Yara International Asa · OSL:YAR
Yara International Asa — Q1 2016 Earnings Presentation
37 slides from Yara International Asa's earnings presentation, Apr 21, 2016
Slide 1: Yara International ASA 2016 first quarter results
Yara International ASA 2016 first quarter results 21 April 2016 IR – 21 April 2016
Slide 2: Safe operations is our first priority
Safe operations is our first priority 14.0 TRI1 12.0 10.0 8.0 6.0 4.0 2.0 0.0 2 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Mar-16 1) TRI: Total recordable injuries, lost time (absence from work), restricted work and medical treatment cases per one million work hours 2) OFD
Slide 3: Summary first quarter
Summary first quarter Strong results in a challenging market Global fertilizer deliveries 5% lower, Brazil deliveries 15% higher Negative price effects offset by lower energy prices and currency effects Improved production reliability Strong Industrial result IR – 21 April 2016 3
Slide 4: Earnings per share
Earnings per share* EPS excluding currency and special items 14.56 10.51 10.59 10.22 9.58 8.52 2.65 9.14 8.26 8.04 7.97 8.17 7.62 7.41 7.03 7.74 6.74 6.69 6.18 5.66 6.40 5.62 3.97 2.65 1.58 0.23 2013 2014 2015 2016 Annual NOK 20.67 27.59 29.38 10.22 *Average number of shares for 1Q 2016: 274.1 milli
Slide 5: Lower exports from China, higher domestic price
Lower exports from China, higher domestic price Declining urea pricing Chinese exports and urea price Black Sea USD/t Kilotons USD/t 400 2,400 550 380 2,200 500 360 2,000 450 340 1,800 400 320 1,600 350 1,400 300 300 1,200 280 250 1,000 260 200 800 240 600 150 220 400 100 200 200 50 180 0 0 Urea pri
Slide 6: Season-to-date Europe and US nitrogen fertilizer industry deliveries at normal level
Season-to-date Europe and US nitrogen fertilizer industry deliveries at normal level Season-to-date deliveries (9 months ending 31 March) Million tons N West Europe Million tons N US 7.0 16.0 -4% -2% 6.0 14.0 12.0 5.0 10.0 4.0 8.0 3.0 6.0 2.0 4.0 1.0 2.0 0.0 0.0 11/12 12/13 13/14 14/15 15/16 11/12 1
Slide 7: Brazil: industry deliveries up 7%, Yara up 15%
Brazil: industry deliveries up 7%, Yara up 15% Brazil season-to-date fertilizer deliveries Yara Brazil 1Q value-added product deliveries Kilotons Kilotons 7,000 450 Thousands +7% 400 6,000 350 5,000 300 4,000 250 3,000 200 +15% 150 2,000 100 1,000 50 0 0 2012 2013 2014 2015 2016 2007 2008 2009 2010
Slide 8: Rio Grande expansion and operational improvement
Rio Grande expansion and operational improvement Consolidation of 3 sites reduces fixed RIG 2 cost and maintenance investments Increased fertilizer production and blending capacity RIG 3 RIG 1 Improved safety and lower unit cost through: – Improved material flows 2.6 Million tons New capacity
Slide 9: Improved production reliability
Improved production reliability Ammonia1 Finished fertilizer & industrial products1 Kilotons Kilotons 2,500 6,000 2,000 5,000 4,000 1,500 3,000 1,000 2,000 500 1,000 0 0 2013 2014 2015 2016 2013 2014 2015 2016 Urea Nitrates NPK CN UAN SSP - based fertilizer * Including share of equity-accounted inve
Slide 10: Earnings before interest, tax, depreciation and amortization (EBITDA)
Earnings before interest, tax, depreciation and amortization (EBITDA) EBITDA excluding special items NOK millions 7,884 4,614 5,742 4,794 5,179 5,055 4,625 4,227 5,055 4,103 5,050 4,184 3,830 4,002 4,528 4,185 4,149 4,039 3,318 3,964 3,508 3,591 3,504 3,223 2,363 1,858 2013 2014 2015 2016 Annual NOK
Slide 11: EBITDA development
EBITDA development NOK millions 5,055 4,794 3 533 954 702 2,051 1,186 EBITDA 1Q15 Volume Price/margin Energy cost Currency Special Other EBITDA 1Q16 items IR – 21 April 2016 11
Slide 12: Stable earnings for Crop Nutrition and Industrial
Stable earnings for Crop Nutrition and Industrial 3,808 EBITDA (NOK millions) 2,845 EBITDA excluding special items 2,884 2,840 1,868 1,778 1,843 1,778 414 423 414 423 Crop Nutrition Industrial Production 1Q15 1Q16 IR – 21 April 2016 12
