Yara International Asa · OSL:YAR
Yara International Asa — Morgan Stanley Paris presentation (September 2013)
44 slides from Yara International Asa's conference presentation, Sep 10, 2013
Slide 1: Yara International ASA
0 Yara International ASA Torgeir Kvidal, CFO 10 September 2013 IR-Date: 2013-09-10
Slide 2: Yara delivers sustainable solutions for agriculture and the environment
Yara delivers sustainable solutions for 1 agriculture and the environment PRODUCT BRANDS AND APPLICATIONS CORE PRODUCTS Global fertilizer Urea Nitric Nitrates acid Ammonia CN NPK Environmental Nitric acid solutions Urea Gases Industrial applications IR-Date: 2013-09-10
Slide 3: Solid global presence
2 Solid global presence IR-Date: 2013-09-10
Slide 4: 20.7 million tons of fertilizer sold on six continents in 2012
20.7 million tons of fertilizer sold on six 3 continents in 2012 46.6% Europe 9.6 mill. tons North America 14.7% 3.0 mill. tons Asia 9.0% 1.9 mill. tons Africa 5.6% 1.2 mill. tons 22.8% Latin America Oceania 4.7 mill. tons 1.3% 0.3 mill. tons IR-Date: 2013-09-10
Slide 5: Integrated business model provides scale, flexibility and end-to-end presence
Integrated business model provides scale, 4 flexibility and end-to-end presence Downstream Upstream Industrial Supply & Trade Scale advantages + Unique flexibility + Unrivalled presence IR-Date: 2013-09-10
Slide 6: Solid farm economics support fertilizer demand
5 Solid farm economics support fertilizer demand 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 Cereals Price Index Cereals 5 year avg. Food Price Index Food 5 year avg. Source: FAO IR-Date: 2013-09-10
Slide 7: Value-added upgrading and distribution make up larger part of contribution margin
6 Value-added upgrading and distribution make up larger part of Yara’s contribution margin Total Yara contribution NOK millions 9,000 8,000 7,000 Trade Industrial upgrade & distribution 6,000 5,000 Fertilizer upgrade & distribution 4,000 3,000 2,000 Commodity overseas 1,000 Commodity Europe 0 1Q10 2
Slide 8: Nitrates are more efficient than urea
7 Nitrates are more efficient than urea Urea (CON2H4) Ammonium (NH4+) Nitrate (NO3-) Urea-N needs to be Ammonium-N is fixed onto Nitrate-N is always dissolved in converted into ammonium- clay minerals in the soil and the soil water and is N before it is plant therefore immobile. The plant transporte
Slide 9: Farmer yield benefits justify nitrate premium
8 Farmer yield benefits justify nitrate premium Nitrogen upgrading margins Nitrate premium, USD/t CAN USD/t 700 160 600 140 Nitrate premium above urea 120 500 Value 100 400 above ammonia 80 300 Value above gas 60 200 40 100 Yara EU gas cost *20 20 0 0 2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 2Q0
Slide 10: Farmer yield benefits justify NPK premium
9 Farmer yield benefits justify NPK premium Phosphate upgrading margins NPK blend premium USD/t USD/t 700 700 600 600 Margin above 500 Value above 500 blend cost raw material 400 400 Urea, fob Black sea NH3, fob Black Sea *0.22 300 300 MOP, cfr NWE 200 200 100 Rock, fob NA *1.4 100 DAP, fob Morocco
Slide 11: Identifying crop segments with highest value potential
We work in a systematic manner to identify the 10 crop segments with highest value potential CVI CVI and hectare grown of key crops 700 Strawberry 600 500 400 300 Apples 200 Oranges 100 Coffee Potato Maize Wheat 0 0 50 100 150 200 250 million ha Crop Value Index is sales price of the crop divided by
Slide 12: Record NPK and nitrate deliveries
11 Record NPK and nitrate deliveries Yara-produced NPK deliveries Yara-produced nitrate deliveries Kilotons Kilotons 1,300 1,700 1,200 1,500 1,100 1,300 1,000 900 1,100 800 900 700 700 600 500 500 2Q09 2Q10 2Q11 2Q12 2Q13 2Q09 2Q10 2Q11 2Q12 2Q13 IR-Date: 2013-09-10
Slide 13: Strong global urea demand, but increased export availability from China
Strong global urea demand, but increased 12 export availability from China Global urea trade and Chinese urea exports (million tons) 1 Jul – 31 Mar Global urea trade Chinese urea exports 32.0 28.7 26.8 +5.2 24.2 20.5 7.4 389 251 350 448 378 6.1 3.9 3.0 +4.4 1.2 08/09 09/10 10/11 11/12 12/13 08/09 09
Slide 14: Ammonia flexibility in Europe
13 Ammonia flexibility in Europe 5.2 Million tons 3.6 1.6 1.3 Urea Land-locked nitrates 0.3 European Flexible Non flexible ammonia capacity Yara can swing 2/3 of European ammonia production without affecting fertilizer production IR-Date: 2013-09-10
