Yara International ASA Berenberg conference

Transcription

1 Yara International ASA Berenberg conference 2 December 215 Svein Tore Holsether, CEO

2 Yara s products, solutions and knowledge create value for customers, shareholders and society 2 Yara crop nutrition program improves results 1 and higher returns for farmers and Yara +37% Yara value creation +2% +23% 1 1) Source: Yara, local coffee trials in Vietnam 2) YaraMila retail price compared to standard NPK Other fertilizer Increased yield Fertilizer price 2 Farmer profit

3 Integrated business model provides scale, flexibility and end-to-end presence 3

4 Fertilizer portfolio is being driven towards greater product differentiation and profit 4 Product portfolio (214/15 season volume) 24% 17% 22% 37% Standard products (Urea, UAN and Ammonia) Differentiated products (CAN, AN) Specialty (CN, Compound NPK, Fertigation) NPK blends Differentiation improves margins and reduces exposure to commodity price volatility On-going efforts to further increase differentiation through: Capacity expansions compound NPK, CN, nitrate and urea+s On-going optimization of NPK portfolio towards higher value segments Innovation and market growth in high-value fertigation markets Continued YaraVita growth

5 Yara Industrial enhances value of fertilizer operations 5 Solid growth last 1 years Yara s global production system enables reliable supply with close proximity to industrial customers Industrial adds value above commodity reference prices Industrial is adding scale in operations Industrial enables optimization of Yara s upstream assets Yara s Industrial segment is unique in the fertilizer industry creating stability and robustness in revenues and margins mill. tonnes Environmental products Quarterly EBITDA, excl. non-recurring items (rebased to 1Q 212=1) CAGR +7% Industrial N-chemicals TAN with more stable earnings than fertilizer 214 CO2 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Industrial Downstream Upstream

6 Strong earnings, also in supply-driven conditions 6 NOK EPS excluding special items and currency YTD 3Q15

7 EBITDA development (YTD) 7 NOK millions 17,857 2,679 of which OFD+Galvani ~ +1,35 mill. of which EU energy ~ +2,5 mill. of which OFD+Galvani ~ -95 million 11,782 1, ,571 3,729 YTD 3Q14 Volume & mix Price/margin Other Currency Special YTD 3Q15 items

8 Lower natural gas cost in Europe 8 USD/ MMBtu Yara European gas & oil cost 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 NOK millions (2) (4) (6) (8) (1,) (1,2) (1,4) Change in European energy cost (151) (3) (588) (55) (726) (891) (1,314) 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 TTF (1-month lag) Yara Europe *Dotted lines denote forward prices as of 13 October 215 Source: Yara, World Bank, Argus/ICIS Heren Actual October 215 estimate*

9 Production Export Domestic Domestic Export Production Increased production and exports from China 9 Million tons Chinese urea balance L12M % Kilotons 2,4 2,2 2, 1,8 1,6 1,4 1,2 1, Chinese exports and urea price Black Sea USD/t Nov 13 Oct 14 Nov 14 Oct 15 Source: BOABC, CFMW

10 Stable European nitrate premium 1 USD/t 7 Nitrogen upgrading margins 1 (monthly publication prices) USD/t 18 European nitrate premium 2 (quarterly Yara realized) Nitrate premium above urea Value above ammonia Yara EU gas cost *2 Value above gas Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 Urea Black sea CFR proxy CAN (46% N) NH3 CFR (46% N) Urea Egypt CFR proxy 1) All prices in urea equivalents 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 2) Yara European realized nitrate prices compared with urea publication prices with one month time lag. All numbers in USD per ton of CAN equivalents.

11 Stable commodity phosphate margins and solid NPK compound premiums 11 USD/t Phosphate upgrading margins NH3, fob Black Sea *.22 Rock, fob NA *1.4 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 DAP, fob USG Value above raw material USD/t NPK premium over blend 1 Weighted average global premium above blend cost Nitrate premium, CIF inland Germany Urea, CIF inland Germany MOP, CIF inland Germany DAP, CIF inland Germany 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1) Export NPK plants, average grade , net of transport and handling cost.

