Yara International Asa · OSL:YAR
Yara International Asa — Investor Day (November 2013)
92 slides from Yara International Asa's investor day presentation, Nov 26, 2013
Slide 1: Capital Markets Day 2013
0 Capital Markets Day 2013 26 November 2013 IR – Date: 2013-11-26
Slide 2: Content
1 Content Track record and strategy Commodity market focus Downstream focus Supply & Trade focus Upstream focus Financial performance & scenarios IR – Date: 2013-11-26
Slide 3: Track record and strategy
2 Track record and strategy Jørgen Ole Haslestad, President & CEO IR – Date: 2013-11-26
Slide 4: Safety culture drives performance
3 Safety culture drives performance Zero is impossible Zero is a dream Zero by Chance Zero by Choice Natural Instincts Dependent Independent Inter-dependent management / rules & personal knowledge / team spirit / pride / self preservation discipline / control / individual ownership / collective owne
Slide 5: Safety in Yara and our way forward
4 Safety in Yara and our way forward It is a framework to develop a Yara Safety Culture that reduces exposure to injury Where we all – Share the responsibility for safety – Taking care of each other – As well as ourselves This development has to deliver a sustainable improvement Achieve a hi
Slide 6: Global megatrends profoundly impact Yara's businesses
5 Global megatrends profoundly impact Yara’s businesses Global growth Urbanization Climate change Globalization Resource scarcity IR – Date: 2013-11-26
Slide 7: Creating Impact is Yara's strategic ambition
6 Creating Impact is Yara’s strategic ambition • Creating Impact is Yara’s strategic ambition, expressed through our mission of striving for better yield, delivering good returns to customers, owners and society at large. • Creating Impact provides focus and direction for Yara’s strategy processes,
Slide 8: Huge amounts of value can be unlocked by optimizing value chains
7 Huge amounts of value can be unlocked by optimizing value chains Purcha Raw Food Manu- Distri- sing/ Distri- material Retail proces- Retail facturing bution Aggre- bution extraction sing gation Logistics Farmer Logistics Consumer • Value chain partnerships, particularly with multinational food com
Slide 9: Creating impact in practice
8 Creating impact in practice Pollution from industry, municipalities and agriculture Solution: Yara commitment to improve farm performance Yara’s P-trap: Phosphorous leakage -60% from treated acreage Baltic Sea Rollout of Yara N- commitment Sensor precision tool Win-win: Farm profitability + enviro
Slide 10: Strong return on investment through the cycle
9 Strong return on investment through the cycle Cash Return on Gross Investment (12-month rolling average) 25% 20% 15% 10% 5% 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 L4Q Ex special items Long-term target IR – Date: 2013-11-26
Slide 11: Reliability investments drive production increases
10 Reliability investments drive production increases Finished fertilizer Ammonia Kilotons Kilotons 5,000 2,000 4,500 1,900 4,000 1,800 3,500 1,700 3,000 1,600 2,500 1,500 2,000 1,400 1,500 1,300 1,000 1,200 500 1,100 0 1,000 2011 2012 2013 2011 2012 2013 * Including share of equity-accounted invest
Slide 12: Long-term growth in NPK deliveries outside Europe
11 Long-term growth in NPK deliveries outside Europe Yara-produced NPK deliveries Kilotons 1,400 1,200 1,000 800 600 400 CAGR 18% 200 0 3Q09 3Q10 3Q11 3Q12 3Q13 Overseas Europe IR – Date: 2013-11-26
Slide 13: Value-added products deliver an increasing share of Yara's contribution
12 Value-added products deliver an increasing share of Yara’s contribution NOK millions Total Yara contribution 9,000 8,000 Trade 7,000 6,000 5,000 Upgrade & distribution 4,000 3,000 Commodity overseas 2,000 1,000 Commodity Europe 0 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 IR – Date: 2013-11-26
