Yara International ASA Second Quarter results 2013Yara International ASA Second Quarter results 2013...
Transcript of Yara International ASA Second Quarter results 2013Yara International ASA Second Quarter results 2013...
IR-Date: 2013-07-19
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19 July 2013
Yara International ASA
Second Quarter results 2013
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Strong results
Record deliveries and low ending stocks
Lower commodity fertilizer margins
Increased nitrate and NPK premiums
Summary second quarter
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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
Earnings per share*
* Average number of shares for 2Q 2013: 279.3 million (2Q 2012: 283.9 million).
NOK 30.23 41.99 37.31 14.72
Annual 2010 2011 2012
EPS excluding currency and
special items
2013
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Solid farm economics support fertilizer demand
Strong global urea demand but increased export availability from China, at
lower prices than last year
Western Europe nitrogen fertilizer industry deliveries 14% higher than
second quarter last year, total 2012/13 season deliveries up 6%
Phosphate and potash markets negatively affected by reduced use in India,
but compound NPK markets running well globally
Strong demand for value-added fertilizer products, including nitrates and
NPKs
Fertilizer market development
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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.
Solid farm economics support fertilizer demand
Source: FAO
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Strong global urea demand, but increased
export availability from China
Global urea trade and Chinese urea exports (million tons) 1 Jul – 31 Mar
20.5
+5.2 28.7
09/10
24.2
08/09
32.0
12/13 11/12
26.8
10/11
Global urea trade
+4.4
7.4
12/13 09/10 11/12
3.0
10/11
6.1
08/09
1.2
3.9
Chinese urea exports
251 350 448 378 389
xxx Average urea price, fob Black Sea
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in 2012/13 season
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
07/08 08/09 09/10 10/11 11/12 12/13
Domestic Imports
Source: TFI, US Trade Commission, Blue-Johnson and Yara estimates
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
07/08 08/09 09/10 10/11 11/12 12/13
Production Net imports
Western Europe USA
+6%
Million tons Million tons
+7%
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500
600
700
800
900
1,000
1,100
1,200
1,300
2Q09 2Q10 2Q11 2Q12 2Q13
Record NPK and nitrate deliveries
Kilotons
500
700
900
1,100
1,300
1,500
1,700
2Q09 2Q10 2Q11 2Q12 2Q13
Yara produced nitrate deliveries
Kilotons
Yara produced NPK deliveries
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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
2010 2012 2011 2013
NOK
millions 15,315 18,163 16,970 8,124
Annual
EBITDA excluding special
items
NOK millions
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EBITDA development
3,995
Volume EBITDA
2Q13
Currency
48
Other
188
Gas & oil
costs in
Europe
232
Price/margin
1,790
Special
items
158
EBITDA
2Q12
4,966
1,130
NOK millions
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Strong earnings in all segments
1,221 1,196
303 288
3,534
2,468
Downstream Industrial Upstream
EBITDA excluding special items
2Q12 2Q13
NOK millions
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Net income from equity-accounted investees
-99
GrowHow UK
7
158
Tringen
63
Lifeco
20
51
Qafco
342 356
44
72
Other
2Q13 2Q12
NOK millions
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1,363
1,551
935
1,219
557 600
1,175
1,670
461 469
2Q12 2Q13 2Q12 2Q13 2Q12 2Q13 2Q12 2Q13 2Q12 2Q13
Yara-produced deliveries Joint venture & third party sourced Total
Increased fertilizer deliveries
Nitrate NPK compound NPK blends Urea UAN
Kilotons
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1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Kilotons Finished fertilizer
Other NPK Nitrates Urea
Low Yara stocks
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Value
above
ammonia
0
100
200
300
400
500
600
700
2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13
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
Farmer yield benefits justify nitrate premium
0
20
40
60
80
100
120
140
160
2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13
Nitrate premium, USD/t CAN
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0
100
200
300
400
500
600
700
4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13
USD/t
Phosphate upgrading margins
DAP, fob USG
Rock, fob NA *1.4
Value above
raw material
0
100
200
300
400
500
600
700
4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13
USD/t
NPK blend premium
NPK T17, del France
NH3, fob Black Sea *0.22
DAP, fob Morocco
MOP, cfr NWE
Urea, fob Black sea
Stable NPK premiums
Margin above
blend cost
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NOK millions
Total Yara contribution
Value-added upgrading and distribution make
up larger part of Yara’s contribution
9,000
8,000
4,000
3,000
2,000
1,000
0
7,000
6,000
5,000
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 2Q11 1Q11 2Q10 1Q10
Commodity Europe
Commodity overseas
Fertilizer upgrade & distribution
Industrial upgrade & distribution
Trade
4Q11 3Q11 4Q10 3Q10
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0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0
50
100
150
200
250
300
1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13
Air1 deliveries % of total Industrial deliveries excl. industrial gases
Solid growth in Air1 deliveries
Kilotons
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Strong cash flow
Dividends
from equity
accounted
investees
29
Cash
earnings**
1,527
Net debt
Mar 13*
1,984
Yara Dividend
3,418
72
Other
741
Net debt
Jun 13*
FX loss
409
Net investments
1,204
Net operating
capital
679
* 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
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Continued strong farm economics support fertilizer demand
Urea market likely dominated by China in 3Q due to increased supply; from
