Yara International Asa · OSL:YAR
Yara International Asa — Non-Deal Roadshow (May 2012)
40 slides from Yara International Asa's roadshow presentation, May 29, 2012
Slide 1: Yara International ASA
0 Yara International ASA London - May 2012 IR - May 2012
Slide 2: A business strategy geared for global optimization
1 A business strategy geared for global optimization Downstream Upstream Industrial Supply & Trade Scale advantages + Unique flexibility + Unrivalled presence IR - May 2012
Slide 3: Yara – the leader in nitrogen fertilizers
2 Yara – the leader in nitrogen fertilizers Global no 1 in NPK Global no 1 in ammonia Global no 1 in nitrates complex fertilizer Production capacity* (mill t) Production capacity* (mill t) Production capacity* (mill t) 9 7 8 8 6 7 7 6 5 6 5 5 4 4 4 3 3 3 2 2 2 1 1 1 0 0 0 Yara CF GDF Agrium PCS Yara
Slide 4: Yara production capacities
3 Yara production capacities Million tons product 8.0 6.0 4.0 Outside Europe Europe 2.0 0.0 Nitrate NPK Urea IR - May 2012
Slide 5: Yara creates substantial value over and above the commodity nitrogen margin
4 Yara creates substantial value over and above the commodity nitrogen margin Nitrogen upgrading margins Phosphate upgrading margins NPK blend premium USD/t USD/t USD/t 700 800 700 700 650 600 Nitrate premium above urea Margin 600 above blend 600 cost 500 Value above 550 500 raw material 400 500 Val
Slide 6: Nitrate premium is mainly a function of crop prices and marketing effort
5 Nitrate premium is mainly a function of crop prices and marketing effort CAN price, USD/t Wheat price, USD/t 450 400 400 350 350 300 300 250 250 200 200 150 150 100 100 50 50 0 0 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 Adjusted urea* Nitrate premium, USD/t Wheat price * Urea fob Blac
Slide 7: NPKs have significant cash crop share, while nitrates mainly serve commodity crops
6 NPKs have significant cash crop share, while nitrates today mainly serve commodity crops 4,700 150 2,571 Commodity crops 70 866 Cash crops NPK Nitrate NPK Nitrate Europe North America 10 NPK Nitrate 191 Asia 450 343 100 NPK Nitrate NPK Nitrate Africa Latin America IR - May 2012
Slide 8: Incentives remain strong
7 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 Cereals Price Index Food Price Index Annual average Food price index Source: FAO IR - May 2012
Slide 9: Chinese domestic urea price remains strong
8 Chinese domestic urea price remains strong RMB/t 2,600 2,400 +10% 2,200 2,000 1,800 1,600 1,400 1,200 Source: China Fertilizer Market Week IR - May 2012
Slide 10: Current domestic price and 2012 tariff implies swing price above USD 450 fob China
9 Current domestic price and 2012 tariff implies swing price above USD 450 fob China Chinese export price derived from domestic price and tariffs Fob price, USD/t 550 Current* 525 domestic price 500 475 450 425 400 375 350 325 300 1,750 1,850 1,950 2,050 2,150 2,250 2,350 2,450 2,550 Domestic price
Slide 11: Projected nitrogen capacity additions outside China in line with historical consumption growth
10 Projected nitrogen capacity additions outside China in line with historical consumption growth Urea capacity growth relative Year Driving regions to nitrogen capacity World Excluding China World Excluding China 2011 China 46% Pakistan 34% 1.6% (2.0%) 1.4% (1.5%) Pakistan 18% Iran 17% 2012 China 6
Slide 12: Growth strategy on track
11 Growth strategy on track Belle Plaine expansion ICP Dallol SOP investment Potash investment OCP joint venture Pilbara TAN investment IR - May 2012
Slide 13: Additional information
12 Additional information IR - May 2012
Slide 14: Global downstream player with sales to 150 countries
Global downstream player with sales to 150 countries 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 - May 2012
Slide 15: Basis for Yara's profitable growth ambitions
14 Basis for Yara’s profitable growth ambitions Yara Strong earnings through the cycle A scalable business model giving synergies CROGI 25 % 20 % 15 % 10 % 5% 0% 2004 2005 2006 2007 2008 2009 2010 L12M Long term target Industry-leading acquisition track-record Valuation and capital discipline In a