Slide 14: Growth ambition remains firm
13 Growth ambition remains firm Growth in own-produced and JV volumes Ambition is based on identified +8.0 Downstream market 32.5 opportunity and capability 24.5 Capital discipline and opportunity- driven timing Opportunities both within commodity and value-added products 2010 Target IR – Date
Slide 15: Delivering growth in Latin America: Bunge acquisition and OFD Group
14 Delivering growth in Latin America: with Bunge acquisition – and OFD Group Value-added N production in Colombia (Abocol) Distribution companies across Latin America FTEs 2012: 959 USD million 2010 2011 2012 Net Revenues 540 820 796 EBITDA 47 64 35 K tons 2010 2011 2012 Total net volumes 1,0
Slide 16: Yara Pilbara Nitrates project progressing well
15 Yara Pilbara Nitrates project progressing well 330ktpa capacity AN plant, JV with Orica and Apache (Yara share: 45%) Plant ideally located in the world’s biggest iron ore mining region Overall construction close to 60% completion*, excellent safety record Expected commissioning is mid to
Slide 17: Potential joint investment in world-scale ammonia plant on US Gulf coast
16 Potential joint investment in world-scale ammonia plant on US Gulf coast Attractive long-term partnership: – BASF has strong existing presence in the United States and ammonia sourcing requirement for US downstream activities, investment would further strengthen backward integration – Yara has
Slide 18: Growth is progressing and pipeline is strong
17 Growth is progressing and pipeline is strong Growth in own-produced and JV volumes Executed & pipeline projects so far are +8.0 mainly plant 32.5 expansions 0.9 Bunge production 24.5 2.4 tons are limited, but acquisition gives Commodity: Qafco V & VI: 0.7 Commodity: BASF 0.4* significant foot
Slide 19: Commodity market focus
Commodity market focus Dag Tore Mo, Head of Market Intelligence
Slide 20: Continued strong price incentives necessary to match consumption growth
19 Continued strong price incentives necessary to match consumption growth 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 13E 14F 06 07 08 09 10 11 12 1
Slide 21: Apparent urea consumption ex. China – up 3.4% in 2012
20 Apparent urea consumption ex. China – up 3.4% in 2012 110 105 100 95 90 85 80 The trend from 2002-2012 shows a growth rate of 3.0%/year 75 70 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: IFA IR – Date: 2013-11-26
Slide 22: Urea supply outside China increased by 3.4% in 2012
21 Urea supply outside China increased by 3.4% (3.5 million tons) in 2012, to 106.5 million tons Kilotons urea 4,000 2868 3530 3,500 3,000 2,500 2,000 346 1,500 762 1,000 832 -556 470 -419 500 -773 0 Latin America Vietnam China West Asia Egypt South Asia Rest of World West Europe Source: IFA Annual
Slide 23: Global urea exports 1H2013 up 13%
22 ..and global urea exports 1H2013 up 13% Kilotonnes urea 2,500 998 1911 2,000 504 1,500 1340 -232 -195 1,000 22 -526 500 0 West Asia Russia China Iran Ukraine Egypt Rest of World Source: IFA Quarterly Survey, Exports IR – Date: 2013-11-26
Slide 24: India nitrogen consumption outpaces capacity
23 India nitrogen consumption outpaces capacity Urea supply & demand 2005-2012 1,4% 4,6% 30,5 31,0 28,0 26,8 26,5 26,5 25,2 22,6 22,6 22,7 23,0 21,8 22,0 22,0 22,2 20,8 2005 2006 2007 2008 2009 2010 2011 2012 Production Consumption New subsidy policy aimed at increasing production – but limited gas
Slide 25: Projected nitrogen capacity additions outside China in line with historical consumption growth
24 Projected nitrogen capacity additions outside China in line with historical consumption growth Urea capacity growth relative Year Driving regions to nitrogen capacity Excluding China Excluding China Qatar 19% 2013 1.4% (2.5%) Algeria 17% Iran 23% 2014 1.8% (1.8%) India 21% Algeria 25% 2015 3.5% (
Slide 26: Chinese urea prices – the relevant floor prices?
