskl. Yara (06) 4.8 EIGA* (05) 4.0 CEFIC (2004) 7.0 * Onl
Slide 9: Yara's production productivity – a key to attract JV partners
9 Yara’s production productivity – a key to attract JV partners Indexed production cost: 100 = European EFMA average exclusive Yara Ammonia cost position Nitrate cost position NPK cost position Index Index Index 100 100 100 102 100 91 90 93 93 80 91 88 90 90 92 80 89 87 87 80 89 85 85 80 60 60 60 40
Slide 10: Global optimization – a robust and adaptable business model
10 Global optimization – a robust and adaptable business model Change 2006 fertilizer and nitrogen chemicals volumes in million tonnes from last year Global Marketing and Sales Product source* optimization Fertilizer Europe 9.9 -2% Yara production 12.7 Europe Latin America 3.4 +21% Yara production 2
Slide 11: Yara is a leading player in an attractive industry
11 Yara is a leading player in an attractive industry Fertilizer and agricultural commodities are attractive parts of the chemical industry Strong grain market fundamentals via high prices and low inventories Increased demand for biofuels underpins nitrogen demand Healthy supply-demand balance for n
Slide 12: Strong increase in grain production needed to avoid further inventory drop
12 Strong increase in grain production needed to avoid further inventory drop* Million tonnes 108 mill tonnes (5.5%) 2,100 35% 115 days inventory 2,050 30% 2,000 25% Consumption 1,950 20% 1,900 15% 1,850 57 days inventory 1,800 Production 10% 1,750 5% 1,700 0% 1995 1997 1999 2001 2003 2005 2007E 199
Slide 13: Higher demand for meat requires more feed grain
13 Higher demand for meat requires more feed grain Significant potential for increasing Feed grain multipliers meat consumption in emerging countries for meat production World Poultry 2X EU North America Pork 4X Latin America Asia Beef 7X Africa 0 20 40 60 80 100 120 140 0 1 2 3 4 5 6 7 8 9 Kilogram
Slide 14: Biofuel production is expected to show strong growth, driven by the US
14 Biofuel production is expected to show strong growth, driven by the US US ethanol production In the US, 19% of corn crop is used for Billion gallons ethanol production this year 8 7 EU target* is 5.75% for 2010. This could 28% require more than 10% of EU 6 agricultural area 5 32% Energy efficienc
Slide 15: Agricultural commodity prices strong
15 Agricultural commodity prices strong Corn Wheat Soybeans Rice Source: Chicago Board of Trade, 7 May 2007; July contracts IR - Date: 2007-05-10
Slide 16: Grain prices have improved farm profitability
16 Grain prices have improved farm profitability Average US farmer net returns Net return CORN Net return SOYBEANS $ per acre $ per acre 350.0 324 250.0 300.0 200 200.0 250.0 159% 150.0 167% 200.0 150.0 125 100.0 75 100.0 50.0 50.0 0.0 0.0 2006 2007e 2006 2007e Source: USDA estimates IR - Date: 2007
Slide 17: Strong sales growth to NOx embatement
17 Strong sales growth to NOx embatement Power plants - main growth Sales volume (kt) Legislation in place Europe : France new market for 2007 North America – ”Clear skies initiative” – 2008/2010 400 Automotive - new growth area 300 Legislation in place for Europe/North America Europe – 3.5 million
Slide 18: Further delays to urea capacity
18 Further delays to urea capacity Global urea capacity Year Driving regions growth estimate* World Excluding China World Ex. China 2006 4.5% (4.5%) 3.0% (2.9%) China 61% Oman 29% Oman 11% S. Arabia 22% 2007 4.7% (5.3%) 3.8% (4.7%) China 46% Egypt 30% Egypt 16% Iran 27% 2008 4.9% (4.2%) 4.1% (3.0%)
Slide 19: Growth projects will be focused on