Slide 15: Reduced exposure to oil and European gas
14 Reduced exposure to oil and European gas Yara’s geographic energy exposure Yara’s feed-stock contract structure Europe 100% NAT GAS 90% 15% 80% 25% 70% 60% 90% 80% 50% 70% 65% 55% 40% 30% 20% -10% -20% -20% -20% 10% -30% 0% NON 2006 2007 2008 2009 2012 2006 2009 2010 2012 2013 GAS Europe ROW Non
Slide 16: Improvement in Brazil and Bunge closing in 3Q
15 Improvement in Brazil and Bunge closing in 3Q Yara Brazil EBITDA (NOK millions) Positive volume and margin 780 863 improvement compared with 2Q12 (Yara Brazil) Bunge closing during third quarter 76 Transaction value will be adjusted for net operating capital value at time of closing 16 – US
Slide 17: Degree of vertical integration in phosphate and potash
Degree of vertical integration in 16 phosphate and potash Phosphate rock supply and use (mt) Potash supply and use (mt) 1.9 1.9 1.9 1.9 1.0 1.1 1.4 0.9 0.8 0.5 Source Use Source Use External sourcing Own production NPK plant Other IR-Date: 2013-09-10
Slide 18: Multiple growth options; de-bottlenecking and regional M&A most attractive
Multiple growth options; de-bottlenecking and 17 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
Slide 19: More information can be found on www.yara.com
18 More information can be found on www.yara.com IR-Date: 2013-09-10
Slide 20: Yara product capacity values
19 Yara product capacity values Value based on prices 12 months ending 31 Oct 2012 USD/t of NH3 equivalent 1,800 1,600 1,400 1,200 Premium above blend Rock upgrade 1,000 Nitrate value above urea Urea upgrade value 800 Ammonia upgrade value 600 Gas cost 400 200 0 Mt of NH3 equivalents 0.0 1.0 2.0 3.0
Slide 21: Yara sensitivities
20 Yara sensitivities Operating Income EBITDA EPS* USD million USD million USD Urea sensitivity +100 USD/t 925 1,097 3.1 …of which pure Urea 285 422 1.3 …of which Nitrates 367 393 1.1 …of which NPK 198 208 0.6 Nitrate premium +50 USD/t 458 518 1.4 …of which pure Nitrates 289 333 0.9 Hub gas Europe +
Slide 22: Simplified P&Ls for scenarios
21 Simplified P&Ls for scenarios 5-year avg. Chinese swing Last 4 Demand- NOK millions to quarters Domestic driven** 30 Sep 12 Cost price EBITDA1) 17,000 18,000 11,400 16,700 24,400 Depreciation -3,100 -3,200 -3,300 -3,300 -3,300 Interest expense -800 -800 -800 -800 -800 Income before tax 13,100 14,
Slide 23: Increased fertilizer deliveries
22 Increased fertilizer deliveries Kilotons 1,670 1,551 1,363 1,219 1,175 935 557 600 461 469 2Q12 2Q13 2Q12 2Q13 2Q12 2Q13 2Q12 2Q13 2Q12 2Q13 Nitrate NPK compound NPK blends Urea UAN Yara-produced deliveries Joint venture & third party sourced Total IR-Date: 2013-09-10
Slide 24: Fertilizer volumes
23 Fertilizer volumes Kilotons 7,000 6,284 6,339 6,104 6,017 6,000 5,296 5,474 5,438 5,256 5,179 5,210 5,216 5,253 5,300 5,129 4,914 4,970 5,013 5,045 4,882 4,834 5,000 4,763 4,742 4,791 4,759 4,239 4,000 3,496 3,000 2,000 1,000 0 2007 2008 2009 2010 2011 2012 2013 Europe Outside Europe Total IR-Dat
Slide 25: Yara 2Q fertilizer sales by market and product
24 Yara 2Q fertilizer sales by market and product 2013: 6.3 million tons (2012: 5.3 million tons) Kilotons 2Q12 2Q13 2,771 2,254 1,446 1,174 1,117 987 544 644 294 361 Europe Latin America Asia North America Africa 1,551 1,670 1,363 1,219 1,175 935 557 600 489 515 461 469 272 314 NPK compounds NPK bl
Slide 26: Yara production volume
25 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 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Urea Nitrates NPK CN UAN SSP - based fertilizer * Including sha
Slide 27: Low Yara stocks
26 Low Yara stocks Kilotons Finished fertilizer 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 Other NPK Nitrates Urea IR-Date: 2013-09-10
Slide 28: Gas & oil cost
27 Gas & oil cost Yearly averages 2009 – 2010, quarterly averages for 2011-13 with forward prices* for 3Q13 and 4Q13 USD per MMBtu 14 11.5 11.9 12 11.1 11.4 10.9 10.8 11.0 11.0 10.8 10.7 10.9 10.1 10 8 7.6 8.3 8.6 8.3 8.3 8.5 6.6 7.9 8.1 8.3 7.7 7.6 7.8 6 7.6 5.7 4 4.8 2 0 2009 2010 1Q11 2Q11 3Q11 4
Slide 29: Yara European gas cost closer to hub price
28 Yara European gas cost closer to hub price European energy cost Spread between Yara and Zeebrugge USD/ USD/ MMBtu MMBtu 13.0 2.1 12.0 2.0 1.7 11.0 1.4 10.0 1.1 9.0 0.9 0.8 0.7 8.0 7.0 6.0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 Zeebrugge (1-month lag) Yara
Slide 30: Earnings per share