4Q production rates and 1 November tax change enforcement are key
Capacity outside China: unclear timing for new projects
Positive situation in Europe, with continued strong farm margins stimulating
demand
Continued strong demand for premium products
Prospects
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16
76
Q2 2012 Q2 2013
Yara Brazil EBITDA (NOK millions)
Improvement in Brazil and Bunge closing in 3Q
Positive volume and margin
improvement compared with 2Q12
(Yara Brazil)
Bunge closing during third quarter
Transaction value will be adjusted
for net operating capital value at
time of closing
– USD 750 million based on
normalized USD 385 million net
operating capital
780 863
xxx Yara Brazil deliveries (kt) excl. trade
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More information can be found on www.yara.com
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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
5,438 5,253
5,013 5,045
5,300
6,339
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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Yara 2Q fertilizer sales by market and product
2013: 6.3 million tons (2012: 5.3 million tons)
2,254
1,174
544
987
294
2,771
1,446
644
1,117
361
Europe Latin America Asia North America Africa
2Q12 2Q13
935
557
1,363 1,175
489 461 272
1,219
600
1,551 1,670
515 469 314
NPK compounds NPK blends Nitrate Urea Other products UAN CN
Kilotons
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0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Kilotons
Urea Nitrates NPK CN UAN SSP - based fertilizer
2012 2009 2010 2011 2013
Yara production volume*
0
500
1,000
1,500
2,000
2,500
Kilotons
2013
* Including share of equity-accounted investees
Finished fertilizer and industrial products Ammonia
2012 2009 2010 2011
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4.8
5.7
7.6
8.3 8.3 8.6
7.9 7.7
8.1 8.3 8.3 8.5
7.6 7.8 6.6
7.6
10.1
11.1 10.9 10.8 11.0 11.0 10.8
11.4 11.5 11.9
10.7 10.9
0
2
4
6
8
10
12
14
2009 2010 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
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 3Q13 and 4Q13
*Dotted lines denote forward prices as of 12 July 2013
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Yara European gas cost closer to hub price
Spread between Yara and Zeebrugge
Source: Yara, World Bank, Platts *Dotted lines denote forward prices as of 12 July 2013
2.0
1.7
2.1
1.4
1.1
0.9
0.8 0.7
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
USD/ MMBtu
6.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
USD/ MMBtu
Zeebrugge (1-month lag) Yara Europe
European energy cost
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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
0.56
0.27
0.12
0.02
2009 2010 2011 2012 2013
Debt/equity ratio
Net interest-bearing debt / equity ratio (end of period)
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At the beginning of the third quarter 2013
1. The US dollar debt generating p&l exposure was USD 1,150 million
• Kept as hedge of future earnings and to finance inventories in emerging markets
• Around 50% towards EUR with 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 EUR (720 million) and CAD (460 million). The effects of these positions
correspond to offsetting translation effects in equity and the net economic effect for Yara is
neutral.
• Receivables mainly GBP (40 million) and AUD (30 million) as intercompany funding of
subsidiaries. The accounting effect on internal loans does not express the net economic
effect for Yara.
Main currency positions affecting
financial items
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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
Source: USDA, July 2013
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
Continued strong price incentives necessary to
match consumption growth
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55.6
3.0
52.6 55.3
7.9
63.2
0
10
20
30
40
50
60
70
Pro
du
ctio
n
Exp
ort
Dom
estic
Dom
estic
Exp
ort
Pro
du
ctio
n
Million tons
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
Million tons
10/11
Source: BOABC, CFMW
12/13
Strong Chinese urea production
Chinese urea production Domestic urea balance
Jul-May 11/12 Jul-May 12/13
5.1% 11/12
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Strong export increase from China
Chinese urea exports, Kilotons
Source: BOABC
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-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13
Urea price, USD/t
Chinese urea exports Urea, fob Yuzhny
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0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
Index June 2007=1
Source: Fertilizers Europe, Yara estimate for June
European producer nitrate stocks
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-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
Thousand contracts
Source: US Commodity Futures Trading Commission
Non-commercials’ net long position in corn
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Key value drivers – quarterly averages
471
383 385 400
342
2Q12 3Q12 4Q12 1Q13 2Q13
Urea prilled fob Black Sea (USD/t)
331 314
343 351 322
2Q12 3Q12 4Q12 1Q13 2Q13
CAN cif Germany (USD/t)
2.3
2.9
3.4 3.5
4.0
2Q12 3Q12 4Q12 1Q13 2Q13
US gas price Henry Hub (USD/MMBtu)
9.1 9.1
10.3 11.1
10.3
2Q12 3Q12 4Q12 1Q13 2Q13
Zeebrugge day ahead (USD/MMBtu)
5.9
5.5
5.7 5.6
5.8
2Q12 3Q12 4Q12 1Q13 2Q13
NOK/USD exchange rate
536
619 627
562 500
2Q12 3Q12 4Q12 1Q13 2Q13
Ammonia fob Black Sea (USD/t)
Source: Fertilizer Market Publications, CERA, World Bank, Norges Bank
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10-year fertilizer prices – monthly averages
Source: Average of international publications
0
200
400
600
800
1,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
USD/t Ammonia fob Black Sea
0
100
200
300
400
500
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
USD/t CAN cif Germany
0
200
400
600
800
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
USD/t Urea prilled fob Black Sea
Average prices 2003 - 2013
0
200
400
600
800
1,000
1,200
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
USD/t DAP fob US Gulf