Capital Markets Day 2013 26 November 2013 IR Date: 2013-11-26 1 - PowerPoint PPT Presentation

0 Capital Markets Day 2013 26 November 2013 IR – Date: 2013-11-26

1 Content Track record and strategy  Commodity market focus  Downstream focus  Supply & Trade focus  Upstream focus  Financial performance & scenarios  IR – Date: 2013-11-26

2 Track record and strategy Jørgen Ole Haslestad, President & CEO IR – Date: 2013-11-26

3 Safety culture drives performance Zero is impossible Zero is a dream Zero by Zero by Chance Choice Natural Instincts Dependent Independent Inter-dependent management / rules & personal knowledge / team spirit / pride / self preservation discipline / control / individual ownership / collective ownership / being cared for care for my self care for others IR – Date: 2013-11-26

4 Safety in Yara and our way forward It is a framework to develop a  Yara Safety Culture that reduces exposure to injury Where we all  Share the responsibility for safety – Taking care of each other – As well as ourselves – This development has to deliver a  sustainable improvement Achieve a higher level of quality  and consistency in all of us applying our procedures and tools IR – Date: 2013-11-26

5 Global megatrends profoundly impact Yara’s businesses Global growth Urbanization Climate change Globalization Resource scarcity IR – Date: 2013-11-26

6 Creating Impact is Yara’s strategic ambition • Creating Impact is Yara’s strategic ambition, expressed through our mission of striving for better yield, delivering good returns to customers, owners and society at large. • Creating Impact provides focus and direction for Yara’s strategy processes, innovation, business development and everyday business conduct • Creating Impact means Yara will grow by delivering profitable business solutions to the human challenges of food security, resource scarcity and environmental degradation IR – Date: 2013-11-26

7 Huge amounts of value can be unlocked by optimizing value chains Purcha Raw Food Manu- Distri- sing/ Distri- material Retail proces- Retail facturing bution Aggre- bution extraction sing gation Consumer Logistics Farmer Logistics • Value chain partnerships, particularly with multinational food companies, show significant potential of unlocking value • More sustainable value creation for farmers, higher yield with reduced loss and less use of resources • Key to success is fair sharing of value created IR – Date: 2013-11-26 Yara’s positioning

8 Creating impact in practice Pollution from industry, municipalities and agriculture Solution: Yara commitment to improve farm performance Yara’s P -trap: Phosphorous leakage -60% from treated acreage Baltic Sea Rollout of Yara N- Sensor precision tool commitment Win-win: Farm profitability + environment + Yara sales Will be adapted to Yara fertigation systems +5% yields, -20% water consumption Expected sales of 50,000+ units next 10 years Additional 300,000 tons Yara value added product Acquiring of ZIM crop water sensor Water saving ~consumption of Norway technology Current market size 13 mill hectares IR – Date: 2013-11-26

9 Strong return on investment through the cycle Cash Return on Gross Investment (12-month rolling average) 25% 20% 15% 10% 5% 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 L4Q Ex special items Long-term target IR – Date: 2013-11-26

10 Reliability investments drive production increases Finished fertilizer Ammonia Kilotons Kilotons 2,000 5,000 1,900 4,500 1,800 4,000 1,700 3,500 1,600 3,000 1,500 2,500 1,400 2,000 1,300 1,500 1,000 1,200 500 1,100 0 1,000 2011 2012 2013 2011 2012 2013 * Including share of equity-accounted investees IR – Date: 2013-11-26

11 Long-term growth in NPK deliveries outside Europe Yara-produced NPK deliveries Kilotons 1,400 1,200 1,000 800 600 400 CAGR 18% 200 0 3Q09 3Q10 3Q11 3Q12 3Q13 Overseas Europe IR – Date: 2013-11-26

12 Value-added products deliver an increasing share of Yara’s contribution Total Yara contribution NOK millions 9,000 8,000 Trade 7,000 6,000 Upgrade & distribution 5,000 4,000 3,000 Commodity overseas 2,000 1,000 Commodity Europe 0 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 IR – Date: 2013-11-26

13 Growth ambition remains firm Growth in own-produced and JV volumes Ambition is based  on identified Downstream market +8.0 opportunity and 32.5 capability 24.5 Capital discipline  and opportunity- driven timing Opportunities both  within commodity and value-added products 2010 Target IR – Date: 2013-11-26

