Yara International ASA First quarter results April 2015

Transcription

1 Yara International ASA First quarter results April 2015

2 1 Summary first quarter Strong result driven by higher deliveries and margins Margins benefit from lower gas prices and stronger US dollar NOK 1.8 billion currency loss due to US dollar appreciation Improved production reliability Lifeco write-down of NOK 929 million Strong Industrial result

3 2 Earnings per share* EPS excluding currency and special items Annual NOK *Average number of shares for 1Q 2015: million (1Q 2014: million).

4 3 Market development Chinese urea exports put pressure on prices USD nitrate prices have followed the urea price development Western Europe nitrogen fertilizer industry deliveries 3% lower; season-to-date in line Phosphate prices and upgrading margins similar to last year Strong demand for value-added fertilizer products Industrial: continued demand growth for environmental solutions but weaker TAN market

5 4 Chinese urea exports put pressure on prices Chinese exports and urea price Chinese production Kilotons Black Sea USD/t Million tons / / / Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Source: BOABC, CFMW

6 European industry deliveries similar to last season 5 Million tons N West Europe Million tons N USA % % /11 11/12 12/13 13/14 14/ /11 11/12 12/13 13/14 14/15 Domestic Imports Production 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

7 6 Strong production with improved reliability Kilotons Finished fertilizer and industrial products Kilotons Ammonia Urea Nitrates NPK CN UAN SSP - based fertilizer * Including share of equity-accounted investees

8 Industrial accounts for ~20% of world nitrogen consumption 7 Global nitrogen consumption Industrial applications Global Nitrogen market in 2014: 137 mill. tons Industrial 19% 81% Fertilizer CAGR : Fertilizer: ~2% Industrial ~3% 1) Fertecon Ammonia Outlook 2014

9 Yara Industrial enhances value of fertilizer operations 8 Solid growth last 10 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 Quarterly EBITDA, excl. non-recurring items (rebased to 1Q 2012=100) Environmental products CAGR +7% Industrial N-chemicals TAN with more stable earnings than fertilizer 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q CO2 1Q 2015 Industrial Downstream Upstream

10 13% EBITDA growth p.a. since Base Chemicals Gas and Industrial applications Environmental Solutions Mining Applications Key product and service offering Chemical applications for food, feed, automotive, space, pharmaceutical and construction industries CO 2 in a gas, liquid and Dry ice format CN for Industrial Applications Animal nutrition Abatement of emissions from heavy duty vehicles, off-road vehicles. NO x and SO x abatement for maritime sector Solutions to the Civil explosives industry based on Technical nitrates for mining and construction Strategic fit Optimization of Upstream assets Monetize secondary products into primary markets applications Utilize technology, logistic advantage and infrastructure footprint Handling, storage and economies of scale Geographical market Europe Global Global Global Market drivers GDP growth GDP growth, standard of living Legislations, GDP growth GDP growth, infrastructure projects, raw material security EBITDA (MNOK) Market CAGR % 1 5% 1 16% 2 2.5% 3 1) Source: IHS Global Insight. Nominal world GDP growth ) Source: Fertecon Urea Outlook ) Source: «Technical Ammonium Nitrate Quarterly Market Outlook February 2015», CRU

11 Yara well on track to become global market leader for emissions abatement 10 Growth initiatives 2005 to date Invested > NOK 1 bn in own plants 2007 Aug: Yarwil (JV with Wilh. Wilhelmsen) 2011 Oct: acquired Petro Miljö (SNCR technology) 2014 Jan: Acquired H+H (SCR Technology) April: Acquired 63% in Green Tech Marine June: Acquired Strabag (flue gas cleaning) Other selected emissions Technology & services Reagents target: become full-service provider of environmental solutions with top-industry profitability

