Yara International Asa · OSL:YAR
Yara International Asa — Q1 2023 Earnings Presentation
27 slides from Yara International Asa's earnings presentation, Apr 28, 2023
Slide 1: Yara International ASA 2023 first-quarter results
Yara International ASA 2023 first-quarter results 28 April 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) 5.0 4.0 3.0 2.0 1.1 1.0 0.0 1Q16 1Q23 People 1) Total Recordable Injuries per 1 million working hours 3
Slide 4: 1Q impacted by falling prices, but tighter nitrogen market into 2Q
1Q impacted by falling prices, but tighter nitrogen market into 2Q 1Q 2023 Weaker results compared with strong 1Q 2022, with steep market price declines impacting both sales volumes and margins Production curtailments of around 0.6 mt ammonia and 1.3 mt finished fertilizers for the quarter Earnings
Slide 5: Negative commodity price development led to significant position losses and inventory write-downs in 1Q 23
Negative commodity price development led to significant position losses1 and inventory write-downs in 1Q 23 190 MUSD inventory write-downs in 1Q 23, Falling commodity prices for last 2 quarters2,3 driven by declining prices USD/ton USD/mmbtu 736 709 662 Urea FOB Egypt 22 DAP FOB Morocco 9 28 31 584
Slide 6: Lower gas cost more than offset by lower prices and deliveries
Lower gas cost more than offset by lower prices and deliveries EBITDA ex. special items (MUSD)1 ROIC2 1,600 Price/margin: - 830 Energy cost3: + 318 1,200 -370 Fixed costs: -40 800 -512 1,346 28 -4 400 487 0 1Q22 Volume/Mix Margin Currency Other 1Q23 27.7% 5.7% 1) EBITDA ex. special items. For defini
Slide 7: Delayed purchasing in Europe, with imports partly replacing curtailed capacity
Delayed purchasing in Europe, with imports partly replacing curtailed capacity; improved European competitiveness into 2Q Delayed purchasing, with imports partly Increased European competitiveness with replacing curtailed capacity1 normalization of gas and nitrate premium1 Comments Nitrogen deliveri
Slide 8: Increased farmer affordability and optimal application rate
Increased farmer affordability and optimal application rate Cereal index / urea index1 Optimal application rate2 (wheat example, using CAN) 2014-2016 = 1, ratio kg nitrogen per hectare Fertilizer more affordable +14% 1.2 215 196 188 188 Average 2008-2021: 0.98 0.7 0.6 0.5 21/22 2H22 1 year ago Curre
Slide 9: Financial performance
Financial performance EBITDA ex. special items1 EPS ex. currency and special items1 ROIC1 (MUSD) (USD per share) (12-month rolling, %) 1,346 3.20 20.1% 12.7% 487 0.40 Prosperity 1Q22 1Q23 1Q22 1Q23 1Q22 1Q23 Change in net operating capital2 Cash from operations Investments (net)3 (MUSD) (MUSD) (MUSD
Slide 10: Results by segment
Results by segment Inventory write-downs EBITDA ex. special items1 (MUSD) Europe Americas Africa and Asia Industrial Global Plants Clean Ammonia 550 550 516 550 550 Solutions 550 550 500 450 500 500 500 500 500 400 450 450 450 450 450 345 400 350 400 400 400 400 300 350 350 350 350 350 250 300 300 3
Slide 11: Deliveries by segment
Deliveries by segment External deliveries 1Q 2022 vs 1Q 2023, in kt 1Q22 -24% 1Q23 6,123 4,653 Commodity -28% -26% 2,796 -17% 2,249 2,007 -9% 1,670 1,801 1,499 Premium1 -6% 1,078 976 443 417 Total crop Americas Europe Africa & Asia Industrial Clean nutrition Solutions Ammonia 1) Premium defined as D
Slide 12: Yara Improvement Program (YIP)
Yara Improvement Program (YIP) Ammonia production1 (mt) Finished product production1 (mt) Ammonia energy consumption (GJ/ton) Reduced reliability losses, significant share of European Overall stable operation, significant share of European nitrates Performance impacted by curtailments and unproduct
