Yara 3rd quarter presentation 2015 › siteassets › investors › 057... · IR – 21 October...

Yara International ASA

Third quarter results

2015

21 October 2015

1

IR – 21 October 2015

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015YTD

TRI

Safe operations is our first priority

TRI: Total recordable injuries, lost time (absence from work), restricted work and medical treatment cases per one million work hours

2


Strong result with increased deliveries

Pick-up in Brazil sales

European deliveries down 5%, but increase for nitrates

Lower production mainly due to planned maintenance

NOK 3.2 billion gain on divestment of GrowHow UK

Summary third quarter

3


10.54

9.82 9.25

7.67 8.04 6.69

5.66

0.23

6.40

8.26

6.18 6.74

2.65

10.59

14.56

8.32

10.80

9.00

7.21

8.52 7.97

5.62

2.65

7.03 7.74 7.62

8.17

10.51

9.58

7.41

Earnings per share*

*Average number of shares for 3Q 2015: 275.1 million (3Q 2014: 276.2 million).

NOK 37.31 20.67 27.59 27.79

Annual 2012 2013 2014

EPS excluding currency and

special items

2015

4


Lower urea prices due to lower supply costs from China, and increased production

capacity globally

Western Europe nitrogen fertilizer industry deliveries down 5% on third quarter last

year

Brazil fertilizer industry deliveries in line with third quarter 2014; 6% lower year to date

Strong demand for value-added fertilizer products

Market development

5


69.8

10.8

59.0 58.2

15.6

73.8

0

10

20

30

40

50

60

70

80

Pro

duction

Exp

ort

Do

mestic

Do

mestic

Exp

ort

Pro

duction

Million tons

Source: BOABC, CFMW

Increased production and exports from China

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

2,000

2,200

2,400

Black Sea

USD/t

Chinese exports and urea price Chinese urea balance L12M

-2%

Sep – Aug 13/14 Sep – Aug 14/15

Kilotons

6


Normal deliveries in Europe and US

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

3Q11 3Q12 3Q13 3Q14 3Q15

Domestic production Net imports

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

3Q11 3Q12 3Q13 3Q14 3Q15

Domestic production Net 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

US Million tons N West Europe Million tons N

-4% -5%

7


306

175 154

68 85

303

231

148

41

84

305

250 261

37

85

Asia Brazil LatinAmerica excl.

Brazil

Africa NorthAmerica

Continued growth for value-added fertilizer products

Kilotons Kilotons

3Q15 3Q14 3Q13

0

500

1,000

1,500

2,000

2,500

3,000

3,500

3Q11 3Q12 3Q13 3Q14 3Q15

Outside Europe Europe

CAGR

6%

1) YaraBela, YaraMila and YaraLiva deliveries

Value-added fertilizer deliveries1 Value-added fertilizer deliveries1

8


0

1,000

2,000

3,000

4,000

5,000

6,000Kilotons

Urea Nitrates NPK CN UAN SSP - based fertilizer

2014 2011 2012 2013 2015

Lower production mainly due to planned maintenance

0

500

1,000

1,500

2,000

2,500Kilotons

2015

* Including share of equity-accounted investees

Finished fertilizer & industrial products1 Ammonia1

2014 2011 2012 2013

9


Brazil 3Q industry deliveries in line with last year;

Yara prioritized margins in 3Q Brazil 3Q fertilizer deliveries

0

2,000

4,000

6,000

8,000

10,000

12,000

2011 2012 2013 2014 2015

Th

ou

san

ds

+8%

-1%

Kilotons Kilotons

Source: ANDA, Yara

Yara Brazil value-added product 3Q deliveries

0

50

100

150

200

250

300

2007 2008 2009 2010 2011 2012 2013 2014 2015

Yara Brazil deliveries Brazil industry

deliveries

Galvani

10


Brazilian soybean cost competitiveness significantly

improved due to local currency depreciation

Soybeans - production cost with USD/BRL

3.65

0

2

4

6

8

10

12

USD/bu Corn - production cost with USD/BRL 3.65

0

1

2

3

4

5

6

Source: USDA, AMS, AGROCONSULT. Prepared by: Agroconsult.

