Yara International ASA Tor Holba Head of Upstream Nomura Global - PowerPoint PPT Presentation

Yara International ASA Tor Holba – Head of Upstream Nomura Global Chemical Industry Leaders Conference 22 March 2012

1 A business strategy geared for global optimization Downstream Upstream Industrial Supply & Trade + + Scale Unique Unrivalled advantages flexibility presence IR – Date: 2012-03-22

2 Yara – the leader in nitrogen fertilizers Global no 1 in NPK Global no 1 in nitrates Global no 1 in ammonia complex fertilizer Production capacity* (mill t) Production capacity* (mill t) Production capacity* (mill t) 9 7 8 8 7 6 7 6 5 6 5 4 5 4 4 3 3 3 2 2 2 1 1 1 0 0 0 Yara CF GDF Agrium PCS Yara Euroc. GDF Acron Agrofert Yara* Euroc. Acron ZAT Rossosh * Incl. companies’ shares of JVs Source: Fertilizer Europe Source: Fertilizer Europe Source: Yara & Fertecon IR – Date: 2012-03-22

3 Yara creates substantial value over and above the commodity nitrogen margin NPK blend premium Nitrogen upgrading margins Phosphate upgrading margins USD/t USD/t USD/t 700 800 700 650 700 600 Nitrate premium Margin above urea 600 above blend 600 cost 500 550 500 Value above 400 500 raw material Value above 400 gas 450 300 300 400 NH3*0.22 200 200 350 Yara EU gas cost *25 Rock*1.4 100 100 300 4Q09 2Q10 4Q10 2Q11 4Q11 4Q09 2Q10 4Q10 2Q11 4Q11 4Q09 2Q10 4Q10 2Q11 4Q11 Blend cost T17 del France DAP Urea CFR proxy CAN proxy (46% N) IR – Date: 2012-03-22

4 Food prices at high levels despite drop in fourth quarter FAO price index Index 250 200 150 100 50 0 1/2004 1/2005 1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012 Cereals Price Index Food Price Index Yearly avg Food price index Source: FAO IR – Date: 2012-03-22

5 Continued strong price incentives necessary to avoid inventory decline Days of consumption in stocks Grain production and consumption Million tons Days 2,300 120 2,250 110 2,200 Production 100 2,150 90 2,100 Consumption 2,050 80 2,000 70 1,950 60 1,900 50 1,850 1,800 40 98 00 02 04 06 08 10 12F 98 00 02 04 06 08 10 12F Source: USDA, March 2012 IR – Date: 2012-03-22

6 Projected nitrogen capacity additions outside China in line w ith historical consumption grow th Urea capacity growth relative Year Driving regions to nitrogen capacity World Excluding China World Excluding China 2011 China 46% Pakistan 34% 1.6% (2.0%) 1.4% (1.5%) Pakistan 18% Iran 17% 2012 China 64% Qatar 27% 4.2% (4.2%) 2.4% (3.1%) Qatar 10% Algeria 23% 2013 China 28% Algeria 30% 2.3% (2.0%) 2.7% (2.2%) Algeria 22% India 19% 2014 Algeria 23% Algeria 25% 0.3% (0.9%) 0.5% (1.4%) Saudi Arabia 23% Saudi Arabia 25% 2015 Brazil 18% Brazil 19% 2.1% (-) 3.2% (-) Indonesia 15% Indonesia 16% Gross annual addition 2011-2015 ~2.0% Assumed annual closures ~0.5% Net annual addition 2011-2015 ~1.5% Trend consumption growth from 2001 2.5% 2.0% Source: Fertecon urea update January 2012. Consumption data source is IFA. Previous update in paranthesis IR – Date: 2012-03-22

7 Low er Chinese urea exports in 2011 Accumulated urea exports Urea price and export tax USD per ton Export tax Kilotons 8,000 900 200 % 180 % 800 7,000 2010 160 % 700 6,000 Urea fob 140 % Black Sea 2007 600 5,000 Export tax 120 % 2008 500 4,000 100 % 2009 400 80 % 2011 3,000 300 60 % 2,000 200 40 % 1,000 100 20 % 0 0 0 % Source: BOABC IR – Date: 2012-03-22

8 Demand-driven Chinese domestic urea price since mid 2011 RMB/t 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 Urea price ex works Anthracite price Higher coal prices, increased focus on emission control and energy efficiency has led to higher domestic urea prices Source: China Fertilizer Market Week IR – Date: 2012-03-22

9 Current domestic price and 2012 tariff implies sw ing price of USD 430 fob China USD/t 800 765 700 600 500 430 370 400 335 300 200 100 0 CMD 2011 Anthracite price Domestic price Domestic price & 2012 system & 2012 system & 110% tax Cash cost Inland transport Tax Producer margin Series5 IR – Date: 2012-03-22

Global dow nstream player w ith sales to 150 countries 48% Europe 9.4 mill tons North America 15% Asia 2.9 mill tons 12% 2.3 mill tons Africa 6% 1.2 mill tons 19% Latin America 3.8 mill tons Yara plants Joint venture plants Sales offices Development programs R&D Units Date: 28.02.2012 Page: 10

