Yara International ASA · OSL:YAR
Yara International ASA — Q1 2019 Earnings Presentation
28 slides from Yara International ASA's earnings presentation, Apr 26, 2019
Slide 1: Yara International ASA 2019 first quarter results
Yara International ASA 2019 first quarter results 26 April 2019
Slide 2: Safety is our first priority
Safety is our first priority TRI1 (12-month rolling) 5 4.5 1.4 0 Jan'16 Mar'19 1 TRI: Total recordable injuries, lost time (absence from work), restricted work and medical treatment cases per one million work hours. 2
Slide 3: Improved first-quarter results
Improved first-quarter results Earnings improvement continuing Improved but not satisfactory profitability L12M EBITDA excl. special items (MUSD) - EBITDA excluding special items and IFRS 16 2,400 increased by 17%1 2,200 2,000 - Improved margins and positive currency effects 1,800 more than offset l
Slide 4: Unsatisfactory production performance, impacted by technical issues
Unsatisfactory production performance, impacted by technical issues Ammonia production down 3% Technical issues in three of our largest Finished fertilizer production up 3% Improved production in March plants Production volume (mill. tonnes) Monthly production volume • Mixed production performance A
Slide 5: Yara Improvement Program affected by production issues
Yara Improvement Program affected by production issues 1Q development USD millions • Continued high activity, but unsatisfactory 375 results as accumulated improvements 355 20 55 320 were affected by production issues • Underlying improvements adjusted for these issues were 375 MUSD, driven by stron
Slide 6: Capex reducing in 2019, growth projects ramping up
Capex reducing in 2019, growth projects ramping up Capex plan1 Status Growth projects2 USD Billions • Freeport and Köping projects completed and integrated into regular production operations; both 2.2 running at full capacity as of end April Growth - M&As Growth - expansions • Sluiskil expansion: fu
Slide 7: Improving earnings and profitability trend
Improving earnings and profitability trend Quarterly EBITDA excl. special items LTM ROIC USD millions % 464 4.1 424 3.7 3.8 402 3.7 377 3.1 321 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 7
Slide 8: Performance overview
Performance overview 1Q 2018 1Q 2019 EBITDA ex. special items 377 464 (USD millions) EPS excl. currency and special items 0.42 0.59 (USD per share) Cash from operations 234 254 (USD millions) Investments 736 243 (USD millions) ROIC 3.7% 4.1% (12-month rolling) 8
Slide 9: Improved European nitrogen upgrading margins
Improved European nitrogen upgrading margins Higher urea prices outside Higher realized nitrate and Lower European natural gas China NPK prices prices Urea price development1 (USD/t) Yara’s realized CAN and NPK price2 (USD/t) Spot gas prices1 (USD/Mmbtu) +1% -6% +7% -3% 304 414 420 287 7.2 275 7.0 2
Slide 10: EBITDA improvement, mainly driven by nitrogen margins and currency
EBITDA improvement, mainly driven by nitrogen margins and currency EBITDA ex. SI USD millions 464 4 11 17 40 377 37 IFRS 16 +24 MUSD Insurance +6 MUSD Portfolio +6 MUSD Other -17 MUSD 1Q18 Price/ Margin Currency Energy costs Volume Other 1Q19 10
Slide 11: Higher production margins, commercial margins in line
Higher production margins, commercial margins in line EBITDA excluding special items (MUSD) 1Q18 263 1Q19 177 170 160 44 22 Production Sales & Marketing New Business • Higher nitrogen upgrading margins in • Margins in line with a year earlier • Positive contribution from Cubatão Europe • Lower NPK d
Slide 12: Net interest-bearing debt in line with end 2018
Net interest-bearing debt in line with end 2018 USD millions 4,203 4,205 35 243 IFRS 16 impact 409 401 195 3,794 Net debt Cash earnings¹ Net operating Investments (net) Other Net debt Dec 18 capital change Mar 19 1 Operating income plus depreciation and amortization, minus tax paid, net gain/(loss)
Slide 13: Sales & Marketing performance
Sales & Marketing performance Slightly lower EBITDA due to lower Lower commodity deliveries, premium Higher realized prices deliveries product deliveries in line with a year earlier EBITDA ex. SI (MUSD) Volumes (Mt) Revenues (MUSD) -1% +4% -4% 6.9 6.8 2.5 177 2.4 170 3.6 1.2 1.2 3.3 3.2 3.2 1.3 1.3
Slide 14: European fertilizer deliveries up 3% on last year, further increase in Brazilian premium deliveries
European fertilizer deliveries up 3% on last year, further increase in Brazilian premium deliveries Total fertilizer deliveries Mill. tonnes +3% 1Q18 2.4 1Q19 2.4 Portfolio Commodity +16% 1.6 1.4 0.2 +2% -12% Premium 0.8 0.8 0.8 0.7 -16% +1% 0.4 0.4 0.2 0.2 OPP 2.0 2.1 0.3 0.6 0.5 0.6 0.5 0.4 0.2 0.