Slide 13: Lower natural gas cost in Europe
Lower natural gas cost in Europe Yara European gas & oil cost Change in spot energy cost USD/ NOK MMBtu millions 8.0 0 (200) 7.0 (151) (400) 6.0 (600) 5.0 (588) (588) (800) 4.0 (1,000) (923) (1,000) 3.0 (1,200) (1,150) 2.0 (1,400) (1,314) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 1Q15 2Q15 3Q15 4Q15 1Q16 2
Slide 14: Stable European nitrate premium
Stable European nitrate premium Based on Egypt granular urea reference, and excluding nitrate with sulphur Nitrogen upgrading margins1 European nitrate premium2 USD/t (monthly publication prices) USD/t (quarterly Yara realized) 700 160 600 140 120 500 100 Nitrate 400 premium above urea 80 Value abov
Slide 15: Stable commodity phosphate margins and solid NPK compound premiums
Stable commodity phosphate margins and solid NPK compound premiums Phosphate upgrading margins NPK premium over blend1 USD/t USD/t 600 700 600 500 500 400 Value above Weighted average global raw material 400 premium above blend cost 300 Nitrate premium, CIF inland Germany 300 NH3, fob Black Sea *0.2
Slide 16: Net interest-bearing debt development
Net interest-bearing debt development NOK millions 93 2,454 11,868 3,884 315 1,002 349 8,465 401 Net debt Investments net Share Cash earnings* Dividends Net operating FX gain Other Net debt Dec 15 buy/backs from equity- capital change Mar 16 accounted investees * Operating income plus depreciation a
Slide 17: Prospects
Prospects Supportive farm margin outlook overall; higher export profitability in Brazil Current Chinese fob urea prices close to break-even levels for swing producers 2Q catch-up in European nitrogen deliveries expected Continued premium products growth in Brazil, but commodity crop sector d
Slide 18: IR – 21 April 2016
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Slide 19: Strong growth pipeline
Strong growth pipeline 17.9 Capex plan1 Production growth 2015 - end 20185 NOK bn 2.4 Cost&capacity improvements 14.4 M&A Finished fertilizer Ammonia 0.4 0.9 Committed growth Maintenance Mill.tons 22.1 3.3 11.0 8.3 8.7 1.3 0.5 7.2 0.7 4.2 7.7 2.3 4.1 1.3 0.8 6.0 6.3 5.6 5.6 0.8 18.9 2015 2016 2017 2
Slide 20: Yara 1Q fertilizer sales by market and product
Yara 1Q fertilizer sales by market and product Kilotons 1Q15 1Q16 3,008 2,733 1,589 1,377 901 735 474 429 420 400 385 342 Europe Brazil Latin America North America Asia Africa 1,595 1,445 1,414 1,308 1,375 1,175 768 879 716 786 418 354 277 283 NPK compounds1 NPK blends1 Nitrate Urea Other products U
Slide 21: YaraMila and YaraBela deliveries
YaraMila and YaraBela deliveries Yara-produced YaraMila deliveries Yara-produced YaraBela deliveries Kilotons Kilotons 1,600 1,600 1,400 1,400 1,200 1,200 1,000 1,000 800 800 600 600 400 400 200 200 0 - 1Q12 1Q13 1Q14 1Q15 1Q16 1Q12 1Q13 1Q14 1Q15 1Q16 Outside Europe Europe Outside Europe Europe IR
Slide 22: Strong premium product deliveries in Brazil; weaker elsewhere
Strong premium product deliveries in Brazil; weaker elsewhere Value-added fertilizer deliveries1 Value-added fertilizer deliveries1 3,500 401 3,000 2,500 292 296 263 240 2,000 225 203 199 197 188 1,500 172 CAGR 2% 123 1,000 81 500 33 30 0 1Q12 1Q13 1Q14 1Q15 1Q16 Asia Brazil Latin Africa North Ameri
Slide 23: Value-added and distribution make up larger part of Yara's contribution
Value-added and distribution make up larger part of Yaras contribution Total Yara contribution 11,000 10,000 9,000 Trade 8,000 7,000 6,000 Upgrade & distribution 5,000 4,000 3,000 Commodity overseas 2,000 1,000 Commodity Europe 0 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 IR –
Slide 24: Fertilizer deliveries
Fertilizer deliveries Kilotons 7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2009 2010 2011 2012 2013 2014 2015 2016 Europe Outside Europe IR – 21 April 2016 24
