Yara International ASA 2019 first quarter results 26 April 2019 - PowerPoint PPT Presentation

Yara International ASA 2019 first quarter results 26 April 2019

Safety is our first priority TRI 1 (12-month rolling) 5 4.5 1.4 0 Jan'16 Mar'19 1 TRI: Total recordable injuries, lost time (absence from work), restricted work and medical treatment cases per one million work hours. 2

Improved first-quarter results Earnings improvement continuing Improved but not satisfactory profitability L12M EBITDA excl. special items (MUSD) - EBITDA excluding special items and IFRS 16 increased by 17% 1 2,400 2,200 2,000 - Improved margins and positive currency effects 1,800 more than offset lower deliveries 1,600 1,400 - Production performance hit by technical issues in 1,200 three plants 1,000 800 - Return on invested capital (ROIC) at 4.1% 600 400 200 0 1Q16 1Q17 1Q18 1Q19 1 IFRS 16 EBITDA effect is USD 24 million 3

Unsatisfactory production performance, impacted by technical issues Ammonia production down 3% Technical issues in three of our largest Finished fertilizer production up 3% Improved production in March plants Production volume (mill. tonnes) Monthly production volume • Mixed production performance Ammonia Finished products • Technical issues after turnarounds +3% in Pilbara, Sluiskil and Tertre account for losses of: -1% 5.5 5.3 • ~200 kt ammonia 0.2 • ~100 kt of finished fertilizer • Increased production in other plants -3% -9% 2.1 2.1 • Improved production towards the 0.1 end of the quarter 1Q18 1Q19 1Q18 1Q19 Jan Feb Mar Portfolio 4

Yara Improvement Program affected by production issues 1Q development USD millions • Continued high activity, but unsatisfactory 375 results as accumulated improvements 355 20 were affected by production issues 55 320 • Underlying improvements adjusted for these issues were 375 MUSD, driven by strong performance in the rest of the production operations • 2020 improvement target of 500 MUSD maintained 4Q18 1Q 1Q19 ex. Pilbara, 1Q19 incl. Improvements Pilbara, Sluiskil, Tertre Pilbara, Sluiskil, Tertre Sluiskil, Tertre 5

Capex reducing in 2019, growth projects ramping up Capex plan 1 Status Growth projects 2 USD Billions • Freeport and Köping projects completed and integrated into regular production operations; both running at full capacity as of end April 2.2 Growth - M&As • Sluiskil expansion: further work needed to reach Growth - expansions 0.7 100% delivery, to be achieved 2H 2019 Cost&capacity improvements 1.6 Maintenance 0.0 • Brazil projects under construction: 1.3 0.5 0.6 • Salitre: phosphate rock production ramping 1.0 up, chemical production by 1H 2020 0.6 0.1 0.2 0.2 0.2 • Rio Grande consolidation and expansion to 0.1 be completed end 2020 0.8 0.7 0.7 0.6 • Tracking methodology update at Capital Markets Day 2017 2018 2019 2020 1 Committed investments as of end 4Q18 2 Growth portfolio = M&As (Babrala and Cubatão) and expansions/new builds (Uusikaupunki, Porsgrunn/Glomfjord, Sluiskil, Rio Grande, Freeport, Pilbara TAN, Köping, Salitre) 6

Improving earnings and profitability trend Quarterly EBITDA excl. special items LTM ROIC USD millions % 464 4.1 424 3.8 3.7 3.7 402 377 3.1 321 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 7

Performance overview 1Q 2018 1Q 2019 EBITDA ex. special items 377 464 (USD millions) EPS excl. currency and special items 0.42 0.59 (USD per share) Cash from operations 234 254 (USD millions) Investments 736 243 (USD millions) ROIC 3.7% 4.1% (12-month rolling) 8

Improved European nitrogen upgrading margins Higher urea prices outside Higher realized nitrate and Lower European natural gas China NPK prices prices Urea price development 1 (USD/t) Yara’s realized CAN and NPK price 2 (USD/t) Spot gas prices 1 (USD/Mmbtu) +1% -6% +7% -3% 304 420 414 287 7.2 275 7.0 257 +2% 247 242 +3% 3.2 3.1 Urea granular FOB Egypt Urea inland China proxy Europe US CAN 27 NPK 19-10-13 1Q 18 1Q 19 1 Source: BOABC, CFMW, Argus. 1 month lag applied, as proxy for realized prices (delivery assumed to be 1 month after order taking). 9 2 Yara’s realized European nitrate price in CAN 27 equivalents ex. Sulphur, Yara’s realized global NPK price (average grade) at German proxy CIF

