Yara International ASA · OSL:YAR
Yara International ASA — Non-Deal Roadshow (August 2012)
41 slides from Yara International ASA's roadshow presentation, August 2012
Slide 1: Yara International ASA US Roadshow
0 Yara International ASA US Roadshow Thor Giæver, IR August 2012 IR-Date : 2012-08
Slide 2: Integrated business model provides scale, flexibility and a strong end-to-end presence
Integrated business model provides scale, 1 flexibility and a strong end-to-end presence Downstream Upstream Industrial Supply & Trade Scale advantages + Unique flexibility + Unrivalled presence IR-Date : 2012-08
Slide 3: Yara – the leader in nitrogen fertilizers
2 Yara – the leader in nitrogen fertilizers Global no 1 in NPK Global no 1 in ammonia Global no 1 in nitrates complex fertilizer Production capacity* (mill t) Production capacity* (mill t) Production capacity* (mill t) 9 7 8 8 6 7 7 6 5 6 5 5 4 4 4 3 3 3 2 2 2 1 1 1 0 0 0 Yara CF GDF Agrium PCS Yara
Slide 4: Global downstream player with sales to 150 countries
Global downstream player with sales 3 to 150 countries 48% Europe 9.4 mill tons North America 15% 2.9 mill tons Asia 12% 2.3 mill tons Africa 6% 1.2 mill tons 19% Latin America 3.8 mill tons Yara plants Joint venture plants Sales offices Development programs R&D Units IR-Date : 2012-08
Slide 5: Yara 2011 fertilizer sales by market and product
4 Yara 2011 fertilizer sales by market and product Total: 19.5 million tons Kilotons 10,000 9,367 8,000 6,000 3,798 4,000 2,887 2,282 2,000 1,188 0 Europe Latin America Asia North America Africa Kilotons 7,000 6,565 6,000 5,122 5,000 4,236 4,000 3,000 2,000 1,522 1,158 919 1,000 0 NPK Nitrate Urea O
Slide 6: Summary second quarter
5 Summary second quarter Strong results with volume and margin increase Yara-produced fertilizer deliveries up 14% Record Belle Plaine result Lower nitrate and NPK premiums in Europe IR-Date : 2012-08
Slide 7: Earnings per share
6 Earnings per share* EPS excluding currency and special items NOK 14 12.86 12.42 11.84 12 9.86 10.58 10.02 10 7.73 8 6.68 5.42 6 4.93 5.27 3.88 4 3.06 2 1.21 0 2009 2010 2011 2012 Annual NOK 13.08 30.24 41.99 20.44 * Average number of shares for 2Q 2012: 283.9 million (2Q 2011: 287.8 million). IR-D
Slide 8: Net debt development
7 Net debt development NOK millions 4,500 3,971 4,000 500 3,484 3,500 135 3,000 2,500 1,899 2,000 1,500 461 1,000 603 500 3,369 261 0 345 349 -500 NIBD Cash NOC Potash Short-term Other Share Yara FX loss Other NIBD Mar 12* earnings** change investments loans*** investments buy-backs dividend Jun 12*
Slide 9: Drop in northern hemisphere deliveries
8 Drop in northern hemisphere deliveries USA West Europe Million tons Million tons 9.0 18.0 -3% 8.0 -10% 16.0 14.0 7.0 12.0 6.0 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 07/08 08/09 09/10 10/11 11/12 Domestic production Imports Average Source: TFI, US Trade Commi
Slide 10: Strong development in Yara-produced fertilizer volumes, especially outside Europe
Strong development in Yara-produced fertilizer 9 volumes, especially outside Europe Sales volumes by source Sales volumes by region Kilo tons Kilo tons 4,500 +14% 3,500 +10% 4,000 3,000 3,500 2,500 0% 3,000 2,500 2,000 2,000 -16% 1,500 1,500 1,000 1,000 500 500 0 0 Yara-produced Other Outside Europe
Slide 11: Record result in Belle Plaine
10 Record result in Belle Plaine Average granular urea premium, US cornbelt over Arab Gulf USD/t 250 200 150 100 50 0 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 Premium Cornbelt vs fob Arab gulf, granular Average Source: Fertilizer publications IR-Date : 2012-08
Slide 12: Demand rationing needed as production fails
11 Demand rationing needed as production fails Grain production and consumption 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 Consumption Production Source: USDA, August
Slide 13: Continued project delays
12 Continued project delays New 2012 urea capacity Million tons 8.0 Lead time for a new greenfield 7.0 project 4-5 years 6.0 5.0 Significant delays in 2012 4.0 compared with earlier forecasts 3.0 2.0 Further delays evident even compared with latest forecast 1.0 0.0 Oct 11 estimate Jan 2012 est
Slide 14: Projected nitrogen capacity additions outside China in line with historical consumption growth
