Yara International ASA · OSL:YAR
Yara International ASA — Q2 2023 Earnings Presentation
28 slides from Yara International ASA's earnings presentation, Jul 19, 2023
Slide 1: Yara International ASA 2023 second-quarter results
Yara International ASA 2023 second-quarter results 19 July 2023
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 b
Slide 3: Our ambition is zero injuries
Our ambition is zero injuries TRI1 (12-month rolling) 1.1 1) Total Recordable Injuries per 1 million working hours 3
Slide 4: 2Q impacted by falling prices, but improved demand outlook for new season
2Q impacted by falling prices, but improved demand outlook for new season 2Q 2023 Strong cash conversion in a low-margin environment Falling prices generated further position losses, recovery is likely in 3Q based on the latest price developments Positive volume effect from higher premium product de
Slide 5: Strong cash conversion in a low-margin environment
Strong cash conversion in a low-margin environment Strong earnings in 2022, but cash conversion impacted by Weaker earnings in 2023, but strong cash conversion due to operating capital build-up operating capital release EBITDA ex. SI1 Cash from operations2 MUSD EBITDA ex. SI1 Cash from operations2 M
Slide 6: 2Q 2023 impacted by falling commodity prices
2Q 2023 impacted by falling commodity prices 2021 2022 2023 % price change Mar23 vs Jun23 % price change 2Q’22 vs 2Q’23 Urea FOB Egypt, USD/t DAP FOB Morocco, USD/t -16% -23% 1,042 1,181 1,115 743 -54% 641 -58% 565 373 351 Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun Ammonia CFR North West Europe
Slide 7: Falling prices generated further position losses, recovery likely in 3Q
Falling prices generated further position losses, recovery likely in 3Q based on latest price developments Fertilizer commodity prices1 falling for six straight 140 MUSD new inventory write-downs in 2Q 23, driven by months; but urea showing recovery since mid - June declining prices; biggest hit in
Slide 8: Curtailments discontinued as European industry deliveries picked up
Curtailments discontinued as European industry deliveries picked up, ending in line with 21/22 season Yara curtailments discontinued in 2Q with pick-up in demand Comments • Significant pick-up in deliveries in the second quarter, on the back of a tighter nitrogen market with increased European deman
Slide 9: Improved demand and tighter nitrogen market outlook for new season
Improved demand and tighter nitrogen market outlook for new season Urea price development June 2023 Strong farmer incentives1 Declining growth in global urea capacity Granular FOB Egypt Cereal-to-urea price index, 2014-2016=100 Million tonnes urea Supply USD per tonne, per week 1.22 4.5 377 345 Hist
Slide 10: Financial performance
Financial performance EBITDA ex. special items1 EPS ex. currency and special items1 ROIC1 (MUSD) (USD per share) (12-month rolling, %) Change in net operating capital2 Cash from operations Investments (net)3 (MUSD) (MUSD) (MUSD) 1) Alternative performance measures are defined, explained and reconcil
Slide 11: Major margin decline, partially offset by increased premium product deliveries
Major margin decline, partially offset by increased premium product deliveries EBITDA ex. special items (MUSD)1 ROIC2 Price/margin: - 2,130 Energy cost4: + 690 Fixed costs: -39 3 33.4% -5.6% 1) EBITDA ex. special items. For definition and reconciliation see Alternative performance measures (APM) sec
Slide 12: Results by segment
Results by segment EBITDA ex. special items1 (MUSD) Europe Americas Africa and Asia Industrial Global Plants Clean Ammonia Solutions ROIC 12M rolling2 (%) Europe Americas Africa and Asia Industrial Global Plants Clean Ammonia Solutions 1) For definition and reconciliation of EBITDA ex. special items
Slide 13: Strong volume recovery in Europe and increased share of premium products
Strong volume recovery in Europe as expected and increased share of premium products in all regions External deliveries 2Q 2022 vs 2Q 2023, in kt Comments G 2Q22 +2% 2Q23 • Total crop nutrition deliveries in 5,789 5,880 line with a year earlier • Share of premium product -11% deliveries increased ac