Slide 15: Yara and IBM join forces to transform the future of farming
Yara and IBM join forces to transform the future of farming • Partnership agreement to build the world’s leading digital farming platform, combining Yara’s unrivalled agronomic knowledge and market presence with IBM’s digital platforms, services and expertise in data analytics • Yara and IBM will de
Slide 16: Attractive Yara prospects
Attractive Yara prospects Attractive industry Operating cash flow fundamentals and improvement with strict Focused long-term strategy supply-demand outlook capital allocation • Growing population and dietary • Operating cash flow improving • Crop nutrition focus; #1 market improvement drives demand
Slide 17: Yara Capital Markets Day 26 June: venue and agenda
Yara Capital Markets Day 26 June: venue and agenda Venue: Tate Modern, London Main topics Strategy update Our long-term market outlook and how the Yara business model and strategy will create further value Driving value growth in our markets How we will drive further value growth in the market, and
Slide 18: Appendix
Appendix
Slide 19: Yara Improvement Program impacted by reliability in production
Yara Improvement Program impacted by reliability in production Start: 2016 2017 2018 2019 2020 End: 2020 Today Annual impact, USD million, vs. 2015 baseline, at 2015 margins 500 450 355 320 Sustained 242 EBITDA EBITDA benefits at the end of Q1 improvement 84 lower than year end 2018: Continued h
Slide 20: Key sensitivities (based on 2018 production capacities)
Key sensitivities (based on 2018 production capacities) Operating income EBITDA EPS USD million USD million USD Urea sensitivity +10 USD/t 45 54 0.16 …of which pure Urea 38 47 0.14 …of which UAN 7 7 0.02 Nitrate sensitivity CAN +10 USD/t 101 101 0.28 …of which pure Nitrates 61 61 0.17 …of which NPKs
Slide 21: Higher nitrogen upgrading margin, global NPK premium slightly below last year
Higher nitrogen upgrading margin, global NPK premium slightly below last year Nitrogen upgrading margins1 NPK premium over blend2 USD/t (monthly publication prices) USD/t 500 450 287 113 111 267 Yara’s NPK price CAN Weighted average global premium above blend cost Urea Egypt CFR proxy Nitrate premiu
Slide 22: Energy cost
Energy cost Yearly averages 2010-2017, quarterly averages for 2018-2019 with forward prices* for 2Q19 and 3Q19 11.4 11.0 10.7 10.5 9.4 9.1 9.2 9.4 8.1 8.2 7.8 7.6 7.7 8.4 7.1 8.2 8.2 8.0 8.0 8.1 7.7 7.4 6.1 6.6 6.1 5.7 5.6 6.9 6.4 5.0 5.0 5.7 6.3 6.6 4.9 5.9 6.1 5.9 5.7 5.5 4.5 4.9 4.8 4.9 4.4 4.4 4
Slide 23: Yara stocks
Yara stocks Kilotons Finished fertilizer 8,000 Other Compound NPK Nitrates Urea 0 23
Slide 24: Improving industry fundamentals
Improving industry fundamentals Declining grains stocks Nitrogen supply growth set to Lower expected European excluding China reduce significantly natural gas prices Grain stocks ex China and grain prices Global urea capacity additions excl. China Spot gas prices1 (USD/Mmbtu) Mill. Index -35% -36% t
Slide 25: European producers' nitrate stocks
European producers’ nitrate stocks Index June 2007 = 1 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 18/19 12/13 13/14 14/15 15/16 16/17 17/18 Source: Fertilizers Europe, Yara estimate for March 25
Slide 26: Nitrogen supply growth is forecast to reduce significantly
Nitrogen supply growth is forecast to reduce significantly Global urea capacity additions excl. China (mill. tonnes) India Iran USA Others Russia Algeria Nigeria 6.7 4.7 4.2 4.1 2.8% consumption growth 3.4 3.1 2.7 1.4 1.2 1.1 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: CRU March 2019 2
Slide 27: Modest improvement in urea pricing, but no need for Chinese exports
Modest improvement in urea pricing, but no need for Chinese exports Urea price development1 (USD/t) 350 Urea inland proxy China Urea granular fob Egypt 170 Apr-16 Mar-19 1 Source: BOABC, CFMW 27
Slide 28: Slide 28