Yara International Asa · OSL:YAR
Yara International Asa — Q4 2023 Earnings Presentation
34 slides from Yara International Asa's earnings presentation, Feb 9, 2024
Slide 1: Yara International ASA 2023 fourth-quarter results
Yara International ASA 2023 fourth-quarter results 9 February 2024
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) 5.0 4.0 3.0 2.0 1.1 1.0 0.0 1Q16 4Q23 1) Total Recordable Injuries per 1 million working hours 3
Slide 4: Increased crop nutrition deliveries and improving margin trend
Increased crop nutrition deliveries and improving margin trend 4Q 2023 EBITDA1 of 586 MUSD, improving trend since 2Q23 4% increase in crop nutrition deliveries 1 BUSD full-year free cash flow2 Increased buying and rising prices indicate volume catch-up in first half of 2024 NOK 5 per share annual di
Slide 5: Improving EBITDA trend
Improving EBITDA trend EBITDA excl. special items1 per quarter, MUSD Comments EBITDA per quarter excl. SI 19-21 avg. EBITDA Deliveries per quarter EBITDA excl. special Items1 improved in fourth quarter, returning to average 2019-21 levels despite lower deliveries Improvement mainly driven by inc
Slide 6: Strong full-year cash flow, despite challenging market conditions
Strong full-year cash flow, despite challenging market conditions 2023 cash from operations on same level as high-margin 2022 Free cash flow3 of 1 BUSD in 2023 2022 2023 MUSD MUSD Qafco and Salitre proceeds Operations 4,889 2,298 1,882 1,442 1,298 2,391 1,091 2,288 863 532 1,712 -1,242 EBITDA excl.
Slide 7: Proposed dividend of 5 NOK per share
Proposed dividend of 5 NOK per share Net Debt/EBITDA excl. Special Items1 Comments 2.49 2.16 In line with its capital allocation policy, Yara has delivered 1.66 1.72 1.60 2.0 significant cash returns to shareholders, totalling 175 NOK 1.36 1.36 1.5 0.86 per share over the last three years 0.57 0.6
Slide 8: Financial performance
Financial performance EBITDA excl. special items1 EPS excl. currency and special items1 ROIC1 (MUSD) (USD per share) (12-month rolling, %) 1,067 2.46 25.7% 576 0.88 2.9% 4Q22 4Q23 4Q22 4Q23 4Q22 4Q23 Change in net operating capital2 Cash from operations Investments (net)3 (MUSD) (MUSD) (MUSD) 162 -2
Slide 9: 4Q EBITDA excl. special items down 46% compared with 4Q 2022
4Q EBITDA excl. special items down 46% compared with high-price environment in 4Q 2022 EBITDA excl. special items (MUSD)1 ROIC2 -40 Price/margin: - 970 Energy cost4: + 515 -455 -22 26 1,067 576 4Q22 Volume/Mix 3 Margin Currency Other 4Q23 20.4% 8.1% 1) EBITDA excl. special items. For definition and
Slide 10: Results by segment
Results by segment EBITDA excl. special items1 (MUSD) 4Q22 4Q23 Europe Americas Africa and Asia Industrial Global Plants Clean Ammonia Solutions 319 256 258 151 124 81 81 73 59 59 68 43 ROIC 12M rolling2 (%) 4Q22 4Q23 Europe Americas Africa and Asia Industrial Global Plants Clean Ammonia Solutions 3
Slide 11: Increased crop nutrition deliveries
Increased crop nutrition deliveries External deliveries 4Q 2022 vs 4Q 2023, in kt 4Q22 4Q23 Comments Europe deliveries up 6%, but below +4% historical average as buyers were reluctant to take positions 5,315 5,114 Asia demand picking up ahead of application season, recovering compared with weak
Slide 12: Net debt increase mainly due to higher operating capital
Net debt increase mainly due to higher operating capital Net interest-bearing debt: 4Q development (MUSD) +452 (+14%) 3,690 163 3,238 367 432 354 Net debt end Cash earnings1 Net operating Investments (net) Other2 Net debt end of of last quarter capital change current quarter 1) Operating income plus
Slide 13: Fixed cost target to beat inflation in core business
Fixed cost target to beat inflation in core business and moderate spend in growth areas Fixed costs1, in MUSD Portfolio Units Core Business Comments Core business at par with inflation Fixed cost for core business for 2023 in line with inflation ~2 6502 2 513 2 379 2 303 Planned fixed costs redu
Slide 14: Strict capital prioritization in line with strategy
Strict capital prioritization in line with strategy CAPEX1, in BUSD Unspent Growth Maintenance Comments Strict prioritization of capex reduced 2023 capex to 1.2 1.7 BUSD, with no underspend carry-over to 2024 Capex guidance for 2024 of 1.3 BUSD: Capex annual average adjusted by inflation2 1.3 1.