14 Delivering growth in Latin America: with Bunge acquisition – and OFD Group  Value-added N production in Colombia (Abocol)  Distribution companies across Latin America FTEs 2012: 959  USD million 2010 2011 2012 Net Revenues 540 820 796 EBITDA 47 64 35 K tons 2010 2011 2012 Total net volumes 1,030 1,261 1,131 IR – Date: 2013-11-26

15 Yara Pilbara Nitrates project progressing well 330ktpa capacity AN plant, JV  with Orica and Apache (Yara share: 45%) Plant ideally located in the  world’s biggest iron ore mining region Overall construction close to  60% completion*, excellent safety record Expected commissioning is  mid to late 2015 * As of 21 November 2013 IR – Date: 2013-11-26

16 Potential joint investment in world-scale ammonia plant on US Gulf coast 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: 2013-11-26

17 Growth is progressing and pipeline is strong Growth in own-produced and JV volumes Executed & pipeline  projects so far are +8.0 mainly plant expansions 32.5 Bunge production  0.9 24.5 2.4 tons are limited, but acquisition gives significant footprint Commodity: Commodity: Qafco V & VI: 0.7 BASF 0.4* for future upstream Sluiskil: 0.5 Bunge: 0.3 Value-added: growth Porsgrunn 0.3 Value-added: Uusikaupunki 0.2 OFD 0.5 Porsgrunn 0.3 Further investments  Pilbara TAN 0.2 under evaluation 2010 Executed / Close to Pipeline / Target in execution approval remaining IR – Date: 2013-11-26

Commodity market focus Dag Tore Mo, Head of Market Intelligence

19 Continued strong price incentives necessary to match consumption growth Grain consumption and production Days of consumption in stocks Days Million tons 85 2,500 2,450 80 2,400 2,350 75 2,300 2,250 70 2,200 2,150 65 2,100 2,050 60 2,000 55 1,950 06 07 08 09 10 11 12 13E 14F 06 07 08 09 10 11 12 13E 14F Consumption Production Source: USDA, November 2013 IR – Date: 2013-11-26

20 Apparent urea consumption ex. China – up 3.4% in 2012 110 105 100 95 90 85 80 The trend from 2002-2012 shows a growth rate of 3.0%/year 75 70 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: IFA IR – Date: 2013-11-26

21 Urea supply outside China increased by 3.4% (3.5 million tons) in 2012, to 106.5 million tons Kilotons urea 4,000 2868 3530 3,500 3,000 2,500 2,000 346 1,500 762 832 -556 1,000 470 -419 500 -773 0 West Europe Latin America West Asia Egypt Vietnam Rest of World South Asia China Source: IFA Annual statistics IR – Date: 2013-11-26

22 ..and global urea exports 1H2013 up 13% Kilotonnes urea 2,500 998 1911 2,000 504 1,500 1340 -232 -195 22 1,000 -526 500 0 West Asia Russia Ukraine Egypt Iran Rest of World China Source: IFA Quarterly Survey, Exports IR – Date: 2013-11-26

23 India nitrogen consumption outpaces capacity Urea supply & demand 2005-2012 1,4% 4,6% 31,0 30,5 28,0 26,8 26,5 26,5 25,2 23,0 22,6 22,7 22,6 22,2 21,8 22,0 22,0 20,8 2005 2006 2007 2008 2009 2010 2011 2012 Production Consumption New subsidy policy aimed at increasing production – but limited gas available IR – Date: 2013-11-26

24 Projected nitrogen capacity additions outside China in line with historical consumption growth Urea capacity growth relative Year Driving regions to nitrogen capacity Excluding China Excluding China Qatar 19% 2013 1.4% (2.5%) Algeria 17% Iran 23% 2014 1.8% (1.8%) India 21% Algeria 25% 2015 3.5% (2.2%) Iran 13% USA 32% 2016 3.2% Indonesia 14% USA 31% 2017 1.5% Iraq 30% Gross annual addition 2013-2017 ~2.3% Assumed annual closures ~0.5% Net annual addition 2011-2015 ~1.8% Trend consumption growth from 2002 2.1% Source: Fertecon urea update August 2013 (February update in brackets). Consumption data source is IFA. IR – Date: 2013-11-26

25 Chinese urea prices – the relevant floor prices? Urea fob Black Sea USD/mt 600 Urea price China (inland proxy price) 500 400 300 200 100 0 Source: China Fertilizer Market Week, International publications IR – Date: 2013-11-26