Yara International ASA First quarter results 2015 24 April 2015 1 - - PowerPoint PPT Presentation

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Yara International ASA First quarter results 2015 24 April 2015 1 - - PowerPoint PPT Presentation

Feb 08, 2023 41 likes •411 views

Yara International ASA First quarter results 2015 24 April 2015 1 Summary first quarter Strong result driven by higher deliveries and margins Margins benefit from lower gas prices and stronger US dollar NOK 1.8 billion currency loss

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SLIDE 1

Yara International ASA First quarter results 2015

24 April 2015

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SLIDE 2

1 IR – 24 April 2015

Strong result driven by higher deliveries and margins

Margins benefit from lower gas prices and stronger US dollar

NOK 1.8 billion currency loss due to US dollar appreciation

Improved production reliability

Lifeco write-down of NOK 929 million

Strong Industrial result

Summary first quarter

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SLIDE 3

2 IR – 24 April 2015 10.54 9.82 9.25 7.67 8.04 6.69 5.66 0.23 6.40 8.26 6.18 6.74 2.65 8.32 10.8 9.00 7.21 8.52 7.97 5.62 2.65 7.03 7.74 7.62 8.17 10.51

Earnings per share*

*Average number of shares for 1Q 2015: 275.5 million (1Q 2014: 277.1 million).

NOK 37.31 20.67 27.59 2.65 Annual 2012 2013 2014

EPS excluding currency and special items

2015

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SLIDE 4

3 IR – 24 April 2015

Chinese urea exports put pressure on prices

USD nitrate prices have followed the urea price development

Western Europe nitrogen fertilizer industry deliveries 3% lower; season-to-date in line

Phosphate prices and upgrading margins similar to last year

Strong demand for value-added fertilizer products

Industrial: continued demand growth for environmental solutions but weaker TAN market

Market development

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4 IR – 24 April 2015

3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Million tons 13/144 Source: BOABC, CFMW 12/13

Chinese urea exports put pressure on prices

14/15 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 2 000 2 200 2 400 Kilotons Black Sea USD/t

Chinese exports and urea price Chinese production

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SLIDE 6

5 IR – 24 April 2015

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 10/11 11/12 12/13 13/14 14/15 Production Net imports 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 10/11 11/12 12/13 13/14 14/15 Domestic Imports

European industry deliveries similar to last season

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

USA West Europe

+6%

Million tons N Million tons N

0%

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SLIDE 7

6 IR – 24 April 2015

1 000 2 000 3 000 4 000 5 000 6 000 Kilotons

Urea Nitrates NPK CN UAN SSP - based fertilizer 2014 2011 2012 2013 2015

Strong production with improved reliability

500 1 000 1 500 2 000 2 500 Kilotons

2015

* Including share of equity-accounted investees

Finished fertilizer and industrial products Ammonia

2014 2011 2012 2013

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SLIDE 8

7 IR – 24 April 2015

Industrial accounts for ~20% of world nitrogen consumption

Global nitrogen consumption Industrial applications 19% Industrial Fertilizer 81%

Global Nitrogen market in 2014: 137 mill. tons

1) Fertecon Ammonia Outlook 2014

CAGR 2014-20201: Fertilizer: ~2% Industrial ~3%

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8 IR – 24 April 2015

  • Yara’s global production system

enables reliable supply with close proximity to industrial customers

  • Industrial adds value above

commodity reference prices

  • Industrial is adding scale in operations
  • Industrial enables optimization of

Yara’s upstream assets  Yara’s Industrial segment is unique in the fertilizer industry creating stability and robustness in revenues and margins

Yara Industrial enhances value

  • f fertilizer operations

50 100 150 200

Quarterly EBITDA, excl. non-recurring items (rebased to 1Q 2012=100)

Downstream Industrial Upstream

2014 CAGR +7% 2013 6.2 2012 5.7 2011 5.5 2010 5.2 2009 4.6 2008 4.7 2007 3.9 2006 3.8 2005 3.5 2004 3.3 6.7 TAN CO2 Industrial N-chemicals Environmental products

  • mill. tonnes

1Q 2Q 3Q 4Q

2012 2013 2014

1Q 2015

Solid growth last 10 years… … with more stable earnings than fertilizer

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

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9 IR – 24 April 2015

13% EBITDA growth p.a. since 2011

1) Source: IHS Global Insight. Nominal world GDP growth. 2014-2020 2) Source: Fertecon Urea Outlook - 2014 3) Source: «Technical Ammonium Nitrate Quarterly Market Outlook February 2015», CRU

Chemical applications for food, feed, automotive, space, pharmaceutical and construction industries

Base Chemicals

Abatement of emissions from heavy duty vehicles,

  • ff-road vehicles.

NOx and SOx abatement for maritime sector

Environmental Solutions

Solutions to the Civil explosives industry based on Technical nitrates for mining and construction

Mining Applications

CO2 in a gas, liquid and Dry ice format CN for Industrial Applications Animal nutrition

Gas and Industrial applications

Key product and service offering EBITDA 2011- 2014 (MNOK) Market drivers

GDP growth Legislations, GDP growth GDP growth, infrastructure projects, raw material security GDP growth, standard

  • f living

Strategic fit

Optimization of Upstream assets Utilize technology, logistic advantage and infrastructure footprint Handling, storage and economies of scale Monetize secondary products into primary markets applications

Geographical market

Europe Global Global Global

533 426 357 413 2014 2013 2011 2012 492 337 232 311 2014 2013 2011 2012 303 237 139 114 2011 2013 2014 2012 223 225 343 246 2014 2013 2012 2011

Market CAGR 2014-2020 16%2 2.5%3 5%1 5%1

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10 IR – 24 April 2015

Yara well on track to become global market leader for emissions abatement

2020 target: become full-service provider of environmental solutions with top-industry profitability 2005 Other selected emissions Technology & services Reagents

2007 Aug: Yarwil (JV with Wilh. Wilhelmsen) 2005 to date Invested > NOK 1 bn in own plants

2015 2020

2011 Oct: acquired Petro Miljö (SNCR technology) 2014 Jan: Acquired H+H (SCR Technology) April: Acquired 63% in Green Tech Marine June: Acquired Strabag (flue gas cleaning)

2010

Growth initiatives

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11 IR – 24 April 2015

We serve a wide range of customers through an extensive offering

Technology Services

Stationary Marine

  • Dispensing bulk

equipment

  • Telemetry
  • Training
  • SCR

Technology

  • SOx

scrubbers

  • Design and

engineering

  • SCR

Technology

  • SNCR

Technology

  • Hybrid-

systems

Automotive

  • NOxCare40:

High purity urea solution

  • Optimization of
  • perations,

emissions reduction, safety and performance improvement

  • Commissioning
  • Operational

training

  • Safety training
  • Maintenance
  • Spare-parts

Cruise and ferries Coast-near vessels Deep sea vessels Off-road vehicles Cars Trucks

  • AdBlue:

High-quality urea solution

  • NOxCare:

high-quality urea solution and ammonia solution Yara value proposition Yara competitive edge End users

Reagent Power plants Cement factories Waste Incinerators

  • Global reach
  • Strong market

infrastructure

  • Reliable supply
  • Proximity to customers
  • High-quality products
  • Proven technology
  • Strong Yara brand
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12 IR – 24 April 2015

Yara Environmental Solutions grows rapidly

905 713 609 619 604 2014 279 1,183 2013

NOxCare EBITDA (MNOK) AdBlue EBITDA (MNOK) NOxCare volumes (kt) AdBlue volumes (kt)

2012 245 139 4.9 3.2 8.3 2.2 2014 5.4 CAGR +16%1 2020 13.1 Reagent (AdBlue+NOxCare) Technology

Recent acquisitions have built Yara a solid position to capture the fast-growing Environmental Solutions market

USDbn. 1) Per urea-equivalent (46% Nitrogen), excl. non-recurring items, source: Fertecon Urea Outlook - 2014

Yara performance Market growth 2014-2020

Yara ES 2014 sales was USD540mill, predominantly reagents

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13 IR – 24 April 2015

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

4 310 4 966 4 103 3 591 4 184 4 039 3 318 1 858 3 591 4 227 3 964 4 625 4 794 3 935 5 196 4 186 3 541 4 149 4 103 3 223 2 363 3 830 4 185 4 002 4 528 5 742

2012 2014 2013 2015 NOK millions 16,970 13,399 16,407 4,794 Annual

EBITDA excluding special items

NOK millions

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14 IR – 24 April 2015

EBITDA development

316 515 710 4,794 EBITDA 1Q15 Special items Currency 1,023 Other Price/margin 1,089 Volume & mix EBITDA 1Q14 3,591

NOK millions

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15 IR – 24 April 2015

Improved earnings in all segments

1 792 1 843 365 414 1 646 2 884 1 888 1 868 365 414 1 789 3 808 Downstream Industrial Upstream EBITDA excluding special items 1Q14 1Q15

EBITDA1 (NOK millions) 1) 1Q 2015 result reflects new segment structure. 1Q 2014 on previous segment structure.

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16 IR – 24 April 2015

Lower natural gas cost in Europe

4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 USD/ MMBtu TTF (1-month lag) Yara Europe

(36) (660) (891) (726) (1 314) (650) (150)

(1 400) (1 200) (1 000) (800) (600) (400) (200) 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

NOK millions April 2015 estimate*

Source: Yara, World Bank, Argus/ICIS Heren *Dotted lines denote forward prices as of 15 April 2015

Yara European gas & oil cost

Actual

Change in European energy cost

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17 IR – 24 April 2015

Stable European nitrate premium

100 200 300 400 500 600 700 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 USD/t

Nitrogen upgrading margins1 (monthly publication prices)

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

Value above gas Value above ammonia Nitrate premium above urea

Yara EU gas cost *20

20 40 60 80 100 120 140 160 180 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15

European nitrate premium2 (quarterly Yara realized)

USD/t 2) Yara European realized nitrate prices compared with urea publication prices with one month time lag. All numbers in USD per ton of CAN equivalents. 1) All prices in urea equivalents

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18 IR – 24 April 2015

Stable commodity phosphate margins and solid NPK compound premiums

100 200 300 400 500 600 700 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 USD/t

NPK premium over blend1

100 200 300 400 500 600 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 USD/t

Phosphate upgrading margins

DAP, fob USG

Rock, fob NA *1.4 Value above raw material NH3, fob Black Sea *0.22 DAP, CIF inland Germany MOP, CIF inland Germany Urea, CIF inland Germany Weighted average global premium above blend cost

1) Export NPK plants, average grade 19-10-13, net of transport and handling cost.

Nitrate premium, CIF inland Germany

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19 IR – 24 April 2015

Net interest-bearing debt development

634 FX loss 1,831 Investments net 1,994 8,985 Net operating capital change Dividends from equity-accounted investees 449 Cash earnings* 4,893 Net debt Dec 14 11,808 Net debt Mar 15 Other 1,941 * 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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20 IR – 24 April 2015

Incentives for fertilizer application remain supportive

Strong US dollar improves competitiveness of European farmers and nitrogen producers

Yara deliveries in Europe running well in April

Demand for nitrates and compound NPKs continues to grow outside Europe

China to remain swing producer – anthracite coal prices and RMB/USD exchange rate are key for global nitrogen commodity prices

Expected further gas cost reduction of NOK 650 million in Europe in second quarter and NOK 150 million in third quarter 2015

Prospects

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Additional information

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22 IR – 24 April 2015 0.49 0.20 0.07

  • 0.04

0.05 0.13 0.38 0.22 0.08 0.01 0.06 0.32 0.12 0.06 0.06 0.08 0.27 0.12 0.02 0.06 0.17

2010 2011 2012 2013 2014 2015

Debt/equity ratio

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

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23 IR – 24 April 2015

500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 5 000 5 500 6 000 6 500 7 000 Europe Outside Europe

Fertilizer deliveries

Kilotons 2011 2008 2009 2010 2012 2013 2014 2015

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24 IR – 24 April 2015

Yara 1Q fertilizer sales by market and product

3 110 1 585 926 482 285 3 008 1 852 901 420 385 Europe Latin America North America Asia Africa 1Q14 1Q15 1 463 858 1 570 1 246 556 418 279 1 416 763 1 595 1 378 717 418 278 NPK compounds NPK blends Nitrate Urea Other products UAN CN

Kilotons

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25 IR – 24 April 2015

1 570 1 595 1 462 1 416 858 763 1 246 1 378 418 418 835 995 1Q14 1Q15 1Q14 1Q15 1Q14 1Q15 1Q14 1Q15 1Q14 1Q15 1Q14 1Q15 Yara-produced deliveries Joint venture & third party sourced

Fertilizer deliveries by product and source

Nitrate NPK compounds NPK blends Urea UAN Kilotons Other

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26 IR – 24 April 2015

Industrial deliveries

885 864 852 849 816 866 819 844 792 482 511 438 456 382 432 374 368 343 329 346 380 361 339 367 364 358 328

1Q15 4Q14 3Q14 2Q14 1Q14 4Q13 3Q13 2Q13 1Q13

Industrial N-chemicals Environmental products Other Kilotons

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27 IR – 24 April 2015

50 100 150 200 250 300 350 400

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15

Europe North America ROW

AdBlue deliveries

Kilotons

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28 IR – 24 April 2015

500 600 700 800 900 1 000 1 100 1 200 1 300 1 400 1Q11 1Q12 1Q13 1Q14 1Q15

NPK and nitrate deliveries

Kilotons 500 700 900 1 100 1 300 1 500 1 700 1Q11 1Q12 1Q13 1Q14 1Q15 Yara-produced nitrate deliveries Kilotons Yara-produced compound NPK deliveries

