2014 02-18 - 2013 4 q13 web presentation
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  • 1. IR-Date: 2014-02-12 0 12 February 2014 Yara International ASA Fourth Quarter results 2013
  • 2. 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
  • 3. 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
  • 4. 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
  • 5. IR-Date: 2014-02-12 4 0 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
  • 6. 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 lower exports in fourth quarter Chinese urea production, million tons 11/12 0 50 100 150 200 250 300 350 400 450 500 550 0 200 400 600 800 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/tChinese urea exports, Kilotons
  • 7. IR-Date: 2014-02-12 6 0 1,000 2,000 3,000 4,000 5,000 6,000 Kilotons 20122011 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 20122011 2013
  • 8. IR-Date: 2014-02-12 7 0 200 400 600 800 1,000 1,200 1,400 Process Chemicals TAN ES Automotive ES Industry & Maritime Nitrates Other 201120102009 Industrial sales per business unit 2012 2013 Kilotons CAGR 7%
  • 9. IR-Date: 2014-02-12 8 Latin America growth & 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
  • 10. 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 20122011 2013 NOK millions 15,315 18,163 16,970 13,266 Annual EBITDA excluding special items NOK millions
  • 11. 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
  • 12. 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
  • 13. IR-Date: 2014-02-12 12 Stable Downstream and Industrial earnings 684 718 292 282 2,569 1,002 Downstream Industrial Upstream EBITDA excluding special items 4Q12 4Q13 EBITDA (NOK millions)
  • 14. IR-Date: 2014-02-12 13 0 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 20132011
  • 15. IR-Date: 2014-02-12 14 Value above ammonia 0 100 200 300 400 500 600 700 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 0 20 40 60 80 100 120 140 160 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 Nitrate premium, USD/t CAN
  • 16. IR-Date: 2014-02-12 15 0 100 200 300 400 500 600 700 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 0 100 200 300 400 500 600 700 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
  • 17. IR-Date: 2014-02-12 16 Lower forward 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
  • 18. 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
  • 19. 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
  • 20. 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 of shares 63 Other investments net 1,554 Acquisition of Bunge 10 Funding Yara Pilbara Nitrates 249 Net operating 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
  • 21. 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 organic growth and integration of recent acquisitions
  • 22. 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”
  • 23. 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
  • 24. 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 EuropeUSA --11% +1% Million tons N Million tons N
  • 25. IR-Date: 2014-02-12 24 Additional information
  • 26. 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 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Europe Outside Europe Total Fertilizer volumes Kilotons 20102007 2008 2009 2011 2012 2013
  • 27. 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
  • 28. 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
  • 29. 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 0 4Q122Q122Q114Q10 Commodity Europe Commodity overseas Fertilizer upgrade & distribution Trade 2Q132Q10 4Q11 4Q13
  • 30. 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
  • 31. IR-Date: 2014-02-12 30 0 500 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 20122009 2010 2011 2013 Yara production volume* 0 500 1,000 1,500 2,000 2,500 Kilotons 2013 * Including share of equity-accounted investees Finished fertilizer and industrial products Ammonia 20122009 2010 2011
  • 32. 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 0 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
  • 33. 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)
  • 34. 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
  • 35. 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
  • 36. 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 with historical consumption growth
  • 37. IR-Date: 2014-02-12 36 -200 -100 0 100 200 300 400 500 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
  • 38. 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
  • 39. IR-Date: 2014-02-12 38 10-year fertilizer prices – monthly averages Source: Average of international publications 0 200 400 600 800 1,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 USD/t Ammonia fob Black Sea 0 100 200 300 400 500 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 USD/t CAN cif Germany 0 200 400 600 800 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 USD/t Urea prilled fob Black Sea Average prices 2004 - 2013 0 200 400 600 800 1,000 1,200 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 USD/t DAP fob US Gulf