Yara International ASA · OSL:YAR
Yara International ASA — Q3 2021 Earnings Presentation
32 slides from Yara International ASA's earnings presentation, Oct 20, 2021
Slide 1: Yara International ASA 2021 Third quarter results
Yara International ASA 2021 Third quarter results 20 October 2021
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 5 TRI1 (12-month rolling) 4 People 3 2 1 1.1 0 1Q16 3Q21 1) Total Recordable Injuries per 1 million working hours 3
Slide 4: Improved returns demonstrate business model resilience
Improved returns demonstrate business model resilience ROIC1 12M rolling • Improved returns reflecting higher prices ROIC 12M rolling 7.9 % Salitre impairment2 (2.3 pp) 8.3% • 8.3% ROIC1, up from 7.9% a year earlier 6.1 % • ~40% ammonia 3.7 % curtailment in Europe 3Q 3Q 3Q 3Q 2018 2019 2020 2021 1)
Slide 5: Natural gas spike in Europe has triggered significant curtailments
Natural gas spike in Europe has triggered significant curtailments and driven up global nitrogen prices Curtailed production capacity Ammonia production capacity p.a. in million tons Yara Europe ammonia curtailments currently amount Curtailed In operation to around ~40% of capacity 4.8 High Yara
Slide 6: Financial performance
Financial performance EBITDA ex. special items EPS ex. currency and special items ROIC (MUSD) (USD per share) (12-month rolling) 765 1.33 7.9 8.3 558 0.88 Prosperity 3Q20 3Q21 3Q20 3Q21 3Q20 3Q21 Change in net operating capital1 Investments (net)2,3 Cash from operations (MUSD) (MUSD) (MUSD) 222 854
Slide 7: EBITDA increase driven by higher prices
EBITDA increase driven by higher prices Fixed costs: -14 Other: -2 EBITDA ex. special items (MUSD)1 900 ROIC2 -4 -16 240 600 -12 Of which energy cost: -410 765 300 558 0 3Q20 Volume/Mix Margin Currency Other 3Q21 10.4 % 4.1 % 1) EBITDA ex. special items. For definition and reconciliation see APM sec
Slide 8: Improved results in all regions, with strong contribution from overseas production assets
Improved results in all regions, with strong contribution from overseas production assets EBITDA ex. special items1 (MUSD) Europe Americas Africa and Industrial Global Plants Clean Ammonia Asia Solutions 148 285 103 96 145 38 108 118 29 181 64 36 3Q20 3Q21 3Q20 3Q21 3Q20 3Q21 3Q20 3Q21 3Q20 3Q21 3Q2
Slide 9: Net debt increase as strong cash earnings were offset by operating capital increase and dividend payment
Net debt increase as strong cash earnings were offset by operating capital increase and dividend payment Net interest-bearing debt: 3Q development MUSD -197 749 Strong cash earnings offset by operating capital increase 227 and dividend payment -616 731 Net debt/EBITDA3 at 1.31, 3 450 temporarily
Slide 10: Yara Improvement Program (YIP) performance
Yara Improvement Program (YIP) performance Ammonia production Finished product production Ammonia energy consumption Million tonnes Portfolio adjustment3 30 Million tonnes Portfolio adjustment3 GJ/ton 8.9 23.9 34.1 33.7 33.2 33.2 32.7 7.9 7.8 7.7 7.8 20.9 21.1 21.3 21.7 20 10 0 2018 2019 2020 L12M 2
Slide 11: European nitrogen production is essential to global food security
European nitrogen production is essential to global food security Europe represents a significant Annual nitrogen application Nitrogen fertilizer provides food share of global nitrogen production is critical for crops for ~1/2 of the world’s population Finished nitrogen products, nutrient tonnes1 Gr
Slide 12: Resilient business model and collaborative strategy
Resilient business model and collaborative strategy People Knowledge Broadening our core Our Enabling the towards food solutions competitive Hydrogen economy edge Ramping up business within Green Ammonia Connection to Farm Global footprint Driving Sustainable Performance Diverse and Active portfolio
Slide 13: Global food security cannot be solved by any individual company or country
Global food security cannot be solved by any individual company or country; broad collaboration is essential Yara is well positioned to support the much needed We have already demonstrated what is possible food system transformation through collaboration Action Africa Global footprint Products and s
Slide 14: Appendix
Appendix
Slide 15: Driving sustainable performance with an integrated scorecard
Driving sustainable performance with an integrated scorecard People People Planet Planet Prosperity 2025 2025 2025 Yara KPI 2020 L12M Measure Yara KPI 2020 L12M Measure Yara KPI 2020 L12M Measure Target Target Target 6 Strive towards zero Energy efficiency2 33.2 33.2 32.7 Gj/t NH3 Ammonia Production