Slide 16: Yara sensitivities
15 Yara sensitivities Operating Income EBITDA EPS* USD million USD million USD Urea sensitivity +100 USD/t 944 1,095 2.8 …of which pure Urea 304 422 1.2 …of which Nitrates 367 391 1.0 …of which NPK 198 207 0.5 Nitrate premium +50 USD/t 439 467 1.2 …of which pure Nitrates 273 294 0.8 Hub gas Europe +
Slide 17: Price and currency assumptions in scenarios
16 Price and currency assumptions in scenarios Last 4 5-year avg. to Chinese Demand- quarters 30 Sep 11 swing* driven** Ammonia fob Black Sea (USD/t) 459 366 450 550 Urea prilled fob Black Sea (USD/t) 386 342 360 510 Nitrate premium , USD/t 94 77 62 68 Phos rock fob North Africa (USD/t) 164 158 200
Slide 18: Simplified P&Ls for scenarios
17 Simplified P&Ls for scenarios Last 4 5-year avg. to Chinese Demand- NOK quarters 30 Sep 20112) swing driven EBITDA1) 14,800 15,200 13,500 23,600 Depreciation -2,600 -2,600 -2,600 -2,600 Interest expense -800 -700 -700 -700 Income before tax 11,400 11,900 10,200 20,300 Tax -2,400 -2,800 -2,100 -4,
Slide 19: Fertilizer volumes
18 Fertilizer volumes Kilotons Outside Europe Europe 7,000 6,000 5,474 5,481 5,433 5,210 5,216 5,129 4,882 4,791 4,759 2,910 4,914 2,543 4,970 4,834 2,553 5,000 2,658 2,765 2,146 2,290 2,514 2,715 2,617 4,239 2,355 2,412 4,000 2,280 3,000 2,983 2,937 2,880 2,592 2,551 2,451 2,564 2,436 2,400 2,000 2
Slide 20: Net debt development
19 Net debt development NOK millions 6,500 5,539 5,500 4,500 519 203 3,484 3,500 1,931 394 2,360 349 2,500 1,500 1,605 500 Net interest- Cash Dividends Net operating Yara Pilbara Investments Foreign Other Net interest- bearing debt earnings** received from capital change transaction (net) exchange b
Slide 21: Debt/equity ratio
20 Debt/equity ratio Net interest-bearing debt / equity ratio (end of period) 0.8 0.75 0.7 0.63 0.6 0.57 0.56 0.49 0.5 0.38 0.4 0.32 0.3 0.27 0.20 0.22 0.2 0.12 0.12 0.1 0.07 0.0 2009 2010 2011 2012 IR - May 2012
Slide 22: Earnings per share
21 Earnings per share* EPS excluding currency and special items NOK 14 12.86 12.42 11.84 12 10.58 10.02 10 7.73 8 6.68 5.42 6 4.93 5.27 3.88 4 3.06 2 1.21 0 2009 2010 2011 2012 Annual NOK 13.08 30.24 41.99 10.58 * Average number of shares for 1Q 2012: 285.5 million (1Q 2011: 288.3 million). IR - May
Slide 23: Yara 1Q fertilizer sales by market and product
22 Yara 1Q fertilizer sales by market and product 2012: 5.4 million tons (2011: 5.5 million tons) Kilotons 1Q11 1Q12 3,500 2,937 2,880 3,000 2,500 2,000 1,500 1,000 732 798 831 796 597 606 383 353 500 0 Europe Latin America Asia North America Africa Kilotons 3,000 1Q11 1Q12 2,000 1,808 1,606 1,413 1
Slide 24: Yara – production volume
23 Yara – production volume* Finished fertilizer 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 2009 2010 2011 2012 UAN CN NPK Nitrates Urea * Including share of equity-accounted investees IR - May 2012 23
Slide 25: Yara's average gas costs
24 Yara’s average gas costs Yearly averages 2005 – 2010, quarterly averages for 2011-12 with forward prices* for 2Q12 and 3Q12 and 4Q12 USD per MMBtu 14 12.0 12.5 11.4 11.7 12 11.1 11.0 10.9 10.8 10.1 10 7.6 8 7.5 7.0 9.6 6.6 8.3 8.3 8.6 8.2 8.2 8.5 7.6 7.9 6 5.6 5.6 5.7 4 4.8 2 0 2006 2007 2008 200
Slide 26: Stocks down in first quarter
25 Stocks down in first quarter Yara finished fertilizer stocks Kilotons 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 NPK/Nitrates Other finished fertilizer IR - May 2012
Slide 27: Yara Pilbara transaction
26 Yara Pilbara transaction Realized strategic goals Management of ammonia plant Development of TAN project NOK millions Key financial terms Price for 16% ownership 832 Net interest-bearing debt in Yara Pilbara 1,099 Effect on Yara’s net interest-bearing debt 1,931 Special items during quarter N
Slide 28: Currency exposure affecting P&L
