Yara International ASA Second quarter results 2014

Transcription

1 Yara International ASA Second quarter results July 214

2 1 Summary second quarter Strong result Lower nitrate deliveries amid early end to season in Europe Continued strong NPK deliveries and value-added premiums Improved European commodity margins due to lower gas price Continued Industrial segment growth

3 2 Earnings per share* EPS excluding currency and special items Annual NOK Average number of shares for 2Q 214: million (2Q 213: million).

4 3 Fertilizer market development Continued robust fertilizer demand Stable urea prices, production curtailed in China and Ukraine Western Europe nitrogen fertilizer industry deliveries 8% lower, season to date 2% higher Tight phosphate markets, following a short-lived correction in April and May Strong demand for value-added fertilizer products

5 Farm economics strong overall, despite grain price decline 4 Source: FAO

6 5 Lower US nitrogen deliveries, stable in Europe Million tons N USA Million tons N West Europe % % /1 1/11 11/12 12/13 13/14. 9/1 1/11 11/12 12/13 13/14 Production Net imports Domestic 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 Chinese urea: strong export volume increase, limited production increase Chinese production (kilotons) 13/14 12/13 11/12 1,8 1,6 1,4 1,2 Chinese exports (kilotons) Season-to-date 1.8 mt (7.9 mt season-to-date last year) Year-to-date 3.8 mt (1.3 mt year-to-date last year) Black Sea USD/t Season-to-date 65.7 mt (64.6 mt season-to-date last year) Year-to-date 29.7 mt (29.6 mt year-to-date last year) 1, Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Source: BOABC, CFMW

8 Strong NPK quarter and season, with continued growth outside Europe 7 Yara-produced compound NPK deliveries (by season) Yara-produced compound NPK deliveries (by quarter) Kilotons 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 CAGR 7% 9/1 1/11 11/12 12/13 13/14 Kilotons 1,4 1,3 1,2 1,1 1, Q1 2Q11 2Q12 2Q13 2Q14 Europe Overseas

9 Brazil: Yara benefiting both from Bunge acquisition and increase in industry deliveries 8 Brazil 1H fertilizer industry deliveries Yara Brazil 1H fertilizer deliveries 1 Kilotons 14, +7% Kilotons 3,5 12, 3, 1, 2,5 8, 2, 6, 1,5 4, 1, 2, Source: ANDA, Yara 1) Excluding trade

10 Earnings before interest, tax, depreciation and amortization (EBITDA) 9 NOK millions 5,444 4,982 4,966 EBITDA excluding special items 4,281 3,455 4,31 4,13 3,591 4,184 4,39 3,318 3,591 4,227 1,858 Annual NOK millions ,163 16,97 13,399 7,818

11 1 EBITDA development NOK millions 15 4, , EBITDA 2Q13 Volume & mix Price/margin Gas & oil costs in Europe Special items Other Currency EBITDA 2Q14

12 11 Improved Downstream and Industrial earnings EBITDA (NOK millions) EBITDA excluding special items 2,493 2,498 1,525 1, Downstream Industrial Upstream 2Q13 2Q14

13 12 Strong growth in Air1 deliveries Kilotons > 1 million tons of product sold L12M 2% 18% 16% 14% 12% 1% 8% 6% 4% 2% 1Q1 2Q1 3Q1 4Q1 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Europe North America ROW % of total Industrial deliveries %

14 13 Strong nitrate premium at season close USD/t 8 Nitrogen upgrading margins 1 (monthly publication prices) 18. European nitrate premium 2 (quarterly Yara realized) Nitrate premium above urea Value above ammonia Value above gas Yara EU gas cost *2 2. 2Q1 4Q1 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14. 2Q1 4Q1 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 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.

