Yara International ASA · OSL:YAR
Yara International ASA — Q2 2022 Earnings Presentation
26 slides from Yara International ASA's earnings presentation, Jul 19, 2022
Slide 1: Yara International ASA 2022 Second-quarter results
Yara International ASA 2022 Second-quarter results 19 July 2022
Slide 2: Cautionary note
Cautionary note This presentation contains forward-looking information and statements relating to the business, financial performance and results of Yara and/or industry and markets in which it operates. Forward-looking statements are statements that are not historical facts and may be identified by
Slide 3: Our ambition is zero injuries
Our ambition is zero injuries TRI1 (12-month rolling) 6 People 4 2 1.1 0 1Q16 2Q22 1) Total Recordable Injuries per 1 million working hours 3
Slide 4: Resilient Yara business model
Resilient Yara business model ROIC1 12M rolling 17.7 % • Continued volatile market conditions, significant organizational efforts to optimize operations • Improved returns with strong performance from overseas production assets 9.8 % • Higher prices and margins include increased risk premium to cove
Slide 5: Growing food security concerns in current geopolitical environment
Growing food security concerns in current geopolitical environment Emerging food crisis: Call for coordinated action: • 828 million people affected by hunger • Support planting and harvesting in conflict zones • 50 million people in 45 countries on the edge of famine • Keep borders and markets open,
Slide 6: Risk of nitrogen shortages and further price spikes if natural gas availability deteriorates
Risk of nitrogen shortages and further price spikes if natural gas availability in Europe deteriorates further EU spot gas price1 Comments TTF (USD/Mmbtu) • Seasonally lower demand combined with gas price surge leading to nitrogen production curtailments in Europe +54% 51,0 • Yara has curtailed seve
Slide 7: Financial performance
Financial performance EBITDA ex. special items1 EPS ex. currency and special items1 ROIC1 (MUSD) (USD per share) (%, 12-month rolling) 1,475 3.32 17.7 775 1.42 9.8 2Q21 2Q22 2Q21 2Q22 2Q21 2Q22 Prosperity Change in net operating capital2 Investments (net)3 Cash from operations (MUSD) (MUSD) (MUSD) 4
Slide 8: Reduced deliveries reflect lower demand and active exposure management
Reduced deliveries reflect lower demand and active exposure management External deliveries, in million tonnes 2Q21 -21% 2Q22 7,347 Commodity 5,793 -22% 3,841 3,009 -22% 1% Premium1 -18% 2,032 1,846 1,862 1,576 1,474 -31% 1,209 589 404 Total crop Americas Europe Asia & Africa Industrial Clean nutriti
Slide 9: Improved margins as higher prices more than offset increased energy cost and lower deliveries
Improved margins as higher prices more than offset increased energy cost and lower deliveries EBITDA ex. special items (MUSD)1 Fixed costs: -52 ROIC2 26 - 48 908 Price/margin: 1,931 1475 - 187 Energy cost: -1,023 775 2Q21 Volume/Mix Margin Currency Other 2Q22 13.8 % 33.4 % 1) EBITDA ex. special item
Slide 10: Yara Improvement Program (YIP)
Yara Improvement Program (YIP) Ammonia production1 Finished product production1 Ammonia energy consumption - Lower reliability performance overall but strong - Reliability issues for some European sites offset - Increase in energy consumption linked to performance in North America ramp-up of Rio Gra
Slide 11: Strong cash earnings fund dividend payment and increased operating capital
Strong cash earnings fund dividend payment and increased operating capital Net interest-bearing debt: 2Q development (MUSD) -67 796 -1,295 239 355 3,421 3,448 Net debt end of last Cash earnings 1 Net operating capital Investments (net) Dividends Other 2 Net debt end current quarter change quarter 1)
Slide 12: Resilient returns from geographical diversification, flexible asset and strong organization
Resilient returns from geographical diversification, flexible asset and strong organization TTF ($/MMBTU) Yara EBITDA ex. 45 Special items1 Covid-19 pandemic Emerging energy and food crisis 12M BUSD 40 4.5 Gas TTF2 ($/MMBTU) 4.4 Overseas3 35 4.0 3.7 3.5 30 3.0 2.9 25 2.6 2.4 2.5 2.2 2.2 2.2 20 2.2 2