12 We serve a wide range of customers through an extensive offering 11 End users Yara value proposition Yara competitive edge Automotive Trucks Off-road vehicles Cars Reagent AdBlue: High-quality urea solution Technology Services Dispensing bulk equipment Telemetry Training Global reach Strong market infrastructure Stationary Power plants Cement factories Waste Incinerators NOxCare: high-quality urea solution and ammonia solution SCR Technology SNCR Technology Hybridsystems Optimization of operations, emissions reduction, safety and performance improvement Reliable supply Proximity to customers High-quality products Marine Cruise and ferries Coast-near vessels Deep sea vessels NOxCare40: High purity urea solution SCR Technology SOx scrubbers Design and engineering Commissioning Operational training Safety training Maintenance Spare-parts Proven technology Strong Yara brand

13 12 Yara Environmental Solutions grows rapidly Yara performance Market growth ,183 USDbn. 905 CAGR +16% AdBlue volumes (kt) NOxCare volumes (kt) AdBlue EBITDA (MNOK) NOxCare EBITDA (MNOK) Yara ES 2014 sales was USD540mill, predominantly reagents Technology Reagent (AdBlue+NOxCare) Recent acquisitions have built Yara a solid position to capture the fast-growing Environmental Solutions market 1) Per urea-equivalent (46% Nitrogen), excl. non-recurring items, source: Fertecon Urea Outlook

14 Earnings before interest, tax, depreciation and amortization (EBITDA) 13 NOK millions EBITDA excluding special items Annual NOK millions ,970 13,399 16,407 4,794

15 14 EBITDA development NOK millions 515 1, ,794 1,089 3, EBITDA 1Q14 Volume & mix Price/margin Other Currency Special items EBITDA 1Q15

16 15 Improved earnings in all segments EBITDA 1 (NOK millions) EBITDA excluding special items Downstream Industrial Upstream 1Q14 1Q15 1) 1Q 2015 result reflects new segment structure. 1Q 2014 on previous segment structure.

17 16 Lower natural gas cost in Europe Yara European gas & oil cost Change in European energy cost USD/ MMBtu NOK millions 0 (200) (400) (600) (800) (1 000) (36) (660) (891) (726) (650) (150) 5.0 (1 200) 4.0 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 (1 400) (1 314) 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 TTF (1-month lag) Yara Europe Actual April 2015 estimate* *Dotted lines denote forward prices as of 15 April 2015 Source: Yara, World Bank, Argus/ICIS Heren

18 17 Stable European nitrate premium USD/t 700 Nitrogen upgrading margins 1 (monthly publication prices) USD/t 180 European nitrate premium 2 (quarterly Yara realized) Nitrate premium above urea Value above ammonia Value above gas Yara EU gas cost * Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 0 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 Urea CFR CAN (46% N) NH3 CFR (46% N) 1) All prices in urea equivalents 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.

19 Stable commodity phosphate margins and solid NPK compound premiums 18 USD/t Phosphate upgrading margins USD/t NPK premium over blend Value above raw material Weighted average global premium above blend cost NH3, fob Black Sea * Nitrate premium, CIF inland Germany Urea, CIF inland Germany 100 Rock, fob NA * MOP, CIF inland Germany 0 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 DAP, fob USG DAP, CIF inland Germany 0 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 1) Export NPK plants, average grade , net of transport and handling cost.

20 19 Net interest-bearing debt development NOK millions 11,808 4,893 1,831 1,941 8,985 1, Net debt Dec 14 Cash earnings* Dividends from equity-accounted investees Net operating capital change Investments net FX loss Other Net debt Mar 15 * Operating income plus depreciation and amortization, minus tax paid, net gain/loss on disposals, net interest expense and bank charges

21 20 Prospects Incentives for fertilizer application remain supportive Strong US dollar improves competitiveness of European farmers and nitrogen producers Yara deliveries in Europe running well in April Demand for nitrates and compound NPKs continues to grow outside Europe China to remain swing producer anthracite coal prices and RMB/USD exchange rate are key for global nitrogen commodity prices Expected further gas cost reduction of NOK 650 million in Europe in second quarter and NOK 150 million in third quarter 2015

