Yara International ASA Third Quarter results 2013 18 October 2013 - - PowerPoint PPT Presentation

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yara international asa third quarter results 2013
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Yara International ASA Third Quarter results 2013 18 October 2013 - - PowerPoint PPT Presentation

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0 Yara International ASA Third Quarter results 2013 18 October 2013 IR-Date: 2013-10-18 1 Summary third quarter Strong results despite weaker commodity fertilizer markets 17% increase in deliveries including Brazil acquisition

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IR-Date: 2013-10-18

18 October 2013

Yara International ASA Third Quarter results 2013

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IR-Date: 2013-10-18 1

Strong results despite weaker commodity fertilizer markets

17% increase in deliveries including Brazil acquisition

Robust value-added premiums

Stable NPK deliveries outside Europe

Strong Industrial deliveries, especially NOX abatement

Summary third quarter

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IR-Date: 2013-10-18 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

Earnings per share*

* Average number of shares for 3Q 2013: 277.6 million (3Q 2012: 281.4 million).

NOK 30.23 41.99 37.31 20.38 Annual 2010 2011 2012

EPS excluding currency and special items

2013

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IR-Date: 2013-10-18 3

Solid farm economics support fertilizer demand, despite lower grain prices

Increased exports from China led to supply-driven urea pricing

Western Europe nitrogen fertilizer industry deliveries 9% lower

Phosphate and potash markets impacted by reduced consumption in India, but compound NPK markets running well globally

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

Fertilizer market development

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IR-Date: 2013-10-18 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.

Solid farm economics support fertilizer demand

Source: FAO

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IR-Date: 2013-10-18 5

Strong global urea demand, but increased export availability from China

40.3 +6.4 12/13 11/12 33.9 10/11 36.9 09/10 31.4 08/09 27.8

Global urea trade Chinese urea exports

251 350 448 378 389 xxx Average urea price, fob Black Sea 350 300 250 200 150 100 50 1 800 450 1 400 1 200 1 000 800 600 400 200 400 1 600 Jul- 12 Sep- 12 Nov- 12 Jan- 13 Mar- 13 May- 13 Sep- 13 Jul- 13 Chinese exports Urea price USD/t Kilotons

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IR-Date: 2013-10-18 6

Cautious start to season in Europe and US

0.0 0.5 1.0 1.5 2.0 2.5 3Q08 3Q09 3Q10 3Q11 3Q12 3Q13 Domestic Imports

Source: Yara estimate for fertilizer deliveries to selected West European countries. US nitrogen deliveries based on TFI, US Trade Commission, Blue-Johnson and Yara estimates*

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 3Q08 3Q09 3Q10 3Q11 3Q12 3Q13 Production Net imports

Western Europe USA*

  • 17%*
  • 9%

Million tons Million tons

*July only, due to non-availability of more recent US trade data

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IR-Date: 2013-10-18 7 200 400 600 800 1,000 1,200 1,400 3Q09 3Q10 3Q11 3Q12 3Q13

CAGR 18%

Long-term growth in NPK deliveries outside Europe; stable year-over-year development

Kilotons Yara-produced NPK deliveries Overseas Europe

198 64 73 76 15 237 86 68 72 18 271 95 64 54 14 Asia Brazil Latin America excl. Brazil Africa North America

Overseas Yara-produced NPK deliveries Kilotons 3Q13 3Q12 3Q11

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IR-Date: 2013-10-18 8 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Kilotons 2012 2011 2013

Record 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: 2013-10-18 9

Bunge acquisition completed and integration underway

Bunge Fertilizantes Yara Brasil Sales volume 2012 (mt) 4.6 3.3 Revenues 2012 (USD billions) 2.6 1.8 Employees ~1,300 ~1,300 SSP production units 2 1 Blending units 22 11 Own sales force ~100 ~80 Sales representatives ~500 ~300

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IR-Date: 2013-10-18 10

Bunge acquisition improves geographical balance

2012 Fertilizer deliveries, Yara and Bunge Brazil

Africa 1.2 mill. tons Europe 9.6 mill. tons Asia 1.9 mill. tons North America 3.0 mill. tons Latin America 4.7 mill. tons Oceania 0.3 mill. tons Bunge 4.6 mill. tons

