Yara International Asa · OSL:YAR
Yara International Asa — Q2 2013 Earnings Presentation
36 slides from Yara International Asa's earnings presentation, Jul 19, 2013
Slide 1: Yara International ASA Second Quarter results 2013
0 Yara International ASA Second Quarter results 2013 19 July 2013 IR-Date: 2013-07-19
Slide 2: Summary second quarter
1 Summary second quarter Strong results Record deliveries and low ending stocks Lower commodity fertilizer margins Increased nitrate and NPK premiums IR-Date: 2013-07-19
Slide 3: Earnings per share
2 Earnings per share* 12.86 12.42 EPS excluding currency and 11.84 special items 10.54 10.02 9.82 9.25 8.04 7.73 7.67 6.68 6.68 5.42 5.27 2010 2011 2012 2013 Annual NOK 30.23 41.99 37.31 14.72 * Average number of shares for 2Q 2013: 279.3 million (2Q 2012: 283.9 million). IR-Date: 2013-07-19
Slide 4: Fertilizer market development
3 Fertilizer market development Solid farm economics support fertilizer demand Strong global urea demand but increased export availability from China, at lower prices than last year Western Europe nitrogen fertilizer industry deliveries 14% higher than second quarter last year, total 2012/13 s
Slide 5: Solid farm economics support fertilizer demand
4 Solid farm economics support fertilizer demand 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 Cereals Price Index Cereals 5 year avg. Food Price Index Food 5 year avg. Source: FAO IR-Date: 2013-07-19
Slide 6: Strong global urea demand, but increased export availability from China
Strong global urea demand, but increased 5 export availability from China Global urea trade and Chinese urea exports (million tons) 1 Jul – 31 Mar Global urea trade Chinese urea exports 32.0 28.7 26.8 +5.2 24.2 20.5 7.4 389 251 350 448 378 6.1 3.9 3.0 +4.4 1.2 08/09 09/10 10/11 11/12 12/13 08/09 09/
Slide 7: Increased US and European industry deliveries in 2012/13 season
Increased US and European industry deliveries 6 in 2012/13 season USA Western Europe Million tons Million tons +7% 9.0 18.0 8.0 +6% 16.0 7.0 14.0 12.0 6.0 10.0 5.0 8.0 4.0 6.0 3.0 4.0 2.0 2.0 1.0 0.0 0.0 07/08 08/09 09/10 10/11 11/12 12/13 07/08 08/09 09/10 10/11 11/12 12/13 Production Net imports D
Slide 8: Record NPK and nitrate deliveries
7 Record NPK and nitrate deliveries Yara produced NPK deliveries Yara produced nitrate deliveries Kilotons Kilotons 1,300 1,700 1,200 1,500 1,100 1,300 1,000 900 1,100 800 900 700 700 600 500 500 2Q09 2Q10 2Q11 2Q12 2Q13 2Q09 2Q10 2Q11 2Q12 2Q13 IR-Date: 2013-07-19
Slide 9: Earnings before interest, tax, depreciation and amortization (EBITDA)
Earnings before interest, tax, depreciation and 8 amortization (EBITDA) NOK millions EBITDA excluding special items 6,587 5,444 4,982 4,966 4,281 4,310 4,103 4,129 3,995 3,455 3,591 3,251 2,992 2,486 Annual 2010 2011 2012 2013 NOK 15,315 18,163 16,970 8,124 millions IR-Date: 2013-07-19
Slide 10: EBITDA development
9 EBITDA development NOK millions 1,130 1,790 4,966 158 232 188 3,995 48 EBITDA Special Volume Price/margin Gas & oil Other Currency EBITDA 2Q12 items costs in 2Q13 Europe IR-Date: 2013-07-19
Slide 11: Strong earnings in all segments
10 Strong earnings in all segments NOK millions EBITDA excluding special items 3,534 2,468 1,221 1,196 303 288 Downstream Industrial Upstream 2Q12 2Q13 IR-Date: 2013-07-19
Slide 12: Net income from equity-accounted investees
11 Net income from equity-accounted investees NOK millions 356 342 2Q12 2Q13 158 63 72 51 44 20 7 -99 Qafco Tringen GrowHow UK Lifeco Other IR-Date: 2013-07-19
Slide 13: Increased fertilizer deliveries