Projected nitrogen capacity additions outside 13 China in line with historical consumption growth Urea capacity growth relative Year Driving regions to nitrogen capacity World Excluding China World Excluding China 2011 China 34% Pakistan 34% 1.3% (1.6%) 1.3% (1.4%) Pakistan 22% Iran 17% 2012 China 6
Slide 15: Current domestic price and 2012 tariff implies swing price around USD 380 fob China
Current domestic price and 2012 tariff implies 14 swing price around USD 380 fob China Chinese export price derived from domestic price and tariffs Fob price, USD/t 550 525 500 475 450 425 400 375 350 325 300 1,750 1,850 1,950 2,050 2,150 2,250 2,350 2,450 2,550 Domestic price ex works, RMB/t * Chin
Slide 16: Reduced exposure to oil and European gas
15 Reduced exposure to oil and European gas Yara’s geographic energy exposure Yara’s feed-stock contract structure Europe 100% NAT 90% GAS 15% 25% 80% 70% 60% 80% 70% 65% 50% 55% 40% 30% 20% -20% -20% -20% -30% 10% 0% NON 2006 2007 2008 2009 2012 GAS 2006 2009 2010 2012 Europe ROW Spot gas Oil-linke
Slide 17: Yara production capacities
16 Yara production capacities Million tons product 8.0 6.0 4.0 Outside Europe Europe 2.0 0.0 Nitrate NPK Urea IR-Date : 2012-08
Slide 18: Yara creates substantial value over and above the commodity nitrogen margin
Yara creates substantial value over and above 17 the commodity nitrogen margin Nitrogen upgrading margins Phosphate upgrading margins NPK blend premium USD/t USD/t USD/t 700 700 700 650 600 Nitrate premium 600 above urea Margin 600 above blend Value above 500 500 cost raw material 550 400 400 500 Va
Slide 19: Achieving premium requires proper marketing of nitrate benefits
Achieving premium requires proper marketing 18 of nitrate benefits Nitrate-based fertilizers are superior to urea both Nitrate premium is a function of crop agronomically and environmentally prices but can be enhanced through proper marketing The carbon footprint is CAN price Wheat price The agronom
Slide 20: Premiums reflect actual value-add from using Yara Crop nutrition program
Premiums reflect actual value-add from using 19 Yara Crop nutrition program Yara crop nutrition program significantly improves …for instance providing higher returns results compared with traditional farmer for Vietnam coffee growers and Yara practices… (based on field trial) Others Yara 160 % 37% 2
Slide 21: Value-added product growth focused on cash crops
Value-added product growth focused on 20 cash crops NPKs have significant cash crop share, while Nitrates’ agronomic advantage has nitrates today mainly serve commodity crops higher value for cash crops than for commodity crops kt Increase in crop 4,700 Commodity crops Crop value with production val
Slide 22: Global collaboration are progressing well e.g. Nestle initiatives on three continents
Global collaboration are progressing well e.g. 21 Nestle initiatives on three continents Mexico: increased yield of Robusta Vietnam: increased coffee yield of coffee (Robusta) Africa: increased yield and Guatemala: impact sustainability of of nutrition on cup Cocoa and Coffee taste (Arabica) and CO2
Slide 23: Strong NPK volume and margin growth outside Europe
Strong NPK volume and margin growth outside 22 Europe NPK volume development NPK blend premiums Index Million tons UK 08 =1 3.0 7 2.5 6 5 2.0 4 1.5 CAGR 3 39% 1.0 CAGR 2 16% 0.5 1 0.0 0 2008 2009 2010 2011 2016 2008 2009 2010 2011 Potential Asia Latin America Asia Latin America UK IR-Date : 2012-08
Slide 24: Growth strategy on track
23 Growth strategy on track Belle Plaine expansion ICP Dallol SOP investment Potash investment OCP joint venture Pilbara TAN investment IR-Date : 2012-08
Slide 25: More information can be found on www.yara.com
24 More information can be found on www.yara.com IR-Date : 2012-08
Slide 26: Yara sensitivities
25 Yara sensitivities Operating Income EBITDA EPS* USD million USD million USD Urea sensitivity +100 USD/t 944 1,095 2.8 …of which pure Urea 304 422 1.2 …of which Nitrates 367 391 1.0 …of which NPK 198 207 0.5 Nitrate premium +50 USD/t 439 467 1.2 …of which pure Nitrates 273 294 0.8 Hub gas Europe +
Slide 27: Price and currency assumptions in scenarios
26 Price and currency assumptions in scenarios Last 4 5-year avg. to Chinese Demand- quarters 30 Sep 11 swing* driven** Ammonia fob Black Sea (USD/t) 459 366 450 550 Urea prilled fob Black Sea (USD/t) 386 342 360 510 Nitrate premium , USD/t 94 77 62 68 Phos rock fob North Africa (USD/t) 164 158 200
Slide 28: Simplified P&Ls for scenarios
