Yara International ASA Fourth Quarter results 2013 12 February 2014 - - PowerPoint PPT Presentation

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yara international asa fourth quarter results 2013
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Yara International ASA Fourth Quarter results 2013 12 February 2014 - - PowerPoint PPT Presentation

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0 Yara International ASA Fourth Quarter results 2013 12 February 2014 IR-Date: 2014-02-12 1 Summary fourth quarter Lower result reflecting weaker prices Weak commodity margins but robust value-added premiums Strong production and

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IR-Date: 2014-02-12

12 February 2014

Yara International ASA Fourth Quarter results 2013

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IR-Date: 2014-02-12 1

Lower result reflecting weaker prices

Weak commodity margins but robust value-added premiums

Strong production and deliveries

Proposed dividend NOK 10 per share, 48% of net income

Summary fourth quarter

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IR-Date: 2014-02-12 2 5.27 12.86 6.68 5.42 10.02 7.73 12.42 11.84 10.54 9.82 9.25 7.67 8.04 6.68 5.65 0.21

Earnings per share*

* Average number of shares for 4Q 2013: 277.2 million (4Q 2012: 280.6 million).

NOK 30.23 41.99 37.21 20.63 Annual 2010 2011 2012

EPS excluding currency and special items

2013

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IR-Date: 2014-02-12 3

Farm economics support fertilizer demand, despite lower grain prices

Chinese supply costs drive urea pricing, amid curtailments in East Europe and slow exports from North Africa

Western Europe nitrogen fertilizer industry deliveries 8% higher, season to date 1% higher

Phosphate and potash markets impacted by reduced consumption in India, but strong phosphate market improvement from November

Strong demand for value-added fertilizer products, including nitrates and NPKs

Fertilizer market development

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IR-Date: 2014-02-12 4

50 100 150 200 250 300 1/2004 1/2005 1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012 1/2013 Index

FAO price index

Cereals Price Index Cereals 5 year avg. Food Price Index Food 5 year avg.

Farm economics support fertilizer demand

Source: FAO

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IR-Date: 2014-02-12 5

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 13/14 Source: BOABC, CFMW 12/13

Chinese urea production in line season to date, and low er exports in fourth quarter

Chinese urea production, million tons

11/12 50 100 150 200 250 300 350 400 450 500 550 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13

Urea price, USD/t Chinese urea exports, Kilotons

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IR-Date: 2014-02-12 6 1,000 2,000 3,000 4,000 5,000 6,000 Kilotons 2012 2011 2013

Strong production

1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 2,000 Kilotons * Including share of equity-accounted investees

Finished fertilizer Ammonia

2012 2011 2013

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IR-Date: 2014-02-12 7

200 400 600 800 1,000 1,200 1,400 Process Chemicals TAN ES Automotive ES Industry & Maritime Nitrates Other 2011 2010 2009

Industrial sales per business unit

2012 2013 Kilotons

CAGR 7%

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IR-Date: 2014-02-12 8

Latin America grow th & integration progress

OFD (Colombia):

–

Integration preparation underway, with resource transfer from Bunge work

–

Closing expected mid 2014

Bunge (Brazil):

–

Integration completed

–

Result improvement expected going forward

–

USD 50 million synergies effective 2014

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IR-Date: 2014-02-12 9

Earnings before interest, tax, depreciation and amortization (EBITDA)

3,251 6,587 2,486 2,992 4,281 3,455 5,444 4,982 4,310 4,966 4,103 3,591 4,129 3,995 3,307 1,835

2010 2012 2011 2013 NOK millions 15,315 18,163 16,970 13,266 Annual

EBITDA excluding special items

NOK millions

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IR-Date: 2014-02-12 10

EBITDA development

EBITDA 4Q12 3,591 Currency 226 Other 395 Gas & oil costs in Europe 51 Price/margin 1,934 Volume 852 Special items 556 EBITDA 4Q13 1,835 NOK millions

