Yara International Asa · OSL:YAR
Yara International Asa — Shareholder Meeting (May 2008)
27 slides from Yara International Asa's shareholder meeting presentation, May 8, 2008
Slide 1: Delivering growth in an attractive market
Delivering growth in an attractive market Annual General Meeting, Oslo 8 May 2008 President and CEO Thorleif Enger
Slide 2: A chemical company with fertilizer application as its biggest market
1 A chemical company with fertilizer application as its biggest market Fertilizer Nitric acid Energy Ammonia Urea Industrial Yara converts energy, natural minerals and nitrogen from the air into useful products for farmers and industrial customers IR - Date: 2008-05-08
Slide 3: Three segments mitigate cyclicality and create value for Yara
2 Three segments mitigate cyclicality and create value for Yara EBITDA*, pro forma until 2005 . USD millions Knowledge Margin Local market knowledge 2,000 Strong customer relations 1,800 288 Agronomic and application 1,600 competence Differentiation and branding . 1,400 290 1,200 790 Sourcing & logi
Slide 4: Global optimization creates value
3 Global optimization creates value 2007 fertilizer and nitrogen chemicals volumes in million tonnes* Global Marketing and Sales Product source** optimization Fertilizer Europe Yara production 17.9 13.5 Europe Latin America 4.7 Yara production 2.9 outside Europe Sourcing Business Asia 28.2 2.5 Alloc
Slide 5: Yara achievements in 2007
4 Yara achievements in 2007 Kemira GrowHow acquisition HoA for Libya JV First step in India JV with Wilhelmsen for maritime deNOX Sluiskil urea upgrade decided Praxair JV for industrial gas New European gas agreements mitigating oil price risk IR - Date: 2008-05-08
Slide 6: Yara share with 74% return p.a. since IPO
5 Yara share with 74%* return p.a. since IPO Index (25.03.2004 = 100) Shareholders as of 30 Apr 2008 1,050 Yara 18.4 % 950 850 Other 36.2 % 750 Norwegian 650 state 11.7 % US 550 450 UK 350 Norway 250 15.4 % 150 Oslo Stock 18.2 % Exchange 50 /04 /04 /05 /05 /06 /06 /07 /07 /08 /25 /25 /25 /25 /25 /25
Slide 7: Earnings per share
6 Earnings per share* NOK 12.00 9.63 10.00 8.00 7.01 6.00 4.85 5.10 4.68 3.42 3.67 4.00 3.01 2.77 2.00 0.00 2006 2007 2008 Accumulated NOK 13.86 20.60 9.63 * Average number of shares for 1Q 2008: 291.6 million (1Q 2007: 295.7 million) * Kemira GrowHow included from 4Q 2007 IR - Date: 2008-05-08
Slide 8: Yara's 5-year average return significantly above cost of capital
7 Yara’s 5-year average return* significantly above cost of capital Cash Return On Gross Investment** 18% 16.1% 16% 14.4% 14.1% 14.1% Average: 14% 13.9% 12% 10.6% 10% 8% 6% 4% 2% 0% 2003 2004 2005 2006 2007 * Target: Minimum 10% CROGI as an average over the business cycle. ** CROGI defined as gross
Slide 9: Yara compares favorably with Norwegian peers
8 Yara compares favorably with Norwegian peers Gross return on assets*, percent 2005 2006 2007 Yara 21.6 Yara 16.6 Yara 16.4 Norsk Hydro 15.6 Orkla 13.6 15.0 Hydro** Aluminium Aker 14.3 Hydro Solutions 13.4 Orkla 13.6 Aluminium Aker 10.6 Aker Norske 8.2 10.4 Kværner Skog Orkla 10.2 Norske Aker Norsk
Slide 10: Strong balance sheet after Kemira GrowHow completion
9 Strong balance sheet after Kemira GrowHow completion Net interest-bearing debt / equity ratio (end of period) 0.45 0.42 0.41 0.39 0.40 0.37 0.36 0.35 0.35 0.34 0.33 0.34 0.34 0.35 0.31 0.30 0.27 0.25 0.20 0.15 0.10 0.05 0.00 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2005 2005 2005 2005 2006 2006 2006
Slide 11: Global trends and drivers support the fertilizer business
10 Global trends and drivers support the fertilizer business Fertilizer consumption Population growth Economic growth Higher meat consumption in developing countries Focus on protein-rich diets More fruit and vegetables Hunger reduction Biofuels High energy prices Industrial consumption Economic gro
Slide 12: Increased grain production required to avoid further inventory drop
11 Increased grain production required to avoid further inventory drop Million tons 2,200 3 5% 2,150 2001-2008: 1.7% growth/year 115 days inventory 30% 2,100 2,050 2 5% 2,000 20% 1,950 Consumption 1,900 15% 1,850 10 % 55 days inventory 1,800 Production 5% 1,750 1995-2001: 0.8% growth/year 1,700 0% 1
Slide 13: Increased food production required, with less land per capita
12 Increased food production required, with less land per capita m2 per capita billions 3,000 World 8.5 World population will exceed population 8 billion by 2030 Arable land 2,750 Global arable land can be 7.5 increased by maximum 7% 2,500 Significant reduction in arable land per capita 6.5 2,250 Wi
