Yara International ASA · 07/12/2016 · Bank of America Merrill Lynch European Chemicals...
Transcript of Yara International ASA · 07/12/2016 · Bank of America Merrill Lynch European Chemicals...
Yara International ASA Bank of America Merrill Lynch
European Chemicals Conference
7 December 2016
Svein Tore Holsether, CEO
Thor Giæver, IR
IR – December 2016
Integrated business model creates value through scale, flexibility
and value chain presence
2
IR – December 2016
Fertilizer portfolio is being driven towards greater
product differentiation and profit
• Differentiation improves margins and
reduces exposure to commodity
price volatility
• On-going efforts to further increase
differentiation through:
• Capacity expansions compound
NPK, CN, nitrate and urea+S
• On-going optimization of NPK
portfolio towards higher value
segments
• Innovation and market growth in
high-value fertigation markets
• Continued YaraVita growth
21%
36%
24%
19%
Standard products (Urea, UAN and Ammonia)
Differentiated products (CAN, AN)
Specialty (CN, Compound NPK, Fertigation)
NPK blends
Product portfolio (2015/16 season volume)
3
IR – December 2016
Brazil: focus on premium products and solutions drives growth
4
Source: ANDA, Yara
0
100
200
300
400
500
600
3Q07 3Q08 3Q09 3Q10 3Q11 3Q12 3Q13 3Q14 3Q15 3Q16
+100%
0
2,000
4,000
6,000
8,000
10,000
12,000
3Q12 3Q13 3Q14 3Q15 3Q16
Th
ou
san
ds +6%
Kilotons Kilotons
0
1,000
2,000
3,000
4,000
3Q12 3Q13 3Q14 3Q15 3Q16
Th
ou
san
ds
+11%
Kilotons
Yara Brazil Industry Galvani Trade
Yara Brazil 3Q premium product deliveries Brazil 3Q fertilizer deliveries
IR – December 2016
Brazil: unrivalled market presence and farmer-centric strategy
> 20,000 growers using Yara solutions
> 200 Yara agronomists and 600 sales
representatives
> 55% of Yara deliveries are direct to farmer
> 55,000 interactions with growers p.a.
Unrivalled presence: 28 sites in 11 states Farmer-centric strategy drives growth
Galvani (fertilizer
production, mining
and port operation)
Yara (offices,
production, blending
and distribution of
fertilizers, port
operation)
5
IR – December 2016
Lower European nitrate premiums in 16/17 season
6
0
100
200
300
400
500
600
700
3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16
USD/t
Nitrogen upgrading margins1 (monthly publication prices)
CAN (46% N) NH3 CFR (46% N) Urea Egypt CFR proxy
Yara EU gas cost *20
Nitrate
premium
above urea
Value above
ammonia
Value
above gas
0
10
20
30
40
50
60
70
80
90
100
3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16
European nitrate premium2 (quarterly Yara realized) USD/t
2) Yara European realized nitrate prices (excl. sulphur grades)
compared with urea publication prices (Egypt CFR proxy) with
1 month time lag. All numbers in USD per tonne of CAN equivalents. 1) All prices in urea equivalents
IR – December 2016
Weighted average global
premium above blend cost
0
100
200
300
400
500
600
700
3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16
USD/t NPK premium over blend1
Value above
raw material
0
100
200
300
400
500
600
3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16
USD/t Phosphate upgrading margins
DAP, fob USG
Lower commodity phosphate margins, solid compound NPK
premiums
7
1) Export NPK plants, average grade 19-10-13, net of
transport and handling cost.
