Yara International ASA · OSL:YAR
Yara International ASA — Q3 2023 Earnings Presentation
27 slides from Yara International ASA's earnings presentation, Oct 20, 2023
Slide 1: Yara International ASA 2023 third-quarter results
Yara International ASA 2023 third-quarter results 20 October 2023
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 b
Slide 3: Our ambition is zero injuries
Our ambition is zero injuries TRI1 (12-month rolling) 5.0 4.0 3.0 2.0 1.0 1.0 0.0 1Q16 3Q23 1) Total Recordable Injuries per 1 million working hours 3
Slide 4: Continued strong cash conversion in lower margin environment
Continued strong cash conversion in lower margin environment 3Q 2023 EBITDA down 62% due to reduced margins Operating cash flow of 1 BUSD primarily due to operating capital release European nitrate price negatively impacted by long order book at start of 3Q Supportive fundamentals for full season bu
Slide 5: Lower gas prices and higher deliveries more than offset by strong price decline
Lower gas prices and higher deliveries more than offset by strong price decline EBITDA ex. special items (MUSD)1 ROIC2 70 Price/margin: - 1,420 Energy cost4: + 810 -610 1,001 -16 -49 Fixed costs: -57 396 3Q22 Volume/Mix3 Margin Currency Other 3Q23 21.5% 3.6% 1) EBITDA ex. special items. For definiti
Slide 6: Operating cash flow of 1 BUSD primarily due to operating capital release
Operating cash flow of 1 BUSD primarily due to operating capital release Strong earnings in 2022, but cash conversion impacted by Weaker earnings in 2023, but strong cash conversion due to operating capital build-up operating capital release EBITDA ex. SI1 Cash from operations2 MUSD EBITDA ex. SI1 C
Slide 7: European nitrate price negatively impacted by long order book at start of 3Q
European nitrate price negatively impacted by long order book at start of 3Q Price development 3Q23 Comments: Nitrate premium USD/t Longer order book built ahead -10% of 3Q, to maintain deliveries and Urea 325 cash flow through off-season FOB Arab Gulf 291 summer period Order-taking fell as urea
Slide 8: Risk of new nitrogen curtailments if slow European demand continues
Risk of new nitrogen curtailments if slow European demand continues Slow start to the season in Europe Improved farmer incentives from last year1 Increasing European gas prices2 Kt N in Europe (all products, nutrient tonnes), 3Q Cereal-to-urea price index, 2014-2016=100 TTF, USD / MMBtu 0.87 25 Forw
Slide 9: Financial performance
Financial performance EBITDA ex. special items1 EPS ex. currency and special items1 ROIC1 (MUSD) (USD per share) (12-month rolling, %) 1,001 2.00 22.0% 396 6.2% 0.19 3Q22 3Q23 3Q22 3Q23 3Q22 3Q23 Change in net operating capital2 Cash from operations Investments (net)3 (MUSD) (MUSD) (MUSD) 801 -238 1
Slide 10: Results by segment
Results by segment EBITDA ex. special items1 (MUSD) 3Q22 3Q23 Europe Americas Africa and Asia Industrial Global Plants Clean Ammonia Solutions 386 308 162 156 93 122 56 59 66 30 7 -95 ROIC 12M rolling2 (%) 3Q22 3Q23 Europe Americas Africa and Asia Industrial Global Plants Clean Ammonia Solutions 27
Slide 11: Increased crop nutrition deliveries for all regions
Increased crop nutrition deliveries for all regions External deliveries 3Q 2022 vs 3Q 2023, in kt 3Q22 3Q23 Comments G +14% Improved premium and commodity product deliveries, 6,459 compared with significant curtailments last year 5,660 Clean Ammonia deliveries Commodity 11% impacted by planned 1
Slide 12: Net debt reduction driven by substantial operating capital release
Net debt reduction driven by substantial operating capital release Net interest-bearing debt: 3Q development (MUSD) -617 (-16%) 3,856 208 3,238 801 101 291 Net debt end Cash earnings1 Net operating Investments (net) Other2 Net debt end of of last quarter capital change current quarter 1) Operating i
Slide 13: Yara Improvement Program (YIP)