Slide 14: Substantial operating capital release partially funded record dividend payment
Substantial operating capital release partially funded record dividend payment Net interest-bearing debt: 2Q development (MUSD) 3,856 -399 3,025 1,229 35 2,626 732 28 270 Net debt end Cash earnings1 Net operating Investments (net) Other2 Net debt end of Dividend Net debt end of of last quarter capit
Slide 15: Continued strong focus on operational improvement and capital discipline
Continued strong focus on operational improvement and capital discipline Ammonia production1 (mt) Finished product production1 (mt) GHG emission intensity (t CO2e/tN) Some setbacks in the quarter due to turnaround performance Overall flat development during the quarter Negative impact from curtailme
Slide 16: Driving sustainable performance with an integrated scorecard
Driving sustainable performance with an integrated scorecard People Planet Profit 1) Measured annually 1) GHG absolute emissions scope 1+2 target is for 2030 with a 1) YIP performance 2) Status per end of the quarter 2019 baseline 2) Market reference used in the premium calculation is currently 2) C
Slide 17: Yara is playing a leading role in tackling the food crisis and climate change
Yara is playing a leading role in tackling the food crisis and climate change while enabling the energy transition Focused strategy Profitable growth Strong shareholder returns Resilient and flexible business model Building on Yara’s leading ammonia Strong capital discipline maintained – position to
Slide 18: Appendix
Appendix
Slide 19: Free cash flow
Free cash flow Free cash flow before financing activities1,2 Divestment proceeds Operations Investments Free cash flow adjusted for divestment proceeds 1,973 1,669 1,491 1,442 1,560 1,298 1,246 1,142 1,008 863 845 532 284 288 14 105 -230 -859 -730 -916 -1,098 -1,243 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q1
Slide 20: Nitrate and NPK premiums
Nitrate and NPK premiums Nitrogen upgrading margins1 NPK premium over blend2 USD/t CAN27 equivalents (weekly publication prices) USD/t Source: Fertilizer Market publications 1) Nitrate premium in CIF Germany terms, above Urea Granular FOB Egypt, in 27% N (USD/t): All prices in CAN27 equivalents, wit
Slide 21: Key product price development
Key product price development 2Q22 2Q23 Urea price development1 (USD/t) Spot gas prices1 (USD/Mmbtu) Yara realized CAN2 and NPK price3 (USD/t) -61% -26% 919 925 -62% -55% 33.0 697 689 -19% 456 356 368 312 12.5 -66% 6.4 2.2 Urea granular Urea inland Europe (TTF) US (Henry Hub) CAN 27 Compound NPK FOB
Slide 22: Energy cost
Energy cost Quarterly averages for 2018 – 2Q 2023 with forward prices1 for 3Q 2023 US gas price (Henry Hub) Yara Global2 TTF day ahead Yara Europe 57.9 34.5 30.8 31.4 31.3 29.8 28.4 24.5 22.6 23.8 16.4 17.0 20.9 20.0 14.3 15.4 15.6 8.8 11.2 9.5 10.7 7.4 7.9 5.5 10.2 8.7 6.7 9.5 4.7 4.6 2.7 2.1 2.6 3
Slide 23: Details of energy cost actuals and estimate 3Q 2023
Details of energy cost actuals and estimate 3Q 2023 3Q23 estimations based on Europe 3Q22 4Q22 1Q23 2Q23 forward prices Average gas cost USD/MMbtu 34.5 31.4 24.6 14.3 10.7 Gas consumption1 Million MMBtu 30.3 26.4 23.1 24.0 30.3 European gas cost USD millon 1,046 830 566 345 325 3Q23 estimations base
Slide 24: Yara inventories
Yara inventories Finished products inventory development in mt 8 7 6 5 4 Other 3 Compound 2 NPK 1 Nitrates Urea 0 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 25
Slide 25: Peak of capacity additions is behind us
Peak of capacity additions is behind us Global urea capacity additions ex. China 1 (mt) India Russia Iran Algeria USA Nigeria Australia Others Production 6.7 6.2 5.5 4.5 4.5 4.4 4.2 3.2 2.3% consumption 2.2 growth2 1.0 0.4 0.7 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 1) Urea proje
Slide 26: Farmer incentives: wheat example
Farmer incentives: wheat example Optimal nitrogen application kg/ha +13% 215 196 191 188 3 3 21/22 2H22 1 year ago current Wheat price 345 337 349 257 USD / mt CAN271 price USD/ton 638 727 709 297 Grain yield2 t/ha 9.49 9.43 9.45 9.59 Farmer revenue above nitrogen cost 2,810 2,669 2,800 2,228 USD/ha
Slide 27: 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 34-40
Slide 28: Slide 28