12 Thousands Brazil 3Q industry deliveries in line with last year; Yara prioritized margins in 3Q Kilotons 12, Brazil 3Q fertilizer deliveries -1% Yara Brazil value-added product 3Q deliveries Kilotons , 25 8, 2 6, 15 4, +8% 1 2, Brazil industry deliveries Source: ANDA, Yara Yara Brazil deliveries Galvani

13 Brazil: Improved profitability and risk management 13 MNOK Source: Yara -22 Galvani Yara Brazil 3Q EBITDA Q 212 3Q 213 3Q 214 3Q 215 Yara Brazil risk management Days % YTD 215 Net credit days Net overdues >3 days of total receivables (%)

14 Multiple growth options; de-bottlenecking and regional M&A currently most attractive 14 1 Reconfiguration/expansion at existing sites, potential for increased NPKs, nitrates and CN 2 Pursue medium-size/regional M&A, likely highest probability of success in current environment 3 Secure longer term partnerships with access to low cost raw materials for potential new builds

15 Strong growth pipeline 15 NOK bn Capex plan Production growth Cost&capacity improvements 1.3 mt Committed growth.5 Maintenance Committed growth (NOKbn) 1 1) Yaras share of capex BASF JV Pilbara TAN + M&A 3.7 Porsgrunn Köping Sluiskil Uusikapunki.3 Galvani (Salitre) Ammonia vessels Other projects Total Production Committed growth 3 M&A 4 Sale Production Ammonia 5 GrowHow 217 UK 2) Finished fertilizer and industrial products, excl. bulk blends 3) Committed projects only. TAN Pilbara: 16 kt (net 9kt), Porsgrunn: 25kt, Glomfjord: 185kt, Uusikapunki: 25kt, Köping: 9kt, Sluiskil: net 16kt, 4) Full-year impact vs. 214 of Galvani (6% of ~ 3 mill.- tons) and OFD: ~4kt higher than 214 5) Pilbara ammonia: 42 kt, BASF JV: 51 kt

16 16 Yara targets payout ratio of 4-45% of net income Share of net income 64% 32% 7% 25% 48% 25% 23% 48% 3% 18% 26% 7% 19% 21% 5% 16% 41% 6% 34% 19% 1% 18% 23% 6% 17% 47% 12% 35% 16% 48% 53% 6% 47% Share buy backs Dividends Target range 4-45%

17 Additional information

18 18 Safe operations is our first priority TRI YTD TRI: Total recordable injuries, lost time (absence from work), restricted work and medical treatment cases per one million work hours

19 Price sensitivities linked to capacities 19 Parameter Operating income (MUSD) EBITDA (MUSD) EPS (USD) 1 Urea + USD 1/t... of which pure urea of which UAN CAN price + USD 1/t of which pure nitrates of which NPK Compound NPK premium + USD 1/t Hub gas Europe + USD.1/MMbtu Ammonia + USD 1/t Phosphate rock + USD 1/t

20 Yara benefits from a stronger USD 2 Revenues and raw material costs are both USD-driven Fixed cost base in EUR (~4%), NOK (~2%), BRL (~15%) and USD/other (~25%) Impact of 1% appreciation vs. NOK 1 Run-rate vs. 214-average 2 Fixed costs (NOK bn) Translation impact on gross profit (NOK bn) EBITDA (NOK bn) EBIT (NOK bn) EPS (NOK) 3 NOK vs. FX 214 avg. 3 Feb 215 % appreciation in FX vs NOK Impact on EPS (NOK) USD % 14.7 EUR % -.8 BRL % -.6 Combined Note: Currency gain/loss on USD debt reported in P&L statement will vary 1) Compared with 214 average FX-rates. Assumed long-term effects (approx. one year +) 2) Run-rate=market as of 3 Feb ) 25% tax rate

21 Value-added and distribution make up larger part of Yaras contribution 21 NOK millions Total Yara contribution 11, 1, 9, Trade 8, 7, 6, Upgrade & distribution 5, 4, 3, 2, Commodity overseas 1, 1Q1 3Q1 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 Commodity Europe

