Yara International Asa · OSL:YAR
Yara International Asa — Q1 2013 Earnings Presentation
39 slides from Yara International Asa's earnings presentation, Apr 22, 2013
Slide 1: Yara International ASA First Quarter results 2013
0 Yara International ASA First Quarter results 2013 Torgeir Kvidal, CFO IR-Date: 2013-04-22
Slide 2: Summary first quarter
1 Summary first quarter Strong results with stable margins Strong cash flow Fertilizer deliveries close to last year despite late spring Record NPK production and sales IR-Date: 2013-04-22
Slide 3: Earnings per share
2 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 5,42 5,27 2010 2011 2012 2013 Annual NOK 30.23 41.99 37.31 8.04 * Average number of shares for 1Q 2013: 280.6 million (1Q 2012: 285.5 million). IR-Date: 2013-04-22
Slide 4: Underlying EBITDA improvement
3 Underlying EBITDA improvement NOK millions 122 4,310 458 180 95 4,129 342 101 EBITDA Special Volume Price/margin Gas & oil Other Currency EBITDA 1Q12 items costs in 1Q13 Europe IR-Date: 2013-04-22
Slide 5: Stable fertilizer volumes
4 Stable fertilizer volumes Kilotons 1 466 1 450 1 328 1 306 1 284 1 238 392 275 320 316 1Q12 1Q13 1Q12 1Q13 1Q12 1Q13 1Q12 1Q13 1Q12 1Q13 Nitrate NPK compound NPK blends Urea UAN Yara-produced fertilizer JV/TPP Total IR-Date: 2013-04-22
Slide 6: Record NPK production and sales
5 Record NPK production and sales Kilotons 1 300 1 200 1 100 1 000 900 800 700 600 500 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 Yara-produced NPK compound deliveries Yara NPK compound production IR-Date: 2013-04-22
Slide 7: Stable value-added premiums
6 Stable value-added premiums Nitrogen upgrading margins Phosphate upgrading margins NPK blend premium USD/t USD/t USD/t 700 600 700 550 600 600 500 Value above raw material Margin above Nitrate premium 450 500 blend cost 500 above urea 400 400 Urea, fob Black sea 400 Value above 350 ammonia 300 300
Slide 8: Yara European gas cost closer to hub price
7 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 0,7 8,0 0,6 7,0 6,0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 Zeebrugge (1-month lag) Yara Europe *Dotted
Slide 9: Strong cash flow
8 Strong cash flow NOK millions 954 2,741 218 146 -1,984 1,119 682 169 NIBD Cash earnings** Dividends from Net operating Net investments FX loss Other NIBD Dec 12* equity accounted capital Mar 13* investees * Included in net interest-bearing debt are external bank time deposits (4-12 months), this i
Slide 10: Fertilizer incentives remain strong
9 Fertilizer incentives remain strong 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: 2013-04-22
Slide 11: Stronger pre-buying in Northern hemisphere…
Stronger pre-buying in Northern hemisphere… 10 Nitrogen deliveries season to date (9 months ending 31 March) USA West Europe Million tons Million tons 14,0 +5% 7,0 12,0 6,0 +4% 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 Pr
Slide 12: …met by strong supply response from China
11 …met by strong supply response from China More balanced urea market compared with last year Chinese urea exports, Kilotons Urea price, USD/t 1 800 550 1 600 500 1 400 450 400 1 200 350 1 000 300 800 250 600 200 400 150 200 100 0 50 -200 0 Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan 10 10 11 11 11
Slide 13: Debottlenecking and regional M&A most attractive
Debottlenecking and regional M&A 12 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 partnerships with access to low cost raw
Slide 14: More information can be found on www.yara.com
13 More information can be found on www.yara.com IR-Date: 2013-04-22
Slide 15: Yara sensitivities
14 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 16: Simplified P&Ls for scenarios
15 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 17: Grain consumption growth stronger than population growth
Grain consumption growth stronger 16 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 18: Higher meat consumption requires more feed grain
17 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 19: Large variations in yields across regions
18 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 20: Yara's crop nutrition solutions provide large benefits for farmers
Yara’s crop nutrition solutions provide large 19 benefits for farmers Citrus yield in Brazil Coffee yield in Vietnam 65 3,3 44% 3,0 12% 45 Current practice Yara Current practice Yara Corn yield in Tanzania Sugarcane yield in Brazil 84 4,3 19% 71 83% 2,4 Current practice Yara Current practice Yara So
Slide 21: Working closely with end-users key enabler to acheive premiums
Working closely with end-users key enabler to 20 acheive 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: 2013-04-22