25 Chinese urea prices – the relevant floor prices? Urea fob Black Sea USD/mt 600 Urea price China (inland proxy price) 500 400 300 200 100 0 Source: China Fertilizer Market Week, International publications IR – Date: 2013-11-26
Slide 27: Chinese urea production still gaining, ending up in export markets
26 Production still gaining year on year, and ending up in the export markets Chinese urea production Domestic urea balance Million tons Million tons 7.0 30 12/13 13/14 6.0 25 24.2 11/12 23.2 -4.0% 5.0 20 19.7 19.0 3.5 5.2 4.0 15 3.0 10 2.0 5 1.0 0.0 0 Export Export Domestic Domestic Production Prod
Slide 28: China swing scenario
27 China swing scenario RMB/mt = 6.1 * USD/mt 301 200 + 50 1,650 X+10 1,900 = 311 X High export tax: 2185 (+15%) = 358 IR – Date: 2013-11-26
Slide 29: Downstream focus
28 Downstream focus Egil Hogna, Head of Downstream IR – Date: 2013-11-26
Slide 30: Safety is first priority in Downstream, and goes hand-in-hand with productivity
29 Safety is first priority in Downstream, and goes hand-in-hand with productivity Yara Downstream Productivity System promotes: – Safety principles and tools at all levels, from business unit managers to operators – Understanding of the link between safety and productivity Operational team, Ghana
Slide 31: Performance stabilizing last two years with growth compensating for tougher market
Performance stabilizing last two years with 30 growth compensating for tougher market Sales volumes (million tons) EBITDA (USD millions) 20.7 22.5 912 19.5 674 688 2011 2012 Last 12M 2011 2012 Last 12M Gross operating capital days (12 months rolling) CROGI (cash return on gross investment) 93 92 92
Slide 32: Portfolio is being driven towards greater product differentiation and profit
31 Portfolio is being driven towards greater product differentiation and profit Product portfolio (2012/13 season volume) Differentiation improves margins 10% and reduces exposure to commodity price volatility 35% 28% On-going efforts to further increase differentiation through: – Additional Nit
Slide 33: Yara's product portfolio is continuously improved to meet changing customer needs
32 Yara’s product portfolio is continuously improved to meet changing customer needs Yara has over many years developed a wide, differentiated product offering Continuous development of both new and improved differentiated products key to maintaining earnings in competitive global market We wi
Slide 34: YaraVita: a specialty product success story
33 YaraVita: a specialty product success story YaraVita revenues, USD millions 110 CAGR +17% 78 81 68 58 2009/2010 2010/2011 2011/2012 2012/2013 BP 2014 IR – Date: 2013-11-26
Slide 35: Yara acquires ZIM crop sensor technology to increase water use efficiency
34 Yara acquires ZIM crop sensor technology to increase water use efficiency Agriculture consumes 70% of global freshwater resources; increased water scarcity drives demand for new agricultural solutions Crop sensor technology can improve nutrient and water use efficiency in agriculture. The Yar
Slide 36: YaraVita Procote: Cost effective vehicle for differentiation
35 YaraVita Procote: Cost effective vehicle for differentiation and better agronomic efficiency Uses YaraVita micronutrient expertise Fertilizer in innovative new fertilizer coating products Allows wider differentiation within Downstream with minimal complexity Very strong agronomic and materi
Slide 37: Brazil will replace USA as the bread basket of the world
36 “Brazil will replace USA as the bread basket of the world in the 21st century” (Source: FAO) IR – Date: 2013-11-26
Slide 38: Unprecedented scale and technology; world class productivity
37 Unprecedented scale and technology; world class productivity Fazenda Planalto Mato Grosso IR – Date: 2013-11-26
Slide 39: Fertilizer consumption tripled in the last 20 years
38 Fertilizer consumption tripled in the last 20 years, contributing to almost double productivity Planted area (million ha) Grains production (million tn) Mill. hectares Fertilizer consumption (million tn) Mill. tons 200 30 180 +204% 27 160 24 140 21 120 18 +143% 100 15 80 12 60 9 40 6 20 +42% 3 0