15 14 Improved NPK premiums USD/t Phosphate upgrading margins USD/t NPK premium over blend Value above raw material 5 4 Weighted average global premium above blend cost 3 NH3, fob Black Sea *.22 3 Nitrate premium Urea, fob Black sea Rock, fob NA *1.4 1 MOP, cfr NWE 2Q1 4Q1 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 DAP, fob USG DAP, fob Morocco 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 1) Export NPK plants, average grade , net of transport and handling cost.

16 15 Lower natural gas cost in Europe Yara European gas & oil cost Change in European energy cost USD/ MMBtu 13. NOK millions 2 Actual for quarter (2) 1 (51) (36) July 214 estimate** (4) 7. (6) (8) (66) (95) (7) 4. 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 (1,) 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 Zeebrugge (1-month lag) Yara Europe *Dotted lines denote forward prices as of 1 July 214 Source: Yara, World Bank, Platts ** Based on forward prices as of 1 July 214

17 16 Fertilizer deliveries by product and source Kilotons 1,551 1,672 1,36 1,331 1,119 1,211 1, Q13 2Q14 2Q13 2Q14 2Q13 2Q14 2Q13 2Q14 2Q13 2Q14 2Q13 2Q14 Nitrate NPK compounds NPK blends Urea UAN Other Yara-produced deliveries Joint venture & third party sourced Total

18 17 Yara stocks: normal level, adjusted for Bunge Kilotons Finished fertilizer 6, Bunge Fertilizer included from 3Q 213 5, 4, 3, 2, 1, - Urea Nitrates Compound NPK Other

19 18 Net interest-bearing debt development NOK millions 3,347 2, ,758 2, ,382 1,58 Net debt Mar 14* Cash earnings** Dividends received from equityaccounted investees Net operating capital change Investments net Yara Dividend FX gain/(loss) Other Net debt Jun 14* * Included in net interest-bearing debt are external bank time deposits (4-12 months), this is part of other current assets in balance sheet ** Operating income plus depreciation and amortization, minus tax paid, net gain/loss on disposals, net interest expense and bank charges

20 19 Prospects

21 2 Prospects Farm economics strong overall, despite grain price decline Break-even urea export price from China; domestic coal price and export tax regime are key for global commodity nitrogen pricing going forward Capacity outside China: limited greenfield additions next 2 years, and curtailments currently in Ukraine Yara European 3Q deliveries in line so far, and improved commodity-n margins with lower gas cost

22 21 25 kt NPK expansion in Uusikaupunki, Finland Annual NPK production capacity (kt) 1,25 1, 25 Strong NPK demand growth outside Europe presents solid business case Current Expansion End 215 Project to install new granulator adds ~25 kt annual capacity Competitive capex at ~2 EUR/t capacity addition Completion end 215

23 22 Additional information

24 Value-added upgrading and distribution make up larger part of Yara s contribution 23 NOK millions 9, Total Yara contribution 8, 7, Trade 6, 5, Fertilizer upgrade & distribution 4, 3, 2, Commodity overseas 1, Commodity Europe 2Q1 4Q1 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14

25 24 Debt/equity ratio.75 Net interest-bearing debt / equity ratio (end of period)

26 25 Gas & oil cost Yearly averages 29 21, quarterly averages for with forward prices* for 3Q14 and 4Q14 USD per MMBtu Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 US gas price (Henry Hub) Yara Global Zeebrugge day ahead Yara Europe *Dotted lines denote forward prices as of 1 July 214 Source: Yara, World Bank, Platts

27 26 Currency exposure affecting P&L At the beginning of the third quarter The US dollar debt generating p&l exposure was USD 95 million Kept as hedge of future earnings and to finance inventories in emerging markets Around 8% towards EUR and BRL, the rest towards NOK and emerging market currencies 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 (2 million) Receivables mainly EUR (165 million), GBP (25 million) and AUD (45 million)

28 27 Fertilizer deliveries Kilotons 7, 6, 5, 6,14 5,256 5,179 4,763 6,284 6,17 4,742 4,882 5,21 5,216 4,791 5,474 5,129 4,914 4,759 5,296 4,97 4,834 5,437 5,253 5,13 5,44 6,342 6,146 5,884 5,297 6,491 6,45 4,239 4, 3,496 3, 2, 1, Europe Outside Europe Total

