Yara International Asa · OSL:YAR
Yara International Asa — Q4 2012 Earnings Presentation
38 slides from Yara International Asa's earnings presentation, Mar 5, 2013
Slide 1: Yara International ASA Fourth Quarter results 2012
0 Yara International ASA Fourth Quarter results 2012 Jørgen Ole Haslestad, CEO IR-Date: 2013-03-05
Slide 2: Summary fourth quarter
1 Summary fourth quarter Strong quarter and full-year results Fertilizer volumes 19% higher than same quarter last year Lower upgrading margins but higher value-added premiums Strong cash flow Proposed dividend NOK 13 per share IR-Date: 2013-03-05
Slide 3: Earnings per share
2 Earnings per share* EPS excluding currency and special items NOK 14 12.86 12.42 11.84 12 10.58 9.86 10.02 10 9.30 7.73 7.72 8 6.68 5.42 6 5.27 4.93 3.88 4 3.06 2 1.21 0 2009 2010 2011 2012 Annual NOK 13.08 30.24 41.99 37.49 * Average number of shares for 4Q 2012: 280.6 million (4Q 2011: 286.0 mill
Slide 4: Strong full-year underlying results
3 Strong full-year underlying results NOK per share Urea price, USD/t 40 600 36.28 35.52 34.94 35 500 30 400 25 20.69 20 300 15.91 15 11.54 200 9.80 10 8.82 100 5 0 0 2005 2006 2007 2008 2009 2010 2011 2012 IR-Date: 2013-03-05
Slide 5: Stronger value-added premiums
4 Stronger value-added premiums Nitrogen upgrading margins Phosphate upgrading margins NPK blend premium USD/t USD/t USD/t 700 700 700 600 600 600 Margin above Nitrate premium 500 blend cost above urea Nitrate premium 500 500 Value above Urea raw material 400 400 Value above 400 ammonia 300 MOP 300
Slide 6: Strong volume development, especially outside Europe
Strong volume development, 5 especially outside Europe Yara-produced compound NPK Yara-produced Nitrate Kilotons Kilotons +14% 700 1,200 +12% 600 1,000 +35% 500 800 400 600 300 400 200 +111% 100 200 0 0 Europe Overseas Europe Overseas 4Q11 4Q12 IR-Date: 2013-03-05
Slide 7: Lower spread versus European spot gas price
6 Lower spread versus European spot gas price Gas prices, USD/MMBtu +6% New hub-linked gas contract in 10.8 11.4 place in Ferrara from October Yara +13% -3% 8.6 8.3 Spread against Zeebrugge expected to reduce further with Brunsbüttel conversion 10.3 Zeebrugge 9.0 Yara’s global average cost dec
Slide 8: Strong cash flow
7 Strong cash flow NOK millions 3,500 3,000 2,866 2,500 2,000 2,459 1,500 118 954 1,000 92 1,372 500 398 0 217 -500 NIBD Sep* Cash Dividends NOC Investments FX gain Other NIBD Dec* earnings** received change (net) * Included in net interest-bearing debt are external bank time deposits (4-12 months),
Slide 9: Proposed dividend of NOK 13 per share
8 Proposed dividend of NOK 13 per share NOK per share 13.00 7.00 5.50 4.50 4.50 4.00 2.25 2.35 2.50 2004 2005 2006 2007 2008 2009 2010 2011 2012 IR-Date: 2013-03-05
Slide 10: Balance sheet can accommodate targeted cash distribution and significant growth
9 Balance sheet can accommodate targeted cash distribution and significant growth Debt to equity ratio development assuming base earnings equal to average of swing scenarios 0.6 0.5 0.4 0.3 0.2 0.1 0.0 3Q12 2013S 2014S 2015S 2016S Annual growth CAPEX 2 BUSD, 45% payout Annual growth CAPEX 1 BUSD, 30
Slide 11: Debottlenecking and regional M&A most attractive
10 Debottlenecking and regional M&A 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 12: Update on Bunge acquisition
11 Update on Bunge acquisition Regulatory process (CADE): Brazilian fertilizer market good progress, formal merger Million tons control notification submitted 10 10% CAGR 09-12 8 Full-time post merger integration team established 6 Yara organizational readiness for closing from mid 2013 4 Mi
Slide 13: Continued strong price incentives necessary to avoid further inventory decline
Continued strong price incentives necessary to 12 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 14: Strong demand and supply response
13 Strong demand and supply response Stable urea price despite record Chinese supply Chinese urea exports Urea price Kilotons 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 11 12 12 12
Slide 15: Season to date US and European nitrogen deliveries modestly ahead of last season
Season to date US and European nitrogen 14 deliveries modestly ahead of last season USA, million tons N West Europe, million tons N +4% 8.5 4.0 8.2 8.4 3.9 +6% 8.0 7.3 3.4 3.4 6.9 3.3 3.2 2H07 2H08 2H09 2H10 2H11 2H12 2H07 2H08 2H09 2H10 2H11 2H12 Net imports Domestic production Source: Yara estimat
Slide 16: Curtailments and continued project delays
15 Curtailments and continued project delays Egyptian urea capacity and exports 2013 incremental urea capacity (million tons) 6.3 million tons RoW 4.8 4.9 21% Algeria 4.1 39% 3.0 * Qatar 12% 14% UAE 15% 2011 2012 Egypt Capacity Exports * November 2011-October 2012 Source: Fertecon urea updates, GTIS