29 Earnings per share* 12.86 12.42 EPS excluding currency and 11.84 special items 10.54 10.02 9.82 9.25 8.04 7.73 7.67 6.68 6.68 5.42 5.27 2010 2011 2012 2013 Annual NOK 30.23 41.99 37.31 14.72 * Average number of shares for 2Q 2013: 279.3 million (2Q 2012: 283.9 million). IR-Date: 2013-09-10
Slide 31: EBITDA development
30 EBITDA development NOK millions 1,130 1,790 4,966 158 232 188 3,995 48 EBITDA Special Volume Price/margin Gas & oil Other Currency EBITDA 2Q12 items costs in 2Q13 Europe IR-Date: 2013-09-10
Slide 32: Strong cash flow
31 Strong cash flow NOK millions 741 72 409 3,418 1,984 1,527 29 1,204 679 Net debt Cash Dividends Net operating Net investments Yara Dividend FX loss Other Net debt Mar 13* earnings** from equity capital Jun 13* accounted investees * Included in net interest-bearing debt are external bank time depo
Slide 33: Debt/equity ratio
32 Debt/equity ratio 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 0.20 0.22 0.12 0.12 0.08 0.07 0.06 0.02 0.01 -0.04 2009 2010 2011 2012 2013 IR-Date: 2013-09-10
Slide 34: Continued strong price incentives necessary to match consumption growth
Continued strong price incentives necessary to 33 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 35: Grain consumption growth stronger than population growth
Grain consumption growth stronger 34 than population growth Million tons Billions 2,500 12 US drought resulting in 2.9% drop in production, low stocks, demand rationing and spiking prices 10 2,000 3% drop in production 3% drop in production, low stocks, demand rationing and 8 4% drop in production,
Slide 36: Higher meat consumption requires more feed grain
35 Higher meat consumption requires more feed grain Significant potential for increasing Feed grain multipliers for meat meat consumption in emerging countries 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 Kg/capi
Slide 37: Large variations in yields across regions
36 Large variations in yields across regions Maize yields Wheat yields Tons/Ha Tons/Ha 12 8 10 7 6 8 5 6 4 4 3 2 2 1 0 0 US Argentina China Brazil Mexico France China US India Russia Rice yields Soybean yields Tons/Ha Tons/Ha 8 4 7 3 6 3 5 2 4 3 2 2 1 1 1 0 0 China Viet Nam Indonesia Bangladesh Indi
Slide 38: Working closely with end-users key enabler to achieve premiums
Working closely with end-users key enabler to 37 achieve premiums 48% Europe 9.4 mill tons North America 15% 2.9 mill tons Asia 12% 2.3 mill tons Africa 6% 1.2 mill tons 19% Latin America 3.8 mill tons Yara plants Joint venture plants Sales offices Development programs R&D Units IR-Date: 2013-09-10
Slide 39: Increased US and European industry deliveries in 2012/13 season
Increased US and European industry deliveries 38 in 2012/13 season USA Western Europe Million tons Million tons +7% 9.0 18.0 8.0 +6% 16.0 7.0 14.0 12.0 6.0 10.0 5.0 8.0 4.0 6.0 3.0 4.0 2.0 2.0 1.0 0.0 0.0 07/08 08/09 09/10 10/11 11/12 12/13 07/08 08/09 09/10 10/11 11/12 12/13 Production Net imports
Slide 40: Chinese urea production increase
39 Chinese urea production increase Chinese urea production Domestic urea balance Million tons Million tons 7.0 80 12/13 70 69.8 6.0 11/12 6.0% 61.9 61.4 60 58.4 5.0 7.9 50 3.1 4.0 10/11 40 3.0 30 2.0 20 1.0 10 0.0 0 Export Domestic Domestic Export Production Production Jul Aug Sep Oct Nov Dec Jan F
Slide 41: Chinese urea export increase
40 Chinese urea export increase Chinese urea exports, Kilotons Urea price, USD/t 1,800 550 1,600 500 450 1,400 400 1,200 350 1,000 300 800 250 200 600 150 400 100 200 50 0 0 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Urea, fob Yuzhny Chinese urea exports Source: BOABC IR-Date: 2013-09-10
Slide 42: European producer nitrate stocks
41 European producer nitrate stocks Index June 2007=1 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 Source: Fertilizers Europe, Yara estimate for June IR-Date: 2013-09-10
Slide 43: Key value drivers – quarterly averages
42 Key value drivers – quarterly averages Zeebrugge day ahead (USD/MMBtu) Urea prilled fob Black Sea (USD/t) CAN cif Germany (USD/t) 11.1 471 10.3 10.3 343 351 400 331 322 9.1 9.1 383 385 314 342 2Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13 Ammonia fob Black Sea (USD/t)
Slide 44: 10-year fertilizer prices – monthly averages
43 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 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Urea prilled fob Black Sea DAP fob US Gulf USD
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