Yara International Asa · OSL:YAR
Yara International Asa — Q2 2015 Earnings Presentation
35 slides from Yara International Asa's earnings presentation, Jul 21, 2015
Slide 1: Yara International ASA Second quarter results 2015
Yara International ASA Second quarter results 2015 21 July 2015
Slide 2: Summary second quarter
1 Summary second quarter Strong result driven by increased deliveries Continued benefit from lower gas prices and stronger US dollar Positive start to the new fertilizer season in Europe Continued growth for premium fertilizer products in Latin America and Asia Industrial deliveries up 9%
Slide 3: Earnings per share
2 Earnings per share* EPS excluding currency and special items 10.80 10.54 10.51 10.59 9.82 8.32 9.25 2.65 9.58 9.00 8.52 8.26 7.97 8.17 7.67 8.04 7.74 7.62 6.69 7.03 6.74 7.21 6.18 6.40 5.66 5.62 2.65 0.23 2012 2013 2014 2015 Annual NOK 37.31 20.67 27.59 13.24 *Average number of shares for 2Q 2015:
Slide 4: Market development
3 Market development Tighter domestic market in China triggers urea price rebound Western Europe nitrogen fertilizer industry deliveries down 5% on second quarter last year; lower by 2% for the season Brazil fertilizer industry deliveries down 14% on a year earlier; 10% lower year to date Ph
Slide 5: Normal deliveries in Europe and USA
4 Normal deliveries in Europe and USA West Europe USA Million tons N Million tons N 9.0 20.0 +5% -2% 8.0 18.0 7.0 16.0 14.0 6.0 12.0 5.0 10.0 4.0 8.0 3.0 6.0 2.0 4.0 1.0 2.0 0.0 0.0 10/11 11/12 12/13 13/14 14/15 10/11 11/12 12/13 13/14 14/15 Domestic production Net imports Domestic production Net im
Slide 6: Urea price rebound on tighter Chinese domestic balance
5 Urea price rebound on tighter Chinese domestic balance Tighter Chinese domestic urea balance Urea price rebound Million tons USD/t 70 380 66.1 64.7 360 60 -6% 54.0 340 50.6 50 10.8 15.5 320 40 300 30 280 260 20 240 10 220 0 200 Export Export Domestic Domestic Production Production Jul-13 Oct-13 Ja
Slide 7: Brazil: Lower deliveries of commodity products but increased value-added sales
6 Brazil: Lower deliveries of commodity products but increased value-added sales Brazil 1H fertilizer industry deliveries Yara Brazil value-added product 1H deliveries Kilotons Kilotons 450 14,000 Thousands -10% 400 12,000 350 10,000 300 8,000 250 200 6,000 150 -16% 4,000 100 2,000 50 0 0 1H 2011 1H
Slide 8: Long-term growth in YaraMila and YaraLiva deliveries outside Europe
7 Long-term growth in YaraMila and YaraLiva deliveries outside Europe YaraMila and YaraLiva deliveries Outside Europe YaraMila and YaraLiva deliveries Kilotons Kilotons 2,000 403 1,800 374 360 1,600 1,400 1,200 1,000 200 800 CAGR 9% 136 138 142 600 123 121 110 96 103 400 52 49 37 200 0 2Q11 2Q12 2Q1
Slide 9: YaraVita - global brand name for Yara's range of micronutrients
8 YaraVita - global brand name for Yara’s range of micronutrients Products designed for foliar application, seed treatment, fertigation and fertilizer coating Produced in Yara’s Pocklington site in UK Million units 30 Total 2014 contribution of USD 64 CAGR million 25 11% 20 Annual capacity o
Slide 10: Earnings before interest, tax, depreciation and amortization (EBITDA)
9 Earnings before interest, tax, depreciation and amortization (EBITDA) EBITDA excluding special NOK millions items 5,742 5,196 5,179 4,794 4,966 5,055 4,625 4,310 4,186 4,184 4,227 4,103 4,002 4,528 3,935 3,830 4,103 4,149 4,185 3,591 4,039 3,964 3,318 3,591 3,541 3,223 2,363 1,858 Annual 2012 2013
Slide 11: EBITDA development
10 EBITDA development NOK millions 5,179 83 of which of which EU of which OFD+Galvani energy OFD+Galvani +477 million +588 million -279 million 294 1,251 429 4,227 516 EBITDA Volume & mix Price/margin Other Currency Special EBITDA 2Q14 items 2Q15 IR – 21 July 2015