27 Currency exposure affecting P&L At the end of the first quarter 2012 1. The US dollar debt generating P&L exposure was USD 800 million • Kept as hedge of future earnings and to finance inventories in emerging markets • Around 75% towards EUR with the rest towards NOK and emerging market currencie
Slide 29: Strong US spring demand drives urea price
28 Strong US spring demand drives urea price USD/t 800 750 700 650 600 550 500 450 400 350 300 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 fob Black Sea, prill fob NOLA, granular fob Egypt, granular Source: Average of publications IR - May 2012 28
Slide 30: Record March industry deliveries in Europe
29 Record March industry deliveries in Europe European industry nitrogen deliveries Index* 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun 11/12 09/10 10/11 * Index value 1 = monthly average of deliveries Jul 07-Jun10 Source: Fertilizers Europe, Yara estimates IR
Slide 31: Deliveries still lagging last season
30 Deliveries still lagging last season Season to date (9 months ended 31 March) USA West Europe Million tons Million tons 7.0 14.0 -5% -12% 12.0 6.0 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 07/08 08/09 09/10 10/11 11/12 Production Net imports Domestic Imports A
Slide 32: Dry and cold weather impacting European season
31 Dry and cold weather impacting European season IR - May 2012
Slide 33: European producer nitrate stocks
32 European producer nitrate stocks Index, June 2007=1 1.8 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 11/12 07/08 08/09 09/10 10/11 Source: Fertilizers Europe IR - May 2012
Slide 34: Continued strong price incentives necessary to avoid inventory decline
33 Continued strong price incentives necessary to avoid inventory decline Grain production and consumption Days of consumption in stocks Million tons Days 2,400 120 110 2,300 100 2,200 90 2,100 80 70 2,000 60 1,900 50 1,800 40 01 03 05 07 09 11E 13F 01 03 05 07 09 11E 13F Consumption Production Sour
Slide 35: Chinese exports needed to balance the global market
34 Chinese exports needed to balance the global market Accumulated urea exports Urea price and export tax Kilotons USD per ton Export tax 8,000 600 120 % 7,000 2010 500 100 % 6,000 400 80 % 5,000 2007 4,000 300 60 % 2011 3,000 2009 200 40 % 2,000 100 20 % 1,000 2012 0 0 0% * Export tax during low ta
Slide 36: Nitrates' agronomic advantage has higher value for cash crops than for commodity crops
35 Nitrates’ agronomic advantage has higher value for cash crops than for commodity crops Crop value with nitrates Increase in crop production value €/ha Index using nitrates instead of urea 3,500 1,200 3,192 1,016 3,000 1,000 2,500 800 2,000 1,553 600 1,500 400 1,000 500 200 100 0 0 Wheat/UK Orange
Slide 37: Key value drivers – quarterly averages
36 Key value drivers – quarterly averages Zeebrugge day ahead(USD/MMBtu) Urea prilled fob Black Sea (USD/t) CAN cif Germany (USD/t) 600 450 9.6 9.5 377 384 376 378 484 400 361 9.5 500 446 9.4 408 350 9.3 389 9.3 400 354 300 9.2 9.2 250 300 9.1 200 9.0 9.0 9 200 150 8.9 100 100 8.8 50 8.7 0 0 1Q 11 2
Slide 38: 10-year fertilizer prices – monthly averages
37 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 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Urea prilled fob Black Sea DAP fob U
Slide 39: Nitrate-based fertilizers are superior to urea both agronomically and environmentally
38 Nitrate-based fertilizers are superior to urea both agronomically and environmentally The agronomical efficiency of nitrates is The carbon footprint is lower than for Urea superior to urea Nitrogen recovery (% of AN) Lifecycle carbon footprint (kg CO2 eq/kg N) 100 12 75 8 50 4 25 0 0 AN Urea UAN
Slide 40: Focus on key investment value drivers ensures value-creating growth
39 Focus on key investment value drivers ensures value-creating growth Typical source of value Key investment creation Attractive Attractive Selected examples value driver capital cost/ operating cash entry fee flow Distressed seller Rostock Non-core divestiture Belle Plaine Typically Advantageo