Yara International ASA Third Quarter results 2013

Transcription

1 Yara International ASA Third Quarter results October 213 IR-Date:

2 1 Summary third quarter Strong results despite weaker commodity fertilizer markets 17% increase in deliveries including Brazil acquisition Robust value-added premiums Stable NPK deliveries outside Europe Strong Industrial deliveries, especially NO X abatement IR-Date:

3 2 Earnings per share* EPS excluding currency and special items Annual NOK * Average number of shares for 3Q 213: million (3Q 212: million). IR-Date:

4 3 Fertilizer market development Solid farm economics support fertilizer demand, despite lower grain prices Increased exports from China led to supply-driven urea pricing Western Europe nitrogen fertilizer industry deliveries 9% lower Phosphate and potash markets impacted by reduced consumption in India, but compound NPK markets running well globally Strong demand for value-added fertilizer products, including nitrates and NPKs IR-Date:

5 4 Solid farm economics support fertilizer demand Index 3 FAO price index /24 1/25 1/26 1/27 1/28 1/29 1/21 1/211 1/212 1/213 Source: FAO Cereals Price Index Cereals 5 year avg. Food Price Index Food 5 year avg. IR-Date:

6 Strong global urea demand, but increased export availability from China Global urea trade Kilotons Chinese urea exports USD/t /9 9/1 1/11 11/12 12/13 Jul- 12 Sep- 12 Nov- 12 Jan- 13 Mar- 13 May- 13 Jul- 13 Sep- 13 xxx Average urea price, fob Black Sea Urea price Chinese exports IR-Date:

7 6 Cautious start to season in Europe and US Million tons USA* Million tons Western Europe %* % Q8 3Q9 3Q1 3Q11 3Q12 3Q13. 3Q8 3Q9 3Q1 3Q11 3Q12 3Q13 Production Net imports Domestic Imports *July only, due to non-availability of more recent US trade data Source: Yara estimate for fertilizer deliveries to selected West European countries. US nitrogen deliveries based on TFI, US Trade Commission, Blue-Johnson and Yara estimates* IR-Date:

8 Long-term growth in NPK deliveries outside Europe; stable year-over-year development 7 Kilotons 1,4 Yara-produced NPK deliveries Kilotons 271 Overseas Yara-produced NPK deliveries 1, , CAGR 18% Q9 3Q1 3Q11 3Q12 3Q13 Asia Brazil Latin America excl. Brazil Africa North America Overseas Europe 3Q11 3Q12 3Q13 IR-Date:

9 8 Record production Kilotons 5, Finished fertilizer Kilotons 2, Ammonia 4,5 1,9 4, 1,8 3,5 1,7 3, 1,6 2,5 1,5 2, 1,4 1,5 1,3 1, 1,2 5 1,1 1, * Including share of equity-accounted investees IR-Date:

10 Bunge acquisition completed and integration underway 9 Bunge Fertilizantes Yara Brasil Sales volume 212 (mt) Revenues 212 (USD billions) Employees ~1,3 ~1,3 SSP production units 2 1 Blending units Own sales force ~1 ~8 Sales representatives ~5 ~3 IR-Date:

11 Bunge acquisition improves geographical balance 212 Fertilizer deliveries, Yara and Bunge Brazil 1 North America 3. mill. tons Europe 9.6 mill. tons Asia 1.9 mill. tons Bunge 4.6 mill. tons Africa 1.2 mill. tons Latin America 4.7 mill. tons Oceania.3 mill. tons IR-Date:

12 11 Significantly improved footprint in Brazil 1, km ~6 USD/t Bunge plant Yara plant Market size Mato Grosso Northeast West Bahia Paraná Minas Gerais Rio Grande do Sul São Paulo IR-Date:

13 Bunge acquisition increases purchasing scale Potash purchases, China, India and Yara 12 Million tons, MOP equivalents 212 First half China India Yara China India Yara Source: Yara, International Fertilizer Industry Association Bunge IR-Date:

14 Earnings before interest, tax, depreciation and amortization (EBITDA) 13 NOK millions 6,587 EBITDA excluding special items 5,444 4,982 4,966 3,251 2,992 2,486 4,281 3,455 4,31 4,13 3,591 4,129 3,995 3,37 Annual NOK millions ,315 18,163 16,97 11,432 IR-Date:

15 14 EBITDA development NOK millions 4, ,37 EBITDA 3Q12 Special items Volume Price/margin Gas & oil costs in Europe Other Currency EBITDA 3Q13 IR-Date:

16 15 Strong earnings in Downstream and Industrial NOK millions EBITDA excluding special items 3,77 1,799 1, Downstream Industrial Upstream 3Q12 3Q13 IR-Date:

17 16 Net income from equity-accounted investees NOK millions 412 3Q12 3Q Qafco Tringen GrowHow UK Lifeco Other IR-Date:

18 17 Increased fertilizer deliveries Kilotons 1,336 1,35 1,38 1,94 1, , Q12 3Q13 3Q12 3Q13 3Q12 3Q13 3Q12 3Q13 3Q12 3Q13 Nitrate NPK compounds NPK blends Urea UAN Yara-produced deliveries Joint venture & third party sourced Total IR-Date:

19 18 Yara stocks, including Bunge Brazil from 3Q Kilotons Finished fertilizer 6, 5,5 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, Other NPK Nitrates Urea Bunge IR-Date:

20 19 Farmer yield benefits justify nitrate premium USD/t Nitrogen upgrading margins Nitrate premium, USD/t CAN Nitrate premium above urea Value above ammonia Value above gas Yara EU gas cost * Q9 1Q1 3Q1 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 3Q9 1Q1 3Q1 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 Urea CFR CAN (46% N) NH3 CFR (46% N) IR-Date:

21 2 Stable NPK premiums USD/t Phosphate upgrading margins USD/t NPK blend premium Value above raw material 5 Margin above blend cost 4 4 Urea, fob Black sea 3 NH3, fob Black Sea *.22 3 MOP, cfr NWE Rock, fob NA *1.4 1 DAP, fob Morocco 1Q1 3Q1 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 DAP, fob USG 1Q1 3Q1 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 NPK T17, del France IR-Date:

22 21 Strong cash generation NOK millions , , ,39 4, Net debt Jun 13* Cash earnings** Dividends from equity accounted investees Net operating capital change Funding Yara Pilbara Nitrates Acquisition of Bunge Other investments net Yara Share buy backs / redemption of shares Yara Dividend FX loss Other Net debt Sep 13* * 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 IR-Date:

23 22 Prospects Continued strong farm economics support fertilizer demand Marginal urea profitability in China; Chinese coal price and export tax regime are key for global urea pricing going forward Capacity outside China: limited greenfield additions next 2-3 years apart from Algeria Limited pipeline stocks in Europe; improved Yara nitrate deliveries following North African urea price increases and new Yara nitrate prices Potash and phosphate market volatility has limited impact on compound NPK deliveries IR-Date:

24 Potential joint investment in world-scale ammonia plant on US Gulf coast 23 Attractive long-term partnership: BASF has strong existing presence in the United States and ammonia sourcing requirement for US downstream activities, investment would further strengthen backward integration Yara has a strong global ammonia production and trade network, investment would further strengthen this position, and increase its North American upstream presence US Gulf location advantageous due to existing industry infrastructure, construction resources and natural gas Location, capacity and other project parameters currently under discussion IR-Date:

25 24 Additional information IR-Date:

26 25 Fertilizer volumes Kilotons 7, 6, 5, 6,14 5,256 5,179 4,763 6,284 6,17 4,742 4,882 5,21 5,216 4,791 5,474 5,129 4,914 4,759 5,296 4,97 4,834 5,438 5,253 5,13 5,45 5,299 6,343 5,884 4, 3,496 4,239 3, 2, 1, Europe Outside Europe Total IR-Date:

27 Yara 3Q fertilizer sales by market and product 213: 5.9 million tons (212: 5. million tons) 26 Kilotons 2,27 2,138 2,377 3Q12 3Q13 1, Europe Latin America Asia North America Africa 1,94 1, ,38 1,336 1, , NPK compounds NPK blends Nitrate Urea Other products UAN CN IR-Date:

28 27 NPK and nitrate deliveries Yara-produced NPK deliveries Yara-produced nitrate deliveries Kilotons 1,3 1,2 1,1 1, Kilotons 1,7 1,5 1,3 1, Q9 3Q1 3Q11 3Q12 3Q13 5 3Q9 3Q1 3Q11 3Q12 3Q13 IR-Date:

29 Value-added upgrading and distribution make up larger part of Yara s contribution 28 NOK millions 9, Total Yara contribution 8, 7, 6, 5, Trade Industrial upgrade & distribution 4, Fertilizer upgrade & distribution 3, 2, 1, Commodity overseas Commodity Europe 1Q1 2Q1 3Q1 4Q1 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 IR-Date:

30 29 European producer nitrate stocks Index June 27= Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 13/14 8/9 9/1 1/11 11/12 12/13 Source: Fertilizers Europe IR-Date:

31 3 Yara production volume* Kilotons 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 Finished fertilizer and industrial products Kilotons 2,5 2, 1,5 1, 5 Ammonia Urea Nitrates NPK CN UAN SSP - based fertilizer * Including share of equity-accounted investees IR-Date:

32 31 Gas & oil cost Yearly averages 29 21, quarterly averages for with forward prices* for 4Q13 and 1Q14 USD per MMBtu Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 US gas price (Henry Hub) Yara Global Zeebrugge day ahead Yara Europe *Dotted lines denote forward prices as of 8 October 213 Source: Yara, World Bank, Platts IR-Date:

33 32 Yara European gas cost closer to hub price USD/ MMBtu European energy cost USD/ MMBtu Spread between Yara and Zeebrugge Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Zeebrugge (1-month lag) Yara Europe *Dotted lines denote forward prices as of 8 October 213 Source: Yara, World Bank, Platts IR-Date:

34 33 Debt/equity ratio.75 Net interest-bearing debt / equity ratio (end of period) IR-Date:

35 34 Currency exposure affecting P&L At the beginning of the fourth quarter The US dollar debt generating p&l exposure was USD 1,1 million Kept as hedge of future earnings and to finance inventories in emerging markets Around 5% towards EUR and NOK, the rest towards emerging market currencies (mainly BRL) The debt level in emerging markets will fluctuate with fertilizer seasons 2. Additional p&l exposure came from internal currency positions vs. NOK Payables mainly EUR (46 million) and CAD (5 million) Receivables mainly GBP (55 million) and AUD (4 million) The effects of these positions correspond to offsetting translation effects in equity and the net economic effect for Yara is neutral IR-Date:

36 Continued strong price incentives necessary to match consumption growth 35 Grain consumption and production Days of consumption in stocks Million tons Days 2,5 85 2,45 2,4 8 2,35 2,3 75 2,25 2,2 7 2,15 2,1 65 2,5 6 2, 1, E 14F E 14F Consumption Production Source: USDA, September 213 IR-Date:

37 36 Chinese urea production and export balance Chinese urea production Domestic urea balance Million tons /14 12/13 11/12 Million tons % Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Production Export Domestic Domestic Export Production Source: BOABC, CFMW Jul-Aug 12/13 Jul-Aug 13/14 IR-Date:

38 37 Chinese urea export increase Chinese urea exports, Kilotons 1,8 1,6 1,4 1,2 1, Urea price, USD/t Jul-1 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Urea, fob Yuzhny Chinese urea exports Source: BOABC IR-Date:

39 Projected nitrogen capacity additions outside China in line with historical consumption growth 38 Year Driving regions Excluding China Qatar 19% Algeria 17% Iran 23% India 21% Algeria 25% Iran 13% USA 32% Indonesia 14% USA 31% Iraq 3% Urea capacity growth relative to nitrogen capacity Excluding China 1.4% (2.5%) 1.8% (1.8%) 3.5% (2.2%) 3.2% 1.5% Gross annual addition ~2.3% Assumed annual closures ~.5% Net annual addition ~1.8% Trend consumption growth from % Source: Fertecon urea update August 213 (February update in brackets). Consumption data source is IFA. IR-Date:

40 39 Non-commercials net long position in corn Thousand contracts Jan-7 Jul-7 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Source: US Commodity Futures Trading Commission IR-Date:

41 4 Key value drivers quarterly averages Zeebrugge day ahead (USD/MMBtu) Urea prilled fob Black Sea (USD/t) CAN cif Germany (USD/t) Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 US gas price Henry Hub (USD/MMBtu) Ammonia fob Black Sea (USD/t) NOK/USD exchange rate Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 Source: Fertilizer Market Publications, CERA, World Bank, Norges Bank IR-Date:

42 41 1-year fertilizer prices monthly averages USD/t 1, Ammonia fob Black Sea USD/t 5 CAN cif Germany USD/t 8 Urea prilled fob Black Sea USD/t 1,2 DAP fob US Gulf 6 1, Source: Average of international publications Average prices IR-Date: