Yara International Asa · OSL:YAR
Yara International Asa — Q1 2013 Earnings Presentation
29 slides from Yara International Asa's earnings presentation, Apr 22, 2013
Slide 1: Yara International ASA First Quarter results 2013
0 Yara International ASA First Quarter results 2013 22 April 2013 IR-Date: 2013-04-22
Slide 2: Summary first quarter
1 Summary first quarter Strong results with stable margins Strong cash flow Fertilizer deliveries close to last year despite late spring Record NPK production and sales IR-Date: 2013-04-22
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 5.42 5.27 2010 2011 2012 2013 Annual NOK 30.23 41.99 37.31 8.04 * Average number of shares for 1Q 2013: 280.6 million (1Q 2012: 285.5 million). IR-Date: 2013-04-22
Slide 4: Fertilizer market development
3 Fertilizer market development Tight agricultural markets support fertilizer demand Urea markets remain demand-driven despite strong supply increase from China and elsewhere Western Europe nitrogen fertilizer industry deliveries equal to first quarter last year; season-to-date deliveries 4% a
Slide 5: Fertilizer incentives remain strong
4 Fertilizer incentives remain strong 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: 2013-04-22
Slide 6: Stronger pre-buying in Northern hemisphere…
Stronger pre-buying in Northern hemisphere… 5 Nitrogen deliveries season to date (9 months ending 31 March) USA West Europe Million tons Million tons 14.0 +5% 7.0 12.0 6.0 +4% 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 Pro
Slide 7: …met by strong supply response from China
6 …met by strong supply response from China More balanced urea market compared with last year Chinese urea exports, Kilotons Urea price, USD/t 1,800 550 1,600 500 1,400 450 400 1,200 350 1,000 300 800 250 600 200 400 150 200 100 0 50 -200 0 Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan 10 10 11 11 11
Slide 8: Record NPK production and sales
7 Record NPK production and sales Kilotons 1,300 1,200 1,100 1,000 900 800 700 600 500 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 Yara-produced NPK compound deliveries Yara NPK compound production IR-Date: 2013-04-22
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 3,455 3,591 3,251 2,992 2,486 Annual 2010 2011 2012 2013 NOK 15,315 18,163 16,970 4,129 millions IR-Date: 2013-04-22
Slide 10: Underlying EBITDA improvement
9 Underlying EBITDA improvement NOK millions 122 4,310 458 180 95 4,129 342 101 EBITDA Special Volume Price/margin Gas & oil Other Currency EBITDA 1Q12 items costs in 1Q13 Europe IR-Date: 2013-04-22
Slide 11: Strong earnings in all segments
10 Strong earnings in all segments NOK millions EBITDA excluding special items 2,669 2,649 1,235 1,004 278 235 Downstream Industrial Upstream 1Q12 1Q13 IR-Date: 2013-04-22
Slide 12: Stable fertilizer volumes
11 Stable fertilizer volumes Kilotons 1,466 1,450 1,328 1,306 1,284 1,238 392 275 320 316 1Q12 1Q13 1Q12 1Q13 1Q12 1Q13 1Q12 1Q13 1Q12 1Q13 Nitrate NPK compound NPK blends Urea UAN Yara-produced fertilizer JV/TPP Total IR-Date: 2013-04-22
Slide 13: Higher net income from equity-accounted investees
Higher net income from 12 equity-accounted investees NOK millions 350 1Q12 1Q13 309 89 57 53 49 32 -62 Qafco Tringen GrowHow UK Lifeco IR-Date: 2013-04-22
Slide 14: Stable value-added premiums
13 Stable value-added premiums Nitrogen upgrading margins Phosphate upgrading margins NPK blend premium USD/t USD/t USD/t 700 600 700 550 600 600 500 Value above raw material Margin above Nitrate premium 450 500 blend cost 500 above urea 400 400 Urea, fob Black sea 400 Value above 350 ammonia 300 30
Slide 15: Yara European gas cost closer to hub price
14 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 0.7 8.0 0.6 7.0 6.0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 Zeebrugge (1-month lag) Yara Europe *Dotted
