Yara International ASA Berenberg conference 2 December 215 Svein Tore Holsether, CEO
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
Integrated business model provides scale, flexibility and end-to-end presence 3
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
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 3.3 24 25 26 27 Environmental products Quarterly EBITDA, excl. non-recurring items (rebased to 1Q 212=1) 2 15 1 5 3.5 3.8 3.9 4.7 CAGR +7% 4.6 28 29 21 211 Industrial N-chemicals 212 213 TAN with more stable earnings than fertilizer 214 CO2 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 212 213 214 215 Industrial Downstream Upstream 5.2 5.5 5.7 6.2 6.7
Strong earnings, also in supply-driven conditions 6 NOK 13.86 11.54 9.8 1.2 2.6 15.91 36.28 28.27 13.8 8.82 3.24 2.69 41.99 34.94 37.31 35.34 24.95 2.67 EPS excluding special items and currency 3.66 27.59 27.79 27.49 25 26 27 28 29 21 211 212 213 214 YTD 3Q15
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 1,58 271 1,571 3,729 YTD 3Q14 Volume & mix Price/margin Other Currency Special YTD 3Q15 items
Lower natural gas cost in Europe 8 USD/ MMBtu 9. 8.5 8. 7.5 7. 6.5 6. 5.5 5. 4.5 4. 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*
Production Export Domestic Domestic Export Production Increased production and exports from China 9 Million tons 8 71.1 7 6 5 4 3 2 1 Chinese urea balance L12M % 59.7 59.7 11.4 14.5 74.2 Kilotons 2,4 2,2 2, 1,8 1,6 1,4 1,2 1, 8 6 4 2 Chinese exports and urea price Black Sea USD/t 55 5 45 4 35 3 25 2 15 1 5 Nov 13 Oct 14 Nov 14 Oct 15 Source: BOABC, CFMW
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) 6 5 4 Nitrate premium above urea 16 14 12 1 3 Value above ammonia 8 2 1 Yara EU gas cost *2 Value above gas 6 4 2 3Q12 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.
Stable commodity phosphate margins and solid NPK compound premiums 11 USD/t 6 5 4 3 2 1 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 7 6 5 4 3 2 1 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 19-1-13, net of transport and handling cost.
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 3 12 1, 25 8, 2 6, 15 4, +8% 1 2, 5 211 212 213 214 215 Brazil industry deliveries Source: ANDA, Yara Yara Brazil deliveries Galvani 27 28 29 21 211 212 213 214 215
Brazil: Improved profitability and risk management 13 MNOK Source: Yara -22 Galvani Yara Brazil 3Q EBITDA 29 46 664 2Q 212 3Q 213 3Q 214 3Q 215 Yara Brazil risk management Days % 3 28 1 27 27 9 25 8 2 2 7 6 15 5 4 1 3 5 2 1 212 213 214 YTD 215 Net credit days Net overdues >3 days of total receivables (%)
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
Strong growth pipeline 15 NOK bn Capex plan Production growth 214-217 14.6 14.5.8 Cost&capacity improvements 1.3 mt Committed growth.5 Maintenance 21.6.9 8.3 7.4 9.2 1.2 3. 6.8 1.2.6 2.2 5.5 5.8 5. 5. 18.8 1. 215 Committed growth (NOKbn) 1 1) Yaras share of capex 216 217 BASF JV 1.1 1.7.5 Pilbara TAN + M&A 3.7 Porsgrunn.6 1.2.3 Köping.3.8.3 Sluiskil.3.8.3 Uusikapunki.3 Galvani (Salitre) 1.6.9.8 Ammonia vessels.2 1.4 Other projects.2.6.8.6 Total 8.3 7.4 3..6 218 Production 214 2 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 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% 24 25 26 27 28 29 21 211 212 Share buy backs Dividends Target range 4-45% 213 214
Additional information
18 Safe operations is our first priority 2. 18. 16. 14. 12. 1. 8. 6. 4. 2.. TRI 1987 1989 1991 1993 1995 1997 1999 21 23 25 27 29 211 213 215 YTD TRI: Total recordable injuries, lost time (absence from work), restricted work and medical treatment cases per one million work hours
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 7 39 33 7 51 44.2.15.13 2 CAN price + USD 1/t of which pure nitrates of which NPK 38 96 58 4 12 62.11.28.17 3 Compound NPK premium + USD 1/t 51 54.16 4 Hub gas Europe + USD.1/MMbtu -16-18 -.5 5 Ammonia + USD 1/t 7 9.3 6 Phosphate rock + USD 1/t 15 15.4
