Yara International ASA · OSL:YAR
Yara International ASA — Non-Deal Roadshow (September 2015)
46 slides from Yara International ASA's roadshow presentation, Sep 2, 2015
Slide 1: Yara International ASA London roadshow
Yara International ASA London roadshow 02 September 2015 Torgeir Kvidal, CEO Kjetil Storås, IR
Slide 2: Integrated business model provides scale, flexibility and end-to-end presence
1 Integrated business model provides scale, flexibility and end-to-end presence Downstream Upstream Industrial Supply & Trade Scale advantages + Unique flexibility + Unrivalled presence IR – 02 September 2015
Slide 3: Fertilizer portfolio is being driven towards greater product differentiation and profit
2 Fertilizer portfolio is being driven towards greater product differentiation and profit Product portfolio (2014/15 season volume) Differentiation improves margins and reduces exposure to 17% commodity price volatility 37% On-going efforts to further increase differentiation through: 24% – Capa
Slide 4: Yara Industrial enhances value of fertilizer operations
3 Yara Industrial enhances value of fertilizer operations Solid growth last 10 years… • Yara’s global production system mill. tonnes CAGR enables reliable supply with close +7% 6.2 6.7 5.5 5.7 proximity to industrial customers 4.7 4.6 5.2 3.8 3.9 3.5 • Industrial adds value above 3.3 commodity refer
Slide 5: Strong earnings despite supply driven market
4 Strong earnings despite supply driven market EPS excluding special items and currency NOK 41.99 36.28 34.94 37.31 35.34 28.27 30.66 30.24 27.59 20.69 24.95 20.60 20.08 20.67 15.91 13.24 13.86 13.08 11.54 9.8 8.82 10.20 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H 2015 IR – 02 September 201
Slide 6: EBITDA development
5 EBITDA development NOK millions of which EU of which of which OFD+Galvani energy OFD+Galvani 627 +751 million +1,902 -594 million 9,973 million 2,274 795 1,031 745 7,818 EBITDA Volume & mix Price/margin Other Currency Special EBITDA 1H14 items 1H15 IR – 02 September 2015
Slide 7: Lower natural gas cost in Europe
6 Lower natural gas cost in Europe Yara European gas & oil cost Change in European energy cost NOK USD/ millions MMBtu 10.0 0 (50) (200) 9.0 (400) (350) 8.0 (600) (588) 7.0 (660) (800) (726) 6.0 (891) (1,000) 5.0 (1,200) 4.0 (1,400) (1,314) 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 2Q14 3Q14 4Q14 1Q15 2Q15
Slide 8: Stable European nitrate premium
7 Stable European nitrate premium Nitrogen upgrading margins1 European nitrate premium2 USD/t (monthly publication prices) USD/t (quarterly Yara realized) 700 180 160 600 140 500 Nitrate premium 120 above urea 400 100 Value above 300 ammonia 80 Value 60 200 above gas 40 100 Yara EU gas cost *20 20 0
Slide 9: Stable commodity phosphate margins and solid NPK compound premiums
8 Stable commodity phosphate margins and solid NPK compound premiums Phosphate upgrading margins NPK premium over blend1 USD/t USD/t 600 700 600 500 500 400 Weighted average global Value above premium above blend cost raw material 400 300 Nitrate premium, CIF inland Germany 300 NH3, fob Black Sea *0
Slide 10: Brazil: Lower deliveries of commodity products but increased value-added sales
9 Brazil: Lower deliveries of commodity products but increased value-added sales Brazil 1H fertilizer industry deliveries Yara Brazil value-added product 1H deliveries Kilotons Kilotons 450 14,000 Thousands -10% 400 12,000 350 10,000 300 8,000 250 200 6,000 150 -16% 4,000 100 2,000 50 0 0 1H 2011 1H
Slide 11: Long-term growth in YaraMila and YaraLiva deliveries outside Europe
10 Long-term growth in YaraMila and YaraLiva deliveries outside Europe YaraMila and YaraLiva deliveries Outside Europe YaraMila and YaraLiva deliveries Kilotons Kilotons 2,000 403 1,800 374 360 1,600 1,400 1,200 1,000 200 800 CAGR 9% 136 138 142 600 123 121 110 96 103 400 52 49 37 200 0 2Q11 2Q12 2Q