22 Yara Industrial: 13% EBITDA growth p.a. since Base Chemicals Gas and Industrial applications Environmental Solutions Mining Applications Key product and service offering Strategic fit Geographical market Market drivers Chemical applications for food, feed, automotive, space, pharmaceutical and construction industries Optimization of Upstream assets GDP growth CO 2 in a gas, liquid and Dry ice format CN for Industrial Applications Animal nutrition Monetize secondary products into primary markets applications Abatement of emissions from heavy duty vehicles, off-road vehicles. NO x and SO x abatement for maritime sector Utilize technology, logistic advantage and infrastructure footprint Europe Global Global Global GDP growth, standard of living Legislations, GDP growth Solutions to the Civil explosives industry based on Technical nitrates for mining and construction Handling, storage and economies of scale GDP growth, infrastructure projects, raw material security EBITDA (MNOK) Market CAGR % % ) Source: IHS Global Insight. Nominal world GDP growth ) Source: Fertecon Urea Outlook ) Source: «Technical Ammonium Nitrate Quarterly Market Outlook February 215», CRU % 2 2.5%

23 Yara Industrial serves a wide range of customers through an extensive offering Automotive Trucks Off-road vehicles Cars End users Reagent AdBlue: High-quality urea solution Yara value proposition Technology Services Dispensing bulk equipment Telemetry Training Yara competitive edge Global reach Strong market infrastructure 23 Stationary Marine Power plants Cement factories Waste Incinerators Cruise and ferries Coast-near vessels Deep sea vessels NOxCare: high-quality urea solution and ammonia solution NOxCare4: High purity urea solution SCR Technology SNCR Technology Hybridsystems SCR Technology SOx scrubbers Design and engineering Optimization of operations, emissions reduction, safety and performance improvement Commissioning Operational training Safety training Maintenance Spare-parts Reliable supply Proximity to customers High-quality products Proven technology Strong Yara brand

24 Earnings per share* 24 EPS excluding currency and special items Annual NOK *Average number of shares for 3Q 215: million (3Q 214: million).

25 Continued growth for value-added fertilizer products 25 Value-added fertilizer deliveries 1 Value-added fertilizer deliveries 1 Kilotons Kilotons 3, , 2, , 1,5 1, 5 CAGR 6% Q11 3Q12 3Q13 3Q14 3Q15 Outside Europe Europe 1) YaraBela, YaraMila and YaraLiva deliveries Asia Brazil Latin America excl. Brazil 3Q13 3Q14 Africa 3Q15 North America

26 European deliveries down 5%, but increase for nitrates 26 Kilotons 2,163 2,217 2,95 Nitrate-based fertilizer is superior to urea both agronomically and environmentally Higher crop yields and protein content Lower N-losses / higher N-efficiency Lower carbon footprint 1,126 1,185 1,29 3Q 213 3Q 214 3Q 215 Urea Other NPK compound Nitrates

27 Lower production mainly due to planned maintenance 27 Kilotons 6, Finished fertilizer & industrial products 1 Ammonia 1 Kilotons 2,5 5, 2, 4, 1,5 3, 1, 2, 1, Urea Nitrates NPK CN UAN SSP - based fertilizer * Including share of equity-accounted investees

28 Net interest-bearing debt development 28 NOK millions 1,471 3,282 4, ,335 1, ,452 4,41 Net debt Jun 15 Cash earnings* Growhow UK Dividends from equityaccounted investees Net operating capital change Investments net Yara dividend FX loss Other Net debt Sep 15 * Operating income plus depreciation and amortization, minus tax paid, net gain/loss on disposals, net interest expense and bank charges

29 Currency exposure affecting Profit & Loss 29 At the beginning of the fourth quarter The US dollar debt generating Profit & Loss exposure was USD 1,5 million Kept as hedge of future earnings and to finance inventories in emerging markets Fairly even split of exposure towards EUR, BRL and other emerging market currencies The debt level in emerging markets will fluctuate with fertilizer seasons 2. Additional Profit & Loss exposure from internal currency positions vs. NOK Payables mainly CAD (45 million) Receivables mainly EUR (2 million)

30 Yara 3Q fertilizer sales by market and product 3 Kilotons 3,12 3,516 3Q14 3Q15 2,195 2, Europe Latin America North America Asia Africa 914 1,44 1,88 1,665 1,39 1,413 1, , NPK compounds NPK blends Nitrate Urea Other products UAN CN

31 YaraMila and YaraBela deliveries 31 Yara-produced YaraMila deliveries Kilotons Kilotons Yara-produced YaraBela deliveries 1,6 1,4 1,6 1,4 1,2 1,2 1, 1, Q11 3Q12 3Q13 3Q14 3Q15 3Q11 3Q12 3Q13 3Q14 3Q15 Outside Europe Europe Outside Europe Europe

