Yara International ASA · OSL:YAR

Yara International ASA — Non-Deal Roadshow (September 2011)

41 slides from Yara International ASA's roadshow presentation, Sep 6, 2011

  1. Slide 1: Yara International ASA – Carnegie US Roadshow

    Yara International ASA Carnegie US Roadshow 6-7 September 2011

  2. Slide 2: A business strategy geared for global optimization

    1 A business strategy geared for global optimization Downstream Upstream Industrial Supply & Trade Scale advantages + Unique flexibility + Unrivalled presence IR – Date: 2011-09-02

  3. 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 Agrium PCS Koch Yar

  4. Slide 4: Global downstream presence with sales offices in more than 50 countries

    3 Global downstream presence with sales offices in more than 50 countries 51% Europe 10.3 mill tons North America 13% 2.7 mill tons Asia 11% 2.3 mill tons Africa 7% 1.4 mill tons 18% Latin America 3.6 mill tons Sales Yara plants Joint venture plants Sales offices IR – Date: 2011-09-02

  5. Slide 5: Yara's operating cash costs are mainly variable

    4 Yaras operating cash costs are mainly variable Operating cash costs 2010 NOK billions 60  Temporary plant closures can be made speedy and with limited 50 stop/start costs 40  Example for ammonia/urea Variable costs (89%) plants: 30 49.2 - Raw materials – Takes half a week to stop and a - Energy

  6. Slide 6: Yara flexibility to produce or import ammonia in Europe

    5 Yara flexibility to produce or import ammonia in Europe Million tons 6 5.0 3.2  Yara can swing 2/3 of European 5 ammonia production without 4 affecting fertilizer production 3  Almost all Yara nitrate and NPK 2 capacity has ammonia import flexibility 1.3 1 Land-locked plants** 0.5 0 Yara Europe*

  7. Slide 7: Developing multiple applications for nitrogen chemicals

    6 Example of product innovation Developing multiple applications for nitrogen chemicals Methyl Mineral wool Pulp and  Basic molecules into products Methcrylates paper that play a role in our daily life Yeast Pharmaceutical Production – Nitric acid to produce Amino Acids, polyurethanes that are Dair

  8. Slide 8: Key trends impacting Yara the next 10 years

    7 Key trends impacting Yara the next 10 years  Food security  Climate change  Water scarcity  Need for agricultural productivity IR – Date: 2011-09-02

  9. Slide 9: Climate change and food security are related

    8 Climate change and food security are related - established Downstream R&D project portfolio Climate change Food security N2O emissions Crop nutrition from soils research Fertilizer for algae Improved Innovation Reduce Increase Nutrient management Bioenergy emissions productivity Product developmen

  10. Slide 10: Yara fertilizer reduces carbon footprint from farming

    9 Yara fertilizer reduces carbon footprint from farming Fertilizer - an efficient solar energy catalyst  Production marginal part of carbon footprint - efficient application more important  Huge positive effects of fertilizer use by lower land use Production Application  Yara’s production more en

  11. Slide 11: Stocks-to-use decline despite strong incentives and record production

    10 Stocks-to-use decline despite strong incentives and record production Grain production and consumption Days of consumption in stocks Million tons Days 2,300 120 2,250 110 2,200 Production 100 2,150 2,100 90 2,050 Consumption 80 2,000 70 1,950 60 1,900 1,850 50 1,800 40 98 00 02 04 06 08 10 12F 98

  12. Slide 12: Strong farm incentives

    11 Strong farm incentives FAO price index Index 280 260 240 220 200 180 160 140 120 100 80 1/2000 1/2001 1/2002 1/2003 1/2004 1/2005 1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 Food Price Index Cereals Price Index Source: FAO IR – Date: 2011-09-02

  13. Slide 13: Strong season with increased nitrogen deliveries

    12 Strong season with increased nitrogen deliveries USA West Europe Million tons Million tons 9.0 18.0 +11% 16.0 8.0 +9% 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 07/08 08/09 09/10 10/11 Production Net imports Domestic Imports Source: Yara estimate fo

  14. Slide 14: Strong market for all nutrients

    13 Strong market for all nutrients Urea prilled fob Black Sea DAP fob US Gulf MOP fob Vancouver USD/t USD/t USD/t 450 700 450 400 600 400 350 350 500 300 300 250 400 250 200 300 200 150 150 200 100 100 50 100 50 0 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2010 2011 2010 2011 2010 2011 Source: Fertiliz

  15. Slide 15: Projected nitrogen capacity additions in line with historical consumption growth

    14 Projected nitrogen capacity additions in line with historical consumption growth Urea capacity growth relative Year Driving regions to nitrogen capacity World Excluding China World Excluding China 2010 China 50% Trinidad 15% 2.5% (2.6%) 2.0% (2.0%) Trinidad 8% Iran 12% 2011 China 54% Pakistan 30%