Slide 12: Chinese domestic urea balance
11 Chinese domestic urea balance Chinese domestic urea balance Urea price Million tons USD/t 80 380 70.6 72.6 70 360 -5% 59.4 340 60 56.5 11.1 320 50 16.2 300 40 280 30 260 20 240 10 220 0 200 Export Export Domestic Domestic Production Production Urea price China (inland proxy price) Urea fob Black
Slide 13: Chinese urea exports put pressure on prices
12 Chinese urea exports put pressure on prices Chinese exports and urea price Chinese production Black Sea Kilotons USD/t Million tons 15/16 2,400 550 7.0 12/13 2,200 500 6.5 14/15 2,000 450 13/144 1,800 6.0 400 1,600 350 5.5 1,400 300 1,200 5.0 250 1,000 200 4.5 800 150 600 4.0 400 100 3.5 200 50 0
Slide 14: Yara expands value-add production capacity in Sluiskil, Netherlands
13 Yara expands value-add production capacity in Sluiskil, Netherlands New urea granulator with capacity of 660 kt per year, replacing old prilling unit with capacity of 400 kt per year Granulator will produce urea with sulphur, a product sold with a premium to regular urea Investment frees up
Slide 15: Multiple growth options; de-bottlenecking and regional M&A currently most attractive
14 Multiple growth options; de-bottlenecking and 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 16: Yara targets payout ratio of 40-45% of net income
15 Yara targets payout ratio of 40-45% of net income Share of net income 64% 16% 53% 48% 48% 47% 6% 41% 12% 6% 32% 25% 30% 7% 26% 21% 23% 48% 7% 19% 47% 5% 1% 6% 34% 35% 25% 23% 18% 19% 16% 18% 17% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Share buy backs Dividends Target range 40-45% I
Slide 17: <a So rd ce LS ~ae
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Slide 18: Price sensitivities linked to capacities
17 Price sensitivities linked to capacities Operating income EBITDA EPS Parameter (MUSD) (MUSD) (USD) Urea + USD 10/t 39 51 0.15 1 ... of which pure urea 0.13 33 44 … of which UAN 7 7 0.02 CAN price + USD 10/t 96 102 0.28 2 58 62 0.17 … of which pure nitrates 38 40 0.11 … of which NPK 3 Compound NPK
Slide 19: Yara benefits from a stronger USD
18 Yara benefits from a stronger USD Revenues and raw material costs are both USD-driven Fixed cost base in EUR (~40%), NOK (~20%), BRL (~15%) and USD/other (~25%) Impact of 10% appreciation vs. NOK1 “Run-rate” vs. 2014-average2 Translation impact NOK vs. FX Fixed costs on gross profit EBITDA EB
Slide 20: Yara has gained a solid position in the fast-growing Latin American market
19 Yara has gained a solid position in the Acquisition fast-growing Latin American market MUSD cost (EV) Bunge OFD Galvani August 2013 October 2014 December 2014 750 377 3181 • Brazil’s largest • Value-add fertilizer • Three phosphate downstream company production, significant mining operations and
Slide 21: Value-added expansions in the Nordics to meet increasing demand outside Europe
20 Value-added expansions in the Nordics to meet increasing demand outside Europe Norway Sweden Finland • 250 kt NPK and Calcium Nitrate • Nitric acid upgrade and expansion • 250 kt NPK expansion In (CN) expansion in Porsgrunn in Køping Uusikaupunki, Finland - Enables further 185 kt • Strong long-te
Slide 22: YaraVita - global brand name for Yara's range of micronutrients
21 YaraVita - global brand name for Yara’s range of micronutrients Products designed for foliar application, seed treatment, fertigation and fertilizer coating Produced in Yara’s Pocklington site in UK Million units 30 Total 2014 contribution of USD 64 CAGR million 25 11% 20 Annual capacity
Slide 23: CAPEX guidance
22 CAPEX guidance Capex plan April 2015 Production growth 2014-2017 NOK bn mt 12.6 20.7 0.3 11.5 11.7 1.3 0.2 1.3 1.5 3.1 8.7 1.0 3.5 1.7 1.8 4.2 1.3 1.3 0.9 6.2 5.2 5.3 5.3 18.8 2014 2015 2016 2017 Production Committed M&A4 Production 2017 Committed growth (NOKbn)2 20142 growth3 Uusikapunki 0.4 - -