32 Industrial volume development 32 Kilotons Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Industrial N-chemicals Environmental products Other

33 AdBlue deliveries 33 Kilotons Q1 4Q1 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

34 Debt/equity ratio 34 Net interest-bearing debt / equity ratio (end of period)

35 Yara stocks Kilotons Finished fertilizer 7, Bunge Fertilizer included from 3Q , 5, 4, 3, 2, 1, - Urea Nitrates Compound NPK Other

36 Normal deliveries in Europe and US 36 Million tons N West Europe 3Q11 3Q12 3Q13 3Q14 3Q15 Domestic production -5% Net imports Million tons N US 3Q11 3Q12 3Q13 3Q14 3Q15 Domestic production -4% Net imports Source: Yara estimate for fertilizer deliveries to selected West European countries. Total nitrogen deliveries based on TFI, US Trade Commission, Blue-Johnson and Yara estimates

37 Brazilian soybean cost competitiveness significantly improved due to local currency depreciation 37 USD/bu 12 Soybeans - production cost with USD/BRL 3.65 USD/bu 6 Corn - production cost with USD/BRL Mato Grosso, Brazil 2 Mato Grosso, Brazil 2 Iowa, USA 1 Iowa, USA Paraná, Brazil Source: USDA, AMS, AGROCONSULT. Prepared by: Agroconsult.

38 European producers nitrate stocks 38 Index June 27 = Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Source: Fertilizers Europe, Yara estimate for September 15/16 1/11 11/12 12/13 13/14 14/15

39 Energy cost 39 Yearly averages , quarterly averages for with forward prices* for 4Q15 and 1Q16. USD per MMBtu Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 US gas price (Henry Hub) Yara Global TTF day ahead (Zeebrugge ) Yara Europe *Dotted lines denote forward prices as of 13 October 215 Source: Yara, World Bank, Platts/Argus/ICIS Heren

40 Farm economics support fertilizer demand, even in USD based economies Index 3 FAO price index /24 1/25 1/26 1/27 1/28 1/29 1/21 1/211 1/212 1/213 1/214 1/215 Source: FAO Cereals Price Index Cereals 5 year avg. Food Price Index Food 5 year avg.

41 Global grain balance 41 Grain consumption and production Million tons 2,55 2,5 2,45 2,4 2,35 2,3 2,25 2,2 2,15 2,1 2,5 2, 1, E 16F Days of consumption in stocks Days E 16F Consumption Production Source: USDA October 215

42 Non-commercials net long position in corn 42 Thousand contracts Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Source: US Commodity Futures Trading Commission

43 Projected nitrogen capacity additions outside China 43 Year Driving regions Excluding China Algeria 18% Iran 16% USA 3% Algeria 15% USA 44% Nigeria 15% Nigeria 3% Russia 2% Russia 34% Nigeria 34% Urea capacity growth relative to nitrogen capacity Excluding China 2.6% (2.6%) 3.% (3.3%) 1.6% (2.3%) 1.5% (1.3%) 1.3% Gross annual addition ~2.% Assumed annual closures ~.5% Net annual addition ~1.5% Trend consumption growth from 23 2.% Source: CRU urea update September 215 (June 215 in brackets). Consumption data source is IFA.

44 Key value drivers quarterly averages 44 TTF day ahead (USD/MMBtu) Urea prilled fob Black Sea (USD/t)/Urea granular fob Egypt (dotted line, USD/t) CAN cif Germany (USD/t) Q14 4Q14 1Q15 2Q15 3Q15 3Q14 4Q14 1Q15 2Q15 3Q15 3Q14 4Q14 1Q15 2Q15 3Q15 US gas price Henry Hub (USD/MMBtu) Ammonia fob Black Sea (USD/t) NOK/USD exchange rate Q14 4Q14 1Q15 2Q15 3Q15 3Q14 4Q14 1Q15 2Q15 3Q15 3Q14 4Q14 1Q15 2Q15 3Q15 Source: Fertilizer Market Publications, CERA, World Bank, Norges Bank

45 1-year fertilizer prices monthly averages 45 USD/t Ammonia fob Black Sea 1, USD/t CAN cif Germany USD/t Urea prilled fob Black Sea/Urea granular fob Egypt Source: Average of international publications USD/t DAP fob US Gulf/MOP granular fob Vancouver 1,2 1, Average prices

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