Yara International Asa · OSL:YAR
Yara International Asa — Q3 2020 Earnings Presentation
32 slides from Yara International Asa's earnings presentation, Oct 20, 2020
Slide 1: Yara International ASA 2020 Third quarter results
Yara International ASA 2020 Third quarter results 20 October 2020
Slide 2: Safety is our first priority
Safety is our first priority Ensuring a safe workplace for employees and partners, with zero injuries as our ambition TRI1 (12-month rolling) 5 4 3 2 1.3 1 0 3Q16 3Q20 1 Total Recordable Injuries per 1 million working hours 2
Slide 3: Continued growth in returns and cash flow
Continued growth in returns and cash flow Nine consecutive quarters of ROIC growth Industry-leading cash returns L12M ROIC • NOK 18 per share additional dividend proposed − Total NOK 53 per share cash returns1 paid or 7.9 committed to shareholders in 2020 • 7.9% ROIC2, up from 6.1% a year earlier 4.
Slide 4: Lower nitrogen prices and off-season nitrate premiums, record premium product deliveries
Lower nitrogen prices and off-season nitrate premiums, record premium product deliveries Compound NPK Total revenues1 Nitrate revenues2 revenues3 MUSD MUSD MUSD 2,789 375 728 677 2,423 313 144 1 278 339 103 379 1 192 231 210 1 511 389 1 231 297 3Q19 3Q20 3Q19 3Q20 3Q19 3Q20 Premium Commodity value 1
Slide 5: USD 2.5 billion free cash flow rolling 4 quarters
USD 2.5 billion free cash flow1 rolling 4 quarters Free cash flow before financing activities1 Comments MUSD, rolling 4 quarters 2,491 Operations • Strategy execution driving Investments improved earnings and lower Free cash flow 1,491 capital expenditure Free cash flow adjusted for Qafco proceeds 1
Slide 6: Organizational changes to support Yara's ongoing transition
Organizational changes to support Yara’s ongoing transition Yara International Svein Tore Holsether Chief Financial Officer Legal & HR Lars Røsæg Kristine Ryssdal Farming Solutions Strategy & Communications Terje Knutsen Pablo Barrera Lopez Regional units: Europe Africa & Asia Americas Global Plants
Slide 7: Investing for a greener future: 38% green revenue share
Investing for a greener future: Yara has 38% “green revenue” share, and 77% “green investment” share Yara 2019 revenues and investment classified according to “CICERO Shades of Green” report Medium green: Projects and solutions that 23% represent steps towards the long-term vision but 29% are not qu
Slide 8: Performance overview
Performance overview EBITDA ex. Special items EPS ex. currency and special items ROIC (MUSD) (USD per share) (12-month rolling) 630 0.94 0.88 558 7.9% 6.1% 3Q19 3Q20 3Q19 3Q20 3Q19 3Q20 Change in net operating capital1 Investments (net)2 Cash from operations (MUSD) (MUSD) (MUSD) 659 202 255 285 146
Slide 9: Earnings impacted by lower nitrogen prices
Earnings impacted by lower nitrogen prices EBITDA ex. special items (MUSD)1 ROIC2 630 14 14 43 558 89 60 Fertilizer: +10 Maritime: -16 Fixed cost: -14 Ind. chemicals: -8 Portfolio: -11 Other: -18 Nitrates: -68 3Q19 Volume/Mix Price/Margin Energy costs Currency Other 3Q20 8.1% 10.4% 1) EBITDA ex. spe
Slide 10: Europe: stable deliveries but lower premiums in off-season market
Europe: stable deliveries but lower premiums in off-season market Revenues (MUSD) EBITDA ex SI1 (MUSD) ROIC2 719 651 152 6.8% 6.2% 108 584 489 135 162 3Q19 3Q20 3Q19 3Q20 3Q19 3Q20 Premium products Commodities • 3Q deliveries in line with a year • Lower nitrogen prices impacted • 24 USD/t nitrate pr