Slide 24: 13% EBITDA growth p.a. since 2011
23 13% EBITDA growth p.a. since 2011 Gas and Industrial Environmental Base Chemicals Mining Applications applications Solutions Chemical applications CO2 in a gas, liquid Abatement of emissions Solutions to the Civil for food, feed, and Dry ice format from heavy duty vehicles, explosives industry Ke
Slide 25: Yara well on track to become global market leader for emissions abatement
24 Yara well on track to become global market leader for emissions abatement Growth initiatives 2005 to date 2007 2011 2014 Invested > NOK Aug: Yarwil (JV Oct: acquired Jan: Acquired 1 bn in own with Wilh. Petro Miljö H+H (SCR plants Wilhelmsen) (SNCR Technology) Other selected emissions technology)
Slide 26: We serve a wide range of customers through an extensive offering
25 We serve a wide range of customers through an extensive offering End users Yara value proposition Yara competitive edge Reagent Technology Services Trucks • AdBlue: • Dispensing bulk Off-road • Global reach Automotive High-quality equipment vehicles urea • Telemetry Cars solution • Training • Str
Slide 27: Normal deliveries in Europe and USA
26 Normal deliveries in Europe and USA West Europe USA Million tons N Million tons N 9.0 20.0 +5% -2% 8.0 18.0 7.0 16.0 14.0 6.0 12.0 5.0 10.0 4.0 8.0 3.0 6.0 2.0 4.0 1.0 2.0 0.0 0.0 10/11 11/12 12/13 13/14 14/15 10/11 11/12 12/13 13/14 14/15 Domestic production Net imports Domestic production Net i
Slide 28: Improved earnings in Downstream and Upstream
27 Improved earnings in Downstream and Upstream EBITDA1 3,133 (NOK millions) EBITDA excluding special items 2,976 2,498 2,479 1,525 1,605 1,502 1,572 365 335 365 335 Downstream Industrial Upstream 2Q14 2Q15 1) 2Q 2015 result reflects new segment structure as described in note 3 of the financial repo
Slide 29: Yara 2Q fertilizer sales by market and product
28 Yara 2Q fertilizer sales by market and product Kilotons 2Q14 2Q15 2,492 2,462 2,183 2,203 954 1,031 683 537 515 329 Europe Latin America North America Asia Africa 1,360 1,473 1,240 1,331 1,290 1,114 1,141 1,119 986 870 407 438 327 295 NPK compounds NPK blends Nitrate Urea Other products UAN CN IR
Slide 30: YaraMila and YaraBela deliveries
29 YaraMila and YaraBela deliveries Yara-produced YaraMila deliveries Yara-produced YaraBela deliveries Kilotons Kilotons 1,600 1,600 1,400 1,400 1,200 1,200 1,000 1,000 800 800 600 600 400 400 200 200 0 - 2Q11 2Q12 2Q13 2Q14 2Q15 2Q11 2Q12 2Q13 2Q14 2Q15 Outside Europe Europe Outside Europe Europe
Slide 31: 2Q YaraBela volume phasing
30 2Q YaraBela volume phasing 60% Yara-produced YaraBela deliveries in 2Q 49% 50% 46% 45% 42% 40% 40% 37% 31% 30% 30% 30% 28% 29% 26% 27% 24% 20% 17% 10% 0% 2Q 2011 2Q 2012 2Q 2013 2Q 2014 2Q 2015 Source: Yara IR – 02 September 2015
Slide 32: Continued Industrial volume growth
31 Continued Industrial volume growth Kilotons 914 866 885 844 849 852 864 819 816 792 540 511 482 456 438 432 368358 374364 367 382 380 364 343 328 361 346 339 333 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Industrial N-chemicals Environmental products Other IR – 02 September 2015
Slide 33: AdBlue deliveries
32 AdBlue deliveries Kilotons 400 350 300 250 200 150 100 50 0 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Europe North America Rest Of World IR – 02 September 2015
Slide 34: Yara production volume
33 Yara production volume* Finished fertilizer and industrial products Ammonia Kilotons Kilotons 6,000 2,500 5,000 2,000 4,000 1,500 3,000 1,000 2,000 500 1,000 0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Urea Nitrates NPK CN UAN SSP - based fertilizer * Including share of equity-accounted