29 28 Yara 2Q fertilizer sales by market and product Kilotons 2,771 2,183 2,487 2Q13 2Q14 1, , Europe Latin America Asia North America Africa 1,211 1, ,36 1,551 1,119 1,672 1, NPK compounds NPK blends Nitrate Urea Other products UAN CN

30 29 NPK and nitrate deliveries Yara-produced compound NPK deliveries Yara-produced nitrate deliveries Kilotons 1,4 1,3 1,2 1,1 1, Kilotons 1,7 1,5 1,3 1, Q1 2Q11 2Q12 2Q13 2Q14 5 2Q1 2Q11 2Q12 2Q13 2Q14

31 3 Industrial deliveries Kilotons Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Industrial N-chemicals Environmental products Other

32 31 Yara production volume* Kilotons 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 Finished fertilizer and industrial products Kilotons 2,5 2, 1,5 1, 5 Ammonia Urea Nitrates NPK CN UAN SSP - based fertilizer * Including share of equity-accounted investees

33 32 Farm economics support fertilizer demand 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 Source: FAO Cereals Price Index Cereals 5 year avg. Food Price Index Food 5 year avg.

34 For 214/15, global grain production and consumption close to balanced 33 Grain consumption and production Days of consumption in stocks Million tons Days 2,5 85 2,45 2,4 8 2,35 2,3 75 2,25 2,2 7 2,15 2,1 65 2,5 6 2, 1, E 15F E 15F Consumption Production Source: USDA July 214

35 Production Export Domestic Domestic Export Production Production stable, reduced domestic supply due to more exports 34 Chinese urea production Domestic urea balance Million tons /14 12/13 11/12 Million tons % Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Source: BOABC, CFMW Jul-May 12/13 Jul-May 13/14

36 Projected nitrogen capacity additions outside China 35 Year Driving regions Excluding China Qatar 23% Algeria 16% Algeria 16% UAE 15% Saudi Arabia 22% USA 2% USA 48% Malaysia 12% Nigeria 34% USA 26% Urea capacity growth relative to nitrogen capacity Excluding China 1.6% 1.5% 1.9% 2.% 2.1% Gross annual addition ~1.8% Assumed annual closures ~.5% Net annual addition ~1.3% Trend consumption growth from % Source: CRU urea update July 214. Consumption data source is IFA.

37 European producer nitrate stocks ending the season close to average 36 Index June 27= Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 13/14 8/9 9/1 1/11 11/12 12/13 Source: Fertilizers Europe, Yara estimate for June

38 37 Non-commercials net long position in corn Thousand contracts Jan-7 Jul-7 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Source: US Commodity Futures Trading Commission

39 38 Key value drivers quarterly averages Zeebrugge day ahead (USD/MMBtu) Urea prilled fob Black Sea (USD/t)/Urea granular fob Egypt (USD/t) CAN cif Germany (USD/t) Q13 3Q13 4Q13 1Q14 2Q14 2Q13 3Q13 4Q13 1Q14 2Q14 2Q13 3Q13 4Q13 1Q14 2Q14 US gas price Henry Hub (USD/MMBtu) Ammonia fob Black Sea (USD/t) NOK/USD exchange rate Q13 3Q13 4Q13 1Q14 2Q14 2Q13 3Q13 4Q13 1Q14 2Q14 2Q13 3Q13 4Q13 1Q14 2Q14 Source: Fertilizer Market Publications, CERA, World Bank, Norges Bank

40 39 1-year fertilizer prices monthly averages USD/t 1, Ammonia fob Black Sea USD/t 5 CAN cif Germany USD/t 8 Urea prilled fob Black Sea/Urea granular fob Egypt USD/t 1,2 DAP fob US Gulf/MOP granular fob Vancouver 6 1, Source: Average of international publications Average prices