Yara International Asa · OSL:YAR
Yara International Asa — IPO Roadshow (March 2004)
40 slides from Yara International Asa's IPO roadshow presentation, March 2004
Slide 1: Yara – the leading global fertilizer company
Yara – the leading global fertilizer company March 2004
Slide 2: Agenda
Agenda l Introduction l Yara – global leadership l Favorable industry dynamics l Yara business segments l Financial performance l Attractive investment opportunity 2
Slide 3: Transaction structure
Transaction structure Demerging Yara n 80% to Hydro’s existing shareholders n 20% global offering at time of listing, whereof 10% is over-allotment option Background for selected model n Transfer Yara values directly to shareholders n Tax efficient structure n Global offering to effectively position
Slide 4: Yara management
Yara management Egil Hogna Thorleif Enger Head of Chief Executive Investor Relations Officer Arne Cartridge Ken Wallace Chief Chief Legal Communication Counsel Officer Hallgeir Storvik Daniel Clauw Anne Grethe Chief Financial Chief Operating Dalane Officer Officer Chief Personnel Officer Sven Tor Ho
Slide 5: Agenda
Agenda l Introduction l Yara – global leadership l Favorable industry dynamics l Yara business segments l Financial performance l Attractive investment opportunity 5
Slide 6: Yara – a leading fertilizer company
Yara – a leading fertilizer company 2003 revenues* 2003 sales volume* Yara Cargill+IMC** Cargill+IMC** Yara Agrium PCS PCS K+S*** K+S*** Agrium 0 2 4 0 5 10 15 20 25 30 USD billion million metric tonnes Source: Annual reports of companies. Revenues converted to USD at 2003 average currency rates * R
Slide 7: Historical revenue growth
Historical revenue growth Yara Gross Operating Revenues Trevo acquisition Sale of 6 Eni + closures Cycle acquisition Farmland JV top Kynoch SQM 5 acquisition, alliance cycle trough 4 USD billion 3 2 1 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Yara 10 year revenue CAGR* = 5.6% * Compound An
Slide 8: Strong volume growth in overseas markets
Strong volume growth in overseas markets Overseas increasing Increased sourcing from JVs faster than Europe and third party suppliers Mill. tonnes Mill. tonnes 14 25 12 20 10 Key suppliers/ 8 15 JV products Europe 6 10 4 Overseas 5 Yara produced 2 products 0 0 1993 1995 1997 1999 2001 2003 1993 1995
Slide 9: Industry leading profitability
Industry leading profitability Gross return on assets* 2002 2003 Air Products 17.3 Yara 18.1 Yara 17.2 Agrium 17.4 BASF 15.2 Air Products 15.2 K+S 14.4 BASF** 14.5 DuPont 12.7 K+S** 14.0 Kemira 12.0 Kemira 12.6 Syngenta 11.0 Syngenta 11.1 Agrium 9.8 Dow Chemicals 10.2 IMC 9.6 DuPont*** 10.1 PCS 8.2
Slide 10: Agenda
Agenda l Introduction l Yara – global leadership l Favorable industry dynamics l Yara business segments l Financial performance l Attractive investment opportunity 10
Slide 11: Attractive long-term fertilizer industry characteristics
Attractive long-term fertilizer industry characteristics Fertilizer vital to feed the world Government intervention l Continued growth decreasing l Fertilizer industry more Conglomerates looking to profit oriented sell non-core fertilizer businesses l Acquisition opportunities Industry needs to cons
Slide 12: Current outlook positive
Current outlook positive l Low grain stocks l High US energy costs l Strong fertilizer prices l Limited new capacity until 2005 12
Slide 13: Grain stocks drive grain prices
Grain stocks drive grain prices Grain consumption Low grain stocks exceeds production mill, tons mill, tons USD/bu 2000 1000 5 Consumption 1950 Grain inventory 800 4 1900 600 3 1850 Production 400 2 1800 Corn price 1750 200 1 1700 0 0 1994 1996 1998 2000 2002 1994 1996 1998 2000 2002 Grain productio
Slide 14: High US gas prices set ammonia price floor at attractive level