Slide 16: Europe: higher prices more than offset lower volumes
Europe: higher prices more than offset lower volumes External revenues (MUSD) EBITDA ex SI (MUSD) ROIC (12-month rolling) +37% Premium products +37% 891 Commodities 651 662 492 148 9.9% 108 6.2% 159 229 3Q20 3Q21 3Q20 3Q21 3Q20 3Q21 • Higher prices • Higher prices more than offset • Improved earning
Slide 17: Americas: stable deliveries and higher margins
Americas: stable deliveries and higher margins External revenues (MUSD) EBITDA ex SI (MUSD) ROIC (12-month rolling) +51% Premium products +57% 1 972 Commodities 780 1 303 503 285 6.5% 1192 181 4.5% 800 3Q20 3Q21 3Q20 3Q21 3Q20 3Q21 • Higher prices • Increased nitrogen prices more than • Salitre impa
Slide 18: Africa & Asia: improved production and higher prices
Africa & Asia: improved production and higher prices External revenues (MUSD) EBITDA ex SI (MUSD) ROIC (12-month rolling) +45% Premium products 189 % 680 Commodities 469 338 259 103 4.9% 342 210 36 1.2% 3Q20 3Q21 3Q20 3Q21 3Q20 3Q21 • Revenues up due to higher prices and • Improved ammonia productio
Slide 19: Global Plants: higher prices offsetting increase in gas cost
Global Plants: higher prices offsetting increase in gas cost Production (thousand tonnes) EBITDA ex SI (MUSD) ROIC (12-month rolling) Finished +4% +23% products Ammonia 1 727 1 859 145 13.6% 13.9% 118 567 535 3Q20 3Q21 3Q20 3Q21 3Q20 3Q21 • Improved finished fertilizer • Higher nitrogen prices and •
Slide 20: Industrial Solutions: higher European gas costs impacting results
Industrial Solutions: higher European gas costs impacting results External revenues (MUSD) EBITDA ex SI (MUSD) ROIC (12-month rolling) +47% -33% 643 96 15.9% 15.6% 436 64 3Q20 3Q21 3Q20 3Q21 3Q20 3Q21 • Increased deliveries as demand for • Higher gas costs for the European • Stable earnings combined
Slide 21: Clean Ammonia: positive impact from higher ammonia prices
Clean Ammonia: positive impact from higher ammonia prices Total revenues1 (MUSD) EBITDA ex SI (MUSD) ROIC (12-month rolling) +169% +32% 612 38 23.8% 29 19.8% 228 3Q20 3Q21 3Q20 3Q21 3Q20 3Q21 • Revenue increase driven by • Increased commission income from • 12-month rolling ROIC improvement increase
Slide 22: Unchanged total capex, phasing from 2021 to 2022
Unchanged total capex, phasing from 2021 to 2022 Investments1 (BUSD) 2.2 0.2 BUSD phasing 1.6 1.4 1.2 1.1 1.1 max. 1.2 per year from 2022 0.8 excluding phasing 2017 2018 2019 2020 2021 2022 1) 2021 onwards represents committed maximum frame 22
Slide 23: 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 -1,101 -1,394 -2,237 -2,630 -2,954 -3,083 -3,243 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q1
Slide 24: 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) +82% +36% +569% +76% 456 564 12.7 411 +62% 416 250 312 234 +104% 193 3.7 1.9 1.8 Urea granular Urea inland Europe US CAN 27 Compound NPK FOB Egypt China proxy 3Q20 3Q
Slide 25: Nitrate and NPK premiums
Nitrate and NPK premiums Nitrogen upgrading margins1 NPK premium over blend2 USD/t CAN27 equivalents (monthly publication prices) USD/t 17 69 330 450 Yara realized NPK price 133 CAN CIF Weighted average global premium above blend cost 4 Nitrate premium, CIF inland Germany Urea Egypt CFR proxy Urea,
Slide 26: Regional fertilizer deliveries
Regional fertilizer deliveries Million tonnes -3% 3Q20 3Q21 3.0 2.9 -9% 2.3 2.1 Commodity +1% -9% +11% 1.0 1.0 +28% 0.7 0.6 Premium* 0.5 0.6 0.3 0.3 Europe Brazil Asia North Latin Africa America America 1) Premium defined as Differentiated N, NPK, CN, fertigation products and YaraVita 26
Slide 27: Energy cost
Energy cost Quarterly averages for 2018-2021 with forward prices* for 4Q21 and 1Q22 32.3 32.8 31.7 25.9 22.6 16.6 18.3 11.7 9.4 11.7 8.4 8.2 7.8 7.5 6.8 9.5 6.3 6.6 6.1 8.2 6.0 5.5 5.8 5.7 4.8 4.3 4.0 4.3 4.5 4.6 4.3 3.8 3.9 4.1 4.0 3.3 3.1 3.5 3.1 3.1 3.4 2.9 2.9 2.5 2.7 2.4 2.5 2.9 2.3 2.3 4.3 1.9
Slide 28: Yara stocks
Yara stocks Finished fertilizer Mill. tonnes 8 Other Compound NPK Nitrates Urea 0 Q3-17 Q3-18 Q3-19 Q3-20 Q3-21 28
Slide 29: 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 29
Slide 30: CRU expect lower growth in production than gross capacity additions
CRU expect lower growth in production than gross capacity additions in the next years India Algeria Others Global urea capacity additions ex. China (mill. tonnes) Russia USA Production Iran Nigeria Production forecast 6.7 5.5 5.5 4.5 4.7 4.2 3.2 3.4 2.6% consumption 1.7 1.3 growth 1.2 1.0 2014 2015
Slide 31: 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 32: 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 29-34 32