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IR-Date: 2013-10-18 11

Rio Grande do Sul West Bahia Minas Gerais São Paulo Paraná Mato Grosso

1,000 km ~60 USD/t

Significantly improved footprint in Brazil

Northeast Bunge plant Yara plant Market size

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IR-Date: 2013-10-18 12

Bunge acquisition increases purchasing scale

Potash purchases, China, India and Yara

5.3 2.8 1.9 3.9 1.8 1.0 1.1 0.6 China India Yara China India Yara Bunge

Million tons, MOP equivalents

Source: Yara, International Fertilizer Industry Association

2012 First half 2013

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IR-Date: 2013-10-18 13

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

2010 2012 2011 2013 NOK millions 15,315 18,163 16,970 11,432 Annual

EBITDA excluding special items

NOK millions

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IR-Date: 2013-10-18 14

EBITDA development

EBITDA 3Q13 3,307 Currency 79 Other 269 Gas & oil costs in Europe 145 Special items 1 Price/margin 924 Volume 174 EBITDA 3Q12 4,103 NOK millions

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IR-Date: 2013-10-18 15

Strong earnings in Downstream and Industrial

766 1,094 239 291 3,077 1,799 Downstream Industrial Upstream EBITDA excluding special items 3Q12 3Q13 NOK millions

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IR-Date: 2013-10-18 16

Net income from equity-accounted investees

  • 78

GrowHow UK 73 132 Tringen 14 Lifeco 16 85 Qafco 130 412 33 20 Other 3Q13 3Q12 NOK millions

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IR-Date: 2013-10-18 17

1,336 1,305 1,094 1,032 706 1,380 988 1,111 216 258 3Q12 3Q13 3Q12 3Q13 3Q12 3Q13 3Q12 3Q13 3Q12 3Q13 Yara-produced deliveries Joint venture & third party sourced Total

Increased fertilizer deliveries

Nitrate NPK compounds NPK blends Urea UAN Kilotons

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IR-Date: 2013-10-18 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 NPK Nitrates Urea Bunge

Yara stocks, including Bunge Brazil from 3Q

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IR-Date: 2013-10-18 19

Value above ammonia

100 200 300 400 500 600 700 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 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

Farmer yield benefits justify nitrate premium

20 40 60 80 100 120 140 160 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13

Nitrate premium, USD/t CAN

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IR-Date: 2013-10-18 20 100 200 300 400 500 600 700 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 USD/t

Phosphate upgrading margins

DAP, fob USG

Rock, fob NA *1.4 Value above raw material

100 200 300 400 500 600 700 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 USD/t

NPK blend premium

NPK T17, del France

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

Stable NPK premiums

Margin above blend cost

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IR-Date: 2013-10-18 21

Strong cash generation

Net

  • perating

capital change 626 Dividends from equity accounted investees 702 Cash earnings** 2,309 Net debt Jun 13* 741 Yara Dividend 229 Other investments net Net debt Sep 13* 3,519 Other 360 FX loss 70 1,117 Funding Yara Pilbara Nitrates Acquisition

  • f Bunge

331 4,295 732 Yara Share buy backs / redemption

  • f shares

* 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: 2013-10-18 22

Continued strong farm economics support fertilizer demand

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 2-3 years apart from Algeria

Limited pipeline stocks in Europe; improved Yara nitrate deliveries following North African urea price increases and new Yara nitrate prices

Potash and phosphate market volatility has limited impact on compound NPK deliveries

Prospects

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IR-Date: 2013-10-18 23

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

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IR-Date: 2013-10-18 24

Additional information

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IR-Date: 2013-10-18 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 5,438 5,253 5,013 5,045 5,299 6,343 5,884

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: 2013-10-18 26

Yara 3Q fertilizer sales by market and product

2013: 5.9 million tons (2012: 5.0 million tons)

2,270 1,497 469 461 316 2,138 2,377 544 573 252 Europe Latin America Asia North America Africa 3Q12 3Q13 1,094 706 1,336 988 449 216 225 1,032 1,380 1,305 1,111 569 258 229 NPK compounds NPK blends Nitrate Urea Other products UAN CN

Kilotons

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IR-Date: 2013-10-18 27

500 600 700 800 900 1,000 1,100 1,200 1,300 3Q09 3Q10 3Q11 3Q12 3Q13

NPK and nitrate deliveries

Kilotons 500 700 900 1,100 1,300 1,500 1,700 3Q09 3Q10 3Q11 3Q12 3Q13 Yara-produced nitrate deliveries Kilotons Yara-produced NPK deliveries