Mato Grosso, Brazil

Iowa, USA

USD/bu

Mato Grosso, Brazil

Iowa, USA

Paraná, Brazil

11


European deliveries down 5%, but increase for nitrates

Kilotons

1,126 1,185 1,209

499 489 419

395 364 339

3Q 2015

2,095

3Q 2014

2,217

3Q 2013

2,163

Nitrates NPK compound Other Urea

Nitrate-based fertilizer is superior to urea both

agronomically and environmentally

Higher crop yields and protein content

Lower N-losses / higher N-efficiency

Lower carbon footprint

12


Earnings before interest, tax, depreciation and

amortization (EBITDA)

4,310 4,966

4,103 3,591

4,184

4,039 3,318

1,858

3,591

4,227

3,964

4,625 4,794 5,179

7,884

3,935

5,196

4,186

3,541

4,149

4,103

3,223 2,363

3,830 4,185

4,002 4,528

5,742

5,055

4,614

2012 2014 2013 2015

NOK

millions 16,970 13,399 16,407 17,857

Annual

EBITDA excluding special

items

NOK millions

13


EBITDA development

764 1,066

540

1,4553,964

3,306

7,884

EBITDA 3Q15 Special

items

Currency Other Price/margin Volume & mix EBITDA 3Q14

NOK millions

of which

OFD+Galvani

~ +600 million

of which EU

energy

+151 million

of which

OFD+Galvani

~ -350 million

14


Improved earnings in Upstream

1,463 1,519 420 432

2,293

6,221

1,516 1,533

420 432

2,277

2,937

Downstream Industrial Upstream

EBITDA excluding special items

3Q14 3Q15

EBITDA1 (NOK millions)

1) 3Q 2015 result reflects new segment structure as described in note 3 of the financial report.

15


(891)

(726)

(1,314)

(588)

(151)

(550)

(300)

(1,400)

(1,200)

(1,000)

(800)

(600)

(400)

(200)

0

3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16

NOK millions

October 2015 estimate*

Lower natural gas cost in Europe

Source: Yara, World Bank, Argus/ICIS Heren

*Dotted lines denote forward prices as of 13 October 2015

Yara European gas & oil cost

Actual

Change in European energy cost

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16

USD/ MMBtu

TTF (1-month lag) Yara Europe

16


Stable European nitrate premium

0

100

200

300

400

500

600

700

3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15

USD/t

Nitrogen upgrading margins1 (monthly publication prices)

Urea Black sea CFR proxy CAN (46% N)

NH3 CFR (46% N) Urea Egypt CFR proxy

Value

above gas

Value above

ammonia

Nitrate

premium

above urea

Yara EU gas cost *20

0

20

40

60

80

100

120

140

160

180

3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15

European nitrate premium2 (quarterly Yara realized) USD/t

2) Yara European realized nitrate prices compared with urea

publication prices with one month time lag. All numbers in USD

per ton of CAN equivalents. 1) All prices in urea equivalents

17


0

100

200

300

400

500

600

700

3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15

USD/t NPK premium over blend1

Stable commodity phosphate margins and solid NPK

compound premiums

0

100

200

300

400

500

600

3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15

USD/t Phosphate upgrading margins

DAP, fob USG

Rock, fob NA *1.4

Value above

raw material

NH3, fob Black Sea *0.22

DAP, CIF inland Germany

MOP, CIF inland Germany

Urea, CIF inland Germany

Weighted average global

premium above blend cost

1) Export NPK plants, average grade 19-10-13, net of

transport and handling cost.

Nitrate premium, CIF inland Germany

18


Brazil: Improved profitability and risk management

Yara Brazil 3Q EBITDA

Source: Yara

Yara Brazil risk management

664

406

290

-22

3Q 2013 2Q 2012 3Q 2015 3Q 2014

MNOK

2728

27

20

0

5

10

15

20

25

30

0

1

2

3

4

5

6

7

8

9

10

YTD 2015 2014 2013 2012

Net overdues >30 days of total receivables (%)

Net credit days

Days %

Galvani

19


Net interest-bearing debt development

3,282

4,794

2,452

1,335 1,369

4,401

10,471

Net debt

Sep 15

Other FX loss Yara dividend

312

Investments

net

Dividends

from equity-

accounted

investees

377 347

Net operating

capital

change

Growhow UK Cash

earnings*

Net debt

Jun 15

* Operating income plus depreciation and amortization, minus tax paid, net gain/loss on disposals, net interest expense and bank charges

NOK millions

20


Positive farm margin outlook and fertilizer application incentives

Chinese urea production and export costs remain key for global nitrogen pricing

Good start to season in Europe; industry stocks and nitrate premium at normal levels

