Yara International ASA · OSL:YAR
Yara International ASA — Investor Day (November 2005)
21 slides from Yara International ASA's investor day presentation, Nov 30, 2005
Slide 1: Additional information
XG YARA Additional information 97
Slide 2: A chemical company with fertilizer application as its biggest market
A chemical company with fertilizer application as its biggest market Fertilizer Nitric acid Energy Ammonia Urea Industrial Yara converts energy and nitrogen from the air into useful products for farmers and industrial customers Date: 2005-11-30 Page: 98 Yara is a chemical company as all of its main
Slide 3: Yara has a unique business model
Yara has a unique business model Business concepts that Downstream / Industrial exploit Upstream combined strength ”Added-value market pull” ”Low cost product push” z Scale advantage z Favourable gas cost z Balanced fertilization z Scale advantage z Unique market position Dedicated ownership z Ammon
Slide 4: The basis for mineral fertilizer: Energy, ammonia and natural minerals
The basis for mineral fertilizer: Energy, ammonia and natural minerals Nitrogen (N) from air Finished products: Ammonia Urea UAN Nitrates (CAN, AN) Natural NPK gas Specialty fertilizers Industrial products Natural minerals: Phosphorus (P) Potassium (K) Date: 2005-11-30 Page: 100 The basis for produc
Slide 5: Mineral fertilizers boost agricultural productivity
Mineral fertilizers boost agricultural productivity Yield 10 9.3 8 Tonnes per hectare 6 More than 3.5 times higher yield! 4 2.6 2 0 No fertilizer With fertilizer Source: Winter wheat, long term trial, Broadbalk, Rothamsted Date: 2005-11-30 Page: 101 The efficiency of mineral fertilizers has been wel
Slide 6: Unique global network, now also including production in Russia and Australia
Unique global network, now also including production in Russia and Australia 62 46 15 18 22 Major plant Sales office No. of plants/ “On the ground” in ~50 countries, terminals/ sales to more than 120 countries, warehouses more than 160 plants/terminals/warehouses Date: 2005-11-30 Page: 102 The facto
Slide 7: Yara – three business segments with strong synergies
Yara – three business segments with strong synergies Financials last 12 months up to Sept 2005 Downstream Distribution and ammonia-based fertilizer production z Unique global distribution network Sales: USD 5.1 bn z Global no. 1 in calcium nitrate and potassium EBITDA: USD 0.3 bn nitrate specialty f
Slide 8: Downstream and Industrial account for more than half of Yara's total business
Downstream and Industrial account for more than half of Yara’s total business 2004 financials Operating revenues* – USD 6.4 billion Industrial 10% Upstream 34% Down- stream 56% EBITDA – USD 909 million Assets** – USD 4.5 billion Industrial Industrial 11% 9% Upstream 32% Down- Upstream stream 56% Dow
Slide 9: Third party volumes supplement own production to maximize capacity utilization
Third party volumes supplement own production to maximize capacity utilization Yara produced products is Third party volumes significant for approximately 70% of total nearly all Yara products Million Million tonnes tonnes 8 Third party and JV production 25 Own production incl. bulk blends 20 6 Key
Slide 10: Balanced portfolio by product and region
Balanced portfolio by product and region Overseas increasing faster than Europe Yara sales in line with global consumption Million tonnes 154,2 mill tonnes* 8.5 mill tonnes* 14 100% 12 Europe 80% 10 Potash (K) 60% 8 Overseas Phosphate (P) 40% 6 Nitrogen (N) 4 20% 2 0% 1994 1996 1998 2000 2002 2004 G
Slide 11: Globally balanced Yara sales and arbitrage opportunities smoothen seasonality
Globally balanced Yara sales and arbitrage opportunities smoothen seasonality Downstream fertilizer sales volume Thousand Europe Outside Europe tonnes 5,213 5,304 5,305 5,098 4,937 4,898 5,029 5,114 4,956 4,934 4,996 5,000 3,077 3,110 2,175 4,807 4,726 4,742 2,124 2,871 2,498 2,195 2,564 2,664 2,559
Slide 12: Recent strategic growth investments improve Yara's competitiveness
Recent strategic growth investments improve Yara’s competitiveness Investments in 2005 Addition to Yara’s High growth low-cost gas based market production 30% equity in Rossosh 3% points Yes – NPK to China 30% equity in Burrup 3% points Yes – ammonia to Asia Letter of intent for 2% points Yes – urea
Slide 13: Diversified energy sourcing strategy in Europe
Diversified energy sourcing strategy in Europe z Contracts of varying duration and with different suppliers limit exposure z Price linked to multiple oil products to limit price fluctuations z For 2006, Yara’s average European gas contracts are expected to have costs linked to: LSFO 1%: ~55% Gas
Slide 14: Yara's positions and business model provide natural hedges
Yara’s positions and business model provide natural hedges z Competitive production facilities z Geographical spread reduces seasonality z Balanced product and market portfolio z Balance between Upstream and Downstream/Industrial and ammonia production vs. consumption z Long-term financing mostly in
Slide 15: Yara sensitivities updated
Yara sensitivities updated EBITDA EBITDA EPS** USD million NOK million* NOK CAN + 10 USD/t 63.1 410 0.91 Urea + 10 USD/t 26.2 170 0.41 Ammonia + 10 USD/t 6.2 40 0.13 Oil price + 1 USD/boe (cost effect) - 15.4 - 100 - 0.22 Currency + 0.1 NOK/USD at an 6.2 110 0.27 EBITDA of USD 700 million ... of whi
Slide 16: Yara cash distribution policy: 40 – 45% cash return over the cycle
Yara cash distribution policy: 40 – 45% cash return over the cycle z Yara’s average profitability and return on capital is well above investors’ cost of capital Cash distribution must be balanced against opportunities for profitable growth z Financial discipline will be the basis for the developme
Slide 17: Ambitious targets – Hurdle rate updated to better reflect WACC
Ambitious targets – Hurdle rate updated to better reflect WACC z Solid profitability CROGI over the cycle > 10% as average z New investment profitability Ambition: IRR real, after tax > 10% Hurdle rate: IRR real, after tax > 7% z Relative competitiveness Gross Return (EBITDA/Total assets) Be
Slide 18: Key value drivers – 10-year history
Key value drivers – 10-year history Ammonia fob Caribbien (USD/t) Urea prilled fob Black Sea (USD/t) CAN cif Germany (USD/t) 300 200 187 181 180 167 163 175 165 253 180 160 146 250 160 139 197 185 203 140 124 119 140 117 110 111 200 120 103 160 148 137 120 101 96 94 100 86 150 117 100 84 110 80 67 8
Slide 19: Income statement Last 12 months vs. 2004
Income statement Last 12 months vs. 2004 Actual Pro Forma NOK millions L12M 3Q05 Year 2004 Operating revenues 45,424 43,226 Operating income 4,084 3,708 Share of net income in non-consolidated investees 1,054 768 Interest income and other financial income 239 171 Interest expense and other financial
Slide 20: Consolidated balance sheets
Consolidated balance sheets Actual Actual NOK millions 30 Sep 2005 30 Sep 2004 Deferred tax assets 1,605 1,145 Property, plant and equipment 7,229 7,353 Other non-current assets 4,683 3,450 Inventories 6,360 5,688 Receivables 6,947 7,158 Other current assets 1,450 1,380 Cash and cash equivalents 853
Slide 21: www.yara.com
More information can be found at … www.yara.com Date: 2005-11-30 Page: 117 117