Slide 12: Improved earnings in Downstream and Upstream
11 Improved earnings in Downstream and Upstream EBITDA1 3,133 (NOK millions) EBITDA excluding special items 2,976 2,498 2,479 1,525 1,605 1,502 1,572 365 335 365 335 Downstream Industrial Upstream 2Q14 2Q15 1) 2Q 2015 result reflects new segment structure as described in note 3 of the financial repo
Slide 13: Lower natural gas cost in Europe
12 Lower natural gas cost in Europe Yara European gas & oil cost Change in European energy cost NOK USD/ millions MMBtu 10.0 0 (50) (200) 9.0 (400) (350) 8.0 (600) (588) 7.0 (660) (800) (726) 6.0 (891) (1,000) 5.0 (1,200) 4.0 (1,400) (1,314) 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 2Q14 3Q14 4Q14 1Q15 2Q1
Slide 14: Stable European nitrate premium
13 Stable European nitrate premium Nitrogen upgrading margins1 European nitrate premium2 USD/t (monthly publication prices) USD/t (quarterly Yara realized) 700 180 160 600 140 500 Nitrate premium 120 above urea 400 100 Value above 300 ammonia 80 Value 60 200 above gas 40 100 Yara EU gas cost *20 20
Slide 15: Stable commodity phosphate margins and solid NPK compound premiums
14 Stable commodity phosphate margins and solid NPK compound premiums Phosphate upgrading margins NPK premium over blend1 USD/t USD/t 600 700 600 500 500 400 Weighted average global Value above premium above blend cost raw material 400 300 Nitrate premium, CIF inland Germany 300 NH3, fob Black Sea *
Slide 16: Net interest-bearing debt development
15 Net interest-bearing debt development NOK millions 10,471 342 142 8,985 3,396 3,651 1,765 11 186 Net debt Cash earnings* Dividends Net operating Investments Yara dividend FX gain Other Net debt Mar 15 from equity- capital change net Jun 15 accounted investees * Operating income plus depreciation
Slide 17: Prospects
16 Prospects Improved incentives for fertilizer application as grain prices have increased on supply concerns Key crop producing regions continue to benefit from stronger US dollar Positive start to the new fertilizer season in Europe; healthy Yara nitrate order book for third quarter Brazil
Slide 18: Additional information
Additional information
Slide 19: Yara 2Q fertilizer sales by market and product
18 Yara 2Q fertilizer sales by market and product Kilotons 2Q14 2Q15 2,492 2,462 2,183 2,203 954 1,031 683 537 515 329 Europe Latin America North America Asia Africa 1,360 1,473 1,240 1,331 1,290 1,114 1,141 1,119 986 870 407 438 327 295 NPK compounds NPK blends Nitrate Urea Other products UAN CN IR
Slide 20: YaraMila and YaraBela deliveries
19 YaraMila and YaraBela deliveries Yara-produced compound NPK deliveries Yara-produced nitrate deliveries Kilotons Kilotons 1,600 1,600 1,400 1,400 1,200 1,200 1,000 1,000 800 800 600 600 400 400 200 200 0 - 2Q11 2Q12 2Q13 2Q14 2Q15 2Q11 2Q12 2Q13 2Q14 2Q15 Overseas Europe Overseas Europe IR – 21 J
Slide 21: 2Q YaraBela volume phasing
20 2Q YaraBela volume phasing 60% Yara-produced YaraBela deliveries in 2Q 49% 50% 46% 45% 42% 40% 40% 37% 31% 30% 30% 30% 28% 29% 26% 27% 24% 20% 17% 10% 0% 2Q 2011 2Q 2012 2Q 2013 2Q 2014 2Q 2015 Source: International publications, Yara IR – 21 July 2015
Slide 22: Continued Industrial volume growth
21 Continued Industrial volume growth Kilotons 914 866 885 844 849 852 864 819 816 792 540 511 482 456 438 432 368 358 374 364 367 382 380 364 343 328 361 346 339 333 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Industrial N-chemicals Environmental products Other IR – 21 July 2015
Slide 23: AdBlue deliveries
22 AdBlue deliveries Kilotons 400 350 300 250 200 150 100 50 0 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Europe North America Rest Of World IR – 21 July 2015
Slide 24: Yara production volume