Slide 13: Yara issues its first Green Financing Framework
Yara issues its first Green Financing Framework Yara underlines its commitment to sustainability with this Green Financing Framework1 Financing proceeds will be used for the eligible green projects which are expected to create substantial environmental benefits by decarbonizing the food chain, inclu
Slide 14: Appendix
Appendix
Slide 15: Attractive Yara prospects
Attractive Yara prospects Attractive opportunities Focused strategy Strong shareholder returns • Resource and environment • Crop nutrition leader; #1 premium • Strict capital discipline challenges require strong agri product and market presence • Clear capital allocation policy productivity improvem
Slide 16: Driving sustainable performance with an integrated scorecard
Driving sustainable performance with an integrated scorecard People Planet Planet Prosperity 2025 2025 2025 2020 L12M Measure Yara KPI 2020 L12M Measure Yara KPI 2020 L12M Measure Yara KPI Target Target Target Energy efficiency 2 33.2 33.5 32.7 Gj/t NH3 Ammonia Production 6 7.7 7.7 8.6 Mt Strive tow
Slide 17: Nitrate and NPK premiums
Nitrate and NPK premiums Nitrogen upgrading margins1 NPK premium over blend2 USD/t CAN27 equivalents (monthly publication prices) USD/t 1000 249 Yara realized NPK price 1000 16 800 800 600 600 97 Weighted average global premium above blend cost3 400 30 400 CAN CIF Urea Egypt CFR proxy Nitrate premiu
Slide 18: Key product price developments
Key product price developments 2Q21 2Q22 Urea price development1 (USD/t) Spot gas prices1 (USD/Mmbtu) Yara realized CAN2 and NPK price3 (USD/t) +144% +79% +341% 919 924 33.1 +137% 695 +39% 516 456 376 +141% 328 293 7.5 6.5 2.7 Urea granular Urea inland Europe US CAN 27 Compound NPK FOB Egypt China p
Slide 19: Increase in prices drives increased results in all segments
Increase in prices drives increased results in all segments, strong contribution from overseas assets EBITDA ex. special items1 (MUSD) Europe Americas Africa and Industrial Global Plants Clean Ammonia 657 Asia Solutions 325 240 250 168 175 148 171 44 54 93 113 2Q21 2Q22 2Q21 2Q22 2Q21 2Q22 2Q21 2Q22
Slide 20: Free cash flow
Free cash flow Free cash flow before financing activities1 MUSD, rolling 12 months Divestment proceeds Operations Investments Free cash flow adjusted for divestment proceeds 1,973 1,491 1,669 1,298 1,142 863 845 1,008 532 284 105 -1,101 -1,394 -2,237 -2,630 -2,954 -3,083 -3,243 1Q18 2Q18 3Q18 4Q18 1
Slide 21: Energy cost
Energy cost Quarterly averages for 2018-2021 with forward prices* for 2Q22 and 3Q22 60 US gas price (Henry Hub) Yara Global** TTF day ahead Yara Europe 55.7 56.5 55 50 48.5 45 40 38.6 35 30.8 31.4 31.1 31.4 30 29.8 27.0 29.8 25 22.7 22.6 20.9 20 16.4 15.4 15 11.5 8.8 9.5 10 7.4 6.1 6.4 7.5 6.7 4.7 4
Slide 22: Yara stocks
Yara stocks Finished fertilizer million tonnes 8 7 6 5 Other 4 3 Compound 2 NPK 1 Nitrates Urea 0 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 22
Slide 23: European producers' nitrate stocks
European producers’ nitrate stocks Index June 2007 = 1 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 21/22 14/15 15/16 16/17 17/18 18/19 19/20 20/21 Source: Fertilizers Europe, Yara estimates 23
Slide 24: Global urea capacity additions ex. China
Global urea capacity additions ex. China1 million tonnes India Iran USA Others Russia Algeria Nigeria Production 6.7 5.5 5.7 4.7 5.0 4.5 4.2 3.2 2.6% consumption growth 2.0 1.0 1.2 0.7 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 1) Urea projects assessed as “probable” by CRU 24 Sourc
Slide 25: Capex guidance
Capex guidance Annual investments (BUSD) 2.2 Phasing Other Maintenance 1.6 1.5 1.4 0.4 0.9 1.1 0.9 0.5 0.8 0.2 0.2 1.1 0.7 0.8 0.7 0.6 0.6 2017 2018 2019 2020 2021 2022 2022 guidance of 1.5 BUSD consists of annual average of 1.2 BUSD less 0.1 BUSD reduction offset by fixed cost increase and phasing
Slide 26: Alternative performance measures
Alternative performance measures Alternative performance measures are defined, explained and reconciled to the Financial statements in the APM section of the Quarterly report on pages 34-40 26