Slide 11: Americas: increased deliveries, production margins impacted by lower nitrogen prices
Americas: increased deliveries, production margins impacted by lower nitrogen prices Revenues (MUSD) EBITDA ex SI1 (MUSD) ROIC2 1,564 1,303 181 181 6.5% 566 5.3% 481 998 822 3Q19 3Q20 3Q19 3Q20 3Q19 3Q20 Premium products Commodities • Increased deliveries in Latin • Lower production margins due to •
Slide 12: Global plants: earnings impacted by lower upgrading margins
Global plants: earnings impacted by lower upgrading margins Production volumes (kilotonnes)1 EBITDA ex SI2 (MUSD) ROIC3 2,382 2,294 199 14.4% 147 11.8% 1,780 1,727 602 567 3Q19 3Q20 3Q19 3Q20 3Q19 3Q20 Finished products Ammonia • Production decrease reflects • Earnings impacted by lower • Positive i
Slide 13: Industrial solutions: strong margins more than offset lower deliveries
Industrial solutions: strong margins more than offset lower deliveries Revenues (MUSD) EBITDA ex SI1 (MUSD) ROIC2 529 436 89 96 15.9% 13.3% 3Q19 3Q20 3Q19 3Q20 3Q19 3Q20 • Deliveries down 5%, but recovering • Improved margins more than offset • Improvement mainly driven by from initial Covid-19 impa
Slide 14: Improvement program
Improvement program Ammonia production Finished product production Ammonia energy consumption Million tonnes Million tonnes GJ/ton 8.9 24.0 7.9 7.8 7.6 8.1 20.9 21.1 20.9 21.8 34.1 33.7 33.5 33.3 32.7 2018 2019 L12M 3Q20 2023 2018 2019 L12M 3Q20 2023 2018 2019 L12M 3Q20 2023 annualized target annual
Slide 15: Committed investments unchanged, phasing into 2021
Committed investments unchanged, phasing into 2021 Committed investments (BUSD) Comments 2.2 • No change to overall Maximum 2.2 BUSD: commitment of 2.2 BUSD for 2020 and 2021 in total 1.6 • 2020 capex commitments 1.3 estimated to end at 0.9-1.1, 1.1 remainder expected phased 1.1 1.1 into 2021 0.9 20
Slide 16: Lower net interest-bearing debt
Lower net interest-bearing debt 3Q development Comments MUSD 3,577 • Strong positive cash flow from 436 operating earnings, operating 202 146 capital release and Qafco 1,000 proceeds 2,261 108 68 • Operating capital release driven by lower receivables globally and lower inventory in Americas • Net d
Slide 17: Industry-leading cash returns
Industry-leading cash returns Dividends and buy-backs1 per share (NOK) 31 Before ordinary Share buy-backs dividend Dividends 13 18 2004 2020 1) Buy-backs included in the year shares are bought in the market. Payments to the Norwegian state included in the following year (upon cancellation at AGM). C
Slide 18: Top scores for governance and reporting
Top scores for governance and reporting CICERO “Shades of Green” The Governance Group Yara ranked as no. 1 among 100 largest companies in Norway 18
Slide 19: Yara Africa & Asia
Yara Africa & Asia Presence: 20 countries Employees: 1,683 employees Sales: ~4.7 mt deliveries ~1.9 BUSD revenue (2019) Farmers: - Smallholder / non- mechanised in most markets - Large-scale professional in South Africa, New Zealand and Australia Plants: Babrala (India) - 0.7 mt ammonia - 1.3 mt ure
Slide 20: Africa and Asia: strong performance driven by premium product growth
Africa and Asia: strong performance driven by premium product growth Revenues (MUSD) EBITDA ex SI1 (MUSD) ROIC2 506 469 33 1.2% 221 26 259 285 210 3Q19 3Q20 3Q19 3Q20 -1.4% 3Q19 3Q20 Premium products Commodities • Overall deliveries in line with a year • 23% premium product sales • ROIC impact from