Rock, fob North Africa *1.4
NH3, fob Black Sea *0.22
DAP, CIF inland Germany
MOP, CIF inland Germany
Urea, CIF inland Germany
Nitrate premium, CIF inland Germany
IR – December 2016
FAO food prices index on upward trend
8
IR – December 2016
Projected nitrogen capacity additions outside China
9
2018 2017
4.5
2019 2020
4.1
2016
7.4
6.9
2.0
~3 Mt
consumption
growth
Gross capacity additions, excl. China
(mill. tonnes urea1)
Source: CRU, gross capacities, September 2016 1) Using 50% operating rate in new plants’ first year of production
Indonesia 0.7
Egypt 0.6
Malaysia 0.6
Saudi Arabia 0.5
Bangladesh 0.2
USA 1.7
Algeria 1.2
Nigeria 0.7
Iran 0.5
Russia 0.3
India 0.7
Malaysia 0.6
Indonesia 0.5
Mexico 0.5
Bolivia 0.3
Bangladesh 0.3
Canada 0.1
USA 2.5
Nigeria 0.7
Iran 0.5
Russia 0.3
USA 0.9
India 0.7
Brazil 0.6
Turkmenistan 0.6
Mexico 0.5
Azerbaijan 0.4
Indonesia 0.3
Bolivia 0.3
Canada 0.1
Iran 0.5
Russia 0.3
India 0.7
Brazil 0.6
Turkmenistan 0.6
Azerbaijan 0.4
Indonesia 0.3
Russia 0.4
Nigeria 1.3
Algeria 1.2
Russia 0.1
Nigeria 1.3
India 0.6
IR – December 2016
19.5
2.8
16.7
14.8
2.4
17.2
0
5
10
15
20
25
Pro
duction
Exp
ort
Do
mestic
Do
mestic
Exp
ort
Pro
duction
Million tons
5.0
5.2
5.4
5.6
5.8
6.0
6.2
6.4
6.6
6.8
7.0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Million tons
Source: CFMW
16/17
The new season starts with reduced Chinese urea production,
reducing domestic supply by 11%
Chinese urea production Domestic urea balance
Jul-Sep 15/16 Jul-Sep 16/17
-11% 14/15
15/16
IR – December 2016
Increasing coal prices
11
CIF ARA1 December 2016 ($/mt)
1) Amsterdam, Rotterdam, Antwerp
China anthracite prices November 2016 (RMB/mt)
Source: CME Group, China Fertilizer Market Weekly
IR – December 2016
Strategic growth with financial discipline: Profitable growth through brownfield expansion and M&A, while maintaining credit rating
OFD (Latin America)
CN/NPK expansion Porsgrunn (Europe)
NPK expansion Uusikapuunki (Europe)
Greenbelt Fertilizers (Africa)
West Sacramento import terminal (USA)
Expand premium products
sales and supply
Bunge (Crop Nutrition) (Brazil)
Freeport ammonia JV (newbuild in USA)
Pilbara (acq. of remaining 49% stake)(Australia)
New ammonia vessels
Expand commodity scale
based on attractive full-
cost growth opportunities
Act on attractive
opportunities to grow
industrial sales and supply
Galvani (Brazil)
Dallol1 (Africa) Structurally secure P and K
supply
OFD (Latin America)
Pilbara – TAN (newbuild in Australia)
Köping – TAN (Europe)
Small-scale TAN
Le Havre (Europe)
Environmental solution bolt-on (Europe)
1 Not yet committed
Net debt / EBITDA evolution
0.96
0.35
0.07 0.29
0.72 0.63
0.0
0.5
1.0
1.5
2.0
2.5
2010 2011 2012 2013 2014 2015
Net debt/EBITDABBB
rating
≤~ 2x
GrowHow UK (50% stake)
European CO2 business Divest non-core
businesses
Dividend and share buy-backs, share of net income
2015
57%
51%
6%
2014
53%
47%
6%
2013
64%
48%
16%
2012
47%
35%
12%
2011
23%
17%
6%
2010
19%
18%
1%
2009
41%
34%
6%
2008
21%
16%
5%
2007
26%
19%
7%
2006
48%
18%
30%
2005
48%
23%
25%
2004
32%
25%
7%
Dividends Share buy-backs Target range 40-45%
12
IR – December 2016
Strong growth pipeline
13
1) Yara’s share of capex
1.3
2017
16.2
5.4
6.2
3.3
1.3
2016
14.2
5.5
7.0
0.4 1.4
2015
14.4
6.0
4.2
3.3
0.9
2018
9.0
5.6
2.1
Maintenance
Committed growth
M&A
Cost&capacity improvements NOK bn
Capex plan1
2) Finished fertilizer and industrial products, excl. bulk blends. Including Yara share of production in
JVs. 2015 numbers excl. Growhow UK (~300 kt)
3) Committed projects only. TAN Pilbara: 160 kt, Porsgrunn: 250kt, Glomfjord: 185kt, Uusikapunki:
250kt, Köping: 90kt, Sluiskil: net 160kt, Galvani (Salitre - 60% of ~ 1 mill.tons)
4) Excl. Growhow UK (~200 kt). Including 100% ownership in Pilbara NH3 plant
5) Rio Grande expansion ads 0.5 million tons SSP and 1 million ton blends by 2020
Production growth 2015 - end 20185
Finished fertilizer Ammonia
Mill.tons
0.8
1.2
1.7
Production
end 2018
22.7
Committed
growth3
Babrala Regularity
improvement
Production
20152
18.9
0.7
0.7
9.0
7.20.5
Production
end 2018
Babrala BASF JV Regularity
improvement
Production
20154
IR – December 2016
Acquisition of Tata Chemicals’ fertilizer business in India provides
footprint to accelerate premium product growth
14
Integrated world scale urea plant in Babrala, Uttar Pradesh
• ~0.7 million tons ammonia production
• ~1.2 million tons urea production
• Commissioned in 1994
World-class operations and energy efficiency
• Workforce is committed to high HESQ standards; solid safety track
record
• Energy consumption below 21 mmbtu/t, on par with Sluiskil
Significant distribution footprint
• Warehouses: 4 own and approx. 100 third-party operated
• Salesforce: 50 own, and approx. 600 on contract
Acquisition provides footprint to accelerate premium product growth
• Yara India 17% p.a. growth in premium product sales since 2010
• Yara Brazil premium products growth provides reference case
IR – December 2016
Yara growth project pipeline adds ~5 NOK earnings per share by
2020 at current market prices
15
CN/NPK expansion Porsgrunn (2H 2017)
NPK expansion Uusikaupunki (2H 2016)
Urea 8 Sluiskil (2H 2017)
Rio Grande expansion (2H 2020)
Expand premium products
sales and supply
Freeport ammonia JV (4Q 2017)
New ammonia vessels (2016)
Babrala urea asset (2H 2017)
Expand commodity scale
based on attractive full-
cost growth opportunities
Act on attractive
opportunities to grow
industrial sales and supply
Galvani, Salitre (mining: 2H17, chemical 1H18) Structurally secure P and K
supply
Pilbara – TAN (4Q 2016)
Köping – TAN (1H 2018)
Profitable growth through expansions and M&A Incremental earnings at current prices1 (NOK/share)
0.5
1.8
4.0
5.3
2017 2018 2019 2020
Impact2 of +100 USD/t price change (NOK/share)
0.8
1.2 1.5
Urea Ammonia DAP
1 Urea fob Yuzhny 190 USD/t, Ammonia fob Yuzhny 170 USD/t, DAP fob Morocco 345 USD/t 2 At full capacity (2019 for urea and ammonia, 2020 for DAP) 3 Phosphate-driven price change, equivalent to 138 USD/t phosphate rock (72 bpl)
3
IR – December 2016
Yara Improvement Program: significant progress during third
quarter towards full program launch first quarter 2017
2Q 2016 presentation • All units working to establish and detail
improvement initiatives
• Several large-impact initiatives have started
execution, with positive results so far
• Work so far gives confidence Yara will deliver at
least USD 500 million EBITDA improvement by
2020
• Baseline for measurement will be 2015
• Full target, description and timeline to be launched
in connection with 4Q results
16
IR – December 2016
IR – December 2016
Summary third quarter
18
Weaker results due to lower fertilizer commodity prices
Strong growth in premium product deliveries, especially in Brazil
Strong Industrial result
IR – December 2016
Earnings per share*
19
8.04
6.69 5.66
0.23
6.40
8.26
6.18 6.74
2.65
10.59
14.56
1.58
10.22
11.23
3.00
8.52
7.97
5.62
2.65
7.03 7.74 7.62
8.17
10.51 9.58
7.41
3.97
9.14
6.37
3.46
NOK 20.67 27.59 29.38 24.46
Annual 2013 2014 2015 2016
*Average number of shares for 3Q 2016: 273.2 million (3Q 2015: 275.1 million).