Yara Improvement Program (YIP) Ammonia production1 (mt) Finished product production1 (mt) GHG emission intensity (t CO2e/tN) Strong performance across several sites, offset by Improved performance in the quarter driven by higher Improved performance driven by better reliability and lower maintenance
Slide 14: Driving sustainable performance with an integrated scorecard
Driving sustainable performance with an integrated scorecard People Planet Profit 2025 2025 2025 Yara KPI 2021 L12M Measure Yara KPI 2021 L12M Measure Yara KPI 2021 L12M Measure target target target Strive towards GHG emissions, t CO2e/t Ammonia 1 zero accidents 1.0 1.0 <1.0 TRI 3.0 3.0 2.7 7.8 7.8
Slide 15: UN's Sustainable Development Goals lagging
UN’s Sustainable Development Goals lagging "Only 15 per cent of the targets are on track, with many going into reverse. I urge you to keep going […] to see that sustainable development is the best business plan of all" UN Secretary-General Antonio Guterres
Slide 16: Mineral fertilizer fundamental for sustainable agriculture
65 years of science is on our side: Mineral fertilizer fundamental for sustainable agriculture Long-term trial by Yara research centre in Dulmen started in 1958 and, so far, had the following key findings Balanced and Integrated crop nutrition consisting of farmyard manure (organic matter) and min
Slide 17: Yara is playing a leading role in tackling the food crisis and climate change
Yara is playing a leading role in tackling the food crisis and climate change while enabling the energy transition Focused strategy Profitable growth Strong shareholder returns Resilient and flexible business model Building on Yara’s leading ammonia Strong capital discipline maintained – position to
Slide 18: Appendix
Appendix
Slide 19: Nitrate and NPK premiums
Nitrate and NPK premiums Nitrogen upgrading margins1 NPK premium over blend2 USD/t CAN27 equivalents (weekly publication prices) USD/t 1000 Urea Egypt CFR proxy 1000 Yara realized NPK price CAN Nitrate premium, CIF inland Germany Ammonia CFR Urea, CIF inland Germany Yara EU gas*12 DAP, CIF inland Ge
Slide 20: Key product price development
Key product price development 3Q22 3Q23 Urea price development1 (USD/t) Spot gas prices1 (USD/Mmbtu) Yara realized CAN2 and NPK price3 (USD/t) -47% -31% 719 885 -80% -55% 50.8 -20% 650 612 406 381 324 291 -69% 10.1 7.9 2.4 Urea granular Urea inland Europe (TTF) US (Henry Hub) CAN 27 Compound NPK FOB
Slide 21: Energy cost
Energy cost Quarterly averages for 2018 – 3Q 2023 with forward prices1 for 4Q 2023 US gas price (Henry Hub) Yara Global TTF day ahead Yara Europe2 57.9 34.5 31.3 23.8 10.6 16.4 20.0 10.8 15.1 13.1 7.9 9.8 5.5 8.4 9.5 2.5 3.1 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23
Slide 22: Details of energy cost actuals and estimate 4Q 2023
Details of energy cost actuals and estimate 4Q 2023 4Q23 estimations based on Europe 4Q22 1Q23 2Q23 3Q23 forward prices Average gas cost USD/MMbtu 31.4 24.6 14.3 10.8 13.1 Gas consumption1 Million MMBtu 26.4 23.1 24.0 34.8 26.4 European gas cost USD millon 830 566 345 377 346 4Q23 estimations based
Slide 23: Yara inventories
Yara inventories Finished products inventory development in mt 8 7 6 5 4 Other 3 2 Compound NPK 1 Nitrates Urea 0 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 25
Slide 24: Peak of urea capacity additions is behind us
Peak of urea capacity additions is behind us Global urea capacity additions ex. China 1,2 (mt) India Russia Iran Algeria USA Nigeria Australia Others Production 6.7 6.2 5.5 4.5 4.4 4.0 4.2 3.2 2.7 2.0% consumption growth3 1.0 0.4 0.3 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 1) Ure
Slide 25: Farmer incentives: wheat example
Farmer incentives: wheat example Optimal nitrogen application +15% kg/ha 209 209 197 181 3 3 22/23 1H23 1 year ago current Wheat price 309 280 341 247 USD / mt CAN271 price USD/ton 561 382 815 338 Grain yield2 t/ha 9.50 9.57 9.38 9.57 Farmer revenue above nitrogen cost 2,525 2,383 2,650 2,101 USD/ha
Slide 26: 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 33-39
Slide 27: Knowledge grows
Knowledge grows ; ae ee es : :