Yara International Asa · OSL:YAR
Yara International Asa — Q1 2022 Earnings Presentation
26 slides from Yara International Asa's earnings presentation, Apr 27, 2022
Slide 1: Yara International ASA 2022 First-quarter results
Yara International ASA 2022 First-quarter results 27 April 2022
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 1.1 1) Total Recordable Injuries per 1 million working hours 3
Slide 4: War in Ukraine reduces food and fertilizer supply, driving prices higher
War in Ukraine reduces food and fertilizer supply, driving prices higher and threatening global food security Unprecedented volatility in energy prices 1 Food prices at all time high, large jump in March 2 275 Food Price Index Meat Dairy TTF USD/MMBtu Cereals Oils Sugar 80 70 225 60 50 175 40 30 125
Slide 5: Coordinated action needed to create a more resilient global food system
Coordinated action needed to create a more resilient global food system Yara contribution: Call for coordinated action: Yara’s Response • Objective to continue supplying customers and secure • Support planting and harvesting in conflict zones continuity in global food chains • Keep borders and marke
Slide 6: Robust Yara business model
Robust Yara business model ROIC1 12M rolling 12.7% • Significant efforts to optimize operations amid supply disruptions and volatile market conditions • Focus on maintaining supply to customers and securing continuity in food supply chain • Overall margin improvement due to tight market situation, h
Slide 7: Lower deliveries amid higher prices
Lower deliveries amid higher prices Million tonnes 1Q21 1Q22 -11% 6.9 6.1 Commodity -3% -24% 2.9 2.9 +2% Premium1 2.8 2.2 +3% 1.8 1.8 -3% 1.1 1.1 0.5 0.4 Total crop nutrition Americas Europe Asia & Africa Industrial Clean Solutions Ammonia 1) Premium defined as Differentiated N, NPK, CN, fertigation
Slide 8: Financial performance
Financial performance EBITDA ex. special items1 EPS ex. currency and special items1 ROIC1 (MUSD) (USD per share) (12-month rolling) Prosperity Change in net operating capital2 Investments (net)3 Cash from operations (MUSD) (MUSD) (MUSD) 1) Alternative performance measures are defined, explained and
Slide 9: Improved margins as higher prices more than offset increased energy cost and lower deliveries
Improved margins as higher prices more than offset increased energy cost and lower deliveries EBITDA ex. special items (MUSD)1 Fixed costs: -31 ROIC2 Price/margin: 1,730 Energy cost: -860 1) EBITDA ex. special items. For definition and reconciliation see APM section of 1Q report, page 31 10 2) Quart
Slide 10: Flexible and resilient business model
Flexible and resilient business model EBITDA ex. Special items1 (MUSD) Operational flexibility Flexible production setup - Significant portion of fertilizer production with ammonia sourcing flexibility Diversified footprint - Unrivalled global optimization ability, from ammonia through finished prod
Slide 11: Yara Improvement Program (YIP)
Yara Improvement Program (YIP) Ammonia production1 Finished product production1 Ammonia energy consumption - Flat production as reliability issues in some - Increase driven by ramp-up of the Rio Grande - Slight progress mainly due to reliability sites offset improvements in other sites project in Br
Slide 12: Net debt decrease; increased operating capital due to higher market prices
Net debt decrease; increased operating capital due to higher market prices, more than offset by cash earnings and Salitre proceeds Net interest-bearing debt: 1Q development MUSD 1 2 1) Operating income plus depreciation and amortization, minus tax paid, net gain/(loss) on disposals, net interest exp
Slide 13: Driving sustainable performance with an integrated scorecard
Driving sustainable performance with an integrated scorecard People People Planet Planet Prosperity 1) Measured annually 2) Energy efficiency target is for 2023 3) GHG absolute emissions scope 1+2 target is for 2030 with a 2019 baseline 4) Cropland with digital farming user activity within defined f
Slide 14: Improved farmer incentives
Improved farmer incentives Backdrop: Wheat example: The crop-yield response relative to amount of nitrogen Current combination of wheat and nitrogen prices suggests in the soil dictates the economical optimum for farmers supportive financial environments for farmers, with ~10% lower optimal applicat
Slide 15: Appendix
Appendix
Slide 16: Attractive Yara prospects
Attractive Yara prospects Attractive opportunities Focused strategy Strong shareholder returns • Resource and environment • Crop nutrition leader; #1 premium • Strict capital discipline challenges require strong agri product and market presence • Clear capital allocation policy productivity improvem
Slide 17: Nitrate and NPK premiums
Nitrate and NPK premiums Nitrogen upgrading margins1 NPK premium over blend2 USD/t CAN27 equivalents (monthly publication prices) USD/t 209 Yara realized NPK price -72 600 700 78 21 300 350 Weighted average global CAN CIF premium above blend cost3 Nitrate premium, CIF inland Germany Urea, CIF inland
Slide 18: 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) +138% +74% +378% 787 +171% 780 30.6 631 +37% 449 404 330 295 +19% 233 6.4 3.6 4.3 Urea granular Urea inland Europe US CAN 27 Compound NPK FOB Egypt China proxy 1Q21 1
Slide 19: Increase in prices drives increased results in all segments
Increase in prices drives increased results in all segments, strong contribution from overseas assets EBITDA ex. special items1 (MUSD) Europe Americas Africa and Industrial Global Plants Clean Ammonia Asia Solutions ROIC 12M rolling2 (%) Europe Americas Africa and Industrial Global Plants Clean Ammo
Slide 20: Free cash flow
Free cash flow Free cash flow before financing activities1 MUSD, rolling 12 months Divestment proceeds Investments Operations Free cash flow adjusted for divestment proceeds 1,973 1,669 1,491 1,298 1,142 863 1,008 845 532 284 -1,101 -1,394 -2,237 -2,630 -2,954 -3,083 -3,243 1Q18 2Q18 3Q18 4Q18 1Q19
Slide 21: Energy cost
Energy cost Quarterly averages for 2018-2021 with forward prices* for 2Q22 and 3Q22 34 US gas price (Henry Hub) Yara Global** TTF day ahead Yara Europe 32.5 32 30.8 31.4 29.5 30 30.4 30.2 28 26 27.6 24.4 24 22.7 21.6 22 20.9 20 18 16.4 16 15.4 14 11.5 12 9.5 10 8.8 8 6.9 7.3 7.5 6.7 6 4.7 4.6 4.3 4
Slide 22: Yara stocks
Yara stocks Finished fertilizer Mill. tonnes 8 7 6 5 Other 4 3 Compound 2 NPK 1 Nitrates Urea 0 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 24
Slide 23: 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 21/22 14/15 15/16 16/17 17/18 18/19 19/20 20/21 Source: Fertilizers Europe, Yara estimates 25
Slide 24: Phasing changes only: no new projects added since last quarter
Phasing changes only: no new projects added since last quarter India Algeria Others Global urea capacity additions ex. China 1 (mill. tonnes) Russia USA Production Iran Nigeria 6.7 5.5 5.1 4.5 4.7 4.2 4.3 3.2 2.6% consumption growth 1.4 1.2 1.0 0.1 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2
Slide 25: Capex guidance
Capex guidance Annual investments (BUSD) 2022 guidance of 1.5 BUSD consists of annual average of 1.2 BUSD less 0.1 BUSD reduction offset by fixed cost increase and phasing of 0.4 BUSD from 2021 27
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 31-37 28