EPS excluding currency and
special items
IR – December 2016
Earnings before interest, tax, depreciation and amortization
(EBITDA)
20
4,184
4,039 3,318
1,858
3,591
4,227
3,964
4,625 4,794 5,179
7,884
3,504
5,055
5,489
3,004 4,149
4,103
3,223 2,363
3,830 4,185
4,002 4,528
5,742
5,055
4,614
3,508
5,050
3,958
2,968
2013 2015 2014 2016
NOK millions
EBITDA excluding special
items
NOK
millions 13,399 16,407 21,361 13,548
Annual
IR – December 2016
EBITDA development
21
3,233
2,641
857
3,004
7,884
EBITDA 3Q16 Other
241
Currency
translation
156
Energy costs Price/Margin Volume
223
EBITDA 3Q15 Special
items
NOK millions
IR – December 2016
Lower prices mainly impact Production segment
22
1,519 1,502
432 403
6,221
894
1,534 1,502
432 403
2,937
857
3Q15 3Q16
EBITDA
(NOK millions)
EBITDA excluding special items
Crop Nutrition Industrial Production
IR – December 2016
Plant productivity improvement and portfolio optimization
will make our upstream positioning more robust
• Implement global best practices
• Improve maintenance execution
• Reduce energy consumption
• Enhance product quality
• Further strengthen safety
culture
• Improve capex efficiency
• Optimize asset footprint
Intensive rollout with up to three parallel groups of
implementations for the next 2.5 years, starting with
Sluiskil
Systemic assessment across Yara Production
organization identified a number of improvement areas
across all sites
23
Example: Production
IR – December 2016
Safe operations is our first priority
24
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
1) TRI: Total recordable injuries, lost time (absence from work), restricted work and medical treatment cases per one million work hours
2) OFD and Galvani included in statistics from January 2016
IR – December 2016
2015 Highlights
Crop Nutrition creates resilience in earnings…
Share of fertilizer volumes by product
Offers the industry’s most comprehensive product portfolio and
has a strong position in value-adding crop solutions.
Increased market presence in Africa and North America by
signing agreements to acquire the Greenbelt Fertilizer and the
Sacramento Terminal
Continued investments in solutions for precision farming and
water scarcity. Investments in 2015 amounted to a total of NOK
1.5 bn
Key financials
Fertilizer volumes by region
(NOKm) 1H 2016 1H 2015 Change YE 2015
Revenue and other income1 37,760 41,950 (4,190) 80,189
EBITDA 3,108 3,415 (307) 6,188
Operating income 2,476 2,854 (378) 4,973
% margin 6.6% 6.8% N/A 6.1%
CROGI (12-month rolling avg.) 16.3% 17.9% N/A 17.5%
0
5,000
10,000
15,000
20,000
25,000
2013 2014 2015
Europe Latin America North America Asia AfricaKilotons
26,317 26,544 23,668
0%
20%
40%
60%
80%
100%
2013 2014 2015
NPK OTHFER UREA CN NITRA UAN
1 External revenue and other income
25
IR – December 2016
… by adding distribution and agronomic competence
Time
Mark
et depth
Sell what we produce
• Place new capacity
• Manage seasonality
Build product
reputation
• High quality products
• Viking ship brand
Farmer centric solutions and
tools
• Our next strategic step to
build Yara’s knowledge
margin
Asset
Product
Crop
Farmer
Build crop
solutions
• Crop knowledge
• Product portfolio
• Application competence
Evolved focus and aspiration
26
IR – December 2016
2015 Highlights
Industrial segment reduces cyclicality and seasonality…
Significantly expansion of terminal and logistics network in North
America and Brazil to better and more efficiently serve the