Slide 35: Net interest-bearing debt development
34 Net interest-bearing debt development NOK millions 10,471 342 142 8,985 3,396 3,651 1,765 11 186 Net debt Cash earnings* Dividends Net operating Investments Yara dividend FX gain Other Net debt Mar 15 from equity- capital change net Jun 15 accounted investees * Operating income plus depreciation
Slide 36: Debt/equity ratio
35 Debt/equity ratio Net interest-bearing debt / equity ratio (end of period) 0.49 0.38 0.32 0.27 0.22 0.20 0.17 0.15 0.12 0.12 0.13 0.07 0.08 0.08 0.06 0.06 0.06 0.06 0.05 0.02 0.01 -0.04 2010 2011 2012 2013 2014 2015 IR – 02 September 2015
Slide 37: Yara stocks
36 Yara stocks Kilotons Bunge Fertilizer Finished fertilizer included from 3Q 2013 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Urea Nitrates Compound NPK Other IR – 02 September 2015
Slide 38: European producers' nitrate stocks
37 European producers’ nitrate stocks Index June 2007=1 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 14/15 10/11 11/12 12/13 13/14 Source: Fertilizers Europe, Yara estimate for June IR – 02 September 2015
Slide 39: Energy cost
38 Energy cost Yearly averages 2009 – 2013, quarterly averages for 2014-15 with forward prices* for 3Q15 and 4Q15. USD per MMBtu 11.0 11.4 11.3 10.7 10.5 9.2 9.8 8.5 9.2 9.4 7.6 7.6 7.4 7.5 7.5 7.2 8.0 8.1 7.6 8.1 6.6 8.2 8.0 7.0 6.6 6.9 6.8 6.8 7.0 6.5 5.7 6.1 6.0 5.7 4.7 5.5 5.7 5.2 4.8 4.4 4.6 4.
Slide 40: Currency exposure affecting Profit & Loss
39 Currency exposure affecting Profit & Loss At the beginning of the third quarter 2015 1. The US dollar debt generating Profit & Loss exposure was USD 1,500 million • Kept as hedge of future earnings and to finance inventories in emerging markets • Around 60% towards BRL with the rest mainly toward
Slide 41: Farm economics support fertilizer demand, even in USD based economies
40 Farm economics support fertilizer demand, even in USD based economies 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 1/2014 1/2015 Cereals Price Index Cereals 5 year avg. Food Price Index Food 5 year avg. Source: FAO IR – 02 Se
Slide 42: For 2015/16, initial estimate calls for balance between production and consumption
41 For 2015/16, initial estimate calls for balance between production and consumption Grain consumption and production Days of consumption in stocks Million tons Days 2,550 85 2,500 2,450 80 2,400 2,350 75 2,300 2,250 70 2,200 2,150 65 2,100 2,050 60 2,000 1,950 55 07 08 09 10 11 12 13 14 15E 16F 07
Slide 43: Non-commercials' net long position in corn
42 Non-commercials’ net long position in corn Thousand contracts 500 400 300 200 100 0 -100 -200 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Source: US Commodity Futures Trading Commission IR – 02 September 2015
Slide 44: Projected nitrogen capacity additions outside China
43 Projected nitrogen capacity additions outside China Urea capacity growth relative Year Driving regions to nitrogen capacity Excluding China Excluding China Algeria 23% 2014 1.1% (1.1%) Iran 20% Algeria 18% 2015 2.6% (2.6%) Saudi Arabia 16% USA 29% 2016 3.1% (3.3%) Algeria 14% USA 33% 2017 2.3% (2
Slide 45: Key value drivers – quarterly averages
44 Key value drivers – quarterly averages TTF day ahead (USD/MMBtu) Urea prilled fob Black Sea (USD/t)/Urea CAN cif Germany (USD/t) granular fob Egypt (dotted line, USD/t) 8.1 358 358 355 354 337 320 315 309 310 7.6 299 295 297 295 277 273 7.0 7.0 6.8 2Q14 3Q14 4Q14 1Q15 2Q15 2Q14 3Q14 4Q14 1Q15 2Q1
Slide 46: 10-year fertilizer prices – monthly averages
45 10-year fertilizer prices – monthly averages Ammonia fob Black Sea CAN cif Germany USD/t USD/t 500 1,000 400 800 600 300 400 200 200 100 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Urea prilled fob Black Sea/Urea granular fob E
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