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IR-Date: 2014-02-12 11

Fourth-quarter special items

71

  • 138
  • 142
  • 295
  • Other:
  • Contract derivative gain
  • Pension plan gain
  • Impairment / scrapping
  • Disputed Lifeco utility cost:
  • Strong increase in utility cost, is disputed by Yara
  • Bunge integration cost:
  • Further USD 9 million and USD 7 million expected in in

first and second quarter 2014 respectively

  • Corporate penalty and confiscation
  • Following conclusion of Økokrim investigation
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IR-Date: 2014-02-12 12

Stable Dow nstream and Industrial earnings

684 718 292 282 2,569 1,002 Downstream Industrial Upstream EBITDA excluding special items 4Q12 4Q13 EBITDA (NOK millions)

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IR-Date: 2014-02-12 13

1,000 2,000 3,000 4,000 5,000 6,000 7,000 Downstream Industrial Upstream

EBITDA per segment excl. special items

EBITDA, NOK millions 2012 2013 2011

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IR-Date: 2014-02-12 14

Value above ammonia

100 200 300 400 500 600 700 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 USD/t

Nitrogen upgrading margins

Urea CFR CAN (46% N) NH3 CFR (46% N)

Nitrate premium above urea Yara EU gas cost *20 Value above gas

Agronomic benefits justify nitrate premium

20 40 60 80 100 120 140 160 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13

Nitrate premium, USD/t CAN

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IR-Date: 2014-02-12 15 100 200 300 400 500 600 700 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 USD/t

Phosphate upgrading margins1

DAP, fob USG

Rock, fob NA *1.4 Value above raw material

100 200 300 400 500 600 700 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 USD/t

NPK premium over blend2

NH3, fob Black Sea *0.22 DAP, fob Morocco MOP, cfr NWE Urea, fob Black sea

Stable NPK premiums

Weighted average global premium above blend cost

1) 1Q 2014 based on January actuals 2) Export NPK plants, average grade 19-10-13, net of transport and handling cost.

Nitrate premium

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IR-Date: 2014-02-12 16

Low er forw ard gas cost in Europe

Spread between Yara and Zeebrugge

Source: Yara, World Bank, Platts *Dotted lines denote forward prices as of 3 February 2014

2.1 1.4 1.1 0.9 0.8 0.8 0.9 0.6 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 USD/ MMBtu 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 USD/ MMBtu Zeebrugge (1-month lag) Yara Europe

Yara European gas & oil cost

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IR-Date: 2014-02-12 17

1,378 1,389 1,233 1,143 477 1,206 1,298 1,429 153 247 337 371 4Q12 4Q13 4Q12 4Q13 4Q12 4Q13 4Q12 4Q13 4Q12 4Q13 4Q12 4Q13 Yara-produced deliveries Joint venture & third party sourced Total

Increased fertilizer deliveries

Nitrate NPK compounds NPK blends Urea UAN Kilotons Other

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IR-Date: 2014-02-12 18

1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 Kilotons Finished fertilizer Other Compound NPK Nitrates Urea

Yara stocks, including Bunge Brazil from 3Q

Bunge Fertilizer included from 3Q 2013

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IR-Date: 2014-02-12 19

Net interest-bearing debt development

Net debt Dec 13* 3,378 Other 79 FX loss 253 Yara Share buy backs / redemption

  • f shares

63 Other investments net 1,554 Acquisition

  • f Bunge

10 Funding Yara Pilbara Nitrates 249 Net

  • perating

capital change 1,070 Dividends and cash from equity accounted investees 209 Cash earnings** 1,072 Net debt Sep 13* 3,519 * 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

NOK millions

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IR-Date: 2014-02-12 20

25% 23% 18% 19% 16% 34% 18% 17% 34% 48% 28% 37% 10% 7% 3% 3% 9% 11% 10%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Minimum 30% dividend Overall target 40-45%

Proposed dividend improves capital efficiency

Numbers reflect cash returns executed in a calendar year relative to net income the year

  • before. 2005 number reflects buy-backs and redemptions carried out in 2004 and 2005.