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 -.4 3. 2.6 2.5 6.7 6.3 7.69 22% 14.7 EUR -.5 - -.5 -.8-1.7 8.38 8.69 4% -.8 BRL -.3 - -.3 -.3 -.8 2.67 2.85 7% -.6 Combined -1.2 3. 1.8 1.4 4.2 13.4 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 215. 3) 25% tax rate
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
Yara Industrial: 13% EBITDA growth p.a. since 211 22 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 211-214 (MNOK) Market CAGR 214-22 413 357 211 212 5% 1 426 213 533 214 311 232 211 212 5% 1 337 213 1) Source: IHS Global Insight. Nominal world GDP growth. 214-22 2) Source: Fertecon Urea Outlook - 214 3) Source: «Technical Ammonium Nitrate Quarterly Market Outlook February 215», CRU 492 214 114 139 237 33 211 212 213 214 246 211 343 212 225 213 16% 2 2.5% 3 223 214
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
Earnings per share* 24 EPS excluding currency and special items 14.56 7.41 1.54 8.32 1.8 9.82 9.25 9. 7.67 7.21 8.52 8.4 7.97 6.69 5.66 5.62 8.26 7.3 7.74 6.4 7.62 6.18 8.17 6.74 1.51 2.65 1.59 9.58 2.65.23 212 213 214 215 Annual NOK 37.31 2.67 27.59 27.79 *Average number of shares for 3Q 215: 275.1 million (3Q 214: 276.2 million).
Continued growth for value-added fertilizer products 25 Value-added fertilizer deliveries 1 Value-added fertilizer deliveries 1 Kilotons Kilotons 3,5 36 33 35 3, 2,5 25 231 261 2, 1,5 1, 5 CAGR 6% 175 154 148 68 41 37 85 84 85 3Q11 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
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 395 364 339 Higher crop yields and protein content 499 489 419 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
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, 5 211 212 213 214 215 211 212 213 214 215 Urea Nitrates NPK CN UAN SSP - based fertilizer * Including share of equity-accounted investees
Net interest-bearing debt development 28 NOK millions 1,471 3,282 4,794 312 1,335 1,369 347 377 2,452 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
Currency exposure affecting Profit & Loss 29 At the beginning of the fourth quarter 215 1. 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)
Yara 3Q fertilizer sales by market and product 3 Kilotons 3,12 3,516 3Q14 3Q15 2,195 2,81 673 526 515 577 345 235 Europe Latin America North America Asia Africa 914 1,44 1,88 1,665 1,39 1,413 1,296 998 941 1,346 274 236 225 233 NPK compounds NPK blends Nitrate Urea Other products UAN CN
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, 8 8 6 6 4 4 2 2-3Q11 3Q12 3Q13 3Q14 3Q15 3Q11 3Q12 3Q13 3Q14 3Q15 Outside Europe Europe Outside Europe Europe
Industrial volume development 32 Kilotons 792 844 819 866 816 849 852 864 885 913 83 343 328 368 358 374 364 432 367 382 339 456 361 438 38 511 346 482 333 54 364 54 385 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Industrial N-chemicals Environmental products Other
AdBlue deliveries 33 Kilotons 4 35 3 25 2 15 1 5 3Q1 4Q1 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15
Debt/equity ratio 34 Net interest-bearing debt / equity ratio (end of period).49.38.32.27.2.22.12.12.7.8.6.2.1.6.6.5.6.8.17.13.15.6 21 211 212 213 214 215 -.4
Yara stocks Kilotons Finished fertilizer 7, Bunge Fertilizer included from 3Q 213 35 6, 5, 4, 3, 2, 1, - Urea Nitrates Compound NPK Other
Normal deliveries in Europe and US 36 Million tons N 2. 1.8 1.6 1.4 1.2 1..8.6.4.2. West Europe 3Q11 3Q12 3Q13 3Q14 3Q15 Domestic production -5% Net imports Million tons N 5. 4.5 4. 3.5 3. 2.5 2. 1.5 1..5. 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
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 3.65 1 5 8 4 6 3 4 Mato Grosso, Brazil 2 Mato Grosso, Brazil 2 Iowa, USA 1 Iowa, USA Paraná, Brazil Source: USDA, AMS, AGROCONSULT. Prepared by: Agroconsult.