automotive Nox abatement markets with respectively DEF (Diesel
Exhaust Fluid) and Arla 32 reagent
Increased deliveries of air pollution abatement products by 20% and
achieved strong growth parameters for Nutriox business (waste
water treatment) and increasing demand for related services and
monitoring technologies
Agreement to sell European CO2 business
Key financials
(NOKm) 1H 2016 1H 2015 Change YE 2015
Revenue and other income1 9,085 8,520 565 17,233
EBITDA 2,116 749 1,367 1,489
Operating income 2,030 602 1,428 1,174
% margin 22.3% 7.1% N/A 6.8%
CROGI (12-month rolling avg.) 43.6% 18.8% N/A 22.0%
1 External revenue and other income 2 Including Yara share of production in equity-accounted investees 3 Including share of JVs
Industrial sales by product2
Kilotons
6,255 6,593 7,030
0
1,500
3,000
4,500
6,000
2013 2014 2015
Environmental products Base ChemicalsMining Applications Animal NutritionCO2 and feed phosphates
27
IR – December 2016
…by securing stable off-take from production plants and the
unseasonal nature of its businesses
Chemical applications for
food, feed, automotive, space,
pharmaceutical and
construction industries
Abatement of emissions from
heavy duty vehicles
NOx and SOx abatement for
maritime sector
Solutions to the Civil explosives
industry
Based on Technical nitrates for
mining and construction
CO2 as gas, liquid and Dry ice
CN for Industrial Applications
Animal nutrition
Key product and
service offering
EBITDA 2013- 20151
(NOKm)
Market drivers GDP growth Legislation, GDP growth GDP growth, infrastructure
projects, supply security GDP growth, standard of living
Strategic fit Optimization of Upstream
assets
Utilize technology, logistic
advantage and infrastructure
footprint
Handling, storage and
economies of scale Monetize secondary products into
primary markets applications
Geographical market Europe Global Global Global
Four business lines with focused strategy and operations
Base Chemicals Environmental Solutions Mining Applications Gas and Industrial
applications
2015
515
2014
533
2013
426 303
2014 2013
237 447
2015 2014 2015
147 223
2013
225
2015
513
2014
492
2013
337
1 EBITDA not adjusted for eliminations between Business Units
28
IR – December 2016
2015 Highlights
Production segment has plants and mines across the globe which
provide scale and flexibility…
In the US, Yara and BASF started construction of a world-scale
ammonia plant in Freeport. In Australia, Yara secured full ownership of
the Pilbara ammonia plant and increased ownership in the Pilbara TAN
plant. Construction started on the project to increase the capacity of
value-added production in Sluiskil, the Netherlands. Yara sold its 50%
stake in GrowHow UK.
Total production ended at 26.5mm tons, ammonia production
decreased by 1% and finished fertilizer and industrial products
increased by 2%
Gas consumption by region in 20152
1 Including Yara share of production in equity-accounted investees; 2 Including share of JVs
22
Europe
159
RoW Canada
109
Million MMBtu
Key financials
Production volumes by product2
(NOKm) 1H 2016 1H 2015 Change YE 2015
Revenue and other income1 22,881 28,266 (5,385) 55,812
EBITDA 4,965 6,017 (1,052) 14,414
Operating income 2,132 4,364 (-2,232) 8,842
% margin 9.3% 15.4% N/A 15.8%
CROGI (12-month rolling avg.) 11.0% 11.4% N/A 12.1%
26,009 25,924 26,259
0
5,000
10,000
15,000
20,000
25,000
30,000
2013 2014 2015
Ammonia Urea Nitrate NPK CN UAN SSPKilotons
29
IR – December 2016
Net interest-bearing debt development
30
3,1462,836