Slide 40: Seasonality in deliveries: peak in second half
39 Seasonality in deliveries: peak in second half Brazil fertilizer industry monthly deliveries as percent of full year (avg. 2012-13) 13% The three crops soy, sugarcane 12% and corn account for ~65% of 11% fertilizer consumption in Brazil 10% 9% Main planting and application 8% for soy and corn
Slide 41: Being a major player in Brazil is of strategic importance to Yara
40 Being a major player in Brazil is of strategic importance to Yara Size Potential Fertilizer growth Brazil already is one of the most Brazil has by far the greatest Brazilian fertilizer demand is important agricultural producers reserve of potential arable land expected to grow at >3.5% Global ara
Slide 42: Brazil is an open import market with a de-regulated distribution sector
41 Brazil is an open import market with a de-regulated fertilizer distribution sector Brazil fertilizer deliveries Brazil fertilizer players by sales volume 2006 2007 2008 2009 2010 2011 Yara HeringerMosaic Fertipar ADM Others Source: IFA Imp Prod Bunge Source: Yara internal N and K are predominantl
Slide 43: Significantly improved footprint in Brazil
42 Significantly improved footprint in Brazil Acquired Bunge plant How Bunge acquisition Yara plant will change Yara 1,000 km Market size Market #5 ~60 USD/t #1 position Employees ~1k ~2k Industrial units 11 35 Northeast Mato Grosso West Bahia Paraná Minas Gerais São Paulo Rio Grande do Sul IR – Dat
Slide 44: Integration and synergy harvest on track
43 Integration and synergy harvest on track Total USD 50 • Operations: million - Plant & overhead optimization - Storage cost reduction - Equipment leasing contracts 35% • Local logistics & procurement : - Gains in scale - Optimization of product flows 20% • Supply: - Maritime freight: larger vessel
Slide 45: Value-added products drive commercial synergies through increased footprint
44 Value-added products drive commercial synergies through increased footprint Brazil value-added product deliveries (kilotons) 900 Significant growth track record 800 for Yara value-added fertilizer 700 products exported from our European production facilities 600 to Brazil 500 400 The enlarged
Slide 46: Acquiring Bunge Fertilizer has positioned Yara as the Downstream player in Brazil
45 Acquiring Bunge Fertilizer has positioned Yara as “THE” Downstream player in Brazil Although the Bunge Fertilizer acquisition is a solid business case on a stand alone basis…… ……a further backwards integration with Upstream assets to capture the full market upside is being studied – Our assum
Slide 47: Overview of the OFD Group of companies
46 Overview of the OFD Group of companies The OFD Group comprises value-added N production in Colombia (Abocol) and SSP- production in Colombia (Fosfatos) in addition to distribution companies across Latin America: – OFD Comercial: Colombia – Omagro: Mexico – Misti: Peru – Norsa: Bolivia – Fertite
Slide 48: Downstream infrastructure and sales volume
47 Downstream infrastructure and sales volume Sales volume (kt) 2010 2011 2012 ALTAMIRA (Storage: 40 k ton) NPK 264 297 241 VERACRUZ (Storage: 60 k ton) OPP CN 75 88 73 (Blends: 264 k ton/y) COATZACOALCOS AN-Solution 34 54 61 (Storage: 30 k ton) TOPOLOBAMPO Own Blends 76 151 145 (Storage: 42 k ton)
Slide 49: Upstream infrastructure and capacities
48 Upstream infrastructure and capacities Site overview in Cartagena, Colombia Port and South Plant, Cartagena North Plant 8 Ha. Expansion 8 Ha. Port South Plant 6 Ha. - Ha. 21 Production capacity kt NPK plant CN plant Ammonia 117 Nitric Acid 241 NPK 320 CN 100 AN-Solution 70 IR – Date: 2013-11-26
Slide 50: Transaction rationale
49 Transaction rationale Secure value-added fertilizer production facility in Latin America with NPK, CN and nitrate capacity Strong foothold in attractive and growing Latin American cash-crop focused fertilizer markets Platform for further growth in the region, complementary to strong positio