23 Yara production volume* Finished fertilizer and industrial products Ammonia Kilotons Kilotons 6,000 2,500 5,000 2,000 4,000 1,500 3,000 1,000 2,000 500 1,000 0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Urea Nitrates NPK CN UAN SSP - based fertilizer * Including share of equity-accounted
Slide 25: Debt/equity ratio
24 Debt/equity ratio Net interest-bearing debt / equity ratio (end of period) 0.49 0.38 0.32 0.27 0.22 0.20 0.17 0.15 0.12 0.12 0.13 0.07 0.08 0.08 0.06 0.06 0.06 0.06 0.05 0.02 0.01 -0.04 2010 2011 2012 2013 2014 2015 IR – 21 July 2015
Slide 26: Yara stocks
25 Yara stocks Kilotons Bunge Fertilizer Finished fertilizer included from 3Q 2013 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Urea Nitrates Compound NPK Other IR – 21 July 2015
Slide 27: European producers' nitrate stocks
26 European producers’ nitrate stocks Index June 2007=1 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 14/15 10/11 11/12 12/13 13/14 Source: Fertilizers Europe, Yara estimate for June IR – 21 July 2015
Slide 28: Energy cost
27 Energy cost Yearly averages 2009 – 2013, quarterly averages for 2014-15 with forward prices* for 3Q15 and 4Q15. USD per MMBtu 11.0 11.4 11.3 10.7 10.5 9.2 9.8 8.5 9.2 9.4 7.6 7.6 7.4 7.5 7.5 7.2 8.0 8.1 7.6 8.1 6.6 8.2 8.0 7.0 6.6 6.9 6.8 6.8 7.0 6.5 5.7 6.1 6.0 5.7 4.7 5.5 5.7 5.2 4.8 4.4 4.6 4.
Slide 29: Currency exposure affecting Profit & Loss
28 Currency exposure affecting Profit & Loss At the beginning of the third quarter 2015 1. The US dollar debt generating Profit & Loss exposure was USD 1,500 million • Kept as hedge of future earnings and to finance inventories in emerging markets • Around 60% towards BRL with the rest mainly toward
Slide 30: Farm economics support fertilizer demand, even in USD based economies
29 Farm economics support fertilizer demand, even in USD based economies FAO price index Index 300 250 200 150 100 50 0 1/2004 1/2005 1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012 1/2013 1/2014 1/2015 Cereals Price Index Cereals 5 year avg. Food Price Index Food 5 year avg. Source: FAO IR – 21 Ju
Slide 31: For 2015/16, initial estimate calls for balance between production and consumption
30 For 2015/16, initial estimate calls for balance between production and consumption Grain consumption and production Days of consumption in stocks Million tons Days 2,550 85 2,500 2,450 80 2,400 2,350 75 2,300 2,250 70 2,200 2,150 65 2,100 2,050 60 2,000 1,950 55 07 08 09 10 11 12 13 14 15E 16F 07
Slide 32: Non-commercials' net long position in corn
31 Non-commercials’ net long position in corn Thousand contracts 500 400 300 200 100 0 -100 -200 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Source: US Commodity Futures Trading Commission IR – 21 July 2015
Slide 33: Projected nitrogen capacity additions outside China
32 Projected nitrogen capacity additions outside China Urea capacity growth relative Year Driving regions to nitrogen capacity Excluding China Excluding China Algeria 23% 2014 1.1% (1.1%) Iran 20% Algeria 18% 2015 2.6% (2.6%) Saudi Arabia 16% USA 29% 2016 3.1% (3.3%) Algeria 14% USA 33% 2017 2.3% (2
Slide 34: Key value drivers – quarterly averages
33 Key value drivers – quarterly averages TTF day ahead (USD/MMBtu) Urea prilled fob Black Sea (USD/t)/Urea CAN cif Germany (USD/t) granular fob Egypt (dotted line, USD/t) 8.1 358 358 355 354 337 320 315 309 310 7.6 299 295 297 295 277 273 7.0 7.0 6.8 2Q14 3Q14 4Q14 1Q15 2Q15 2Q14 3Q14 4Q14 1Q15 2Q1
Slide 35: 10-year fertilizer prices – monthly averages
34 10-year fertilizer prices – monthly averages Ammonia fob Black Sea CAN cif Germany USD/t USD/t 500 1,000 400 800 600 300 400 200 200 100 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Urea prilled fob Black Sea/Urea granular fob E