IR-Date: 2014-02-12
0
12 February 2014
Yara International ASA Fourth Quarter results 2013
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
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
IR-Date: 2014-02-12
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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
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
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/t Chinese urea exports, Kilotons
IR-Date: 2014-02-12
6
0
1,000
2,000
3,000
4,000
5,000
6,000Kilotons
2012 2011 2013
Strong production
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000Kilotons
* Including share of equity-accounted investees
Finished fertilizer Ammonia
2012 2011 2013
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
2011 2010 2009
Industrial sales per business unit
2012 2013
Kilotons
CAGR 7%
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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
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 2012 2011 2013
NOK millions 15,315 18,163 16,970 13,266
Annual
EBITDA excluding special items
NOK millions
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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
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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
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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)
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 2013 2011
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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
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
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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
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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
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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
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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
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
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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”
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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
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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 Europe USA
--11% +1%
Million tons N Million tons N
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24
Additional information
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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
2010 2007 2008 2009 2011 2012 2013
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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
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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
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 4Q12 2Q12 2Q11 4Q10
Commodity Europe
Commodity overseas
Fertilizer upgrade & distribution
Trade
2Q13 2Q10 4Q11 4Q13
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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
IR-Date: 2014-02-12
30
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000Kilotons
Urea Nitrates NPK CN UAN SSP - based fertilizer
2012 2009 2010 2011 2013
Yara production volume*
0
500
1,000
1,500
2,000
2,500Kilotons
2013
* Including share of equity-accounted investees
Finished fertilizer and industrial products Ammonia
2012 2009 2010 2011
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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
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)
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
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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
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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
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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
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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
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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