11 European deliveries lagging last season USA West Europe Million tons Million tons 4.5 9.0 4.0 8.0 -18% 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 2H07 2H08 2H09 2H10 2H11 2H07 2H08 2H09 2H10 2H11 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: 2012-03-22

12 Nitrate premium is mainly a function of crop prices and marketing effort Wheat price, USD/t CAN price, USD/t 450 400 400 350 350 300 300 250 250 200 200 150 150 100 100 50 50 0 0 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 Adjusted urea* Nitrate premium, USD/t Wheat price * Urea fob Black sea adjusted for import costs into Europe and nitrogen content similar to CAN IR – Date: 2012-03-22

13 Nitrates’ agronomic advantage has higher value for cash crops than for commodity crops Crop value with nitrates Increase in crop production value using nitrates instead of urea €/ha Index 3,500 1,200 3,192 1,016 3,000 1,000 2,500 800 2,000 600 1,553 1,500 400 1,000 200 500 100 0 0 Wheat/UK Oranges/Brazil Wheat/UK Oranges/Brazil (160 kg N/ha) (180 kg N/ha) IR – Date: 2012-03-22

14 Good NPK development NPK volumes NPK margins* Kilotons USD/t 2,000 180 1,800 160 1,600 140 1,400 120 1,200 100 1,000 80 800 60 600 40 400 20 200 0 0 1Q 2Q 3Q 4Q 4Q Full year 2010 2011 2010 2011 * Product from Porsgrunn, Glomfjord, Ravenna and Montoir sold in Europe IR – Date: 2012-03-22 IR – Date: 2011-04-29

15 2011 earnings per share highest so far NOK per share 45  Healthy grain fundamentals and 41.99 farm margins led to strong demand 40 for all nutrients 35 30.24 30 28.27  Supply constraints as China halved exports due to a tighter domestic 25 market and higher coal prices 20.63 20 13.88  Rossosh and 16% in Yara Praxair 15 13.08 11.90 10.20 divested at attractive terms 10 5 0 2004PF 2005 2006 2007 2008 2009 2010 2011 EPS EPS ex special items & currency IR – Date: 2012-03-22

16 Strong cash-generation Net interest-bearing debt / equity ratio (end of period) 0.9 0.84 0.8 0.75 0.7 0.63 0.57 0.56 0.6 0.49 0.5 0.40 0.38 0.4 0.34 0.32 0.28 0.27 0.3 0.22 0.20 0.2 0.12 0.12 0.1 0.0 2008 2009 2010 2011 IR – Date: 2012-03-22

17 We aim to increase ow n-produced and JV volumes by 8 million tons by 2016 External OPP/JV sales Million tons 30 25 20 In the five years to 2016, Yara’s 15 OPP/JV sales will grow by 10 40% 5 0 2010 Qafco, Sluiskil Remaining 2016 and Porsgrunn expansions IR – Date: 2012-03-22

18 Basis for Yara’s profitable grow th ambitions Strong earnings through the cycle A scalable business model giving synergies Yara CROGI 25 % 20 % 15 % 10 % 5 % 0 % 2004 2005 2006 2007 2008 2009 2010 L12M Long term target Valuation and capital discipline Industry-leading acquisition track-record In acquisitions Yara looks for:  Relative synergies compared to alternative buyers  Distressed sellers  Our cycle view compared to seller & alternative buyers  Capital and valuation discipline demonstrated  Grain, fertilizer and gas outlook has recently improved  increasing nitrogen asset values IR – Date: 2012-03-22

19 More information can be found at w w w.yara.com IR – Date: 2012-03-22

20 Earnings per share* NOK EPS excluding currency and special items 20 14.93 10.91 15 12.86 12.42 11.84 10.02 9.63 10 7.73 6.68 5.42 5.27 4.93 3.88 5 3.06 1.21 0 -5 -7.27 -10 2008 2009 2010 2011 Annual NOK 28.27 13.08 30.24 41.99 * Average number of shares for 4Q 2011: 286.0 million (4Q 2010: 288.4 million). IR – Date: 2012-03-22

21 Earnings before interest, tax, depreciation and amortization (EBITDA) NOK millions 20,000 18,163 17,917 18,000 15,315 16,000 14,000 12,000 10,000 8,441 8,000 6,618 6,472 6,108 5,549 6,000 4,000 2,000 0 2004PF 2005 2006 2007 2008 2009 2010 2011 EBITDA EBITDA ex special items IR – Date: 2012-03-22

22 Fourth-quarter net debt development NOK millions 6,000 441 5,539 5,500 175 4,961 2,523 297 5,000 786 4,500 2,039 329 4,000 3,500 3,000 304 2,500 2,000 Net interest- Cash earnings** Dividends Net operating Praxair Investments Share buy- Foreign Other Net interest- bearing debt received from capital change divestment (net) backs and exchange bearing debt Sep 11* equity redemption of gain/(loss) Dec 11 accounted 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: 2012-03-22