Slide 51: Downstream focus and priorities
50 Downstream focus and priorities Our goal Our priorities 2014 focus Safe and productive operations Further improved safety and Be the crop Knowledge leadership in productivity nutrition provider sustainable agriculture and crop nutrition adding the most value after own Creating pull for Yara solut
Slide 52: Supply and Trade focus
51 Supply and Trade focus Alvin Rosvoll, Head of Supply and Trade IR – Date: 2013-11-26
Slide 53: Supply & Trade – global optimization
52 Supply & Trade – global optimization Biggest industrial buyer of Third single biggest buyer of Significant market natural gas in Europe P&K globally share on trade Gas consumption, Million MMBtu 2012 P&K purchases (mt) 2012 annual trade volumes (mt) 185 21.3 5.3 43 115 3.0 2.8 19 11 4.6 25 23% 9%
Slide 54: Leading global position in ammonia trade
53 Leading global position in ammonia trade Europe 6.1 4.9 5.1 • Yara-operated ammonia fleet unrivalled giving scale and Available Demand flexibility Americas Middle East / Africa 2.3 2.5 Asia • Operate 18 ships 1.5 1.1 0.7 Available Demand Available Demand • Total shipping capacity of ~260 Availabl
Slide 55: Yara is short on ammonia in Europe
54 Yara is short on ammonia in Europe Million tons Consumption 4.9 Available 1.6 Integrated Flexible 0.3 2.1 1.5 0.5 -1.1 NH3 Urea/UAN Tertre Nitrates Nitrates NPKs IND off-take Short position production IR – Date: 2013-11-26
Slide 56: High sourcing flexibility for European nitrate and NPK plants
55 High sourcing flexibility for European nitrate and NPK plants Yara European ammonia production Nitrate and NPK plant locations Available Integrated Flexible NH3 Urea/UAN Tertre Nitrates NPKs IND Short production Nitrates off-take position IR – Date: 2013-11-26
Slide 57: New ammonia vessels required to replace existing tonnage
56 New ammonia vessels required to replace existing tonnage Remaining time charter – as of Nov 2013 On-going need to secure medium/long term capacity New build rates currently attractive Access latest design, lowering operating cost and meeting increasing regulations Maintain global sourcing
Slide 58: Bunge: increased scale drives maritime logistics savings
57 Bunge: increased scale drives maritime logistics savings 1 USD/t improvement on shipping = 6 MUSD Other Nitrates 6 million tons NPK Urea Phosphate MOP Pre Post Bunge Bunge IR – Date: 2013-11-26
Slide 59: Upstream focus
58 Upstream focus Gerd Löbbert, Head of Upstream IR – Date: 2013-11-26
Slide 60: Knowledge grows
Knowledge grows q . BY CHOICE
Slide 61: Getting tangible benefits from scale and know-how
Getting tangible benefits from 60 scale and know-how 16 Ammonia units 7 Urea units Yara 23 12 8 Nitric Acid units (T)AN/CAN units NPK units + technology 3 SSP units network IR – Date: 2013-11-26
Slide 62: Where to focus in plant operations?
61 Where to focus in plant operations? Safety first - Reliability is the best non-negotiable productivity investment Safety Reliability Cost IR – Date: 2013-11-26
Slide 63: Safe by Choice: evolution of the TRI rate
62 Safe by Choice Evolution of the TRI Rate (Yara employees + Contractors) Recordable Injuries per million hours worked 20.0 18.0 16.0 TRI LTI 14.0 12.0 10.0 “Safe by Choice” 8.0 The road to zero recordables 6.0 4.0 2.0 0.0 1996 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1997 1998 1999 2000 2
Slide 64: The road to an injury free working place
63 The road to an injury free working place Strong centralised safety system Building a common safety culture Reduce exposure to injuries IR – Date: 2013-11-26 Standardisation
Slide 65: Reliability program driving organic growth
64 Reliability program driving organic growth Volume development for NPK plants Production volumes improved via systematic company-wide approach IR – Date: 2013-11-26
Slide 66: Investing in Key Assets