Slide 17: More information can be found on www.yara.com
16 More information can be found on www.yara.com IR-Date: 2013-03-05
Slide 18: Yara sensitivities
17 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 19: Simplified P&Ls for scenarios
18 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 20: Net income after non-controlling interests
19 Net income after non-controlling interests NOK millions 4,000 3,716 3,566 3,500 3,386 3,020 3,000 2,889 2,800 2,616 2,500 2,225 2,165 1,927 2,000 1,522 1,564 1,424 1,500 1,122 1,000 887 500 349 0 2009 2010 2011 2012 Annual NOK 3,782 8,729 12,066 10,602 millions IR-Date: 2013-03-05
Slide 21: Earnings before interest, tax, depreciation and amortization (EBITDA)
Earnings before interest, tax, depreciation and 20 amortization (EBITDA) EBITDA excluding special items NOK millions 7,000 6,587 6,000 5,444 4,968 4,982 5,000 4,281 4,312 4,105 4,000 3,593 3,455 3,251 2,992 3,000 2,486 2,036 2,000 1,259 1,394 860 1,000 0 Annual 2009 2010 2011 2012 NOK 5,549 15,315 1
Slide 22: Debt/equity ratio
21 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 2009 2010 2011 2012 IR-Date: 2013-03-05
Slide 23: Fertilizer volumes
22 Fertilizer volumes 5,474 5,481 5,433 5,210 5,216 5,129 5,247 4,882 2,910 4,914 2,543 4,970 4,834 5,008 5,044 4,791 4,759 2,553 2,993 2,658 2,765 2,146 2,739 2,743 2,290 2,514 2,715 2,355 2,412 2,617 4,239 2,287 2,983 2,937 2,880 2,592 2,551 2,564 2,451 2,436 2,347 2,400 2,256 2,216 2,254 2,270 2,
Slide 24: Yara 4Q fertilizer sales by market and product
23 Yara 4Q fertilizer sales by market and product 2012: 5.0 million tons (2011: 4.2 million tons) 4Q11 4Q12 2,301 1,960 1,252 950 793 611 494 500 233 198 Europe Latin America Asia North America Africa 4Q11 4Q12 1,729 1,545 1,364 1,298 1,088 853 352 332 242 153 167 168 NPK Nitrate Urea Other products
Slide 25: Yara – production volume
24 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 Urea Nitrates NPK CN UAN * Including share of equity-accounted investees IR-Date: 2013-03-05
Slide 26: Yara's average gas costs
25 Yara’s average gas costs Yearly averages 2008 – 2010, quarterly averages for 2011-12 with forward prices* for 1Q13 and 2Q13 USD per MMBtu 14 12.0 11.4 11.8 11.5 12 11.1 11.0 10.9 10.8 11.0 10.8 10.1 10 9.6 7.6 8 8.6 6.6 8.3 8.3 8.1 8.3 8.4 7.9 8.1 7.7 6 7.6 4 4.8 5.7 2 0 2008 2009 2010 1Q11 2Q11
Slide 27: Yara's crop nutrition solutions provide large benefits for farmers
26 Yara’s crop nutrition solutions provide large 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 28: Working closely with end-users key enabler to acheive premiums
Working closely with end-users key enabler to 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 December 2012
Slide 29: Yara product capacity values
28 Yara product capacity values Value based on prices 12 months ending 31 Oct 2012 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
Slide 30: Value-added upgrading and distribution make up major part of Yara's contribution
29 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 31: Ammonia flexibility in Europe
30 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 December 2012
Slide 32: Reduced exposure to oil and European gas
31 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% 70% 65% 50 % 55% 40 % 30 % 20 % -10% -20% -20% -20% 10 % -30% 0% NON 2006 2007 2008 2009 2012 GAS 2006 2009 2010 2012 2013 Europ
Slide 33: Degree of vertical integration in phosphate and potash
32 Degree of vertical integration in phosphate and potash Phosphate rock supply and use (mt) Potash supply and use (mt) 1.9 1.9 1.9 1.9 1.0 1.1 1.4 0.9 0.8 0.5 Source Use Source Use External sourcing Own production NPK plant Other December 2012
Slide 34: Projected nitrogen capacity additions outside China in line with historical consumption growth
Projected nitrogen capacity additions outside 33 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% (2.2%) Vietnam 21% Algeria 39% 2013 2.5
Slide 35: Non-commercials' net long position in corn
34 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: 2013-03-05
Slide 36: Indian urea import requirement
35 Indian urea import requirement Sales minus production Kilotons 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 -1,000 -2,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2012/13 2009/10 2010/11 2011/12 Source: Indian Statistics IR-Date: 2013-03-05
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) 10.3 471 378 446 361 331 343 389 383 385 314 9.3 9.0 9.1 9.1 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 Ammonia fob Black Sea (USD/t) N
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 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Urea prilled fob Black Sea DAP fob US Gulf USD