Yara International ASA. 21 October 2011

Transcription

1 Yara International ASA Third quarter results October 211

2 1 Summary third quarter Strong results driven by improved margins Strong demand outside Europe, satisfactory sales in Europe Sluiskil urea expansion successfully completed Strong Industrial margins despite raw material price increases

3 2 Earnings per share* NOK 2 EPS excluding currency and special items Annual NOK * Average number of shares for 3Q 211: million (3Q 21: million).

4 Fertilizer market development in third quarter 3 Tight agricultural markets with continued strong demand for all nutrients Average Black Sea urea price 73% higher than third quarter 21 but lower Chinese urea exports, due to higher domestic prices and a stricter export policy West Europe nitrogen industry deliveries down 13%, imports down 21% Continued strength in NPK markets

5 4 Stocks-to-use decline despite strong incentives and record production Grain production and consumption Million tons 2,4 2,3 2,22 2,1 2, 1,9 1, F Consumption Production Days of consumption in stocks Days F Source: USDA, October 211

6 5 Grain prices at high levels despite recent drop Wheat (HRW US Gulf) Corn (US Gulf) USD/bu USD/bu Source: World Bank Jun 6-Sep 11, IGC Oct 19

7 6 Strong demand in regions that are in season Record Indian import need Brazilian urea import Kilotons 8, Kilotons 3, 7, 6, 2,5 5, 4, 2, 3, 1,5 2, 1, 1, -1, 5-2, Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 211/12 28/9 29/1 21/ Source: Indian Statistics Source: GTIS

8 7 Strong US deliveries, catch-up likely in Europe Million tons USA Million tons West Europe % % Q7 3Q8 3Q9 3Q1 3Q11 Production Net imports. 3Q7 3Q8 3Q9 3Q1 3Q11 Domestic Imports Source: Yara estimate for fertilizer deliveries to selected West European countries. Total nitrogen deliveries based on TFI, US Trade Commission, Blue-Johnson and Yara estimates

9 8 Chinese domestic urea price remains strong RMB/t 2,4 2,2 2, 1,8 1,6 1,4 1,2 1, Higher coal price lifts floor Demand driven price increase 8 Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Urea price ex works Anthracite price Higher coal prices, increased exports and focus on emission control and energy efficiency has led to higher domestic urea prices Source: China Fertilizer Market Week

10 9 Higher urea swing price USD/t FOB China 8 7 Higher domestic price and stricter tariff system Higher coal price lifts floor 2 1 Ukraine /China floor 8/9 Anthracite cost and 7% tax Current domestic price 11% tax

11 1 Significant growth in finished fertilizer capacity Urea expansion in Sluiskil Qafco expansion NPK expansion / Million tons Million tons Million tons Before U7 New capacity. After U Qafco 5 Qafco NPK capacity 211 Expansion NPK capacity 213

12 Earnings before interest, tax, depreciation and amortization (EBITDA) 11 NOK millions 7, 6, 6,215 6,89 EBITDA excluding special items 6,587 5,444 5, 4, 3, 2, 3,988 1,626 2,36 1, ,394 3,251 2,992 2,486 4,281 3,455 1, Annual NOK millions 17,917 5,549 15,315 13,18

13 12 Strong return on equity Source: The Norwegian Society of Financial Analysts

14 13 Third-quarter EBITDA and operating income excluding special items NOK million EBITDA Operating income Yara total reported 5,444 4,398 Downstream Environmental provisions (16) (16) Import duty charge prior years (26) (26) Upstream Libya costs (57) Qafco restatement of prior periods (82) Rossosh sale 1,415 1,475 Contract derivatives (1) () Yara total excluding special items 4,211 2,965

15 14 Variance analysis Yara group NOK millions 3Q 211 EBITDA 211 5,444 EBITDA 21 2,486 Variance EBITDA 2,958 Volume & mix (384) Price/Margin 2,99 Oil & gas costs in Europe (68) Special items 1,283 Other (48) Conversion (NOK vs. USD)* (275) Total variance explained 2,958 * Based on average NOK per USD rate for the quarter 211: 5.55 (21: 6.16)

