Yara in Brazil A history of profitable growth
Yar ara a is tr is trul uly y globa lobal l – Oper Operati tion ons i s in mor more e tha than 50 n 50 cou countries ntries Sales Sales to a to abo bout 15 ut 150 co 0 coun untries tries KEY FIGURES 2014 Revenues USD 15.1 billion Number of employees > 12 000 6 continents sold 26.3 million tons of fertilizers Agricultural Industrial Environmental products products solutions 26.3 4.4 2.2 37% million million million 13% tons tons tons 7% 5% 37% 1%
Agenda Agriculture importance for Brazil Brazil fertilizer sector Yara Brazil story 3
The Brazilian agribusiness is important for the Brazilian economy Agribusiness Share in Brazilian GDP (in %) 28 25,5 26 23,5 24 22,8 22,5 22 20 18 16 14 12 10 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: CEPEA 4
The Brazilian agribusiness trade surplus contributes significantly to the trade balance Trade Balance (in USD Billion) 82,9 79,4 77,5 Total Balance Brazil Total Balance Agri 74,6 63,0 60,0 54,9 49,7 42,8 38,5 34,2 25,9 20,4 46,5 19,1 44,9 40,0 14,8 33,8 29,8 25,3 24,9 25,0 20,1 19,4 13,2 2,7 2,6 -0,7 -4,2 00 01 02 03 04 05 06 07 08 09 10 11 12 23 14* Source: CGOE / DPI / SRI / MAPA * Jan-Nov 5
Agenda Agriculture importance for Brazil Brazil fertilizer sector Yara Brazil story 6
Brazil has a unique combination of land, water, climate and stable economic growth 400.000 350.000 Potential arable land Área agricultável potencial Australia Europe; Land used for agricultural production (2005) Área agricultável atual (2005) 300.000 and 7% Oceania; 6% 250.000 Africa; 1.000 ha 9% 200.000 Asia; 32% Brazil; 150.000 12% 100.000 Americas ex. Brazil; 34% 50.000 - Fresh water by region/country in percent of EU Russia USA Brasil India China Congo Australia Sudan Angola Indonesia Argentina Nigeria Canada world total Source: FAO – MB Agro consultants Fonte: FAO. Elaboração: MB Agro 7
Brazil will replace USA as the bread basket of the world in the 21 st century (source: FAO) But significant increase in fertilization required Fertilizer consumption Kg nutrient/ha Fertilizer consumption mt nutrients US standards/potential 34 arable land Current consumption/ USA 206 24 potentialarable land +240,0% US standards/ 14 current area Brazil 149 Current consumption/ 10 current area 8
Brazil is today world´s largest producer of key crops Ranking Product Prodution Exports 1 st Soybean 1 st 3 rd Maize 4 th 1 st Sugar Cane 1 st 1 st Coffee 1 st 1 st Orange 1 st Source: USDA, Agroconsult 2009 9
Brazilian farming is characterized by professional farming Mato Grosso Fazenda Planalto 10
Br Braz azil il - the the f fas astes test g t growing wing fer ertil tiliz izer er ma market et Yield evolution ( tons / hectare) Brazil fertilizer industry deliveries 90’s 00’s 10’s Best practice mill. tonnes 35 32,2 CAGR (1990-2014) 3,0 3.0 2,5 2,2 30 Soybean 5.9% 24,5 25 10.0 20,2 20 5,0 3,5 16,4 2,5 15 Corn 1st 10,8 8,2 10 7.2 5 3,6 2,8 2,4 Wheat 0 1990 1995 2000 2005 2010 2014 Sources: FAO, Conab/ Market Intelligence Brazil, ANDA
Fertilizers consumption help to boost Brazilian grains and oilseeds production (in MMT) +97% More (in kg/ha) Fertilizer 00 14 +30% Higher Yields Planted Area 00 14 (in MMT) (in M hectares) +95% +50% 57 More 38 Production 00 14 00 14 Source: ANDA and CONAB 12
Agenda Agriculture importance for Brazil Brazil fertilizer sector Yara Brazil story 13
With almost 40 years of presence, Yara has a vast experience in Brazilian fertilizer sector 1977 2000 2006 2013 2014 Norsk Hydro - CN Acquisition Acquisition Acquisition Acquisition Yara Brazil including Galvani now counts ~3,500 permanent employees 14
Yara Brazil sells ~30% of Yara global fertilizer volume. Relative importance will continue to grow kt 9 000 8 000 Fertilizer volume sold (8,000kt representing ~270,000 trucks) 7 000 TPP OPP 6 000 Galvani expansion projects 5 000 enable continued growth beyond 2015 4 000 3 000 2 000 1 000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 15
Brazil performing well – significant Bunge synergies realized Realized synergies Yara Brazil performance 55 USD million NOK million mill. tonnes 7.9 1 100 8 44 1 000 7 50% 900 6 800 5.2 45% 700 5 600 4 1 076 3.3 10% 20% 500 3 400 300 2 45% 200 30% 334 1 52 100 0 0 Business case Realized 2014 2012 2013 2014 2014 Sourcing Logistics Fixed costs EBITDA Deliveries
Yara footprint secures national coverage in all main agricultural production and expansion areas Yara’s plant Galvani’s industrial plants, greenfield projects, phosphate mine 1 17
Talking ‘safety’…..
Walking ‘safety’…..
Increased end-user interaction in Brazil 45% Cooperatives 25% 20% Agroindustry GROWERS 10% Retailer Knowledge Crop focus Product portfolio Application competence
Galvani expansions further improve scale and cost position Future operations (~2018 ) AS-IS Santa Quiteria 1 Angico Angico (Irecé) L.E.M. L.E.M. Lagamar Salitre Fertilizer plants Paulínia Paulínia Phosphate mines Self-sufficiency Phosphate rock on phosphate surplus mt rock mt 2.2 2.0 Santa Q. 1.0 Santa Q. L.E.M. Angico 0.5 Paulinia Angico Paulinia Salitre Salitre Lagamar L.E.M. Phosphate rock End-products Phoshate rock End-products (mainly SSP) (mainly SSP) Salitre project and Angico expansion will triple phosphate rock production and reduce opex • level signficantly • Salitre project investment decision during H2 2015 with start-up ~2 years later • Yara’s share of indicated capex for the projects ~USD 550 mill.
Growth in Brazil strengthens Yara’s global competitive advantages • Scale in logistics • Scale in raw material sourcing • Cash crop market - untapped potential for Yara’s differentiated products and crop nutrition programs • Operational excellence Po Further potential Brazil also complements Yara’s fertilizer season exposure enhancing the flexibility in our business model
Vision for Yara Brazil going forward The safest fertilizer company to work for The innovator of the Latin American fertilizer industry A balanced product portfolio with both local production and imports Recognized for both improving farmers’ profit and sustainability
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