Slide 13: Cash earnings and release of operating capital more than funded investments
Cash earnings and release of operating capital more than funded investments Net interest-bearing debt: 1Q development (MUSD) -266 71 -251 265 3,206 3,025 Net debt end of last Cash earnings1 Net operating capital Investments (net) Other 2 Net debt end current quarter change quarter 1) Operating incom
Slide 14: Driving sustainable performance with an integrated scorecard
Driving sustainable performance with an integrated scorecard People Planet Prosperity 2025 2025 2025 Yara KPI 2020 L12M Measure Yara KPI 2020 L12M Measure Yara KPI 2020 L12M Measure Target Target Target Strive towards Energy efficiency3 33.2 33.8 32.7 Gj/t NH3 Ammonia Production 7 7.7 7.9 8.6 Mt 1.3
Slide 15: Developing world-scale ammonia facility with >95% carbon capture in partnership with Enbridge
Developing world-scale ammonia facility with >95% carbon capture in partnership with Enbridge Project attributes 1.2 – 1.4 million tonnes 2027 – 2028 USD 2.6 – 2.9 billion • Attractive project attributes: Low-cost natural gas, Annual capacity Year placed in service Total project investment in compet
Slide 16: 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 • Growing a nature-positive food • Strict capital discipline challenges require strong a
Slide 17: Appendix
Appendix
Slide 18: Nitrate and NPK premiums
Nitrate and NPK premiums Nitrogen upgrading margins1 NPK premium over blend2 USD/t CAN27 equivalents (weekly publication prices) USD/t 1000 1000 Urea Egypt CFR proxy Yara realized NPK price CAN Nitrate premium, CIF inland Germany Ammonia CFR Urea, CIF inland Germany 750 Yara EU gas*12 750 DAP, CIF i
Slide 19: Key product price development
Key product price development 1Q22 1Q23 Urea price development1 (USD/t) Spot gas prices1 (USD/Mmbtu) Yara realized CAN2 and NPK price3 (USD/t) -40% +2% 787 781 799 -21% -25% 30.6 633 0% 469 24.3 472 404 404 -14% 4.3 3.7 Urea granular Urea inland Europe (TTF) US (Henry Hub) CAN 27 Compound NPK FOB Eg
Slide 20: 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 1,560 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
Slide 21: Energy cost
Energy cost Quarterly averages for 2018 – 1Q 2023 with forward prices1 for 2Q 2023 US gas price (Henry Hub) Yara Global2 TTF day ahead Yara Europe 57.9 34.5 30.8 31.4 31.3 29.8 24.5 22.7 22.6 23.8 16.4 20.9 17.0 14.7 15.4 15.6 13.2 8.8 11.5 8.0 7.4 5.5 10.8 6.7 9.5 4.7 4.6 2.7 2.2 3Q18 4Q18 1Q19 2Q1
Slide 22: Details of energy cost actuals and estimate 2Q 2023
Details of energy cost actuals and estimate 2Q 2023 2Q23 estimations based on Europe 2Q22 3Q22 4Q22 1Q23 forward prices Average gas cost USD/MMbtu 30.9 34.3 31.2 24.5 14.6 Gas consumption1 MMBtu 34.7 30.3 26.4 22.9 34.7 European gas cost USD millon 1,072 1041 823 562 507 2Q23 estimations based on Ya
Slide 23: Yara inventories
Yara inventories Finished products inventory development in mt 8 7 6 5 Other 4 3 Compound 2 NPK 1 Nitrates Urea 0 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 23
Slide 24: 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 4.7 4.5 4.2 4.4 3.2 2.3% consumption growth2 1.8 1.5 1.0 0.9 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 1) Urea projects as
Slide 25: Farmer incentives: wheat example
Farmer incentives: wheat example Optimal nitrogen application kg/ha +14% 215 196 188 188 3 3 21/22 2H22 1 year ago current Wheat price 345 337 429 282 USD / mt CAN271 price USD/ton 638 727 918 320 Grain yield2 t/ha 9.49 9.43 9.43 9.59 Farmer revenue above nitrogen cost 2,810 2,669 3,404 2,447 USD/ha
Slide 26: 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 30-35
Slide 27: Slide 27