Slide 21: Africa and Asia: deliveries and production
Africa and Asia: deliveries and production Premium product deliveries1 Production volume Comments (kilotonnes) (kilotonnes) +23% • Strong premium product 742 709 deliveries 562 507 457 469 438 329 343 • Babrala plant (India) performing well amid Covid-19 challenge 413 • Pilbara TAN project 366 rampi
Slide 22: Attractive Yara prospects
Attractive Yara prospects Attractive opportunities Focused strategy Strong track record • Resource and environment • Crop nutrition leader; #1 premium • Nine consecutive quarters of ROIC challenges require strong agri product and market presence growth, with USD 1.5 billion free productivity improve
Slide 23: Save the date: Yara ESG investor seminar 7 December 2020
Save the date: Yara ESG investor seminar 7 December 2020 Main topics Farming and food chain solutions - Strong opportunities within sustainable solutions Decarbonize - Driving towards climate-neutral fertilizer production Transformation roadmap and KPIs - Sharpening our focus and capturing opportuni
Slide 24: Appendix
Appendix 10/19/2020 24
Slide 25: Product price developments
Product price developments Urea price development1 (USD/t) Spot gas prices1 (USD/Mmbtu) Yara realized CAN2 and NPK price3 (USD/t) -9% -14% -8% -44% 274 272 451 3.5 250 416 234 -19% 2.3 -15% 1.9 1.8 228 193 Urea granular Urea inland Europe US CAN 27 Compound NPK FOB Egypt China proxy 3Q19 3Q20 1) Sou
Slide 26: Lower nitrogen upgrading margin, global NPK premium relatively stable
Lower nitrogen upgrading margin, global NPK premium relatively stable Nitrogen upgrading margins1 NPK premium over blend2 USD/t (monthly publication prices) USD/t 500 450 Yara’s NPK price 136 CAN CFR 298 133 Weighted average global premium above blend cost Urea Egypt 255 CFR proxy Nitrate premium, C
Slide 27: Lower deliveries in Europe and North America partly offset by increases in Brazil
Lower deliveries in Europe and North America partly offset by increases in Brazil Total deliveries 3Q19 Mill. tonnes 3Q20 +2% 2.9 2.9 -1% 2.3 2.3 Commodity +1% +3% +11% 1.0 1.0 -11% Premium* 0.6 0.7 0.5 0.5 0.3 0.3 Europe Brazil Asia North Latin Africa America America 1) Premium defined as Different
Slide 28: Energy cost
Energy cost Quarterly averages for 2018-2020 with forward prices* for 4Q20 and 1Q21 8.1 9.4 8.2 8.4 8.2 7.8 7.4 6.1 6.6 6.3 5.5 5.1 5.3 6.1 6.0 4.8 4.3 5.0 4.3 3.1 3.9 4.0 4.8 4.9 4.3 4.0 4.2 3.2 4.1 3.8 3.3 4.1 2.6 3.1 3.2 2.9 2.9 2.9 2.8 2.7 2.5 2.3 2.3 2.5 1.9 1.9 1.7 1.7 2Q18 3Q18 4Q18 1Q19 2Q19
Slide 29: Yara stocks
Yara stocks Finished fertilizer Mill. tonnes 8 Other Compound NPK Nitrates Urea 0 Q3-16 Q3-17 Q3-18 Q3-19 Q3-20 29
Slide 30: 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 20/21 14/15 15/16 16/17 17/18 18/19 19/20 Source: Fertilizers Europe, Yara estimate for September 30
Slide 31: Higher nitrogen supply growth forecast in 2021, higher risk of project delays
Higher nitrogen supply growth forecast in 2021, however higher than normal risk of project delays Global urea capacity additions ex. China (mill. tonnes) India Algeria Others Russia USA Production 6.7 Iran Nigeria 5.5 5.4 4.5 4.2 4.0 2.7% consumption growth 3.2 2.4 1.2 0.8 0.4 2014 2015 2016 2017 20
Slide 32: 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 35-40 32