Yara International ASA · OSL:YAR
Yara International ASA — Q2 2021 Earnings Presentation
33 slides from Yara International ASA's earnings presentation, Jul 16, 2021
Slide 1: Yara International ASA 2021 Second-quarter results
Yara International ASA 2021 Second-quarter results 16 July 2021
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 by
Slide 3: Our ambition is zero injuries
Our ambition is zero injuries 5 TRI1 (12-month rolling) 4 People 3 2 1 1.2 0 1Q16 2Q21 1) Total Recordable Injuries per 1 million working hours 3
Slide 4: 12th consecutive quarter of improved returns
12th consecutive quarter of improved returns ROIC1 12M rolling 9.8 % • 9.8% ROIC1, up from 7.3% a year earlier 7.3 % • Improved pricing and recovering premiums 5.4 % • USD 3.0 billion free cash flow2 3.1 % rolling 4 quarters • NOK 20 per share additional dividend proposed 2Q 2Q 2Q 2Q 2018 2019 2020
Slide 5: USD 3.0 billion free cash flow rolling 4 quarters
USD 3.0 billion free cash flow1 rolling 4 quarters FreeMaster Edit cash flow textbefore stylesfinancing activities 1 Edit Master text styles Edit Master text styles Second level 12 months MUSD, rolling Second level Second level Third level Third level Third level Fourth level Fourth level Fourth lev
Slide 6: Further strengthening of the transformation agenda
Further strengthening of the transformation agenda Group Executive Board (GEB) Yara International Svein Tore Holsether EVP Corporate Development & EVP & General Counsel Deputy CEO Kristine Ryssdal Lars Røsæg EVP Farming Solutions EVP & Chief Financial Officer Terje Knutsen Thor Giæver EVP People, Pr
Slide 7: Financial performance
Financial performance EBITDA ex. special items EPS ex. currency and special items ROIC (MUSD) (USD per share) (12-month rolling) +32% 0.36 588 775 1.06 1.42 7.3 % 9.8 % 2Q20 2Q21 2Q20 2Q21 2Q20 2Q21 Prosperity Change in net operating capital1 Investments (net)2 Cash from operations (MUSD) (MUSD) (MU
Slide 8: Improved pricing driving higher margins
Improved pricing driving higher margins Fixed costs: -51 Other: +16 EBITDA ex. special items (MUSD)1 900 -34 ROIC2 -35 252 600 5 Of which energy cost: -203 775 300 588 0 2Q20 Volume/Mix Margin Currency Other 2Q21 9.0 % 13.8 % 1) EBITDA ex. special items. For definition and reconciliation see APM sec
Slide 9: Improved results in all regions
Improved results in all regions EBITDA ex. special items1 (MUSD) Europe Americas Africa and Industrial Global Plants Clean Ammonia Asia Solutions 250 175 180 165 168 114 93 115 45 36 48 70 2Q20 2Q21 2Q20 2Q21 2Q20 2Q21 2Q20 2Q21 2Q20 2Q21 2Q20 2Q21 ROIC2 (%) Europe Americas Africa and Industrial Glo
Slide 10: Premiums recovering following rapid increase in commodity nitrogen prices
Premiums recovering following rapid increase in commodity nitrogen prices Nitrogen upgrading margins1 NPK premium over blend2 USD/t CAN27 equivalents (monthly publication prices) USD/t 97 320 51 450 Yara realized NPK price 134 Weighted average global CAN CIF premium above blend cost 18 Nitrate premi
Slide 11: Positive improvement program trend
Positive improvement program trend Ammonia production Finished product production Ammonia energy consumption Million tonnes Portfolio adjustment3 Million tonnes GJ/ton 8.9 23.9 34.1 33.7 33.2 33.1 32.7 7.9 7.8 7.7 7.9 20.9 21.1 21.3 21.6 2018 2019 2020 L12M 2023 2018 2019 2020 L12M 2023 2018 2019 20