65 Investing in Key Assets Strong focus on category A sites Capex distribution over asset base Strong focus on category A sites 10% 9% Approximately 1/3 of investments in 43% 41% 3 key sites Less than 10% in lower category 47% 50% Strongly influenced by major turnarounds 2013 BP 2014 Cat A (
Slide 67: Total Maintenance
66 External benchmarking FOCUS 5.0 Total Maintenance Cost (% of PRV) 4.0 3.0 Solomon benchmarking 5.29 5.06 2.0 3.95 RAM effectiveness Index 2.96 1.0 0.0 Total Study W-Europe Chemicals Yara (Chemicals & Refinery) (Chemicals & Refinery) (Worldwide) (Weighted Average) # of Plants 339 61 189 8 Total Ma
Slide 68: Internal benchmarking
67 Internal benchmarking Reliability benchmarking Site Personel Index (TPAI) IR – Date: 2013-11-26
Slide 69: Project Engineering Office
68 Project Engineering Office Focusing on project development phase Multiple Purpose Gasification project Equipment additions to expand NPK capacity In Porsgrunn (+300 kT/y) IR – Date: 2013-11-26
Slide 70: Soaring construction cost in North America, but significant regional differences
69 Soaring construction cost in North America, but significant regional differences Industrial building cost index – based on USD/m2 US shale gas driving re-start of industrial sites and new builds, putting pressure on the construction market. Regional differences in construction cost: I Canada: F
Slide 71: Upstream growth: plant expansions and new builds with competitive capex and feedstock
70 Upstream growth: plant expansions and new builds with competitive capex and feedstock Reconfiguration/expansion at existing sites, potential for increased NPKs, nitrates and CN Secure longer term partnerships with access to low cost raw materials for potential new builds IR – Date: 2013-11-26
Slide 72: Financial update
Financial update Torgeir Kvidal, CFO
Slide 73: Financial highlights
72 Financial highlights CROGI Strong results 25% Increase in deliveries from 20% completion of Bunge acquisition 15% Declining commodity fertilizer prices but robust value-added 10% product premiums 5% Improved production regularity 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 L4Q Recor
Slide 74: Financial scenarios are not forecasts, but illustrate potential earnings
73 Financial scenarios are not forecasts, but illustrate potential earnings in given situations • Based on last 4 quarters EBITDA excluding special items Model assumptions • Bunge Fertilizer included on full-year basis • Production assumed at 95% of stated capacity 1. China “low swing” Scenarios 2.
Slide 75: Yara sensitivities
74 Yara sensitivities Operating Income EBITDA EPS* USD million USD million USD Urea sensitivity +100 USD/t 937 1,103 3.1 …of which pure Urea 285 416 1.2 …of which Nitrates 367 393 1.1 …of which NPK 211 220 0.6 Nitrate premium +50 USD/t 468 498 1.4 …of which pure Nitrates 289 311 0.9 Hub gas Europe +
Slide 76: Yara currency exposure updated
75 Yara currency exposure updated USD millions 250 BRL 250 NOK 950 EUR EUR and NOK 550 Previous currency exposure New currency exposure IR – Date: 2013-11-26
Slide 77: Summary of Chinese swing scenario price assumptions
76 Summary of Chinese swing scenario price assumptions USD/t Urea price fob China 440 420 USD/RMB 6.23 USD/RMB 6.23 USD/RMB 6.10 USD/RMB 6.10 400 380 360 360 340 335 320 56 320 22 310 7 7 300 24 24 33 33 280 260 289 289 270 270 0 CMD 12 CMD 12 CMD 13 Assumed cost CMD 13 High tax Assumed cost Realize
Slide 78: Price and currency assumptions in scenarios
77 Price and currency assumptions in scenarios 5-year Chinese swing* Last 4 Demand- avg. to quarters driven** 30 Sep 13 Low High Ammonia fob Black Sea (USD/t) 546 424 400 400 475 Urea prilled fob Black Sea (USD/t) 365 340 300 350 475 Nitrate premium, USD/t 84 85 85 85 85 Phos rock fob North Africa (
Slide 79: Nitrate premium increased to 85 USD/t in scenarios
78 Nitrate premium increased to 85 USD/t in scenarios, in line with 5-year average CAN USD/t 160 Lower urea prices increase farm 140 margins and make room for stronger nitrate premiums 120 100 A situation with continued strong 80 food prices and supply-driven urea 60 pricing allows for higher ni