Above-target dividend proposed, to improve capital efficiency

Growth ambition remains in place, but focus for 2014 on

  • rganic growth and integration
  • f recent acquisitions
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IR-Date: 2014-02-12 21

2014 investment plans

5.2 1.4 3.0 0.8 2.5

Total NOK 13 billion

  • Smaller growth initiatives:
  • Gains in scale
  • Pilbara nitrate plant construction:
  • Expected commissioning mid to late 2015
  • OFD acquisition:
  • Acquisition closing expected mid 2014
  • Productivity improvements:
  • Range of smaller projects
  • Maintenance:
  • On-going reliability upgrade and high turnaround level

adds ~ NOK 1 billion vs. “steady state”

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IR-Date: 2014-02-12 22

Farm economics support fertilizer demand, low grain stocks

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 years apart from Algeria

Strong demand for Yara premium products, including nitrate and NPK

Executing growth in Latin America and improving Yara cost efficiency are key focus areas for 2014

Prospects

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IR-Date: 2014-02-12 23

Cautious start to the US season, Europe in line

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 2H08 2H09 2H10 2H11 2H12 2H13 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

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 2H08 2H09 2H10 2H11 2H12 2H13 Production Net imports

West Europe USA

  • -11%

+1%

Million tons N Million tons N

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IR-Date: 2014-02-12 24

Additional information

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IR-Date: 2014-02-12 25

5,256 5,179 4,763 6,104 6,284 6,017 4,742 3,496 4,882 5,210 5,216 4,791 5,129 4,759 5,474 4,914 5,296 4,970 4,834 4,239 5,437 5,253 5,013 5,044 5,297 6,341 5,884 6,146

1,000 2,000 3,000 4,000 5,000 6,000 7,000 Europe Outside Europe Total

Fertilizer volumes

Kilotons 2010 2007 2008 2009 2011 2012 2013

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IR-Date: 2014-02-12 26

Yara 4Q fertilizer sales by market and product

2013: 6.2 million tons (2012: 5.0 million tons)

2,301 1,252 500 793 198 2,398 2,152 607 773 215 Europe Latin America Asia North America Africa 4Q12 4Q13 1,233 477 1,378 1,298 337 153 168 1,143 1,206 1,389 1,429 547 247 183 NPK compounds NPK blends Nitrate Urea Other products UAN CN

Kilotons

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IR-Date: 2014-02-12 27

500 600 700 800 900 1,000 1,100 1,200 1,300 4Q09 4Q10 4Q11 4Q12 4Q13

NPK and nitrate deliveries

Kilotons 500 700 900 1,100 1,300 1,500 1,700 4Q09 4Q10 4Q11 4Q12 4Q13 Yara-produced nitrate deliveries Kilotons Yara-produced NPK deliveries

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IR-Date: 2014-02-12 28

NOK millions

Total Yara contribution

Value-added upgrading and distribution make up larger part of Yara’s contribution

9,000 8,000 7,000 3,000 6,000 5,000 4,000 2,000 1,000 4Q12 2Q12 2Q11 4Q10 Commodity Europe Commodity overseas Fertilizer upgrade & distribution Trade 2Q13 2Q10 4Q11 4Q13

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IR-Date: 2014-02-12 29

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Index June 2007=1 13/14 08/09 09/10 10/11 11/12 12/13

Source: Fertilizers Europe

European producer nitrate stocks

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IR-Date: 2014-02-12 30 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Kilotons

Urea Nitrates NPK CN UAN SSP - based fertilizer 2012 2009 2010 2011 2013

Yara production volume*

500 1,000 1,500 2,000 2,500 Kilotons

2013

* Including share of equity-accounted investees

Finished fertilizer and industrial products Ammonia

2012 2009 2010 2011

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IR-Date: 2014-02-12 31

4.8 5.7 7.6 8.3 8.3 8.6 7.9 7.7 8.1 8.3 8.3 8.5 7.5 7.8 8.1 7.5 6.6 7.6 10.1 11.1 10.9 10.8 11.0 11.0 10.8 11.4 11.5 11.9 10.8 11.2 11.4 10.4 2 4 6 8 10 12 14 2009 2010 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 US gas price (Henry Hub) Yara Global Zeebrugge day ahead Yara Europe

