Yara International ASA Annual General Meeting 7 May 2019
Safety is our first priority TRI 1 (12-month rolling) 4.5 5 1.4 0 Jan'16 Mar'19 1 TRI: Total recordable injuries, lost time (absence from work), restricted work and medical treatment cases per one million work hours. 2
2018; Profitability improvement on track - execution of new strategy well underway Key points EBITDA development (MUSD) Improved operations and profitability, however still unsatisfactory returns - ~355 MUSD annual improvements realized 1,523 337 417 25 - EBITDA ex. special items at USD 1,525 million, up 7% 80 1,348 8 - ROIC at 3.8%; improving trend but below cost of capital 19 - 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 2017 Volume Price/ Energy Currency Special Other 2018 - Strategic evaluations of non-core units initiated margin cost items 3
Improving earnings and profitability trend Quarterly EBITDA excl. special items LTM ROIC USD millions % 464 4.1 424 3.8 3.7 3.7 402 377 3.1 321 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 4
Yara Improvement Program impacted by reliability in production Start: 2016 End: 2020 2017 2018 2019 2020 Today Annual impact, USD million, vs. 2015 baseline, at 2015 margins 500 450 355 320 Sustained 242 Continued high activity, but EBITDA unsatisfactory results in 1Q as improvement 84 accumulated improvements were affected by production issues One-off Underlying improvements adjusted 69 60 Benefits 1 for these issues were 375 MUSD, 28 15 15 9 driven by strong performance in the rest of the production operations 500 49 Cost 24 14 13 6 11 2020 improvement target of 500 MUSD maintained 116 91 90 69 Investments 9 0 2016 2017 2018 Q1 2019 2019 target 2020 target 1 One-off benefits are related to working capital improvements and white certificates 5
Capex reducing in 2019, growth projects ramping up Capex plan 1 Status Growth projects 2 USD Billions • Freeport and Köping projects completed and integrated into regular production operations; both running at full capacity as of end April 2.2 Growth - M&As • Sluiskil expansion: further work needed to reach Growth - expansions 0.7 100% delivery, to be achieved 2H 2019 Cost&capacity improvements 1.6 Maintenance 0.0 • Brazil projects under construction: 1.3 0.5 0.6 • Salitre: phosphate rock production ramping 1.0 up, chemical production by 1H 2020 0.6 0.1 0.2 0.2 0.2 • Rio Grande consolidation and expansion to 0.1 be completed end 2020 0.8 0.7 0.7 0.6 • Tracking methodology update at Capital Markets Day 2017 2018 2019 2020 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) 6
Yara’s leading global market presence and differentiated product portfolio represent key sources of competitive edge Key value drivers 8.9 • Global presence and farmer interaction 3.0 Europe 31.1% 3.7 • Global agronomic crop North America knowledge 10.5% Asia 13.1% • Crop-specific nutrition solutions 1.3 based on a differentiated Africa 4.6% product portfolio 2.3 9.3 LatAm ex. Brazil • Digital farming and value chain 8.1% collaboration initiatives drive Brazil 32.6% further growth • Commercial excellence Fertilizers 2018 sales figures in mill. tonnes, % = total 2018 Yara sales 7
Long-term premium product growth strategy is showing results High value premium 1 Total fertilizer deliveries Premium NPK deliveries YaraVita deliveries deliveries Million tons Million tons Million tons Million units +7% +24% +15% +55% 28.5 39 5.9 1.7 26.5 1.5 4.8 25 2015 2018 2015 2018 2015 2018 2015 2018 Premiums of more than USD 1 billion generated versus commodity alternative for premium NPKs, High value premium and YaraVita in 2018 1 High value premium defined as CN and fertigation products 8
Our strategy: The crop nutrition company for the future Advance Operational Excellence Create Drive Scalable Innovative Solutions Growth
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 10
Attractive Yara prospects Attractive industry Operating cash flow fundamentals and improvement with strict Focused long-term strategy supply-demand outlook capital allocation • Growing population and dietary • Operating cash flow improving • Crop nutrition focus; #1 market improvement drives demand with cycle and Yara actions presence and #1 premium fertilizer producer • Resource and environment • Committed capex almost halved challenges require strong agri from 2018 to 2019 • Strengthening position with productivity improvement digital farming services and food • Strict capital allocation • Tightening global grain balance chain partnerships • Active portfolio management and slow-down in nitrogen supply growth 11
Proposed dividend NOK 6.50 per share Dividend and buy-backs 1 per share Share of net income excluding currency and special items 2 15.5 65% 0.5 60% 14.1 13.8 1.1 0.8 9% 54% 53% 53% 53% 11.9 49% 6% 5% 6% 47% 11.0 13% 1.9 44% 40% 5% 0.9 42% 13% 34% 32% 7.4 7.2 15.0 22% 29% 28% 0.4 9% 6.5 0.7 7% 2% 13.0 13.0 51% 5.5 5.4 5.3 8% 48% 48% 47% 4.5 10.0 10.0 42% 0.8 40% 1.4 4.0 16% 36% 7.0 4% 1.5 6.5 2.8 27% 25% 25% 25% 2.3 5.5 0.4 20% 20% 4.5 4.5 4.0 12% 2.5 2.4 2.3 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018P 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018P Share buy-backs Dividends Share buy-backs Dividends Target range 40-45% 1 Number of shares based on the number of shares receiving dividend 2 Reported 2018 US dollar figures converted to Norwegian kroner at rate 8.05 12
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