European producers nitrate stocks 38 Index June 27 = 1 1.4 1.2 1..8.6.4.2. 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
Energy cost 39 Yearly averages 29 213, quarterly averages for 214-15 with forward prices* for 4Q15 and 1Q16. USD per MMBtu 11. 11.4 11.3 1.7 6.6 4.7 4.8 4. 7.6 6.6 5.7 4.4 9.2 9.4 8.2 8. 4. 2.8 1.5 9.8 8. 8.1 5.2 3.7 9.2 7.6 6.9 4.6 8.5 7.5 8.1 7. 6.5 6.1 3.9 3.8 7.6 7. 6.8 6. 7.5 7. 5.7 6.5 5.3 6.5 6.6 6. 6.1 5.1 5.2 2.9 2.7 2.7 2.6 2.9 29 21 211 212 213 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 US gas price (Henry Hub) Yara Global TTF day ahead (Zeebrugge 29-212) Yara Europe *Dotted lines denote forward prices as of 13 October 215 Source: Yara, World Bank, Platts/Argus/ICIS Heren
Farm economics support fertilizer demand, even in USD based economies Index 3 FAO price index 4 25 2 15 1 5 1/24 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.
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, 1,95 7 8 9 1 11 12 13 14 15E 16F Days of consumption in stocks Days 85 8 75 7 65 6 55 7 8 9 1 11 12 13 14 15E 16F Consumption Production Source: USDA October 215
Non-commercials net long position in corn 42 Thousand contracts 5 4 3 2 1-1 -2 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
Projected nitrogen capacity additions outside China 43 Year 215 216 217 218 219 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 215-219 ~2.% Assumed annual closures ~.5% Net annual addition 215-219 ~1.5% Trend consumption growth from 23 2.% Source: CRU urea update September 215 (June 215 in brackets). Consumption data source is IFA.
Key value drivers quarterly averages 44 TTF day ahead (USD/MMBtu) 8.1 7. 7. 6.8 6.4 Urea prilled fob Black Sea (USD/t)/Urea granular fob Egypt (dotted line, USD/t) 358 355 32 315 337 295 277 297 268 281 CAN cif Germany (USD/t) 39 31 295 273 257 3Q14 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 3.9 3.8 2.9 2.7 2.7 488 572 413 393 388 6.3 6.9 7.7 7.8 8.2 3Q14 4Q14 1Q15 2Q15 3Q15 3Q14 4Q14 1Q15 2Q15 3Q15 3Q14 4Q14 1Q15 2Q15 3Q15 Source: Fertilizer Market Publications, CERA, World Bank, Norges Bank
1-year fertilizer prices monthly averages 45 USD/t Ammonia fob Black Sea 1, 8 6 4 2 25 26 27 28 29 21 211 212 213 214 215 USD/t CAN cif Germany 5 4 3 2 1 25 26 27 28 29 21 211 212 213 214 215 USD/t Urea prilled fob Black Sea/Urea granular fob Egypt 8 6 4 2 25 26 27 28 29 21 211 212 213 214 215 Source: Average of international publications USD/t DAP fob US Gulf/MOP granular fob Vancouver 1,2 1, 8 6 4 2 25 26 27 28 29 21 211 212 213 214 215 Average prices 25-214