Slide 80: Simplified P&Ls for scenarios
79 Simplified P&Ls for scenarios 5-year avg. Chinese swing Last 4 Demand- NOK millions to quarters driven 30 Sep 132) Low High EBITDA1) 14,800 14,800 11,300 14,700 23,500 Depreciation -3,400 -3,600 -3,600 -3,600 -3,600 Interest expense -900 -800 -800 -800 -800 Income before tax 10,500 10,400 6,900 1
Slide 81: Higher value-added margins and growth offset by lower commodity margins
80 Higher value-added margins and growth offset by lower commodity margins NOK per share 10 29 3 -2 -7 20 1 19 3 Swing CMD12 Volume Phosphate Commodity Value-added Currency Swing CMD 13 Price/Margin Swing CMD margins N margins margins assumed cost 13 assumed high tax IR – Date: 2013-11-26
Slide 82: Upside potential for urea
81 Upside potential for urea Urea fob Black Sea USD/mt 600 Urea price China (inland proxy price) 500 400 300 200 100 0 Source: China Fertilizer Market Week, International publications IR – Date: 2013-11-26
Slide 83: Demand-driven USD 150 per ton on urea improves EPS by 25
82 Demand-driven USD 150 per ton on urea improves EPS by 25 NOK per share 25 54 25 10 29 3 -2 -7 20 1 19 3 Swing Volume Phosphate Commodity Value-added Currency Swing CMD Price/Margin Swing CMD Price/margin Demand CMD12 margins N margins margins 13 assumed 13 assumed driven cost high tax IR – Date:
Slide 84: Risk factors
83 Risk factors Downside protection Downside Negative risks risks Upside risks factors Bumper crops / decline Crop failure / increased Crops: strong incentives in food prices food prices to maximize productivity even at lower food price levels Severe downturn in Increased global LNG global
Slide 85: Yara's flexible cost structure gives downside protection
84 Yara’s flexible cost structure gives downside protection Total cost base L4Q, NOK bn Ammonia sourcing flexibility Available 72 Non flexible Fixed 7 Flexible Variable 65 L4Q 1. Excluding depreciation, NH3 Urea/UAN Tertre Nitrates NPKs IND Short amortization and production Nitrates off-take positio
Slide 86: Strong financial position supports growth
85 Strong financial position supports growth Net interest-bearing debt / equity ratio (end of period) 0.75 0.63 0.57 0.56 0.49 0.38 0.32 0.27 0.22 0.20 0.12 0.12 0.05 OFD 0.07 0.08 0.06 0.01 0.06 0.02 -0.04 IR – Date: 2013-11-26
Slide 87: Cash returns to owners stepped up
86 Cash returns to owners stepped up Annual dividends and buy-backs, NOK per share* 16.7 13.2 8.1 6.2 13.0 5.4 5.4 5.3 4.9 3.9 7.0 5.5 4.0 4.5 4.5 2.3 2.4 2.5 2005 2006 2007 2008 2009 2010 2011 2012 2013 Buy-back Dividend Numbers reflect cash returns executed in a calendar year relative to net incom
Slide 88: Cash return policy 40-45% of net income, minimum 30% dividend
87 Cash return policy 40-45% of net income, minimum 30% dividend 37% 28% Overall target including buy-backs 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 Numbers reflect cash returns executed in a calendar year re
Slide 89: Maintaining BBB credit rating and ability to execute medium-size M&A
88 Maintaining BBB credit rating and ability to execute medium-size M&A Debt / EBITDA at “low swing“ earnings 3.0 Maintaining BBB credit rating is key to growth financing ability 2.5 BBB rating requirement: 2x 2.0 Yara wants ability to execute 1.5 medium-size M&A (up to ~USD 2 bn targets) 1.0 0.
Slide 90: Conclusions and outlook
Knowledge grows ] Conclusions and outlook SA bik
Slide 91: Prospects 2014
90 Prospects 2014 Continued strong demand fundamentals and value-added premiums Chinese domestic urea and coal price development likely to influence commodity nitrogen fertilizer markets Limited nitrogen capacity growth outside China IR – Date: 2013-11-26
Slide 92: Well positioned for further profitable growth
91 Well positioned for further profitable growth Increasing need for sustainable improvements in agricultural productivity Yara’s value-added products and differentiated business create impact and provide sustainable strong returns Yara is committed to delivering sustained shareholder value, t