12 Increased fertilizer deliveries Kilotons 1,670 1,551 1,363 1,219 1,175 935 557 600 461 469 2Q12 2Q13 2Q12 2Q13 2Q12 2Q13 2Q12 2Q13 2Q12 2Q13 Nitrate NPK compound NPK blends Urea UAN Yara-produced deliveries Joint venture & third party sourced Total IR-Date: 2013-07-19
Slide 14: Low Yara stocks
13 Low Yara stocks Kilotons Finished fertilizer 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 Other NPK Nitrates Urea IR-Date: 2013-07-19
Slide 15: Farmer yield benefits justify nitrate premium
14 Farmer yield benefits justify nitrate premium Nitrogen upgrading margins Nitrate premium, USD/t CAN USD/t 700 160 600 140 Nitrate premium above urea 120 500 Value 100 400 above ammonia 80 300 Value above gas 60 200 40 100 Yara EU gas cost *20 20 0 0 2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 2Q
Slide 16: Stable NPK premiums
15 Stable NPK premiums Phosphate upgrading margins NPK blend premium USD/t USD/t 700 700 600 600 Margin above 500 Value above 500 blend cost raw material 400 400 Urea, fob Black sea NH3, fob Black Sea *0.22 300 300 MOP, cfr NWE 200 200 100 Rock, fob NA *1.4 100 DAP, fob Morocco 0 0 4Q09 2Q10 4Q10 2Q
Slide 17: Value-added upgrading and distribution make up larger part of Yara's contribution
16 Value-added upgrading and distribution make up larger part of Yara’s contribution Total Yara contribution NOK millions 9,000 8,000 7,000 Trade Industrial upgrade & distribution 6,000 5,000 Fertilizer upgrade & distribution 4,000 3,000 2,000 Commodity overseas 1,000 Commodity Europe 0 1Q10 2Q10 3Q
Slide 18: Solid growth in Air1 deliveries
17 Solid growth in Air1 deliveries Kilotons 300 20% 18% 250 16% 14% 200 12% 150 10% 8% 100 6% 4% 50 2% 0 0% 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 Air1 deliveries % of total Industrial deliveries excl. industrial gases IR-Date: 2013-07-19
Slide 19: Strong cash flow
18 Strong cash flow NOK millions 741 72 409 3,418 1,984 1,527 29 1,204 679 Net debt Cash Dividends Net operating Net investments Yara Dividend FX loss Other Net debt Mar 13* earnings** from equity capital Jun 13* accounted investees * Included in net interest-bearing debt are external bank time depo
Slide 20: Prospects
19 Prospects Continued strong farm economics support fertilizer demand Urea market likely dominated by China in 3Q due to increased supply; from 4Q production rates and 1 November tax change enforcement are key Capacity outside China: unclear timing for new projects Positive situation in Eur
Slide 21: Improvement in Brazil and Bunge closing in 3Q
20 Improvement in Brazil and Bunge closing in 3Q Yara Brazil EBITDA (NOK millions) Positive volume and margin 780 863 improvement compared with 2Q12 (Yara Brazil) Bunge closing during third quarter 76 Transaction value will be adjusted for net operating capital value at time of closing 16 – US
Slide 22: More information can be found on www.yara.com
21 More information can be found on www.yara.com IR-Date: 2013-07-19
Slide 23: Fertilizer volumes
22 Fertilizer volumes Kilotons 7,000 6,284 6,339 6,104 6,017 6,000 5,296 5,474 5,438 5,256 5,179 5,210 5,216 5,253 5,300 5,129 4,914 4,970 5,013 5,045 4,882 4,834 5,000 4,763 4,742 4,791 4,759 4,239 4,000 3,496 3,000 2,000 1,000 0 2007 2008 2009 2010 2011 2012 2013 Europe Outside Europe Total IR-Dat
Slide 24: Yara 2Q fertilizer sales by market and product
23 Yara 2Q fertilizer sales by market and product 2013: 6.3 million tons (2012: 5.3 million tons) Kilotons 2Q12 2Q13 2,771 2,254 1,446 1,174 1,117 987 544 644 294 361 Europe Latin America Asia North America Africa 1,551 1,670 1,363 1,219 1,175 935 557 600 489 515 461 469 272 314 NPK compounds NPK bl
Slide 25: Yara production volume