Net debt
Sep 16
10,390
Other
32
Foreign
currency
translation loss
114
Net operating
capital change
26
Yara dividend
and share
buy-backs
210
Investments
(net)
Cash earnings* Net debt
Jun 16
9,698
* Operating income plus depreciation and amortization, minus tax paid, net gain/loss on disposals, net interest expense and bank charges
NOK millions
IR – December 2016
Value-added and distribution make up larger part of Yara’s contribution
31
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
1Q15
Trade
Upgrade & distribution
Commodity Europe
Commodity overseas
3Q10 3Q11 1Q12 3Q12 3Q16 1Q16 1Q11 3Q15 3Q14 1Q10 1Q14 3Q13 1Q13
Total Yara contribution
IR – December 2016
Production
32
0
500
1,000
1,500
2,000
2,500
Kilotons
2016 2015 2013 2014
Ammonia1
1) Including share of equity-accounted investees
0
1,000
2,000
3,000
4,000
5,000
6,000
Kilotons
Urea Nitrates NPK CN UAN SSP - based fertilizer
2015 2013 2014 2016
Finished fertilizer & industrial products1
IR – December 2016
Yara 3Q fertilizer sales by market and product
33
2,085
2,930
582 526 577 235
2,100
3,190
619 427 591 322
Europe Brazil Latin America North America Asia Africa
3Q15 3Q16
1,101
1,603 1,415 998
1,347
236 234
1,419 1,750
1,448
913 1,210
229 279
Nitrate Urea Other products UAN CNCompound NPK1 Blend NPK
1) Yara-produced compound NPK and third party sourced (Total NPK minus blend NPK)
Kilotons
IR – December 2016
Fertilizer deliveries
34
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
7,000
Europe Outside Europe
Kilotons
2012 2009 2010 2011 2013 2014 2015 2016
IR – December 2016
Fertilizer deliveries by product and source
35
1,415 1,448
1,101
1,419
1,603 1,750
998 913
236 229
1,582 1,488
3Q15 3Q16 3Q15 3Q16 3Q15 3Q16 3Q15 3Q16 3Q15 3Q16 3Q15 3Q16
Yara-produced deliveries Joint venture & third party sourced
NPK compounds NPK blends Urea UAN Other
Kilotons
Nitrate
IR – December 2016
YaraMila (compound NPK) and YaraBela (nitrate) deliveries
36
0
200
400
600
800
1,000
1,200
1,400
1,600
3Q12 3Q13 3Q14 3Q15 3Q16
Yara-produced YaraMila deliveries
-
200
400
600
800
1,000
1,200
1,400
1,600
3Q12 3Q13 3Q14 3Q15 3Q16
Yara-produced YaraBela deliveries Kilotons
Outside Europe Europe Outside Europe Europe
Kilotons
IR – December 2016
Strong premium product deliveries
37
1) YaraBela, YaraMila and YaraLiva deliveries
0
500
1,000
1,500
2,000
2,500
3,000
3,500
3Q12 3Q13 3Q14 3Q15 3Q16
303
231
148
41
84
305
250 236
37
85
300
499
302
128
84
Asia Brazil LatinAmerica excl.
Brazil
Africa NorthAmerica
Value-added fertilizer deliveries1 Value-added fertilizer deliveries1
CAGR
8%
Outside Europe Europe
3Q16 3Q15 3Q14
IR – December 2016
Industrial volume development
38
893889847829815
892859864852849
816866
819
572571538
577541540
482511
438456432
207242
308328
385364333346
380361339367364
3Q13
374
3Q16 2Q16 1Q16 4Q15 3Q15 2Q15 1Q15 4Q14 3Q14 2Q14 1Q14
382
4Q13
Other Environmental products Industrial N-chemicals
Kilotons
IR – December 2016
AdBlue deliveries
39
0
50
100
150
200
250
300
350
400
450
500
3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Kilotons
IR – December 2016
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Urea Nitrates Compound NPK Other
Yara stocks
40
Kilotons
Finished fertilizer Bunge Fertilizer
included from 3Q 2013
IR – December 2016
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
3Q11 3Q12 3Q13 3Q14 3Q15 3Q16
Domestic production Imports
Normal start to the European season, slow in the US
41
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 3Q16
