Yara International Asa · OSL:YAR
Yara International Asa — Q4 2021 Earnings Presentation
31 slides from Yara International Asa's earnings presentation, Feb 8, 2022
Slide 1: Yara International ASA 2021 Fourth quarter results
Yara International ASA 2021 Fourth quarter results 8 February 2022
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 TRI1 (12-month rolling) People 1.0 1) Total Recordable Injuries per 1 million working hours 3
Slide 4: Improved returns in a volatile market
Improved returns in a volatile market ROIC1 12M rolling • Increased margins reflect business ROIC 12M rolling model resilience Salitre and Dallol impairments2 (3.8 pp in 4Q) • 7.9% ROIC1, in line with a year earlier as impairments offset margin growth 7.9% • NOK 30 per share annual dividend proposed
Slide 5: Rapid increase in market reference prices, not fully reflected in 4Q realized prices
Rapid increase in market reference prices, not fully reflected in 4Q realized prices Urea Natural gas Yara realized prices Strong price increase driven Record price increases in Nitrates: seasonally longer time NPKs: Rapid increase in by healthy demand and tight Europe led to ammonia lag in Europe,
Slide 6: Fourth-quarter price realization highly sensitive to time lag
Fourth-quarter price realization highly sensitive to time lag1 Illustration using financial sensitivities2: Fourth-quarter price realization highly ~480 MUSD negative impact of 2 vs. 1 month sensitive to time lag1 time lag on fourth-quarter price realization Average fourth-quarter publication prices
Slide 7: Improved margins as higher prices more than offset increase in energy costs
Improved margins as higher prices more than offset increase in energy costs EBITDA ex. special items (MUSD)1 Fixed costs: -54 Other: -14 ROIC2 Price/margin: 993 Energy cost: -665 1) EBITDA ex. special items. For definition and reconciliation see APM section of 4Q report, page 31 7 2) Quarterly ROIC,
Slide 8: Proposed dividend of 30 NOK per share, in line with capital allocation policy
Proposed dividend of 30 NOK per share, in line with capital allocation policy Dividend and buy back1 per share Comments • The Yara Board will propose to the Annual General Meeting a 2021 Proposed, dividend of NOK 30 per share to be paid May 2022 • Total NOK 58 per share cash returns paid and propose
Slide 9: Financial performance
Financial performance EBITDA ex. special items1 EPS ex. currency and special items1 ROIC1 (MUSD) (USD per share) (12-month rolling) Prosperity Change in net operating capital2 Investments (net)3, Cash from operations (MUSD) (MUSD) (MUSD) 1) Alternative performance measures are defined, explained and
Slide 10: Positive result development in all regions
Positive result development in all regions EBITDA ex. special items1 (MUSD) Europe Americas Africa and Industrial Global Plants Clean Ammonia Asia Solutions ROIC 12M rolling2 (%) Europe Americas Africa and Industrial Global Plants Clean Ammonia Asia Solutions 1) For definition and reconciliation of
Slide 11: Yara Improvement Program (YIP)
Yara Improvement Program (YIP) Ammonia production Finished product production Ammonia energy consumption - Progress impacted by reliability issues in - Improved reliability in several sites, partly offset - Progress impacted by reliability issues and Europe European sites by reliability issues in so
Slide 12: Driving sustainable performance with an integrated scorecard
Driving sustainable performance with an integrated scorecard People People Planet Planet Prosperity 2 6 6 1 3 1 4 5 6,7 7 6,7 1) Measured annually 8 2) Energy efficiency target is for 2023 3) GHG absolute emissions scope 1+2 target is for 2030 with a 2019 baseline 7 4) Cropland with digital farming
Slide 13: Significant step-up in GHG reduction investments as projects move from planning to execution
Significant step-up in GHG reduction investments as projects move from planning to execution Status absolute emissions (scope 1+2)1 Annual GHG reduction capex Mton CO2e MUSD Planet -30% 1) Measured and reported annually. Reasonable assurance is ongoing for final 2021 results for non-financial report
Slide 14: Sustained top quartile employee engagement, and positive diversity & inclusion trend
Sustained top quartile employee engagement, and positive diversity & inclusion trend Diversity & Inclusion Share of female Employee engagement1 index2 leaders3 Index Index Percent People 1 Measured annually. Employee engagement index is measured through a third-party survey, providing data-driven an
Slide 15: Net debt increase driven by price impact on operating capital