Slide 25: Fertilizer deliveries by product and source
Fertilizer deliveries by product and source Kilotons 1,595 1,445 1,414 1,308 1,375 1,175 1,068 993 879 768 418 354 1Q15 1Q16 1Q15 1Q16 1Q15 1Q16 1Q15 1Q16 1Q15 1Q16 1Q15 1Q16 Nitrate NPK compounds NPK blends Urea UAN Other Yara-produced deliveries Joint venture & third party sourced IR – 21 April 20
Slide 26: AdBlue deliveries
AdBlue deliveries Kilotons 450 400 350 300 250 200 150 100 50 0 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 IR – 21 April 2016 26
Slide 27: Industrial volume development
Industrial volume development Kilotons 892 844 866 849 852 864 859 847 819 816 815 829 792 577 540 541 538 511 482 432 456 438 374 364 382 380 385 368 358 367 361 346 364 343 328 339 333 328 308 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Industrial N-chemicals Environmental pro
Slide 28: Debt/equity ratio
Debt/equity ratio Net interest-bearing debt / equity ratio (end of period) 0.22 0.20 0.17 0.16 0.15 0.12 0.12 0.13 0.11 0.08 0.08 0.07 0.06 0.06 0.06 0.06 0.06 0.05 0.02 0.01 -0.04 2011 2012 2013 2014 2015 2016 IR – 21 April 2016 28
Slide 29: Yara stocks
Yara stocks Kilotons Finished fertilizer Bunge Fertilizer included from 3Q 2013 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Urea Nitrates Compound NPK Other IR – 21 April 2016 29
Slide 30: European producers' nitrate stocks
European producers’ nitrate stocks Index June 2007 = 1 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 15/16 10/11 11/12 12/13 13/14 14/15 Source: Fertilizers Europe, Yara estimate for March IR – 21 April 2016 30
Slide 31: Energy cost
Energy cost Yearly averages 2009 – 2013, quarterly averages for 2014-16 with forward prices* for 2Q16 and 3Q16. 11.0 11.4 11.3 10.7 10.5 9.2 9.8 8.5 9.2 9.4 7.6 7.5 7.6 7.5 7.0 8.2 8.0 8.1 7.6 8.1 6.6 8.0 7.0 6.2 6.6 6.9 7.0 6.8 6.5 6.5 5.0 6.1 5.4 5.7 5.9 4.4 4.3 4.7 5.7 4.8 5.2 5.3 4.2 4.4 4.6 3.8
Slide 32: Global grain balance
Global grain balance Grain consumption and production Days of consumption in stocks Million tons Days 2,550 90 2,500 2,450 85 2,400 80 2,350 2,300 75 2,250 2,200 70 2,150 65 2,100 2,050 60 2,000 1,950 55 07 08 09 10 11 12 13 14 15 16E 07 08 09 10 11 12 13 14 15 16E Consumption Production Source: USD
Slide 33: Non-commercials' net long position in corn
Non-commercials’ net long position in corn Thousand contracts 500 400 300 200 100 0 -100 -200 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Source: US Commodity Futures Trading Commission IR – 21 April 2016 33
Slide 34: Weaker farm economics in USD, affecting particularly P and K demand
Weaker farm economics in USD, affecting particularly P and K 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 1/2014 1/2015 1/2016 Cereals Price Index Cereals 5 year avg. Food Price Index Food 5 year avg. Source: FAO IR – 21
Slide 35: Projected nitrogen capacity additions outside China
Projected nitrogen capacity additions outside China Urea capacity growth relative Year Driving regions to nitrogen capacity Excluding China Excluding China Algeria 26% 2015 1.8% (1.8%) Saudi Arabia 24% USA 22% 2016 3.0% (3.1%) Algeria 15% USA 33% 2017 2.5% (2.3%) Iran 15% USA 34% 2018 1.1% (1.5%) Tu
Slide 36: Key value drivers – quarterly averages
Key value drivers – quarterly averages TTF day ahead (USD/MMBtu) Urea prilled fob Black Sea (USD/t)/Urea CAN cif Germany (USD/t) granular fob Egypt (dotted line, USD/t) 7.0 6.8 295 6.4 337 273 5.5 257 255 249 295 277 297 268 281 4.1 250 270 233 207 1Q15 2Q15 3Q15 4Q15 1Q16 1Q15 2Q15 3Q15 4Q15 1Q16 1
Slide 37: 10-year fertilizer prices – monthly averages
10-year fertilizer prices – monthly averages USD/t Ammonia fob Black Sea USD/t CAN cif Germany 1,000 500 800 400 600 300 400 200 200 100 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 USD/t Urea prilled fob Black Sea/Urea granular fo