16 15 Net debt development NOK millions 9, 8,281 8, 7, 6, 962 5, 4, 3, ,961 3, 2,488 2, Net interestbearing debt Jun 11* Cash earnings** Dividends Net operating received from capital change equity accounted investees Rossosh divestment, incuding dividend Investments (net) Share buybacks and redemption of shares Yara dividend Foreign exchange gain/(loss) Other Net interestbearing debt Sep 11 * Included in net interest-bearing debt are external bank time deposits (4-12 months), this is part of other current assets in balance sheet ** Operating income plus depreciation and amortization, minus tax paid, net gain/loss on disposals, net interest expense and bank charges

17 16 EBITDA per segment NOK millions 5, 4, EBITDA excluding special items 4,71 3, 2, 1, 1, , Downstream Industrial Upstream 3Q11 3Q1

18 17 Downstream segment Continued strong results Improved margins for all product groups, particularly nitrates Strong overseas demand for nitrate-based products Satisfactory sales in Europe

19 18 Nitrates competitively priced Nitrate premium in percentage terms Nitrate premium in absolute terms Premium proxy* 9% 8% 7% 6% 5% 4% 3% 2% 1% USD/t CAN % Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun - Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Avg 2-7 1/11 season 11/12 season Avg 2-7 1/11 season 11/12 season * Urea fob Black Sea adjusted for freight (USD 35) and duty (6.5%) to calculate a CFR NWE proxy

20 19 Industrial segment Strong margins despite raw material price increases Strong volume growth in environmental solutions and water treatment TAN recovery due to favorable change in customer portfolio mix

21 2 Upstream segment Strong result Value creating Rossosh divestment Sluiskil urea expansion successfully completed

22 21 Share of net income in equity-accounted investees NOK millions 3Q 211 3Q 21 Qafco Tringen Burrup (24) 17 GrowHow UK Ltd Lifeco (57) 36 Other Total

23 22 Estimated European energy cost NOK millions 1,4 Actual for quarter October 211 estimate* Cost ch hange on pr revious yea ar 1,2 1, Q1 1Q11 2Q11 3Q11 4Q11 1Q12 * Based on forward prices as of 7 October

24 23 Prospects fourth quarter 211 Urea prices sustained at third-quarter levels following India purchases Chinese 11% urea export tax planned from 1 November Low nitrate stocks in Europe Qafco-5 expansion start-up at end of quarter Yara s energy costs expected to be NOK 75 million higher last year

25 24 Healthy farm margins at today s grain prices Wheat (HRW US Gulf) Corn (US Gulf) USD/bu USD/bu Source: World Bank Jun 6-Sep 11, IGC Oct 11

26 25 Fourth-quarter Chinese exports likely lower Million tons 12. Global urea trade 1. China exported million tons in 4Q1 8. As much as 1.5 million tons were exported in December when the export 6 6. tax was 11% An additional.6 million tons were allowed exported in 1Q. Ex China China Source: IFA, Iran from GTIS

27 26 Prospects next twelve months Global agricultural ral markets are strong, with FAO food price index up 15% from last year Healthy farm margins at today s grain prices, indicating catch-up in European deliveries likely during remainder of season Global nitrogen fertilizer industry outside China running at full capacity; half of projected capacity increase in Algeria but timing estimates vary Qafco-6 expansion start-up in fourth quarter 212

28 Additional information

29 28 Net income after non-controlling interests NOK millions 5, 4,354 4, 3, 2, 1, 3,716 3,175 2,88 2,889 1,927 1,424 1,522 1,564 1, ,225 3,566-1, -2, -3, -2, Annual NOK millions 8,228 3,782 8,729 8,68

30 29 Debt/equity ratio Net interest-bearing debt / equity ratio (end of period)

31 3 Fertilizer volumes Kilotons 7, Outside Europe Europe 6, 5, 4, 3, 2, 6,284 6,17 2,575 3,15 3,71 3,2 4,742 2,18 2,562 3,496 1,54 1,956 5,21 5,216 5,129 4,882 4,791 2,658 2,765 2,146 2,29 2,355 2,983 2,592 2,551 2,451 2,436 5,474 5,481 2,91 4,914 2,543 4,97 4,759 4,834 2,715 2,514 2,412 2,617 2,937 2,347 2,564 2,4 2,256 2,216 1, Accumulated, Kt Fin. fertilizer 2,54 2,99 2,276 15,285