  16. Slide 16: Chinese exports needed to balance the global market

    15 Chinese exports needed to balance the global market Accumulated urea exports Urea price and export tax Kilotons USD per ton Export tax 8,000 900 200 % 7,000 2010 800 180 % 700 160 % 6,000 Urea fob 2007 Black Sea 140 % 600 5,000 Export tax 120 % 2008 500 4,000 100 % 400 2009 80 % 3,000 300 60 % 2,

  17. Slide 17: Increasing Chinese urea cost and price

    16 Increasing Chinese urea cost and price Higher coal Demand driven price lifts floor price increase RMB/t 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Urea price ex works Anthracite price Higher coal prices, increased expo

  18. Slide 18: Chinese urea export price logic

    17 Chinese urea export price logic USD/t 600 500 400 300 200 100 0 Based on anthracite Based on current Based on current price and old tarif reference price and domestic price system zero plant profit IR – Date: 2011-09-02

  19. Slide 19: Nitrate premium

    18 Nitrate premium Nitrate premium proxy* 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Avg 02-07 09/10 season 10/11 season 11/12 season * Urea fob Black Sea adjusted for freight (USD 35) and duty (6.5%) to calculate a CFR NWE proxy IR – Date: 2011-0

  20. Slide 20: Low European producer nitrate stocks

    19 Low 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 10/11 06/07 07/08 08/09 09/10 Source: Fertilizers Europe, June estimate from Yara IR – Date: 2011-09-02

  21. Slide 21: Basis for Yara's profitable growth ambitions

    20 Basis for Yara’s profitable growth ambitions Yara Strong earnings through the cycle A scalable business model giving synergies CROGI 25 % 20 % 15 % 10 % 5% 0% 2004 2005 2006 2007 2008 2009 2010 Long term target Industry-leading acquisition track-record Valuation and capital discipline  In acquis

  22. Slide 22: Well positioned for profitable operations and growth

    21 Well positioned for profitable operations and growth  Strong need for sustainable improvements in agricultural productivity  Flexible business model in volatile markets  Products and solutions addressing climate change and water scarcity challenges  Scalable business in a fragmented industry

  23. Slide 23: More information can be found at www.yara.com

    22 More information can be found at www.yara.com IR – Date: 2011-09-02

  24. Slide 24: Yara sensitivities

    23 Yara sensitivities Operating EBITDA Operating EBITDA Income USD Income NOK EPS** USD million million NOK million million NOK Urea sensitivity +100 USD/t 951 1,090 5,695 6,529 17.4 …of which pure Urea 300 389 1,797 2,330 6.3 …of which Nitrates 368 400 2,205 2,394 6.2 …of which NPK 230 249 1,380 1,

  25. Slide 25: Price and currency assumptions in scenarios

    24 Financial scenarios Price and currency assumptions in scenarios 12 5-year Chinese Demand months to average to swing* -driven** 30 Sep 10 30 Sep 10 Ammonia fob Black Sea (USD/t) 318 322 340 340 Urea prilled fob Black Sea (USD/t) 254 306 270 420 Nitrate premium (% above Nitrogen in Urea) 23% 32% 25

  26. Slide 26: Simplified P&Ls for scenarios

    25 Financial scenarios Simplified P&Ls for scenarios 5-year 12M to 30 Chinese Demand- NOK average to Sep 2010 * swing driven 30 Sep 2010** EBITDA 8,700 13,000 9,500 21,000 Depreciation (2,500) (2,500) (2,500) (2,500) Net finance (1,000) (700) (700) (700) Income before tax 5,200 9,800 6,300 17,800 Ta

  27. Slide 27: Yara's operating cash costs are mainly variable

    26 Yaras operating cash costs are mainly variable Operating cash costs 2010 NOK billions 60  Temporary plant closures can be made speedy and with limited 50 stop/start costs 40  Example for ammonia/urea Variable costs (89%) plants: 30 49.2 - Raw materials – Takes half a week to stop and a - Energy

  28. Slide 28: Structure for Growth Geographical Focus – Regional updates

    27 Structure for Growth Geographical Focus – Regional updates Industry Market Characteristics Yara focus and actions Market structure settled in short to medium term – map North America Consolidated strategic intentions of key players in both market stress and boom scenarios and develop Yara respons

  29. Slide 29: Net income after non-controlling interests

    28 Net income after non-controlling interests NOK millions 5,000 4,354 4,000 3,716 3,175 2,808 2,889 3,000 2,225 1,927 2,000 1,424 1,522 1,564 1,122 887 1,000 349 0 -1,000 -2,000 -2,109 -3,000 2008 2009 2010 2011 Annual NOK millions 8,228 3,782 8,729 5,114 IR – Date: 2011-09-02

  30. Slide 30: Earnings before interest, tax, depreciation and amortization (EBITDA)

    29 Earnings before interest, tax, depreciation and amortization (EBITDA) NOK millions 7,000 EBITDA excluding special 6,587 6,215 6,089 items 6,000 5,000 4,281 3,988 4,000 3,455 3,251 2,992 3,000 2,486 2,036 2,000 1,626 1,259 1,394 860 1,000 0 2009 2010 2011 2008 Annual NOK millions 17,917 5,549 15,3

  31. Slide 31: Debt/equity ratio

    30 Debt/equity ratio Net interest-bearing debt / equity ratio (end of period) 0.9 0.84 0.8 0.75 0.7 0.63 0.6 0.57 0.56 0.49 0.5 0.40 0.38 0.4 0.34 0.28 0.32 0.3 0.27 0.22 0.20 0.2 0.1 0.0 2008 2009 2010 2011 IR – Date: 2011-09-02

  32. Slide 32: Fertilizer volumes up 4% on last year

    31 Fertilizer volumes up 4% on last year Kilotons Outside Europe Europe 7,000 6,284 6,017 6,000 2,575 5,474 5,476 3,015 5,210 5,216 5,129 4,882 4,914 2,543 4,967 5,000 4,742 4,791 4,759 2,910 2,658 2,765 2,146 2,715 2,290 2,355 2,514 2,180 2,412 4,000 3,496 3,710 1,540 3,000 3,002 2,983 2,933 2,562

  33. Slide 33: Yara 2Q fertilizer sales by market and product

    32 Yara 2Q fertilizer sales by market and product 2011: 5.0 million tons (2010: 4.8 million tons) Kilotons 2Q10 2Q11 2,500 2,347 2,250 2,000 1,500 909 859 917 1,000 719 597 485 500 349 289 0 Europe Latin America Asia North America Africa Kilotons 3,000 2Q10 2Q11 2,000 1,458 1,492 1,163 1,209 1,219 1

  34. Slide 34: Yara – production volume

    33 Yara – production volume* Finished fertilizer Ammonia Kilotons Kilotons 5,000 2,500 4,500 4,000 2,000 3,500 3,000 1,500 2,500 2,000 1,000 1,500 1,000 500 500 0 0 2008 2009 2010 2011 2008 2009 2010 2011 Urea Nitrates NPK CN UAN * Including share of equity-accounted investees IR – Date: 2011-09-02

  35. Slide 35: Yara nitrate sales

    34 Yara nitrate sales Share of annual sales 12 % 10 % 8% 6% 4% 2% 0% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 10/11 Avg 05/06-09/10 seasons IR – Date: 2011-09-02

  36. Slide 36: Spot natural gas versus Yara average

    35 Spot natural gas versus Yara average Yearly averages 2005 – 2009, quarterly averages for 2010 and 2011 with forward prices for 2011* USD per MMBtu 14 12.0 11.8 12 11.1 10.8 10.1 10 8.8 8.5 8.3 9.6 7.9 8.0 8 7.5 7.6 7.0 7.0 6.7 6.4 6.6 5.9 6 5.4 5.2 5.6 5.6 5.4 4 4.8 4.4 2 0 2005 2006 2007 2008 20

  37. Slide 37: Domestic urea supply from producers – July to May down 14%

    36 Domestic urea supply from producers – July to May down 14% Chinese urea production Domestic urea balance Million tons Million tons 6.0 60 56.7 09/10 52.6 -14% 51.2 5.0 50 4.1 45.1 4.0 10/11 40 6.1 3.0 30 2.0 20 1.0 10 0.0 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Domestic Domestic Export

  38. Slide 38: Import need returning to the peak level of 08/09

    37 Import need returning to the peak level of 08/09 Sales - Production Kt 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 2011/12 2007/08 2008/09 2009/10 2010/11  Kharif (July planting) – imports Apr-Sep  Rabi (November planting) – im

  39. Slide 39: Structure for Growth Geographical Focus – Regional updates

    38 Structure for Growth Geographical Focus – Regional updates Industry Market Characteristics Yara focus and actions Market structure settled in short to medium term – map North America Consolidated strategic intentions of key players in both market stress and boom scenarios and develop Yara respons

  40. Slide 40: Key value drivers – quarterly averages

    39 Key value drivers – quarterly averages Oil Brent blend spot (USD/bbl) Urea prilled fob Black Sea (USD/t) CAN cif Germany (USD/t) 450 408 450 140 377 384 117 400 359 354 400 120 105 350 318 350 100 87 280 300 78 300 239 244 77 236 80 250 250 60 200 200 150 150 40 100 100 20 50 50 0 0 0 2Q 10 3Q 10

  41. 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 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Urea prilled fob Black Sea DAP fob , US Gulf U

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