Gas & oil cost

USD per MMBtu

Source: Yara, World Bank, Platts

Yearly averages 2009 – 2010, quarterly averages for 2011-13 with forward prices* for 1Q14 and 2Q14

*Dotted lines denote forward prices as of 3 February 2014

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IR-Date: 2014-02-12 32

0.75 0.49 0.20 0.07

  • 0.04

0.63 0.38 0.22 0.08 0.01 0.57 0.32 0.12 0.06 0.06 0.56 0.27 0.12 0.02 0.06 2009 2010 2011 2012 2013

Debt/equity ratio

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

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IR-Date: 2014-02-12 33

Currency exposure affecting P& L

At the beginning of the first quarter 2014

1.

The US dollar debt generating p&l exposure was USD 1,000 million

  • Kept as hedge of future earnings and to finance inventories in emerging markets
  • Around 70% towards EUR and BRL, the rest towards NOK and emerging market

currencies

  • 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 CAD (500 million)
  • Receivables mainly GBP (65 million), EUR and AUD (40 million each)
  • The effects of these positions correspond to offsetting translation effects in equity and the

net economic effect for Yara is neutral

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IR-Date: 2014-02-12 34

Source: USDA January 2014

Record 2013 crop add 2 days of consumption to global grain stocks

1,950 2,000 2,050 2,100 2,150 2,200 2,250 2,300 2,350 2,400 2,450 2,500 06 07 08 09 10 11 12 13E 14F Million tons Consumption Production

Grain consumption and production Days of consumption in stocks

55 60 65 70 75 80 85 06 07 08 09 10 11 12 13E 14F Days

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IR-Date: 2014-02-12 35 Source: Fertecon urea update December 2013 (August update in brackets). Consumption data source is IFA.

Year Driving regions Urea capacity growth relative to nitrogen capacity Excluding China Excluding China 2013 Qatar 26% UAE 20% 1.2% (1.4%) 2014 Iran 28% Algeria 26% 1.5% (1.8%) 2015 Algeria 23% Iran 12% 3.8% (3.5%) 2016 USA 38% Nigeria 12% 2.7% (3.2%) 2017 USA 28% Iraq 27% 1.7% (1.5%) Gross annual addition 2013-2017 ~2.2% Assumed annual closures ~0.5% Net annual addition 2011-2015 ~1.8% Trend consumption growth from 2002 2.1%

Projected nitrogen capacity additions outside China in line w ith historical consumption grow th

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IR-Date: 2014-02-12 36

  • 200
  • 100

100 200 300 400 500 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Thousand contracts

Source: US Commodity Futures Trading Commission

Non-commercials’ net long position in corn

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IR-Date: 2014-02-12 37

Key value drivers – quarterly averages

385 400 342 308 314 4Q12 1Q13 2Q13 3Q13 4Q13

Urea prilled fob Black Sea (USD/t)

343 351 322 294 291 4Q12 1Q13 2Q13 3Q13 4Q13

CAN cif Germany (USD/t)

3.4 3.5 4.0 3.6 3.8 4Q12 1Q13 2Q13 3Q13 4Q13

US gas price Henry Hub (USD/MMBtu)

10.3 11.1 10.3 10.1 10.7 4Q12 1Q13 2Q13 3Q13 4Q13

Zeebrugge day ahead (USD/MMBtu)

5.7 5.6 5.8 6.0 6.1 4Q12 1Q13 2Q13 3Q13 4Q13

NOK/USD exchange rate

627 562 500 430 417 4Q12 1Q13 2Q13 3Q13 4Q13

Ammonia fob Black Sea (USD/t)

Source: Fertilizer Market Publications, CERA, World Bank, Norges Bank

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IR-Date: 2014-02-12 38

10-year fertilizer prices – monthly averages

Source: Average of international publications

200 400 600 800 1,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 USD/t

Ammonia fob Black Sea

100 200 300 400 500 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 USD/t

CAN cif Germany

200 400 600 800 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 USD/t

Urea prilled fob Black Sea Average prices 2004 - 2013

200 400 600 800 1,000 1,200 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 USD/t

DAP fob US Gulf