Slide 16: Strong cash flow
15 Strong cash flow NOK millions 954 2,741 218 146 -1,984 1,119 682 169 NIBD Cash earnings** Dividends from Net operating Net investments FX loss Other NIBD Dec 12* equity accounted capital Mar 13* investees * Included in net interest-bearing debt are external bank time deposits (4-12 months), this
Slide 17: Prospects
16 Prospects Continued strong grain prices support fertilizer demand More balanced market due to earlier purchases in Northern hemisphere China: capacity utilization rates and 1 November tax change enforcement are key for level in second half 2013 Capacity outside China: unclear timing for r
Slide 18: China: capacity utilization and tax enforcement key for export level second half 2013
China: capacity utilization and tax enforcement 17 key for export level second half 2013 Chinese urea exports, Kilotons Urea price, USD/t 1,800 550 1,600 500 1,400 450 400 1,200 350 1,000 300 800 250 600 200 400 150 200 100 0 50 -200 0 Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan 10 10 11 11 11 11 12
Slide 19: Additional information
18 Additional information IR-Date: 2013-04-22
Slide 20: Yara production volume
19 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 21: Yara 1Q fertilizer sales by market and product
20 Yara 1Q fertilizer sales by market and product 2013: 5.3 million tons (2012: 5.4 million tons) Kilotons 1Q12 1Q13 2,880 2,892 798 923 796 802 610 484 353 198 Europe Latin America Asia North America Africa 1,466 1,450 1,328 1,306 1,238 1,284 505 392 275 320 363 316 261 233 NPK compounds NPK blends
Slide 22: Debt/equity ratio
21 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 -0.04 2009 2010 2011 2012 2013 IR-Date: 2013-04-22
Slide 23: Gas & oil cost
22 Gas & oil cost Yearly averages 2009 – 2010, quarterly averages for 2011-13 with forward prices* for 2Q13 and 3Q13 USD per MMBtu 14 12.1 11.1 11.4 11.5 12 10.9 11.0 10.8 11.0 11.0 10.8 10.1 10 8 7.6 8.3 8.6 8.3 8.3 8.5 6.6 7.9 8.1 7.9 8.3 7.7 6 7.6 5.7 4 4.8 2 0 2009 2010 1Q11 2Q11 3Q11 4Q11 1Q12
Slide 24: Chinese urea balance
23 Chinese urea balance Chinese urea production Domestic urea balance Million tons Million tons 7.0 50 45 44.3 6.0 40 39.4 2% 36.4 37.1 5.0 35 7.2 3.0 4.0 30 25 3.0 20 2.0 15 10 1.0 5 0.0 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Export Export Domestic Domestic Production Production 2012 201
Slide 25: Continued strong price incentives necessary to avoid further inventory decline
Continued strong price incentives necessary to 24 avoid further inventory decline Grain consumption and production Days of consumption in stocks Million tons Days 2,350 85 2,300 80 2,250 75 2,200 2,150 70 2,100 65 2,050 60 2,000 1,950 55 06 07 08 09 10 11E 12F 13F 06 07 08 09 10 11E 12F 13F Consumpt
Slide 26: Projected nitrogen capacity additions outside China in line with historical consumption growth
Projected nitrogen capacity additions outside 25 China in line with historical consumption growth Urea capacity growth relative Year Driving regions to nitrogen capacity Excluding China Excluding China Pakistan 37% 2011 1.2% (1.2%) Iran 18% Qatar 39% 2012 1.9% (1.9%) Vietnam 21% Algeria 39% 2013 2.5
Slide 27: Non-commercials' net long position in corn
26 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 Source: US Commodity Futures Trading Commission IR-Date: 2013-04-22
Slide 28: Key value drivers – quarterly averages
27 Key value drivers – quarterly averages Zeebrugge day ahead (USD/MMBtu) Urea prilled fob Black Sea (USD/t) CAN cif Germany (USD/t) 11.1 471 361 351 10.3 331 343 9.3 389 383 385 400 314 9.1 9.1 1Q12 2Q12 3Q12 4Q12 1Q13 1Q12 2Q12 3Q12 4Q12 1Q13 1Q12 2Q12 3Q12 4Q12 1Q13 Ammonia fob Black Sea (USD/t)
Slide 29: 10-year fertilizer prices – monthly averages
28 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