EBITDA improvement, mainly driven by nitrogen margins and currency EBITDA ex. SI USD millions 464 4 17 11 40 377 37 IFRS 16 +24 MUSD Insurance +6 MUSD Portfolio +6 MUSD Other -17 MUSD 1Q18 Price/ Margin Currency Energy costs Volume Other 1Q19 10

Higher production margins, commercial margins in line EBITDA excluding special items (MUSD) 1Q18 1Q19 263 177 170 160 44 22 Production Sales & Marketing New Business • Higher nitrogen upgrading margins in • Margins in line with a year earlier • Positive contribution from Cubatão Europe acquisition (completed May 2018) • Lower NPK deliveries in Asia • Pilbara ammonia outage effect ~ USD • Deliveries up 3% excluding Cubatão 10 million 11

Net interest-bearing debt in line with end 2018 USD millions 4,203 4,205 35 243 IFRS 16 401 409 impact 195 3,794 Net debt Cash earnings¹ Net operating Investments (net) Other Net debt Dec 18 capital change Mar 19 1 Operating income plus depreciation and amortization, minus tax paid, net gain/(loss) on disposals, net interest expense and bank charges 12

Sales & Marketing performance Slightly lower EBITDA due to lower Lower commodity deliveries, premium Higher realized prices deliveries product deliveries in line with a year earlier EBITDA ex. SI (MUSD) Volumes (Mt) Revenues (MUSD) +4% -1% -4% 6.9 2.5 6.8 2.4 177 170 1.2 3.6 1.2 3.3 1.3 1.3 3.2 3.2 1Q18 1Q19 1Q18 1Q19 1Q18 1Q19 Portfolio Commodity Premium* *Premium defined as Differentiated N, NPK, CN, fertigation products and YaraVita. YaraVita only included in revenues as measured in units. 13

European fertilizer deliveries up 3% on last year, further increase in Brazilian premium deliveries Total fertilizer deliveries Mill. tonnes +3% 1Q18 1Q19 2.4 2.4 Portfolio Commodity +16% 1.6 1.4 0.2 +2% -12% Premium 0.8 0.8 0.8 -16% 0.7 +1% 0.4 0.4 0.2 0.2 2.0 2.1 0.3 0.6 0.5 0.6 0.5 0.4 0.2 0.2 0.1 0.1 OPP Europe Brazil Latin Africa Asia North America America *Premium = NPK, Differentiated N, CN, fertigation products and YaraVita. 14 OPP = Own Produced Products

Yara and IBM join forces to transform the future of farming • Partnership agreement to build the world’s leading digital farming platform, combining Yara’s unrivalled agronomic knowledge and market presence with IBM’s digital platforms, services and expertise in data analytics • Yara and IBM will develop digital solutions for both professional and smallholder farmers to sustainably increase yields, crop quality, and incomes • The joint platform will apply artificial intelligence, machine learning and in-field data to achieve worldwide coverage, aiming to reach 100 million hectares of farmland • Yara and IBM will establish joint innovation teams, collaborating at digital hubs in Europe, Singapore, the US and Brazil • The teams will work to develop new capabilities, such as visual analytics, machine learning techniques for crop identification and validation as well as field boundary digitization • The first services are planned for end 2019 15

Attractive Yara prospects Attractive industry Operating cash flow fundamentals and improvement with strict Focused long-term strategy supply-demand outlook capital allocation • Growing population and dietary • Operating cash flow improving • Crop nutrition focus; #1 market improvement drives demand with cycle and Yara actions presence and #1 premium fertilizer producer • Resource and environment • Committed capex almost halved challenges require strong agri from 2018 to 2019 • Strengthening position with productivity improvement digital farming services and food • Strict capital allocation • Tightening global grain balance chain partnerships • Active portfolio management and slow-down in nitrogen supply growth 16

Yara Capital Markets Day 26 June: venue and agenda Venue: Tate Modern, London Main topics Strategy update Our long-term market outlook and how the Yara business model and strategy will create further value Driving value growth in our markets How we will drive further value growth in the market, and optimize our market positions Improving operations How Yara will realize the full value potential of projects Format and timing under execution, and how Yara will drive further operational improvement, beyond the current targets 08:30 – 11:30 Plenary presentations 11:30 – 12:30 Lunch Capital allocation & returns How Yara will allocate capital to drive further value 12:30 – 15:30 Group meetings with management growth 17

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