Yara International ASA Annual General Meeting 7 May 2019 Safety is - - PowerPoint PPT Presentation

Yara International ASA Annual General Meeting

7 May 2019

5

Jan'16 Mar'19

1.4

Safety is our first priority

TRI1 (12-month rolling)

1 TRI: Total recordable injuries, lost time (absence from work), restricted work and medical treatment cases per one million work hours.

2

4.5

2018; Profitability improvement on track - execution of new strategy well underway

Improved operations and profitability, however still unsatisfactory returns

• ~355 MUSD annual improvements realized
• EBITDA ex. special items at USD 1,525 million, up 7%
• ROIC at 3.8%; improving trend but below cost of capital
• Dividend of NOK 6.50/share for 2018 proposed to AGM

Strong capital discipline

• Strict capital allocation; focus on executing committed

investments

• Growth investments halved from 2018 to 2019

New strategy in place, execution well underway

• Operating model adjusted to new strategy
• Strategic evaluations of non-core units initiated

Key points

3 1,348 1,523 417 337 8 Volume Energy cost 2017 Price/ margin 19 Currency 80 Special items 25 Other 2018

EBITDA development (MUSD)

Improving earnings and profitability trend

LTM ROIC Quarterly EBITDA excl. special items

% USD millions 377 321 402 424 464 1Q18 4Q18 2Q18 3Q18 1Q19 3.7 2Q18 1Q18 3Q18 4Q18 1Q19 3.8 3.7 3.1 4.1 4

Yara Improvement Program impacted by reliability in production

• Continued high activity, but

unsatisfactory results in 1Q as accumulated improvements were affected by production issues

• Underlying improvements adjusted

for these issues were 375 MUSD, driven by strong performance in the rest of the production operations

• 2020 improvement target of 500

MUSD maintained 84 242 355 320 450 500

Annual impact, USD million, vs. 2015 baseline, at 2015 margins Today Start: 2016 End: 2020 2017 2018 2019 2020

60 69 28 9 15 15 500 69 116 91 9 90

2020 target Q1 2019 2016 2017 2018 2019 target

14 49 24 6 13 11

1 One-off benefits are related to working capital improvements and white certificates

One-off Sustained EBITDA improvement Benefits1 Cost Investments 5

Capex reducing in 2019, growth projects ramping up

Capex plan1

USD Billions

Status Growth projects2

1 Committed investments as of end 1Q19 2 Growth portfolio = M&As (Babrala and Cubatão) and expansions/new builds (Uusikaupunki, Porsgrunn/Glomfjord, Sluiskil, Rio Grande, Freeport, Pilbara TAN, Köping, Salitre)

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• Freeport and Köping projects completed and

integrated into regular production operations; both running at full capacity as of end April

• Sluiskil expansion: further work needed to reach

100% delivery, to be achieved 2H 2019

• Brazil projects under construction:
• Salitre: phosphate rock production ramping

up, chemical production by 1H 2020

• Rio Grande consolidation and expansion to

be completed end 2020

• Tracking methodology update at Capital Markets

Day

2017 0.0 0.6 0.2 1.3 0.7 0.7 2019 0.7 2.2 0.5 0.2 0.8 2018 0.6 0.1 0.1 0.6 0.2 2020 1.6 1.0

Cost&capacity improvements Growth - M&As Growth - expansions Maintenance

Yara’s leading global market presence and differentiated product portfolio represent key sources of competitive edge

Fertilizers 2018 sales figures in mill. tonnes, % = total 2018 Yara sales

• Global presence and farmer

interaction

• Global agronomic crop

knowledge

• Crop-specific nutrition solutions

based on a differentiated product portfolio

• Digital farming and value chain

collaboration initiatives drive further growth

• Commercial excellence

Key value drivers

8.9 Europe 31.1% 3.0 North America 10.5% 3.7 Asia 13.1% 1.3 Africa 4.6% 9.3 Brazil 32.6% 2.3 LatAm ex. Brazil 8.1%

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Long-term premium product growth strategy is showing results

1 High value premium defined as CN and fertigation products

Premium NPK deliveries

Million tons

5.9 4.8 2015 2018 +24% High value premium1 deliveries

Million tons

YaraVita deliveries

Million units

25 39 2015 2018 +55% 2018 2015 1.5 1.7 +15%

Premiums of more than USD 1 billion generated versus commodity alternative for premium NPKs, High value premium and YaraVita in 2018

Total fertilizer deliveries

Million tons

26.5 28.5 2015 2018 +7%

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Advance Operational Excellence Create Scalable Solutions Drive Innovative Growth

Our strategy: The crop nutrition company for the future

Yara and IBM join forces to transform the future of farming

• Partnership agreement to build the world’s leading digital

farming platform, combining Yara’s unrivalled agronomic knowledge and market presence with IBM’s digital platforms, services and expertise in data analytics

• Yara and IBM will develop digital solutions for both professional

and smallholder farmers to sustainably increase yields, crop quality and incomes

• The joint platform will apply artificial intelligence, machine

learning and in-field data to achieve worldwide coverage, aiming to reach 100 million hectares of farmland

• Yara and IBM will establish joint innovation teams,

collaborating at digital hubs in Europe, Singapore, the US and Brazil

• The teams will work to develop new capabilities, such as visual

analytics, machine learning techniques for crop identification and validation as well as field boundary digitization

• The first services are planned for end 2019

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Attractive Yara prospects

Focused long-term strategy Attractive industry fundamentals and supply-demand outlook Operating cash flow improvement with strict capital allocation

• Operating cash flow improving

with cycle and Yara actions

• Committed capex almost halved

from 2018 to 2019

• Strict capital allocation
• Active portfolio management
• Growing population and dietary

improvement drives demand

• Resource and environment

challenges require strong agri productivity improvement

• Tightening global grain balance

and slow-down in nitrogen supply growth

• Crop nutrition focus; #1 market

presence and #1 premium fertilizer producer

• Strengthening position with

digital farming services and food chain partnerships

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53% 25% 2005 2018P 5% 25% 36% 2004 2% 22% 47% 4% 20% 2011 40% 42% 2006 2016 9% 6% 25% 65% 9% 2007 12% 2008 27% 51% 40% 2009 16% 2010 2014 8% 20% 13% 2012 13% 2013 5% 42% 2015 6% 7% 48% 53% 2017 48% 32% 60% 34% 29% 28% 44% 49% 47% 54% 53%

Proposed dividend NOK 6.50 per share

Share buy-backs Dividends

Dividend and buy-backs1 per share

Target range 40-45%

2.3 2.4 2.5 4.0 4.5 4.5 5.5 7.0 13.0 10.0 13.0 15.0 10.0 6.5 6.5 1.5 1.4 0.8 1.1 1.9 0.8 0.9 0.7 2013 2005 2004 0.4 2006 2008 2011 2009 2.8 2010 0.4 2012 7.4 2014 2016 2007 2015 2017 13.8 2018P 2.3 4.0 5.4 4.5 5.3 5.5 14.1 11.9 15.5 11.0 7.2 0.5 Share buy-backs Dividends

Share of net income excluding currency and special items2

1 Number of shares based on the number of shares receiving dividend

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2 Reported 2018 US dollar figures converted to Norwegian kroner at rate 8.05