32 31 Yara 3Q fertilizer sales by market and product 211: 4.8 million tons (21: 5.5 million tons) Kilotons 3, 2,5 2, 1,5 1, 5 2,564 2,216 1,266 1, Europe Latin America Asia North America Africa 3Q Q Kilotons 3, 3Q1 3Q11 2, 1, 1,868 1,714 1,593 1,419 1, NPK Nitrate Urea Other products UAN CN

33 32 Yara production volume* Finished fertilizer Ammonia Kilotons 5, Kilotons 2,5 4,5 4, 2, 3,5 3, 1,5 2,5 2, 1, 1,5 1, UAN CN NPK Nitrates Urea *I Including share of equity-accounted t dinvestees

34 33 Spot natural gas versus Yara average Yearly averages 25 29, quarterly averages for with forward prices* for 4Q11 and 1Q12 USD per MMBtu Q1 2Q1 3Q1 4Q1 1Q11 2Q11 3Q11 4Q11 1Q12 US gas price (Henry Hub) Yara Global Zeebrugge day ahead Yara Europe *Dotted lines denote forward prices as of 7 October Source: Yara, World Bank, Platts

35 34 Low European producer nitrate stocks Index, June 27= Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 11/12 7/8 8/9 9/1 1/11 Source: Fertilizers Europe, September estimate from Yara

36 35 Strong farm incentives FAO price index Index /2 1/21 1/22 1/23 1/24 1/25 1/26 1/27 1/28 1/29 1/21 1/211 Food Price Index Cereals Price Index Source: FAO

37 36 Non-commercials net long position in corn Thousand contracts Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Source: US Commodity Futures Trading Commission

38 37 Chinese exports needed to balance the global market Accumulated urea exports Urea price and export tax Kilotons USD per ton Export tax 8, 9 2 % 7, % 6, 5, 4, 3, 2, 1, Urea fob Black Sea Export tax 16 % 14 % 12 % 1 % 8 % 6 % 4 % 2 % % Source: BOABC

39 Projected nitrogen capacity additions in line with historical consumption growth 38 Year 21 China 52% Trinidad 7% Urea capacity growth relative Driving regions to nitrogen capacity World Excluding China World Excluding China Trinidad 15% Iran 12% 2.5% (2.5%) 1.9% (2.%) 211 China 53% Pakistan 31% 2.% (2.1%) 1.5% (1.5%) Pakistan 15% Iran 15% 212 China 55% Algeria 41% 4.2% (4.3%) 3.1% (3.1%) Algeria 18% Qatar 17% 213 China 31% UAE 21% 2.% (2.2%) 2.2% (2.2%) UAE 14% Iran 19% 214 India 15% Indonesia 13% India 17% Indonesia 16%.9% (.9%) 1.4% (1.6%) Gross annual addition ~2.1% Assumed annual closures ~.5% Net annual addition ~1.6% Trend consumption growth from % 2.% Source: Fertecon update October 211, IFA on consumption figures

40 39 Key value drivers quarterly averages Zeebrugge day ahead(usd/mmbtu) Urea prilled fob Black Sea (USD/t) CAN cif Germany (USD/t) Q 1 4Q 1 1Q 11 2Q 11 3Q Q 1 4Q 1 1Q 11 2Q 11 3Q 11 3Q 1 4Q 1 1Q 11 2Q 11 3Q 11 US gas price Henry Hub (USD/MMBtu) Ammonia fob Black Sea (USD/t) NOK/USD exchange rate Q 1 4Q 1 1Q 11 2Q 11 3Q Q 1 4Q 1 1Q 11 2Q 11 3Q Q 1 4Q 1 1Q 11 2Q 11 3Q 11 Source: Fertilizer Market Publications, CERA, World Bank, Norges Bank

41 4 1-year fertilizer prices monthly averages Ammonia fob Black Sea USD/t 1, CAN cif Germany USD/t Urea prilled fob Black Sea USD/t Source: Average of international publications DAP fob US Gulf USD/t 1,2 1, Average prices 21-21