Slide 12: Strong cash earnings, additional dividend proposed
Strong cash earnings, additional dividend proposed Net interest-bearing debt: 2Q development MUSD Strong cash earnings and operating capital release -677 41 624 20 NOK per share annual -416 dividend paid in May, and 156 NOK 20 per share additional dividend proposed for 2 828 2 556 payment in thi
Slide 13: Yara is broadening its business model
Yara is broadening its business model People Knowledge Broadening our core Our Enabling the towards food solutions competitive Hydrogen economy edge Ramping up business within Clean Ammonia Connection to Farm Global footprint Driving Sustainable Performance Diverse and Active portfolio Clear capital
Slide 14: Portfolio Development: evolving and executing ownership strategies
Portfolio Development: evolving and executing ownership strategies for portfolio units grown from Yara’s core Yara Clean Ammonia Agoro Carbon Alliance Yara Growth Ventures • Growing project and partnership portfolio • Solutions to enable carbon cropping • Growing venture portfolio with 5 towards cle
Slide 15: Driving sustainable performance with an integrated scorecard
Driving sustainable performance with an integrated scorecard 2Q scorecard (details in appendix) 2Q performance highlights • Lower injury rate • Improving gender balance in senior management positions People • Commercial launch of Agoro Carbon Alliance in June Planet • ROIC1 13.8% in 2Q • Lower opera
Slide 16: Action Africa: improving agricultural yields is key to tackling world hunger
Action Africa: improving agricultural yields is key to tackling world hunger • In the wake of the Covid-19 pandemic, the number of people facing acute hunger has increased • In 2020 Yara donated USD 25 million in fertilizer aid to help avert a food crisis in Southern and Eastern Africa • Yara’s prod
Slide 17: Attractive Yara prospects
Attractive Yara prospects Attractive opportunities Focused strategy Strong shareholder returns • Strong market fundamentals • Crop nutrition leader; #1 premium • Strict capital discipline with clear • Resource and environment product and market presence capital allocation policy challenges require s
Slide 18: Appendix
Appendix
Slide 19: Driving sustainable performance with an integrated scorecard
Driving sustainable performance with an integrated scorecard People People Planet Planet Prosperity 2025 2025 2025 Yara KPI 2020 L12M Measure Yara KPI 2020 L12M Measure Yara KPI 2020 L12M Measure Target Target Target 6 Strive towards zero Energy efficiency2 33.2 33.1 32.7 Gj/t NH3 Ammonia Production
Slide 20: Unchanged capex guidance
Unchanged capex guidance Investments1 (BUSD) 2.2 1.6 1.3 max. 1.2 1.1 0.8 2017 2018 2019 2020 2021 2022 onwards 1) 2021 onwards represents committed maximum frame 20
Slide 21: Europe: higher margins more than offset lower volumes
Europe: higher margins more than offset lower volumes External revenues (MUSD) EBITDA ex SI (MUSD) ROIC (12-month rolling) +18% Premium products +53% 797 Commodities 674 560 498 175 8.8% 7.9% 114 176 237 2Q20 2Q21 2Q20 2Q21 2Q20 2Q21 • Higher prices • Higher margins offset lower • 12-month rolling R
Slide 22: Americas: stable deliveries and higher margins
Americas: stable deliveries and higher margins External revenues (MUSD) EBITDA ex SI (MUSD) ROIC (12-month rolling) +31% Premium products +39% 1 566 Commodities 1 199 641 482 250 9.5% 180 5.9% 925 717 2Q20 2Q21 2Q20 2Q21 2Q20 2Q21 • Increased nitrogen and phosphate • Strong margin improvement • 12-m