Slide 22: Yara product capacity values
21 Yara product capacity values Value based on prices last 12 months 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 4.0 5.0 6.0 7
Slide 23: Value-added upgrading and distribution make up major part of Yara's contribution
22 Value-added upgrading and distribution make up major part of Yara’s contribution Average 2010-2011 contribution, NOK billions 24.3 1.5 2.1 Value-add 11.1 + commodity 9.6 outside Europe Overseas 5.1 European Europe 4.5 4.5 energy exposure Commodity Fertilizer Industrial Trade Total upgrade & upgra
Slide 24: Ammonia flexibility in Europe
23 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: 2013-04-22
Slide 25: Reduced exposure to oil and European gas
24 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 Europ
Slide 26: Earnings before interest, tax, depreciation and amortization (EBITDA)
Earnings before interest, tax, depreciation and 25 amortization (EBITDA) NOK millions EBITDA excluding special items 6 587 5 444 4 982 4 966 4 281 4 310 4 103 4 129 3 455 3 591 3 251 2 992 2 486 Annual 2010 2011 2012 2013 NOK 15,315 18,163 16,970 4,129 millions IR-Date: 2013-04-22
Slide 27: Strong earnings in all segments
26 Strong earnings in all segments NOK millions EBITDA excluding special items 2 669 2 649 1 235 1 004 278 235 Downstream Industrial Upstream 1Q12 1Q13 IR-Date: 2013-04-22
Slide 28: Higher net income from equity-accounted investees
Higher net income from 27 equity-accounted investees NOK millions 350 1Q12 1Q13 309 89 57 53 49 32 -62 Qafco Tringen GrowHow UK Lifeco IR-Date: 2013-04-22
Slide 29: Debt/equity ratio
28 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 -0,04 2009 2010 2011 2012 2013 IR-Date: 2013-04-22
Slide 30: Yara production volume
29 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 31: Yara 1Q fertilizer sales by market and product
30 Yara 1Q fertilizer sales by market and product 2013: 5.3 million tons (2012: 5.4 million tons) Kilotons 1Q12 1Q13 2 880 2 892 798 923 796 802 610 484 353 198 Europe Latin America Asia North America Africa 1 466 1 450 1 328 1 306 1 238 1 284 505 392 275 320 363 316 261 233 NPK compounds NPK blends
Slide 32: Gas & oil cost
31 Gas & oil cost Yearly averages 2009 – 2010, quarterly averages for 2011-13 with forward prices* for 2Q13 and 3Q13 USD per MMBtu 14 12,1 11,1 11,4 11,5 12 10,9 11,0 10,8 11,0 11,0 10,8 10,1 10 8 7,6 8,3 8,6 8,3 8,3 8,5 6,6 7,9 8,1 7,9 8,3 7,7 6 7,6 5,7 4 4,8 2 0 2009 2010 1Q11 2Q11 3Q11 4Q11 1Q12
Slide 33: Continued strong price incentives necessary to avoid further inventory decline
Continued strong price incentives necessary to 32 avoid further inventory decline Grain consumption and production Days of consumption in stocks Million tons Days 2 350 85 2 300 80 2 250 75 2 200 2 150 70 2 100 65 2 050 60 2 000 1 950 55 06 07 08 09 10 11E 12F 13F 06 07 08 09 10 11E 12F 13F Consumpt
Slide 34: Chinese urea balance
33 Chinese urea balance Chinese urea production Domestic urea balance Million tons Million tons 7,0 50 45 44,3 6,0 40 39,4 2% 36,4 37,1 5,0 35 7,2 3,0 4,0 30 25 3,0 20 2,0 15 10 1,0 5 0,0 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Export Domestic Domestic Export Production Production 2012 201
Slide 35: Effect of revised Chinese tax system for 2013
34 Effect of revised Chinese tax system for 2013 FOB China, USD/t 550 525 47 500 47 46 46 475 46 46 46 450 45 45 Startpoint for 45 escalating tax in 2012 45 425 44 44 44 400 44 42 38 375 34 30 25 Startpoint for 21 escalating tax in 2013 350 17 16 17 16 16 15 16 325 15 15 15 300 1 700 1 800 1 900 200
Slide 36: Projected nitrogen capacity additions outside China in line with historical consumption growth
Projected nitrogen capacity additions outside 35 China in line with historical consumption growth Urea capacity growth relative Year Driving regions to nitrogen capacity Excluding China Excluding China Pakistan 37% 2011 1.2% (1.2%) Iran 18% Qatar 39% 2012 1.9% (1.9%) Vietnam 21% Algeria 39% 2013 2.5
Slide 37: Non-commercials' net long position in corn
36 Non-commercials’ net long position in corn Thousand contracts 500 400 300 200 100 0 -100 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Source: US Commodity Futures Trading Commission IR-Date: 2013-04-22
Slide 38: Key value drivers – quarterly averages
37 Key value drivers – quarterly averages Zeebrugge day ahead (USD/MMBtu) Urea prilled fob Black Sea (USD/t) CAN cif Germany (USD/t) 11,1 471 361 351 10,3 331 343 9,3 389 383 385 400 314 9,1 9,1 1Q12 2Q12 3Q12 4Q12 1Q13 1Q12 2Q12 3Q12 4Q12 1Q13 1Q12 2Q12 3Q12 4Q12 1Q13 Ammonia fob Black Sea (USD/t)
Slide 39: 10-year fertilizer prices – monthly averages
38 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