Improved demand in Brazil, with increased competitiveness vs. other crop exporters

Further NOK 850 million European gas cost saving expected next 2 quarters

Prospects

Additional information

22


NOK bn

1.0

1.0

0.5

Production

20142

18.8

Production

2017

20.4

Sale

GrowHow

UK

M&A4 Committed

growth3

Capex plan Production growth 2014-2017

2) Finished fertilizer and industrial products, excl. bulk blends

3) Committed projects only. TAN Pilbara: 160 kt (net 90kt),

Porsgrunn: 250kt, Glomfjord: 185kt, Uusikapunki: 250kt, Köping:

90kt, Sluiskil: net 160kt

4) Full-year impact vs. 2014 of Galvani (60% of ~1 mill.- tons) and

OFD: ~400kt higher than 2014

Capex status

mt

1) Yaras share of capex

0.6

2018

6.8

5.0

1.2

2017

8.5

5.0

2.3

1.2

2016

13.6

5.8

6.5

1.3

2015

9.7

5.5

3.4

0.8

Maintenance

Cost&capacity improvements

Committed growth

BASF JV 1.1 1.7 0.5

TAN Pilbara 0.6

Porsgrunn 0.6 1.2 0.3

Köping 0.3 0.8 0.3

Sluiskil 0.3 0.8 0.3

Uusikapunki 0.3

Ammonia vessels 0.2 1.4

Other projects 0.2 0.6 0.8 0.6

Total 3.4 6.5 2.3 0.6

Committed growth (NOKbn)1

23


Yara 3Q fertilizer sales by market and product

2,195

3,120

673 515 345

2,081

3,516

526 577 235

Europe Latin America North America Asia Africa

3Q14 3Q15

914

1,808

1,390 1,296 941

274 225

1,044

1,665 1,413

998 1,346

236 233

NPK compounds NPK blends Nitrate Urea Other products UAN CN

Kilotons

24


0

200

400

600

800

1,000

1,200

1,400

1,600

3Q11 3Q12 3Q13 3Q14 3Q15

YaraMila and YaraBela deliveries

Kilotons

-

200

400

600

800

1,000

1,200

1,400

1,600

3Q11 3Q12 3Q13 3Q14 3Q15

Yara-produced YaraBela deliveries Kilotons

Yara-produced YaraMila deliveries

Outside Europe Europe Outside Europe Europe

25


NOK millions Total Yara contribution

Value-added and distribution make up larger part of Yaras contribution

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

3Q11 1Q12 1Q11 3Q10 1Q10 3Q12

Commodity Europe

Commodity overseas

Upgrade & distribution

Trade

3Q13 1Q14 3Q14 1Q15 3Q15 1Q13

26


Industrial volume development

830

913885

864852849816

866819

844

792

540540

482511

438456432385364

333346380361

339367364358

328

3Q14 2Q14 1Q14

382

4Q13 3Q13

374

2Q13

368

1Q13

343

3Q15 2Q15 1Q15 4Q14

Industrial N-chemicals Environmental products Other

Kilotons

27


0

50

100

150

200

250

300

350

400

3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

AdBlue deliveries

Kilotons

28


0.49

0.20

0.07

-0.04

0.05

0.13

0.38

0.22

0.08

0.01

0.06

0.15

0.32

0.12

0.06 0.06

0.08 0.06

0.27

0.12

0.02 0.06

0.17

2010 2011 2012 2013 2014 2015

Debt/equity ratio

Net interest-bearing debt / equity ratio (end of period)

29


-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Urea Nitrates Compound NPK Other

Yara stocks

Bunge Fertilizer

included from 3Q 2013

Kilotons

Finished fertilizer

30


0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

15/16 10/11 11/12 12/13 13/14 14/15

Source: Fertilizers Europe, Yara estimate for September

European producers’ nitrate stocks

Index

June 2007 = 1

31


4.0 4.4

4.0

2.8

3.7

5.2 4.6

3.9 3.8

2.9 2.7 2.7 2.7 2.6 2.9

4.8

5.7

8.2 8.0 8.0 8.1

6.9

6.1 6.5

6.0 5.7

5.3 5.1

5.2 4.7

6.6

9.2 9.4

10.5 9.8

7.6 7.0

8.1

7.0 6.8 6.5

6.0 6.1

6.6

7.6

10.7 11.0 11.4 11.3

9.2

7.5

8.5

7.6 7.5 7.0 6.5 6.6

2009 2010 2011 2012 2013 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16

US gas price (Henry Hub) Yara Global TTF day ahead (Zeebrugge 2009-2012) Yara Europe

Energy cost

USD per MMBtu

Source: Yara, World Bank, Platts/Argus/ICIS Heren

Yearly averages 2009 – 2013, quarterly averages for 2014-15 with forward prices* for 4Q15 and 1Q16.