High US gas prices set ammonia price floor at attractive level Ammonia price and Yara has a favorable energy cost US production cost USD/mmbtu USD/mt 6 300 Ammonia fob US Gulf 5 250 4 200 3 150 100 2 US Gulf cash cost 50 1 0 0 1993 1995 1997 1999 2001 2003 2001 2002 2003 US Henry Hub, spot Yara aver
Slide 15: Current fertilizer prices are strong
Current fertilizer prices are strong Urea fob Middle East CAN cif Germany Brent oil price USD/tonne USD/tonne USD/ba 200 200 35 180 180 175 166 30.5 30 28.4 160 160 146 148 140 133 140 25 124 120 120 20.9 20 100 100 80 80 15 60 60 10 40 40 20 20 5 0 0 0 average average Jan-Feb average average histor
Slide 16: Capacity utilization – different expectations going forward
Capacity utilization – different expectations going forward Urea capacity utilization 92% 90% CRU (British Sulphur) 88% 86% 84% Fertecon 82% 80% 78% 76% IFA* 74% 72% 70% 1995 1996 1997 1998 1999 2000 2001 2002 2003E 2004F 2005F 2006F * IFA 2002 indexed to same level as CRU and Fertecon Source: CRU (
Slide 17: Agenda
Agenda l Introduction l Yara – global leadership l Favorable industry dynamics l Yara business segments l Financial performance l Attractive investment opportunity 17
Slide 18: Yara – today the leader in main business segments
Yara – today the leader in main business segments* 2003 carve-out financials l Global no. 1 in ammonia, nitrates and NPK Upstream l Global low cost position in urea (Qafco) Sales: NOK 15.2 bn l Lowest cost producer of ammonia, nitrates EBITDA: NOK 2.4 bn and NPK in Europe Downstream l Unique global
Slide 19: Yara – the leader in nitrogen fertilizers
Yara – the leader in nitrogen fertilizers Global no 1 in Global no 1 in Global no 1 in NPK ammonia nitrates*** complex fertilizer Production capacity* Production capacity Production capacity (mill t) (mill t) (mill t) 6 6 5.0 4 3.7 4.7 4.6 3.8 3.8 2.8 4 4 3.1 2 2 1.7 2.1 1.5 2 2 1.5 1.4 1.4 0 0 0 M
Slide 20: Yara – European low cost producer
Yara – European low cost producer Production cost index: 100 = European EFMA average excl. Yara Ammonia cost position Nitrate cost position NPK cost position Index Index Index 100 100 100 102 100 80 91 90 80 87 87 80 90 89 80 60 60 60 40 40 40 20 20 20 0 0 0 2000 2001 2002 2000 2001 2002 2000 2001 2
Slide 21: Yara Downstream – unique global presence and infrastructure
Yara Downstream – unique global presence and infrastructure 62 46 15 18 22 Major plant Office No. of plants/ “On the ground” in ~50 countries, terminals/ sales to more than 120 countries, warehouses more than 160 infrastructure points 21
Slide 22: Yara Industrial – creating value from co-products
Yara Industrial – creating value from co-products Overall Industrial Market positions optimization H, Ar, products CO etc C02 Industrial No. 1 European supplier gases of carbon dioxide Ammonia NH3 Environ- No. 1 in calcium nitrate Urea mental applications for waste products water treatment HNO3 Indu
Slide 23: Agenda
Agenda l Introduction l Yara – global leadership l Favorable industry dynamics l Yara business segments l Financial performance l Attractive investment opportunity 23
Slide 24: Yara sales and EBITDA
Yara sales and EBITDA Sales EBITDA NOK billion NOK billion l Strong increase in NOK 45 5 sales and EBITDA for 40 2003 35 4 n Strong fertilizer prices 30 n Productivity improve- 3 ments reduced fixed 25 cost per tonne by 6% 20 2 15 l 2003 positive trend 10 1 more than offset 5 increased energy cost 0
Slide 25: Strong fourth quarter results
Strong fourth quarter results l Strong results for the quarter § Strong increase in nitrogen prices § High European sales early in 2003/04 season § Position gains on ammonia and urea § High energy and freight costs l High productivity § Record volumes § Very good safety performance l Solid results o
Slide 26: Upstream business – performance in line with fertilizer cycle
Upstream business – performance in line with fertilizer cycle Sales EBITDA NOK billion NOK billion l Focus on cost and productivity contributed 16 3.0 to strong performance 14 2.5 12 l In 2003 higher 2.0 ammonia and urea 10 prices significantly 8 1.5 improved results, offsetting higher energy 6 1.0
