yara international asa 2015 fourth quarter results4q13 4q14 4q15 0 500 1,000 1,500 2,000 2,500 3,000...

Yara International ASA

2015 fourth quarter

results

11 February 2016

IR – 11 February 2016

Safe operations is our first priority

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

TRI

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


Summary fourth quarter

• Weaker result reflecting lower margins and deliveries

• Significant downtime impacts production of urea, ammonia and nitrates

• Global deliveries down 7%, but increase in Brazil

• Strong Industrial result with continued growth for environmental products

• Asset write-downs of NOK 1,150 million

• Proposed dividend NOK 15 per share, 51% of net income


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

1.58

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

3.97

Earnings per share*

*Average number of shares for 4Q 2015: 274.6 million (4Q 2014: 275.8 million).

NOK 37.31 20.67 27.59 29.38

Annual 2012 2013 2014

EPS excluding currency and

special items

2015


35.1

9.4

25.6

31.9

7.0

38.9

0

5

10

15

20

25

30

35

40

45

Pro

duction

Exp

ort

Do

mestic

Do

mestic

Exp

ort

Pro

duction

Million tons

Chinese urea balance this season

+24%

Source: BOABC, CFMW

Jul-Dec 14/15 Jul-Dec 15/16

200

220

240

260

280

300

320

340

360

380USD/t

Urea price China (inland proxy price) Urea fob Black Sea

Declining urea pricing

Lower urea prices due to lower supply cost from China


Season-to-date Europe and US nitrogen fertilizer

industry deliveries behind last year

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

2H11 2H12 2H13 2H14 2H15

Domestic production Net imports

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2H11 2H12 2H13 2H14 2H15

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

West Europe Million tons N US Million tons N

-5% -4%


Lower production due to maintenance stops and

unplanned outages

0

500

1,000

1,500

2,000

2,500

Kilotons

2015

0

1,000

2,000

3,000

4,000

5,000

6,000

Kilotons

Urea Nitrates NPK CN UAN SSP - based fertilizer

2014 2011 2012 2013 2015

* Including share of equity-accounted investees

Finished fertilizer & industrial products1 Ammonia1

2014 2011 2012 2013


292

183

144

77

119

281 287 268

62

122

224

370

242

56

108

Asia Brazil LatinAmerica excl.

Brazil

Africa NorthAmerica

Continued premium products growth outside Europe

Kilotons Kilotons

4Q15 4Q14 4Q13

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4Q11 4Q12 4Q13 4Q14 4Q15

Outside Europe Europe

CAGR

10%

1) YaraBela, YaraMila and YaraLiva deliveries

Value-added fertilizer deliveries1 Value-added fertilizer deliveries1


Brazil: 4Q industry deliveries 7% lower than last year,

pick-up in Yara deliveries

222 198

290

102 116

147

175

231 250

183

287

370

4Q 1Q 2Q 3Q

Brazil 4Q fertilizer deliveries

Kilotons Kilotons

Source: ANDA, Yara

Yara Brazil value-added product deliveries

2015 2014 2013 Brazil

deliveries Brazil industry

deliveries

Galvani

deliveries

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2011 2012 2013 2014 2015

Th

ou

san

ds

+2% ex.

Galvani

-7%

Galvani

170 kt


57%

51%

6%

2014

53%

47%

6%

2013

64%

48%

16%

2012

47%

2015P

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%

Proposed dividend NOK 15 per share

Dividends Share buy-backs

Dividend and buy-backs1 NOK per share

Target range 40-45%

2,3 2,4 2,54,0 4,5 4,5

5,5

13,0

10,0

13,0

15,0

1,5

1,1

1,9

7,0

0,8

0,81,4

2015P

5.3

2008

4.5

2007

5.4

2006

4.0

2012

14.1

2011

7.4

0.4

2010

5.5

2009

15.5

0.5

2014

13.8

2013

11.9

2005

2.8

0.4

2004

2.3

Dividends Share buy-backs

Share of net income

1) Number of shares based on the number of shares receiving dividend


NutrioxTM - calcium nitrate with integrated technology

solutions, for preventive waste water odor control

• Hydrogen sulphide (H2S) is a toxic gas that often

develops in waste water and sewage systems

• The absence of air and oxygen cause bacterial

production of hydrogen sulphide (H2S).