*Dotted lines denote forward prices as of 13 October 2015

32


At the beginning of the fourth quarter 2015

1. The US dollar debt generating Profit & Loss exposure was USD 1,500

million

• Kept as hedge of future earnings and to finance inventories in emerging markets

• Fairly even split of exposure towards EUR, BRL and other emerging market

currencies

• The debt level in emerging markets will fluctuate with fertilizer seasons

2. Additional Profit & Loss exposure from internal currency positions vs.

NOK

• Payables mainly CAD (450 million)

• Receivables mainly EUR (200 million)

Currency exposure affecting Profit & Loss

33


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 1/2014 1/2015

Index

FAO price index

Cereals Price Index Cereals 5 year avg. Food Price Index Food 5 year avg.

Farm economics support fertilizer demand, even in USD

based economies

Source: FAO

34


Global grain balance

1,950

2,000

2,050

2,100

2,150

2,200

2,250

2,300

2,350

2,400

2,450

2,500

2,550

07 08 09 10 11 12 13 14 15E 16F

Million tons

Consumption Production

Grain consumption and production Days of consumption in stocks

55

60

65

70

75

80

85

07 08 09 10 11 12 13 14 15E 16F

Days

Source: USDA October 2015

35


-200

-100

0

100

200

300

400

500

Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15

Thousand contracts

Source: US Commodity Futures Trading Commission

Non-commercials’ net long position in corn

36


Source: CRU urea update September 2015 (June 2015 in brackets) . Consumption data source is IFA.

Year Driving regions Urea capacity growth relative

to nitrogen capacity

Excluding China Excluding China

2015 Algeria 18%

Iran 16% 2.6% (2.6%)

2016 USA 30%

Algeria 15% 3.0% (3.3%)

2017 USA 44%

Nigeria 15% 1.6% (2.3%)

2018 Nigeria 30%

Russia 20% 1.5% (1.3%)

2019 Russia 34%

Nigeria 34% 1.3%

Gross annual addition 2015-2019 ~2.0%

Assumed annual closures ~0.5%

Net annual addition 2015-2019 ~1.5%

Trend consumption growth from 2003 2.0%

Projected nitrogen capacity additions outside China

37


Key value drivers – quarterly averages

320 315 295 277 268

358 355 337 297 281

3Q14 4Q14 1Q15 2Q15 3Q15

Urea prilled fob Black Sea (USD/t)/Urea granular fob Egypt (dotted line, USD/t)

309 310 295 273 257

3Q14 4Q14 1Q15 2Q15 3Q15

CAN cif Germany (USD/t)

3.9 3.8

2.9 2.7 2.7

3Q14 4Q14 1Q15 2Q15 3Q15

US gas price Henry Hub (USD/MMBtu)

7.0 8.1

7.0 6.8 6.4

3Q14 4Q14 1Q15 2Q15 3Q15

TTF day ahead (USD/MMBtu)

6.3 6.9

7.7 7.8 8.2

3Q14 4Q14 1Q15 2Q15 3Q15

NOK/USD exchange rate

488

572

413 393 388

3Q14 4Q14 1Q15 2Q15 3Q15

Ammonia fob Black Sea (USD/t)

Source: Fertilizer Market Publications, CERA, World Bank, Norges Bank

38


10-year fertilizer prices – monthly averages

Source: Average of international publications

0

200

400

600

800

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

USD/t Urea prilled fob Black Sea/Urea granular fob Egypt

Average prices 2005 - 2014

0

200

400

600

800

1,000

1,200

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

USD/t DAP fob US Gulf/MOP granular fob Vancouver

0

100

200

300

400

500

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

USD/t CAN cif Germany

0

200

400

600

800

1,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

USD/t Ammonia fob Black Sea

Yara 3rd quarter presentation 2015 › siteassets › investors › 057... · IR – 21 October...

Documents

Transcript of Yara 3rd quarter presentation 2015 › siteassets › investors › 057... · IR – 21 October...