Slide 23: Africa & Asia: improved production, product mix and pricing
Africa & Asia: improved production, product mix and pricing External revenues (MUSD) EBITDA ex SI (MUSD) ROIC (12-month rolling) +41% Premium products 96 % 654 Commodities 463 324 232 93 2.9% 330 48 231 0.9% 2Q20 2Q21 2Q20 2Q21 2Q20 2Q21 • Revenues up due to higher prices, • Improved prices and deli
Slide 24: Global Plants: higher prices offset increased gas cost
Global Plants: higher prices offset increased gas cost Production (thousand tonnes) EBITDA ex SI (MUSD) ROIC (12-month rolling) +0% +2% 1 776 1 807 165 168 15.8% 10.8% 570 540 2Q20 2Q21 2Q20 2Q21 2Q20 2Q21 • Shorter stops and outages • Increased nitrogen and phosphate • Positive impact from Qafco im
Slide 25: Industrial Solutions: higher deliveries and better reliability
Industrial Solutions: higher deliveries and better reliability offset increased gas prices External revenues (MUSD) EBITDA ex SI (MUSD) ROIC (12-month rolling) +41% +65% 552 115 18.3% 15.1% 390 70 2Q20 2Q21 2Q20 2Q21 2Q20 2Q21 • Deliveries up 8% as demand for • EBITDA up mainly due to higher • 12-mo
Slide 26: Clean Ammonia: improved ammonia price level
Clean Ammonia: improved ammonia price level positively impacted commissions earnings and gains on ammonia trade Total revenues1 (MUSD) EBITDA ex SI (MUSD) ROIC (12-month rolling) +115% +22% 570 45 22.2% 36 19.9% 265 2Q20 2Q21 2Q20 2Q21 2Q20 2Q21 • Revenue increase driven by higher • EBITDA increase
Slide 27: Key product price developments
Key product price developments Urea price development1 (USD/t) Spot gas prices1 (USD/Mmbtu) Yara realized CAN2 and NPK price3 (USD/t) +61% +26% +258% +34% 376 513 7.5 328 +51% 408 234 245 293 +57% 194 2.7 2.1 1.7 Urea granular Urea inland Europe US CAN 27 Compound NPK FOB Egypt China proxy 2Q20 2Q21
Slide 28: Regional fertilizer deliveries
Regional fertilizer deliveries Million tonnes -16% 2Q20 2Q21 -4% 2.4 2.3 2.2 2.0 +29% Commodity -2% 1.2 1.1 1.1 +5% 0.9 -9% 0.5 0.6 Premium* 0.4 0.3 Europe Brazil Asia North Latin Africa America America 1) Premium defined as Differentiated N, NPK, CN, fertigation products and YaraVita 28
Slide 29: Energy cost
Energy cost Quarterly averages for 2018-2021 with forward prices* for 3Q21 and 4Q21 11.7 11.2 11.3 10.7 9.4 8.4 8.8 9.4 8.2 9.1 7.8 7.5 8.2 6.9 6.6 6.3 6.1 6.0 6.7 5.5 4.8 4.5 4.6 4.3 4.0 4.3 4.1 3.8 3.9 4.0 3.5 3.6 3.7 3.3 4.3 3.4 2.9 2.9 3.1 3.1 3.1 2.9 2.5 2.7 2.5 2.3 2.3 2.4 1.9 1.9 1.7 1.7 3Q18
Slide 30: Yara stocks
Yara stocks Finished fertilizer Mill. tonnes 8 Other Compound NPK Nitrates Urea 0 Q2-17 Q2-18 Q2-19 Q2-20 Q2-21 30
Slide 31: European producers' nitrate stocks
European producers’ nitrate stocks Index June 2007 = 1 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 20/21 14/15 15/16 16/17 17/18 18/19 19/20 Source: Fertilizers Europe, Yara estimate for March 31
Slide 32: Higher nitrogen supply growth forecast in 2021
Higher nitrogen supply growth forecast in 2021, however higher than normal risk of project delays Global urea capacity additions ex. China (mill. tonnes) India USA Russia Nigeria Iran Others 6.7 Algeria Production 5.5 5.3 5.1 4.5 4.2 2.6% consumption growth 3.2 3.2 1.7 1.3 1.2 1.0 2014 2015 2016 201
Slide 33: 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 31-36 33