Slide 14: Agricultural commodity prices still strong
13 Agricultural commodity prices still strong Corn Wheat Soybeans Rice Source: Chicago Board of Trade, 6 May 2008; November/December 2008 contracts IR - Date: 2008-05-08
Slide 15: Higher grain prices more than offset increase in fertilizer costs
14 Higher grain prices more than offset increase in fertilizer costs EUR/ha Change March’07 – March’08 700 Assumptions Wheat yield: 6.2 tons/ha 600 Fertilizer application: 500 K N: 132 kg/ha P P2O5: 25 kg/ha 400 N K2O: 20 kg/ha Wheat 300 Price increase March 07 - March 08: 200 Wheat: 100 EUR/ton CAN
Slide 16: Considerable potential for optimal fertilizer application
15 Considerable potential for optimal fertilizer application kg/ha 300 250 200 150 100 50 0 France FSU + EE South Asia East Asia Sub-Saharan Latin America Africa Source: FAO IR - Date: 2008-05-08
Slide 17: Fertilizer is a catalyst for solar energy
16 Fertilizer is a catalyst for solar energy Optimal use of fertilizer gives: 1) More biomass and and absorption of solar energy 2) Better use of agricultural areas 3) Lower CO2 emissions (when biomass replaces fossil fuel) Food and feed Solar energy 10-15 times more energy in biomass Bio energy 1 u
Slide 18: Strong Industrial growth
17 Strong Industrial growth Kt Kt Process Chemicals Stationary NOX abatement 1,800 400 1,600 Ammonia Nitric acid Urea 350 1,400 300 1,200 250 1,000 200 800 600 150 400 100 200 50 0 0 2003 2004 2005 2006 2007 Q107 Q108 2003 2004 2005 2006 2007 Q107 Q108 Kt Technical Ammonium Nitrate Kt AdBlue 800 140
Slide 19: Recent consumption growth is running ahead of urea capacity increases
18 Recent consumption growth is running ahead of urea capacity increases Increasing price level on “stranded gas” Alternative uses (LNG, GTL, metal smelters, power generation) Time constraints and increased costs for developing gas resources Substantially increased investment costs for ammonia / ure
Slide 20: Components in Yara's Growth Strategy
19 Components in Yara’s Growth Strategy Mature Markets North America Europe Distribution Growth Markets China India Brazil Other Industrial applications Production Other Qatar Libya FSU low-cost gas regions 5 IR - Date: 2008-05-08
Slide 21: Kemira GrowHow – an important strategic move
20 Kemira GrowHow – an important strategic move Kemira GrowHow Supports Yara’s global growth strategy, improved geographical coverage Eastern Europe Phosphate: attractive complementary platform 11% securing sourcing RoW Other 12% Western Strenghtens Yara’s position in balanced Europe 40% fertilizati
Slide 22: Siilinjärvi phosphate rock expansion
21 Siilinjärvi phosphate rock expansion Siilinjärvi annual capacity today 850 kt rock p.a. Phase 1 capacity increase 150 kt rock p.a. (to 1,000 kt) Modification of existing grinding and flotation Operational second half 2009 Phase 2 capacity increase 300 kt rock p.a. (to 1,300 kt) New crushers, grin
Slide 23: Qafco-5 expansion
22 Qafco-5 expansion Letter of Intent signed for construction, total cost USD 3.2 billion Additional 4,600 tpd ammonia and 3,850 tpd urea Total annual site capacity will be 3.8 mill tons ammonia and 4.3 mill tons urea Upgrades of existing facilities and infrastructure for future expansion Completion
Slide 24: Prospects next twelve months
23 Prospects next twelve months Increased Chinese export tax tightens global nitrogen balance Grain prices at historical high levels incentivize increased fertilizer application, even at higher fertilizer prices Urea capacity growth running at lower rate than demand growth Continued energy cost incr
Slide 25: Yara – the Industry Shaper
24 Yara – the Industry Shaper The no.1 fertilizer company Positioned Market and product for leadership industry leadership Strong and stable financial performance Business strength from environmental sustainability Solid growth foundation IR - Date: 2008-05-08
Slide 26: Additional information
iG YARA Additionalintormation
Slide 27: Energy prices reflected in nitrogen players' performance
26 Energy prices reflected in nitrogen players’ performance Gross return on assets*, percent 2005 2006 2007 Agrium 24.3 PCS 19.6 PCS 22.1 PCS 22.3 Air Products 17.9 Air Products 18.6 Yara 21.6 Dow 17.6 17.1 DuPont Dow 18.8 Yara 16.6 Yara 16.4 Air Products 17.9 DuPont 16.2 Syngenta 16.2 Akzo Nobel 13