19 Growth projects will be focused on Organic growth: Yara has historically achieved 3-4% growth p.a. Step growth: Increased production in gas regions with competitive cost level Market positions in regions and segments with high growth Attractive acqusitions in mature regions IR - Date: 2007-05-10
Slide 20: Yara's growth projects initiated the last year
20 Yara’s growth projects initiated the last year Growth markets: Fertibras, Brazil China BlueChemical Kribhco, India Olemeca, speciality fertilizer Mexico Phosyn, folie fertilizer Balderton, trade supply Competitive gas: Started Burrup, Australia Decided Qafco-5 Trinidad feasability study Libya JV
Slide 21: Brazil has big potential to increase arable land acreage
21 Brazil has big potential to increase arable land acreage Max potential farm land (million ha) Fertilizer consumption per harvest area Brazil 58 160 300 277 272 United States 188 81 250 Russia 132 88 EU 116 60 200 149 India 169 150 127 China 96 42 100 Canada 45 31 50 Argentina 27 44 0 0 100 200 30
Slide 22: Yara is part of the solution
22 Yara is part of the solution Feeding the world Environmental Care Bioenergy Crops • Balanced fertilization • Higher yields reduce land • Adding biomass essential for global food use production security • Energy-efficient plants • Energy crop productivity • High-tech tools optimize with low emissi
Slide 23: Yara greenhouse gas emissions
23 Yara greenhouse gas emissions 2005 data Mill. tonnes . CO2-e 12 2 main sources: Ammonia plants – CO2 Nitric Acid plants – N2O 10 . 8 N2O emissions’ greenhouse effect is 300 times that of CO2 per unit of 6 weight . 4 Reducing emissions: CO2 – energy efficiency 2 N2O – catalyst technology 0 CO2 N2O
Slide 24: New technology from Yara (nitric acid plants)
24 New technology from Yara (nitric acid plants) Potential reduction: Yara Potential reduction: Industry Mill. tonnes Mill. tonnes CO2-e CO2-e 75 12 60 54 10 10 50 8 40 30 6 30 5 4 20 3 2 10 0 0 N2O Target Further Europe Global Norway emissions 2008 potential 100 potential CO2-e Yara plants 2005 200
Slide 25: Operational excellence in Yara ammonia plants
25 Operational excellence in Yara ammonia plants Energy consumption per tonne ammonia (relative index) China’s coal-fired ammonia plants use 140 70% more energy 122 and emit 2.5 times 118 120 more CO2 108 109 100 100 80 60 40 20 0 Yara Europe US Romania Russia Europe ex Yara & Bulgaria IR - Date: 20
Slide 26: Outlook 2007
26 Outlook 2007 Grain prices have softened recently, but continued high price levels support strong farm profitability and fertilizer demand Market rebound and strengthened position in Brazil New Middle East urea capacity delayed Growth in Chinese production could limit price increases in demand- dr
Slide 27: Yara – the Industry Shaper
27 Yara – the Industry Shaper The no.1 fertilizer company Positioned Market and product for leadership industry leadership Strong and stable financial performance Business strength from environmental sustainability Solid growth foundation IR - Date: 2007-05-10
Slide 28: Additional information
cg YARA Additional information
Slide 29: Energy prices reflected in nitrogen players' performance
29 Energy prices reflected in nitrogen players’ performance Gross return on assets*, percent 2004 2005 2006 Yara** 21.4 Agrium 24.3 PCS 19.6 Agrium 20.2 PCS 22.3 Air Products 17.9 Air Products 16.6 Yara 21.6 Dow 17.6 Akzo Nobel 14.9 Dow 18.8 Yara 16.6 PCS 14.1 Air Products 17.9 DuPont 16.2 Kemira Gr
Slide 30: Post-turnaround Yara compares favorably with Norwegian peers
30 Post-turnaround Yara compares favorably with Norwegian peers Gross return on assets*, percent 2003 2004 2005 2006 Yara 17.3 Yara 21.1 Yara 21.6 Tomra 23.2 Hydro Elkem 13.6 13.7 Tomra 15.3 Yara Aluminium 16.6 Tomra 12.3 Orkla 11.0 Hydro Orkla 13.6 15.0 Aluminium Orkla 10.5 Elkem 10.7 Hydro Norske