22 Additional information

23 22 Debt/equity ratio Net interest-bearing debt / equity ratio (end of period)

24 23 Fertilizer deliveries Kilotons Europe Outside Europe

25 24 Yara 1Q fertilizer sales by market and product Kilotons Q14 1Q Europe Latin America North America Asia Africa NPK compounds NPK blends Nitrate Urea Other products UAN CN

26 25 Fertilizer deliveries by product and source Kilotons Q14 1Q15 1Q14 1Q15 1Q14 1Q15 1Q14 1Q15 1Q14 1Q15 1Q14 1Q15 Nitrate NPK compounds NPK blends Urea UAN Other Yara-produced deliveries Joint venture & third party sourced

27 26 Industrial deliveries Kilotons Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 Industrial N-chemicals Environmental products Other

28 27 AdBlue deliveries Kilotons Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 Europe North America ROW

29 28 NPK and nitrate deliveries Yara-produced compound NPK deliveries Yara-produced nitrate deliveries Kilotons Kilotons Q11 1Q12 1Q13 1Q14 1Q Q11 1Q12 1Q13 1Q14 1Q15

30 29 Yara stocks Kilotons Finished fertilizer Bunge Fertilizer included from 3Q Urea Nitrates Compound NPK Other

31 30 Energy cost Yearly averages , quarterly averages for with forward prices* for 2Q15 and 3Q15. USD per MMBtu Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 US gas price (Henry Hub) Yara Global TTF day ahead (Zeebrugge ) Yara Europe *Dotted lines denote forward prices as of 15 April 2015 Source: Yara, World Bank, Platts/Argus/ICIS Heren

32 31 Net income from equity-accounted investees NOK millions Q Q Qafco GrowHow UK Lifeco Other

33 32 Currency exposure affecting P&L At the beginning of the second quarter The US dollar debt generating p&l exposure was USD 1,600 million Kept as hedge of future earnings and to finance inventories in emerging markets Around 50% towards BRL with the rest mainly towards other emerging market currencies and EUR The debt level in emerging markets will fluctuate with fertilizer seasons 2. Additional p&l exposure from internal currency positions vs. NOK Payables mainly CAD (400 million) Receivables mainly EUR (400 million)

34 33 European producers nitrate stocks Index June 2007= Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 14/15 10/11 11/12 12/13 13/14 Source: Fertilizers Europe, Yara estimate for March

35 Projected nitrogen capacity additions outside China 34 Year Driving regions Excluding China Algeria 23% Iran 20% Algeria 18% Saudi Arabia 16% USA 28% Algeria 13% Nigeria 31% USA 26% Nigeria 36% Russia 24% Urea capacity growth relative to nitrogen capacity Excluding China 1.1% (1.1%) 2.6% (2.6%) 3.3% (3.1%) 2.3% (2.2%) 1.3% (1.3%) Gross annual addition ~2.1% Assumed annual closures ~0.5% Net annual addition ~1.6% Trend consumption growth from % Source: CRU urea update March 2015 (December 2014 in brackets). Consumption data source is IFA.

36 35 Key value drivers quarterly averages 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 2Q14 3Q14 4Q14 1Q15 1Q14 2Q14 3Q14 4Q14 1Q15 1Q14 2Q14 3Q14 4Q14 1Q15 US gas price Henry Hub (USD/MMBtu) Ammonia fob Black Sea (USD/t) NOK/USD exchange rate Q14 2Q14 3Q14 4Q14 1Q15 1Q14 2Q14 3Q14 4Q14 1Q15 1Q14 2Q14 3Q14 4Q14 1Q15 Source: Fertilizer Market Publications, CERA, World Bank, Norges Bank

37 36 10-year fertilizer prices monthly averages USD/t Ammonia fob Black Sea USD/t 500 CAN cif Germany USD/t 800 Urea prilled fob Black Sea/Urea granular fob Egypt USD/t DAP fob US Gulf/MOP granular fob Vancouver Source: Average of international publications Average prices