27 Simplified P&Ls for scenarios Last 4 5-year avg. to Chinese Demand- NOK quarters 30 Sep 20112) swing driven EBITDA1) 14,800 15,200 13,500 23,600 Depreciation -2,600 -2,600 -2,600 -2,600 Interest expense -800 -700 -700 -700 Income before tax 11,400 11,900 10,200 20,300 Tax -2,400 -2,800 -2,100 -4,
Slide 29: Earnings before interest, tax, depreciation and amortization (EBITDA)
Earnings before interest, tax, depreciation and 28 amortization (EBITDA) EBITDA excluding special items NOK millions 7,000 6,587 6,000 5,444 4,968 4,982 5,000 4,281 4,312 4,000 3,455 3,251 2,992 3,000 2,486 2,036 2,000 1,259 1,394 860 1,000 0 2009 2010 2011 2012 Annual NOK 5,549 15,315 18,163 9,280
Slide 30: Fertilizer volumes
29 Fertilizer volumes Kilotons 7,000 6,000 5,474 5,481 5,433 5,210 5,216 5,129 5,247 4,882 4,791 4,759 2,910 4,914 2,543 4,970 4,834 2,553 2,993 5,000 2,658 2,765 2,146 2,290 2,514 2,715 2,617 4,239 2,355 2,412 4,000 2,280 3,000 2,983 2,937 2,880 2,592 2,551 2,451 2,564 2,000 2,436 2,347 2,400 2,256
Slide 31: Yara 2Q fertilizer sales by market and product
30 Yara 2Q fertilizer sales by market and product 2012: 5.2 million tons (2011: 5.0 million tons) Kilotons 2Q11 2Q12 2,500 2,256 2,254 2,000 1,500 1,174 909 917 987 1,000 600 538 500 289 294 0 Europe Latin America Asia North America Africa Kilotons 3,000 2Q11 2Q12 2,000 1,489 1,493 1,363 1,211 1,219
Slide 32: Yara – production volume
31 Yara – production volume* Finished fertilizer Kilotons Ammonia Kilotons 2,500 5,000 4,500 2,000 4,000 3,500 1,500 3,000 2,500 2,000 1,000 1,500 1,000 500 500 0 0 2009 2010 2011 2012 2009 2010 2011 2012 Urea Nitrates NPK CN UAN * Including share of equity-accounted investees IR-Date : 2012-08
Slide 33: Yara’s average gas costs
32 Yara’s average gas costs Yearly averages 2006 – 2010, quarterly averages for 2011-12 with forward prices* for 3Q12 and 4Q12 USD per MMBtu 14 12.0 12 11.1 11.0 11.0 10.9 10.8 10.6 10.5 10.1 10 7.6 8 7.5 7.0 9.6 6.6 8.3 8.3 8.6 7.6 7.9 7.7 7.7 7.5 6 5.6 5.6 5.7 4 4.8 2 0 2006 2007 2008 2009 2010 1Q
Slide 34: Currency exposure affecting P&L
33 Currency exposure affecting P&L At the beginning of the third quarter 2012 1. The US dollar debt generating P&L exposure was USD 800 million • Kept as hedge of future earnings and to finance inventories in emerging markets • Around 90% towards EUR with the rest towards NOK and emerging market cur
Slide 35: Incentives remain strong
34 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 Cereals Price Index Food Price Index Annual average Food price index Source: FAO IR-Date : 2012-08 34
Slide 36: Strong and increasing grain prices
35 Strong and increasing grain prices Corn – December 2012 contract Wheat – December 2012 contract USD/bu USD/bu 9 10 8 9 +33% 7 +55% 8 6 7 5 6 5 4 4 3 3 2 2 1 1 0 0 1 Feb 12 1 Jun 12 13 Jul 12 13 Aug 12 1 Feb 12 1 Jun 12 13 Jul 12 13 Aug 12 Source: Chicago Board Of Trade IR-Date : 2012-08
Slide 37: European producer nitrate stocks
36 European producer nitrate stocks Index, June 2007=1 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 11/12 07/08 08/09 09/10 10/11 Source: Fertilizers Europe, Yara estimate for June IR-Date : 2012-08
Slide 38: Chinese exports needed to balance the global market
Chinese exports needed to balance 37 the global market Accumulated urea exports Urea price and export tax Kilotons USD per ton Export tax 8,000 600 120 % 7,000 2010 500 100 % 6,000 400 80 % 5,000 2007 4,000 300 60 % 2011 2009 3,000 200 40 % 2,000 100 20 % 1,000 2012 0 0 0% * Export tax during low ta
Slide 39: Indian urea import requirement
38 Indian urea import requirement Sales minus production Kilotons 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 -1,000 -2,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2012/13 2009/10 2010/11 2011/12 Source: Indian Statistics IR-Date : 2012-08
Slide 40: Key value drivers – quarterly averages
39 Key value drivers – quarterly averages Zeebrugge day ahead(USD/MMBtu) Urea prilled fob Black Sea (USD/t) CAN cif Germany (USD/t) 600 450 9.6 9.5 384 376 378 484 471 400 361 9.5 500 446 331 9.4 408 350 9.3 389 9.3 400 300 9.2 9.2 250 9.1 300 9.1 200 9.0 9 200 150 8.9 100 100 8.8 50 8.7 0 0 2Q 11 3
Slide 41: 10-year fertilizer prices – monthly averages
40 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 20 20 20 20 20 20 20 20 20 20 20 20 0 01 02 03 04 05 06 07 08 09 10 11 12 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Urea prilled fob Black S