24 Yara production volume* Finished fertilizer and industrial products Ammonia Kilotons Kilotons 5,000 2,500 4,500 4,000 2,000 3,500 3,000 1,500 2,500 2,000 1,000 1,500 1,000 500 500 0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Urea Nitrates NPK CN UAN SSP - based fertilizer * Including sha
Slide 26: Gas & oil cost
25 Gas & oil cost Yearly averages 2009 – 2010, quarterly averages for 2011-13 with forward prices* for 3Q13 and 4Q13 USD per MMBtu 14 11.5 11.9 12 11.1 11.4 10.9 10.8 11.0 11.0 10.8 10.7 10.9 10.1 10 8 7.6 8.3 8.6 8.3 8.3 8.5 6.6 7.9 8.1 8.3 7.7 7.6 7.8 6 7.6 5.7 4 4.8 2 0 2009 2010 1Q11 2Q11 3Q11 4
Slide 27: Yara European gas cost closer to hub price
26 Yara European gas cost closer to hub price European energy cost Spread between Yara and Zeebrugge USD/ USD/ MMBtu MMBtu 13.0 2.1 12.0 2.0 1.7 11.0 1.4 10.0 1.1 9.0 0.9 0.8 0.7 8.0 7.0 6.0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 Zeebrugge (1-month lag) Yara
Slide 28: Debt/equity ratio
27 Debt/equity ratio Net interest-bearing debt / equity ratio (end of period) 0.75 0.63 0.57 0.56 0.49 0.38 0.32 0.27 0.20 0.22 0.12 0.12 0.08 0.07 0.06 0.02 0.01 -0.04 2009 2010 2011 2012 2013 IR-Date: 2013-07-19
Slide 29: Main currency positions affecting financial items
Main currency positions affecting 28 financial items At the beginning of the third quarter 2013 1. The US dollar debt generating p&l exposure was USD 1,150 million • Kept as hedge of future earnings and to finance inventories in emerging markets • Around 50% towards EUR with the rest towards NOK and
Slide 30: Continued strong price incentives necessary to match consumption growth
Continued strong price incentives necessary to 29 match consumption growth Grain consumption and production Days of consumption in stocks Million tons Days 2,500 85 2,450 2,400 80 2,350 75 2,300 2,250 70 2,200 2,150 65 2,100 2,050 60 2,000 1,950 55 06 07 08 09 10 11 12 13E 14F 06 07 08 09 10 11 12 1
Slide 31: Strong Chinese urea production
30 Strong Chinese urea production Chinese urea production Domestic urea balance Million tons Million tons 7.0 70 12/13 63.2 6.0 60 5.1% 11/12 55.6 55.3 52.6 5.0 50 7.9 3.0 4.0 10/11 40 3.0 30 2.0 20 1.0 10 0.0 0 Export Export Domestic Domestic Production Production Jul Aug Sep Oct Nov Dec Jan Feb Ma
Slide 32: Strong export increase from China
31 Strong export increase from China Chinese urea exports, Kilotons Urea price, USD/t 1,800 550 1,600 500 450 1,400 400 1,200 350 1,000 300 800 250 200 600 150 400 100 200 50 0 0 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Urea, fob Yuzhny Chinese urea exports Source: BOABC IR-Date: 2013-07-19
Slide 33: European producer nitrate stocks
32 European producer nitrate stocks Index June 2007=1 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 Source: Fertilizers Europe, Yara estimate for June IR-Date: 2013-07-19
Slide 34: Non-commercials' net long position in corn
33 Non-commercials’ net long position in corn Thousand contracts 500 400 300 200 100 0 -100 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Source: US Commodity Futures Trading Commission IR-Date: 2013-07-19
Slide 35: Key value drivers – quarterly averages
34 Key value drivers – quarterly averages Zeebrugge day ahead (USD/MMBtu) Urea prilled fob Black Sea (USD/t) CAN cif Germany (USD/t) 11.1 471 10.3 10.3 343 351 400 331 322 9.1 9.1 383 385 314 342 2Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13 2Q12 3Q12 4Q12 1Q13 2Q13 Ammonia fob Black Sea (USD/t)
Slide 36: 10-year fertilizer prices – monthly averages
35 10-year fertilizer prices – monthly averages Ammonia fob Black Sea CAN cif Germany USD/t USD/t 1,000 500 800 400 600 300 400 200 200 100 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Urea prilled fob Black Sea DAP fob US Gulf USD