Yara International ASA Fourth Quarter results 2013 12 February 2014 - PowerPoint PPT Presentation

0 Yara International ASA Fourth Quarter results 2013 12 February 2014 IR-Date: 2014-02-12

1 Summary fourth quarter 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  IR-Date: 2014-02-12

2 Earnings per share* 12.86 EPS excluding currency and 12.42 special items 11.84 10.54 9.82 10.02 9.25 8.04 6.68 7.73 7.67 6.68 5.42 5.65 5.27 0.21 2010 2011 2012 2013 Annual NOK 30.23 41.99 37.21 20.63 * Average number of shares for 4Q 2013: 277.2 million (4Q 2012: 280.6 million). IR-Date: 2014-02-12

3 Fertilizer market development 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 IR-Date: 2014-02-12

4 Farm economics support fertilizer demand FAO price index Index 300 250 200 150 100 50 0 1/2004 1/2005 1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012 1/2013 Cereals Price Index Cereals 5 year avg. Food Price Index Food 5 year avg. Source: FAO IR-Date: 2014-02-12

5 Chinese urea production in line season to date, and low er exports in fourth quarter Chinese urea production, million tons Chinese urea exports, Kilotons Urea price, USD/t 7.0 1,800 550 12/13 500 13/14 1,600 6.0 11/12 450 1,400 400 5.0 1,200 350 4.0 1,000 300 250 800 3.0 200 600 2.0 150 400 100 1.0 200 50 0.0 0 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Source: BOABC, CFMW IR-Date: 2014-02-12

6 Strong production Ammonia Finished fertilizer Kilotons Kilotons 2,000 6,000 1,900 5,000 1,800 1,700 4,000 1,600 1,500 3,000 1,400 2,000 1,300 1,200 1,000 1,100 0 1,000 2011 2012 2013 2011 2012 2013 * Including share of equity-accounted investees IR-Date: 2014-02-12

7 Industrial sales per business unit Kilotons 1,400 1,200 1,000 800 CAGR 7 % 600 400 200 0 2009 2010 2011 2012 2013 Process Chemicals TAN ES Automotive ES Industry & Maritime Nitrates Other IR-Date: 2014-02-12

8 Latin America grow th & 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 IR-Date: 2014-02-12

9 Earnings before interest, tax, depreciation and amortization (EBITDA) NOK millions EBITDA excluding special items 6,587 5,444 4,966 4,982 4,310 4,281 3,995 4,103 4,129 3,591 3,455 3,251 3,307 2,992 2,486 1,835 2010 2011 2012 2013 Annual NOK 15,315 18,163 16,970 13,266 millions IR-Date: 2014-02-12

10 EBITDA development NOK millions 3,591 852 556 1,934 51 1,835 395 226 EBITDA Special Volume Price/margin Gas & oil Other Currency EBITDA 4Q12 items costs in 4Q13 Europe IR-Date: 2014-02-12

11 Fourth-quarter special items • Other: - Contract derivative gain - Pension plan gain - Impairment / scrapping 71 • Disputed Lifeco utility cost: -138 - Strong increase in utility cost, is disputed by Yara -142 • Bunge integration cost: - Further USD 9 million and USD 7 million expected in in first and second quarter 2014 respectively -295 • Corporate penalty and confiscation - Following conclusion of Økokrim investigation IR-Date: 2014-02-12

12 Stable Dow nstream and Industrial earnings EBITDA (NOK millions) EBITDA excluding special items 2,569 1,002 718 684 292 282 Downstream Industrial Upstream 4Q12 4Q13 IR-Date: 2014-02-12

13 EBITDA per segment excl. special items EBITDA, NOK millions 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2011 2012 2013 Downstream Industrial Upstream IR-Date: 2014-02-12