Slide 27: Downstream business – stable results
Downstream business – stable results Sales EBITDA NOK billion NOK billion 35 2.5 l Resilient performance 30 following successful 2.0 turnaround program 25 20 1.5 l 2003 EBITDA stable with 15 higher margins nearly 1.0 offsetting weaker dollar 10 0.5 5 l Improved performance 0 0.0 and lower ammonia in
Slide 28: Industrial business – cashflow stable with strong profitability
Industrial business – cashflow stable with strong profitability Sales EBITDA NOK billion NOK billion l Strong underlying growth and 6 1.0 attractive margins, reflecting attractive 5 0.8 positions in stable markets 4 0.6 l 2003 sales increased 3 on higher volume, 0.4 while EBITDA was 2 affected by hi
Slide 29: Net cash from operating activities higher than capital expenditures
Average Net cash from operating activities higher than Capital exp. Average annual Capex vs Net cash from operating activities 2001 - 2003 3000 2,486 NOK million 2000 1,167 1000 Major upgrading and growth Continuity investments 0 Capital expenditures Net cash from operating activities Annual continu
Slide 30: Solid balance sheet
Solid balance sheet Balance sheet per Dec 31, 2003 30000 25,814 25,814 25000 Non-interest 20000 bearing debt Current assets Key credit ratios 15000 Interest Net debt / EBITDA = 1.61 bearing debt Net debt / Equity = 0.86 10000 5000 Fixed assets Equity 0 Assets Debt and Equity l Net debt at NOK 7.6 bi
Slide 31: Targets
Targets l Solid profitability n CROGI at normalized prices* >10% l Investment hurdle-rate n IRR real, after tax >10% l Relative competitiveness n Gross Return (EBITDA/Total assets) Best quartile of peers l Financial strength n Long-term rating target Mid investment grade l Cash returns to shareholde
Slide 32: Agenda
Agenda l Introduction l Yara – global leadership l Favorable industry dynamics l Yara business segments l Financial performance l Attractive investment opportunity 32
Slide 33: Yara – the leading fertilizer company
Yara – the leading fertilizer company l The global no. 1 fertilizer company l Market leadership in all its key segments Strong platform for l Balanced product portfolio profitable growth l Profitability above peers l Financial discipline 33
Slide 34: Forward-Looking Statements
34 Forward-Looking Statements This presentation material contains “forward-looking” information relating to Yara’s business. Forward-looking information consists of information that is other than historical fact, and can be identified by words such as “believes,” “anticipates,” “projects,” “intends,
Slide 35: Appendix
XG YARA Appendix)
Slide 36: Ammonia fob Trinidad
Ammonia fob Trinidad USD/tonnes 300 250 200 150 100 50 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: Average of prices indicated in industry publications for the applicable year Average price 1994 - 2003 36
Slide 37: Urea prilled bulk fob Middle East
Urea prilled bulk fob Middle East USD/tonnes 250 200 150 100 50 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: Average of prices indicated in industry publications for the applicable year Average price 1994 - 2003 37
Slide 38: CAN Germany bulk delivered warehouse
CAN Germany bulk delivered warehouse USD/tonnes 200 180 160 140 120 100 80 60 40 20 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: Average of prices indicated in industry publications for the applicable year Average price 1994 - 2003 38
Slide 39: www.yara.com
New web pages l From March 25 Yara’s new web pages can be found at www.yara.com 39
Slide 40: Definition of non-GAAP measures
Definition of non-GAAP measures Operating Income Total Assets + Share of net income 20-50 - Deferred Tax Assets companies + Interest Income - Other Current Liabilities + Net loss/gain on securities + Accumulated Depreciation PP&E + Dividends received from 0-20 + Accumulated Depreciation companies Go