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29 IR – 24 April 2015

  • 1 000

2 000 3 000 4 000 5 000 6 000 7 000 Kilotons Finished fertilizer Urea Nitrates Compound NPK Other

Yara stocks

Bunge Fertilizer included from 3Q 2013

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30 IR – 24 April 2015

4.0 4.4 4.0 2.8 3.7 5.2 4.6 3.9 3.8 2.9 2.9 2.6 2.7 4.8 5.7 8.2 8.0 8.0 8.1 6.9 6.1 6.5 6.0 6.0 5.7 5.5 4.7 6.6 9.2 9.4 10.5 9.8 7.6 7.0 8.1 7.0 6.9 6.8 6.6 7.6 10.7 11.0 11.4 11.3 9.2 7.5 8.5 7.6 7.3 7.0

2009 2010 2011 2012 2013 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 US gas price (Henry Hub) Yara Global TTF day ahead (Zeebrugge 2009-2012) Yara Europe

Energy cost

USD per MMBtu

Source: Yara, World Bank, Platts/Argus/ICIS Heren

Yearly averages 2009 – 2013, quarterly averages for 2014-15 with forward prices* for 2Q15 and 3Q15.

*Dotted lines denote forward prices as of 15 April 2015

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31 IR – 24 April 2015

Net income from equity-accounted investees

24

  • 90

53 204 17

  • 955

129 169 Other Lifeco GrowHow UK Qafco NOK millions 1Q15 1Q14

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32 IR – 24 April 2015

Currency exposure affecting P&L

At the beginning of the second quarter 2015

1.

The US dollar debt generating p&l exposure was USD 1,600 million

  • Kept as hedge of future earnings and to finance inventories in emerging markets
  • Around 50% towards BRL with the rest mainly towards other emerging market

currencies and EUR

  • The debt level in emerging markets will fluctuate with fertilizer seasons

2.

Additional p&l exposure from internal currency positions vs. NOK

  • Payables mainly CAD (400 million)
  • Receivables mainly EUR (400 million)
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33 IR – 24 April 2015

0.0 0.2 0.4 0.6 0.8 1.0 1.2 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Index June 2007=1 14/15 10/11 11/12 12/13 13/14

Source: Fertilizers Europe, Yara estimate for March

European producers nitrate stocks

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34 IR – 24 April 2015

Source: CRU urea update March 2015 (December 2014 in brackets) . Consumption data source is IFA.

Year Driving regions Urea capacity growth relative to nitrogen capacity Excluding China Excluding China 2014 Algeria 23% Iran 20% 1.1% (1.1%) 2015 Algeria 18% Saudi Arabia 16% 2.6% (2.6%) 2016 USA 28% Algeria 13% 3.3% (3.1%) 2017 Nigeria 31% USA 26% 2.3% (2.2%) 2018 Nigeria 36% Russia 24% 1.3% (1.3%) Gross annual addition 2014-2018 ~2.1% Assumed annual closures ~0.5% Net annual addition 2014-2018 ~1.6% Trend consumption growth from 2002 2.0%

Projected nitrogen capacity additions outside China

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35 IR – 24 April 2015

Key value drivers – quarterly averages

338 299 320 315 295 414 358 358 355 337 1Q14 2Q14 3Q14 4Q14 1Q15

Urea prilled fob Black Sea (USD/t)/Urea granular fob Egypt (dotted line, USD/t)

345 354 309 310 295 1Q14 2Q14 3Q14 4Q14 1Q15

CAN cif Germany (USD/t)

5.2 4.6 3.9 3.8 2.9 1Q14 2Q14 3Q14 4Q14 1Q15

US gas price Henry Hub (USD/MMBtu)

9.8 7.6 7.0 8.1 7.0 1Q14 2Q14 3Q14 4Q14 1Q15

TTF day ahead (USD/MMBtu)

6.1 6.0 6.3 6.9 7.7 1Q14 2Q14 3Q14 4Q14 1Q15

NOK/USD exchange rate

438 485 488 572 413 1Q14 2Q14 3Q14 4Q14 1Q15

Ammonia fob Black Sea (USD/t)

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

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36 IR – 24 April 2015

10-year fertilizer prices – monthly averages

Source: Average of international publications

200 400 600 800 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USD/t

Urea prilled fob Black Sea/Urea granular fob Egypt Average prices 2005 - 2014

200 400 600 800 1 000 1 200 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USD/t

DAP fob US Gulf/MOP granular fob Vancouver

100 200 300 400 500 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USD/t

CAN cif Germany

200 400 600 800 1 000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USD/t

Ammonia fob Black Sea