Domestic production Imports
West Europe US Million tons N Million tons N
-13% +2%
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 – December 2016
Reduced exports from China amid lower prices
42
170
190
210
230
250
270
290
310
330
350
370
390
410
430
450
USD/t
Urea fob Black Sea Urea prilled fob China
Urea granular fob Egypt
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
Chinese exports and urea price Declining urea pricing Black Sea
USD/t Kilotons
Source: BOABC, CFMW
IR – December 2016
European producers’ nitrate stocks
43
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
16/17 10/11 11/12 12/13 13/14 14/15 15/16
Source: Fertilizers Europe, Yara estimate for September
Index
June 2007 = 1
IR – December 2016
Energy cost
44
4.0 4.4
4.0
2.8
3.7
5.2 4.6
3.9 3.8
2.9 2.7 2.7 2.1 2.0 2.1
2.8 2.8 3.3
3.6
4.8
5.7
8.2 8.0 8.0 8.1
6.9
6.1 6.5
5.9 5.7 5.3 5.2
4.1 4.0 4.3
4.9 4.7
6.6
9.2 9.4
10.5 9.8
7.6 7.0
8.1
7.0 6.8 6.5
5.4
4.2 4.4 4.2 5.1 5.3
6.6
7.6
10.7 11.0 11.4 11.3
9.2
7.5
8.5
7.6 7.5 7.0
6.2
5.0 4.6 4.9
5.2 5.8
2009 2010 2011 2012 2013 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
US gas price (Henry Hub) Yara Global TTF day ahead (Zeebrugge 2009-2012) Yara Europe
Yearly averages 2009 – 2013, quarterly averages for 2014-16 with forward prices* for 4Q16 and 1Q17.
*Dotted lines denote forward prices as of 13 October 2016 Source: Yara, World Bank, Argus/ICIS Heren
IR – December 2016
Global grain balance
45
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
2,600
07 08 09 10 11 12 13 14 15 16E 17F
Million tons
Consumption Production
Grain consumption and production Days of consumption in stocks
55
60
65
70
75
80
85
90
95
07 08 09 10 11 12 13 14 15 16E 17F
Days
Source: USDA October 2016
IR – December 2016
Non-commercials’ net long position in corn
46
-200
-100
0
100
200
300
400
500
Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
Thousand contracts
Source: US Commodity Futures Trading Commission
IR – December 2016
Weak grain production economics, affecting particularly P and K
demand
47
0
50
100
150
200
250
300
1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012 1/2013 1/2014 1/2015 1/2016
Index FAO price index
Cereals Price Index Cereals 5 year avg. Food Price Index Food 5 year avg.
Source: FAO
IR – December 2016
Key value drivers – quarterly averages
48
268 250 207 198 183
281 270 233
208 193
3Q15 4Q15 1Q16 2Q16 3Q16
Urea prilled fob Black Sea (USD/t)/Urea granular fob Egypt (dotted line, USD/t)
257 255 249
197 166
3Q15 4Q15 1Q16 2Q16 3Q16
CAN cif Germany (USD/t)
2.7
2.1 2.0 2.1
2.9
3Q15 4Q15 1Q16 2Q16 3Q16
US gas price Henry Hub (USD/MMBtu)
6.4
5.5
4.1 4.3 4.2
3Q15 4Q15 1Q16 2Q16 3Q16
TTF day ahead (USD/MMBtu)
8.2
8.5
8.7
8.3 8.3
3Q15 4Q15 1Q16 2Q16 3Q16
NOK/USD exchange rate
388 355
270 274
210
3Q15 4Q15 1Q16 2Q16 3Q16
Ammonia fob Black Sea (USD/t)
Source: Fertilizer Market Publications, CERA, World Bank, Norges Bank
IR – December 2016
10-year fertilizer prices – monthly averages
49
0
200
400
600
800
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
USD/t Urea prilled fob Black Sea/Urea granular fob Egypt
Average prices 2006 - 2015
0
200
400
600
800
1,000
1,200
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
USD/t DAP fob US Gulf/MOP granular fob Vancouver
0
100
200
300
400
500
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
USD/t CAN cif Germany
0
200
400
600
800
1,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
USD/t Ammonia fob Black Sea