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IR-Date: 2013-10-18 28

NOK millions

Total Yara contribution

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

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

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IR-Date: 2013-10-18 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: 2013-10-18 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: 2013-10-18 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 7.9 8.3 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 11.3 11.8 2 4 6 8 10 12 14 2009 2010 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 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 4Q13 and 1Q14

*Dotted lines denote forward prices as of 8 October 2013

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IR-Date: 2013-10-18 32

Yara European gas cost closer to hub price

Spread between Yara and Zeebrugge

Source: Yara, World Bank, Platts *Dotted lines denote forward prices as of 8 October 2013

1.7 2.1 1.4 1.1 0.9 0.8 0.9 0.9 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 USD/ MMBtu 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 USD/ MMBtu Zeebrugge (1-month lag) Yara Europe

European energy cost

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IR-Date: 2013-10-18 33

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 2009 2010 2011 2012 2013

Debt/equity ratio

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

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IR-Date: 2013-10-18 34

Currency exposure affecting P&L

At the beginning of the fourth quarter 2013

1.

The US dollar debt generating p&l exposure was USD 1,100 million

  • Kept as hedge of future earnings and to finance inventories in emerging markets
  • Around 50% towards EUR and NOK, the rest towards emerging market currencies

(mainly BRL)

  • 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 EUR (460 million) and CAD (500 million)
  • Receivables mainly GBP (55 million) and AUD (40 million)
  • 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: 2013-10-18 35 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 Source: USDA, September 2013

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

Continued strong price incentives necessary to match consumption growth

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IR-Date: 2013-10-18 36

11.8 1.0 10.7 9.4 2.8 12.2 2 4 6 8 10 12 14 Production Export Domestic Domestic Export Production

Million tons

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

Million tons 13/14 Source: BOABC, CFMW 12/13

Chinese urea production and export balance

Chinese urea production Domestic urea balance

Jul-Aug 12/13 Jul-Aug 13/14

  • 12.0%

11/12

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IR-Date: 2013-10-18 37

Chinese urea export increase

Chinese urea exports, Kilotons

Source: BOABC 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-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

Urea price, USD/t Chinese urea exports Urea, fob Yuzhny

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IR-Date: 2013-10-18 38 Source: Fertecon urea update August 2013 (February update in brackets). Consumption data source is IFA.

Year Driving regions Urea capacity growth relative to nitrogen capacity Excluding China Excluding China 2013 Qatar 19% Algeria 17% 1.4% (2.5%) 2014 Iran 23% India 21% 1.8% (1.8%) 2015 Algeria 25% Iran 13% 3.5% (2.2%) 2016 USA 32% Indonesia 14% 3.2% 2017 USA 31% Iraq 30% 1.5% 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%

Projected nitrogen capacity additions outside China in line with historical consumption growth

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IR-Date: 2013-10-18 39

  • 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 Thousand contracts

Source: US Commodity Futures Trading Commission

Non-commercials’ net long position in corn

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IR-Date: 2013-10-18 40

Key value drivers – quarterly averages

383 385 400 342 308 3Q12 4Q12 1Q13 2Q13 3Q13

Urea prilled fob Black Sea (USD/t)

314 343 351 322 294 3Q12 4Q12 1Q13 2Q13 3Q13

CAN cif Germany (USD/t)

2.9 3.4 3.5 4.0 3.6 3Q12 4Q12 1Q13 2Q13 3Q13

US gas price Henry Hub (USD/MMBtu)

9.1 10.3 11.1 10.3 10.1 3Q12 4Q12 1Q13 2Q13 3Q13

Zeebrugge day ahead (USD/MMBtu)

5.5 5.7 5.6 5.8 6.0 3Q12 4Q12 1Q13 2Q13 3Q13

NOK/USD exchange rate

619 627 562 500 430 3Q12 4Q12 1Q13 2Q13 3Q13

Ammonia fob Black Sea (USD/t)

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

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IR-Date: 2013-10-18 41

10-year fertilizer prices – monthly averages

Source: Average of international publications

200 400 600 800 1,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 USD/t

Ammonia fob Black Sea

100 200 300 400 500 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 USD/t

CAN cif Germany

200 400 600 800 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 USD/t

Urea prilled fob Black Sea Average prices 2003 - 2013

200 400 600 800 1,000 1,200 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 USD/t

DAP fob US Gulf