Net debt increase driven by price impact on operating capital Net interest-bearing debt: 4Q development MUSD 1 2 1) Operating income plus depreciation and amortization, minus tax paid, net gain/(loss) on disposals, net interest expense and bank charges 2) Other includes new leases, foreign currency
Slide 16: Full year condensed statement of income
Full year condensed statement of income USD million, except share information Comments • Increased revenues reflecting higher prices • Operating cost increase due to higher input prices, in addition to Salitre and Dallol impairments (~570 MUSD) • Foreign currency translation loss of 100 MUSD on US d
Slide 17: Condensed statement of financial position
Condensed statement of financial position USD million Comments • Higher market prices increased both current assets and current liabilities • Reduced equity reflects dividend distributions, share buy-backs and net income reduced with impairments 17
Slide 18: Extending our ambition: Growing a Nature-Positive Food Future
Extending our ambition: Growing a Nature-Positive Food Future Climate neutrality Regenerative farming Prosperity Reduce our own emissions and Improve farming Improve farmer income and improve productivity at our production productivity and nutrient use efficiency sustainability sites (NUE) — — — Pos
Slide 19: Lantmännen and Yara sign world's first contract to bring fossil free fertilizers to market
Lantmännen and Yara sign world’s first contract to bring fossil free fertilizers to market • First proof point of the viability of green fertilizers1 to the food value chain • Carbon footprint of nitrate-based green fertilizers reduced by 80-90% using renewable energy • With green fertilizers in Lan
Slide 20: Attractive Yara prospects
Attractive Yara prospects Attractive opportunities Focused strategy Strong shareholder returns • Resource and environment • Crop nutrition leader; #1 premium • Strict capital discipline challenges require strong agri product and market presence • Clear capital allocation policy productivity improvem
Slide 21: Appendix
Appendix
Slide 22: Free cash flow
Free cash flow Free cash flow before financing activities1 MUSD, rolling 12 months Divestment proceeds Investments Operations Free cash flow adjusted for divestment proceeds 1,973 1,669 1,491 1,298 1,142 863 1,008 845 532 -1,101 -1,394 -2,237 -2,630 -2,954 -3,083 -3,243 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19
Slide 23: Nitrate and NPK premiums
Nitrate and NPK premiums Nitrogen upgrading margins1 NPK premium over blend2 USD/t CAN27 equivalents (monthly publication prices) USD/t 99 Yara realized NPK price 700 -77 600 118 350 Weighted average global 300 premium above blend cost3 CAN CIF 20 Nitrate premium, CIF inland Germany Urea, CIF inland
Slide 24: Regional fertilizer deliveries
Regional fertilizer deliveries Million tonnes -7% +7% 2.3 2.2 2.2 2.1 Commodity -32% 1.1 -4% +20% 0.8 0.8 0.7 -11% 0.6 Premium1 0.5 0.3 0.3 Europe Brazil Asia North Latin Africa America America 1) Premium defined as Differentiated N, NPK, CN, fertigation products and YaraVita 24
Slide 25: Energy cost
Energy cost Quarterly averages for 2018-2021 with forward prices* for 1Q22 and 2Q22 30.0 30.8 26.4 24.2 22.7 23.0 21.1 17.7 15.4 11.7 9.4 8.4 8.2 7.8 7.5 6.6 6.8 6.3 8.2 6.1 6.0 5.5 4.8 4.3 4.0 4.3 4.5 4.6 4.3 4.7 3.8 3.9 4.1 4.0 4.0 3.8 3.3 3.1 3.5 3.1 3.1 3.4 2.9 2.9 2.5 2.7 2.4 2.5 2.9 2.3 2.3 4.
Slide 26: Yara stocks
Yara stocks Finished fertilizer Mill. tonnes 8 7 6 5 Other 4 3 Compound NPK 2 Nitrates 1 Urea 0 Q4-17 Q4-18 Q4-19 Q4-20 Q4-21 26
Slide 27: 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 21/22 14/15 15/16 16/17 17/18 18/19 19/20 20/21 Source: Fertilizers Europe, Yara estimates 27
Slide 28: Higher nitrogen supply growth forecast in 2022, however demand outlook remains strong
Higher nitrogen supply growth forecast in 2022, however demand outlook remains strong India USA Global urea capacity additions ex. China (mill. tonnes) Russia Nigeria Iran Others Algeria Production 6.7 5.5 5.5 4.5 4.7 4.2 3.2 3.4 2.6% consumption 2.1 growth 1.2 1.3 1.0 2014 2015 2016 2017 2018 2019
Slide 29: Phasing of capex to 2022
Phasing of capex to 2022 Annual investments (BUSD) • 2021 capex at 0.9 BUSD, phasing of 0.4 BUSD into 2022 • USD 0.1 BUSD reduction in 2022- capex, offset by fixed cost increase • Total capex for 2021 and 2022 reduced from 2.5 BUSD to 2.4 BUSD 29
Slide 30: Updated sensitivties and production capacities on www.yara.com
Updated sensitivties and production capacities on www.yara.com In million USD Previous New Urea sensitivity + 10 USD/t 44 44 of which pure urea 38 38 of which pure UAN 6 6 Nitrate sensitivity CAN + 10 USD/t 1) 106 103 of which pure nitrates 66 65 of which NPKs 41 38 Ammonia + 10 USD/t 2) 7 8 Hub gas
Slide 31: 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 31