Slide 15: Yara Improvement Program (YIP)
Yara Improvement Program (YIP) Ammonia production1 (mt) Finished product production1 (mt) GHG emission intensity (t CO2e/tN) Consistent performance across most assets offset a few Strong performance across several key sites in a more Stable GHG due to better reliability and fewer curtailments in the
Slide 16: Full year condensed statement of income
Full year condensed statement of income Comments - Lower revenue and variable cost reflect lower prices for both finished products and raw materials - 2023 impairment loss relates mainly to Tertre plant, Belgium (168 MUSD) - High effective tax rate in 2023 due to Tertre impairment and tax losses in
Slide 17: Condensed statement of financial position
Condensed statement of financial position Comments - Reduction in current assets reflects the lower price levels in 2023 compared to 2022, impacting both inventories and trade receivables - In addition to lower prices, trade payables reduced further due to lower commodity TPP1 sourcing to Brazil - E
Slide 18: Driving sustainable performance with an integrated scorecard
Driving sustainable performance with an integrated scorecard People Planet Profit 2025 2025 2025 Yara KPI 2021 2022 2023 Yara KPI 2021 2022 2023 Yara KPI 2021 2022 2023 target target target Strive towards zero GHG emissions, Ammonia 1.0 1.1 1.1 <1.0 3.0 3.1 3.0 2.7 7.8 7.7 7.8 8.6 accidents, TRI int
Slide 19: Increased buying activity indicates volume catch-up in 1H 2024
Increased buying activity and higher optimal application rates indicate volume catch-up in 1H 2024 Lagging European deliveries season-to-date, improved farmer Slow start to the season in the US, incentives (mt N delivered in Europe in core countries1) significant imports needed to cover demand3, in
Slide 20: Yara strategy focused on profitable decarbonization, strengthening core
Yara strategy focused on profitable decarbonization, strengthening ammonia and crop nutrition core Key global trends Strategic response Key projects and priorities Decarbonize and diversify Climate emergency and energy position through profitable Sluiskil CCS: FID confirmed, estimated decarbonizat
Slide 21: Strengthening core nitrate upgrading margin through decarbonization of ammonia
Yara will strengthen its core nitrate upgrading margin through decarbonization of ammonia Yara can utilize its flexible ammonia position to reduce carbon Yara will strengthen its core nitrate upgrading margin emissions and reduce carbon tax exposure through decarbonization opportunity unique to nitr
Slide 22: 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 23: Appendix
Appendix
Slide 24: Updated sensitivities & production capacities on www.yara.com
Updated sensitivities & production capacities on www.yara.com USD million Previous New Urea sensitivity + 10USD/t 44 42 Main changes: … of which pure urea 38 36 • Capacity utilization rate updated from 95% to 90% to match the actual average utilization … of which pure UAN 6 6 rate Nitrate sensitivit
Slide 25: 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 2,104 1,669 1,560 1,442 1,298 1,246 1,142 1,091 863 532 284 288 105 -1,242 2018 2019 2020 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q
Slide 26: Nitrate and NPK premiums
Nitrate and NPK premiums Nitrate premium above urea1 NPK premium above commodity blend2 USD/t (CAN27 equivalents) USD/t (NPK average grade equivalents) 1200 1200 CAN Yara realized NPK price Urea Egypt CFR proxy Commodity Blend -2M lag 800 800 400 400 0 0 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23
Slide 27: Key product price development
Key product price development 4Q22 4Q23 Urea price development1 (USD/t) Spot gas prices1 (USD/Mmbtu) Yara realized CAN2 and NPK price3 (USD/t) -44% -27% 714 -54% 867 -63% 732 34.8 629 -4% 403 357 344 334 12.9 -56% 6.3 2.8 Urea granular Urea inland Europe (TTF) US (Henry Hub) CAN 27 Compound NPK FOB
Slide 28: Energy cost
Energy cost Quarterly averages for 2020 – 4Q 2023 with forward prices1 for 1Q and 2Q 2024 US gas price (Henry Hub) TTF day ahead Yara Global Yara Europe2 57.9 34.5 31.3 12.8 23.8 9.6 11.9 9.0 9.7 16.4 20.0 13.0 10.4 7.9 7.9 5.5 9.5 10.0 2.7 2.7 2.4 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3
Slide 29: Details of energy cost actuals and estimate 1Q and 2Q
Details of energy cost actuals and estimate 1Q and 2Q 2024 1Q24 estimations based on 2Q24 estimations based on Europe 1Q23 2Q23 3Q23 4Q23 forward prices forward prices Average gas cost USD/MMbtu 24.6 14.3 10.8 13.0 11.9 10.4 Gas consumption1 Million MMBtu 23.1 24.0 34.8 37.5 23.1 24.0 European gas c
Slide 30: Yara inventories
Yara inventories Finished products inventory development in mt 8 7 6 5 Other 4 3 Compound 2 NPK 1 Nitrates Urea 0 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 32
Slide 31: Peak of urea capacity additions is behind us
Peak of urea capacity additions is behind us Global urea capacity additions ex. China 1,2 (mt) India Russia Iran Algeria USA Nigeria Australia Others Production 6.7 6.2 5.5 4.9 4.5 4.2 4.2 3.2 2.0% average historical 1.7 consumption 1.0 1.2 growth3 0.1 2015 2016 2017 2018 2019 2020 2021 2022 2023 20
Slide 32: Farmer incentives: wheat example
Farmer incentives: wheat example Optimal nitrogen application kg/ha +6% 209 211 197 199 22/23 2H23 1 year ago current 22/23 2H23 1 year ago3 current3 Wheat price (USD/t) 309 251 315 238 CAN price (USD/t) 561 337 550 302 Optimal nitrogen application (kg/ha) 197 209 199 211 Grain yield (t/ha) 9.50 9.5
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 35-41
Slide 34: Knowledge grows
Knowledge grows ; ae ee es : :