14 Agronomic benefits justify nitrate premium Nitrate premium, USD/t CAN Nitrogen upgrading margins USD/t 160 700 140 600 Nitrate premium above urea 120 500 100 Value 400 above ammonia 80 300 60 Value above gas 200 40 100 Yara EU gas cost *20 20 0 0 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 Urea CFR CAN (46% N) NH3 CFR (46% N) IR-Date: 2014-02-12

15 Stable NPK premiums NPK premium over blend 2 Phosphate upgrading margins 1 USD/t USD/t 700 700 600 600 500 500 Weighted average global Value above premium above blend cost raw material 400 400 Nitrate premium NH3, fob Black Sea *0.22 300 300 Urea, fob Black sea 200 200 MOP, cfr NWE Rock, fob NA *1.4 100 100 DAP, fob Morocco 0 0 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 DAP, fob USG 2) Export NPK plants, average grade 19-10-13, net of 1) 1Q 2014 based on January actuals transport and handling cost. IR-Date: 2014-02-12

16 Low er forw ard gas cost in Europe Yara European gas & oil cost Spread between Yara and Zeebrugge USD/ USD/ MMBtu MMBtu 13.0 2.1 12.0 11.0 1.4 10.0 1.1 9.0 0.9 0.9 0.8 0.8 0.6 8.0 7.0 6.0 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Zeebrugge (1-month lag) Yara Europe *Dotted lines denote forward prices as of 3 February 2014 Source: Yara, World Bank, Platts IR-Date: 2014-02-12

17 Increased fertilizer deliveries Kilotons 1,429 1,378 1,389 1,298 1,233 1,206 1,143 477 371 337 247 153 4Q12 4Q13 4Q12 4Q13 4Q12 4Q13 4Q12 4Q13 4Q12 4Q13 4Q12 4Q13 Nitrate NPK compounds NPK blends Urea UAN Other Yara-produced deliveries Joint venture & third party sourced Total IR-Date: 2014-02-12

18 Yara stocks, including Bunge Brazil from 3Q Kilotons Bunge Fertilizer Finished fertilizer included from 3Q 2013 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 Other Compound NPK Nitrates Urea IR-Date: 2014-02-12

19 Net interest-bearing debt development NOK millions 3,519 3,378 79 253 63 1,072 209 1,554 1,070 10 249 Net debt Cash Dividends Net Funding Acquisition Other Yara Share FX loss Other Net debt Sep 13* earnings** and cash operating Yara of Bunge investments buy backs / Dec 13* from equity capital Pilbara net redemption accounted change Nitrates of shares investees * 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 IR-Date: 2014-02-12

20 Proposed dividend improves capital efficiency 37% 28% Above-target dividend  48% proposed, to improve capital Overall target 40-45% 10% efficiency 3% Minimum 30% dividend 34% 34% Growth ambition remains in  10% 11% 9% 7% place, but focus for 2014 on 25% 23% organic growth and integration 3% 19% 18% 18% 17% 16% of recent acquisitions 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 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. IR-Date: 2014-02-12

21 2014 investment plans Total • Smaller growth initiatives: NOK 13 billion - Gains in scale • Pilbara nitrate plant construction: 2.5 - Expected commissioning mid to late 2015 0.8 • OFD acquisition: 3.0 - Acquisition closing expected mid 2014 • Productivity improvements: 1.4 - Range of smaller projects • Maintenance: 5.2 - On-going reliability upgrade and high turnaround level adds ~ NOK 1 billion vs. “steady state” IR-Date: 2014-02-12

22 Prospects 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 IR-Date: 2014-02-12

23 Cautious start to the US season, Europe in line USA West Europe Million tons N Million tons N 4.5 9.0 --11% 4.0 8.0 +1% 3.5 7.0 3.0 6.0 2.5 5.0 2.0 4.0 3.0 1.5 2.0 1.0 1.0 0.5 0.0 0.0 2H08 2H09 2H10 2H11 2H12 2H13 2H08 2H09 2H10 2H11 2H12 2H13 Production Net imports 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 IR-Date: 2014-02-12

24 Additional information IR-Date: 2014-02-12