• H2S causes eye, nose and throat irritation. H2S can

also transform into sulphuric acid, causing corrosion in

sewage networks

• Nutriox™ provides H2S prevention for corrosion,

odor and toxicity control of municipal and industrial

waste water systems

128 128 131

76 84 90

2013

226 215

2015 2014

208

North America Rest of World Europe

Kilotons


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

3,504

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

3,508

2012 2014 2013 2015

NOK

millions 16,970 13,399 16,407 21,361

Annual

EBITDA excluding special

items

NOK millions


EBITDA development

722

1 296

461

1 460

3 504

4 625

102

EBITDA 4Q15 Special

items

Currency Other Price/margin Volume EBITDA 4Q14

NOK millions

Of which

Pilbara and

Belle Plaine

~ 700 MNOK


Write-downs of NOK 1,150 million

• Yara Montoir (France) – nitrate and

compound NPK plant

• small scale

• limited export opportunities

• serves home market, exposed to more

commodity grains

• Yara Trinidad - ammonia plant

• small scale

• frequent gas supply curtailments

• lower energy efficiency compared to

Yara’s average

382

224

1 150

544

Total write-

downs

Other Montoir Trinidad

NOK millions


Earnings per segment

1,211 1,253

235

308

3,434

2,176

1,234 1,435

296

308

3,251

1,998

Crop Nutrition Industrial Production

EBITDA excluding special items

4Q14 4Q15

EBITDA1 (NOK millions)

1) 4Q 2015 result reflects new segment structure as described in note 3 of the financial report.


Lower natural gas cost in Europe

(726)

(1,314)

(588)

(151)

(588)

(900)

(1,050)

(1,400)

(1,200)

(1,000)

(800)

(600)

(400)

(200)

0

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

NOK millions

February 2016 estimate*

Source: Yara, World Bank, Argus/ICIS Heren

*Dotted lines denote forward prices as of 02 February 2016

Yara European gas & oil cost

Actual

Change in European energy cost

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

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

USD/ MMBtu

TTF (1-month lag) Yara Europe


Stable European nitrate premium

0

100

200

300

400

500

600

700

4Q12 2Q13 4Q13 2Q14 4Q14 2Q15 4Q15

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

4Q12 2Q13 4Q13 2Q14 4Q14 2Q15 4Q15

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


Value above

raw material

0

100

200

300

400

500

600

700

4Q12 2Q13 4Q13 2Q14 4Q14 2Q15 4Q15

USD/t NPK premium over blend1

Stable commodity phosphate margins and solid NPK

compound premiums

0

100

200

300

400

500

600

4Q12 2Q13 4Q13 2Q14 4Q14 2Q15 4Q15

USD/t Phosphate upgrading margins

DAP, fob USG

Rock, fob North Africa *1.4

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


Net interest-bearing debt development

2 5333 229

793

756

4 057

1 164

11 868

4 401

Galvani

payment

Pilbara

buy-out

Cash

earnings*

Net debt

Sep 15

Other Net debt

Dec 15

FX gain

362

Share

buy/backs

364

Investments

net

Net operating

capital

change

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

NOK millions


Prospects

• Supportive farm margin outlook and fertilizer application incentives

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

• Catch-up in Europe deliveries expected in 1H 2016

• Continued nitrate and NPK demand growth for higher value crops, but P and K demand

impacted in commodity crop sectors

• Further NOK 2 billion European gas cost saving expected next 2 quarters


71.4

13.6

57.7 61.6

13.8

75.3

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

7%

Jan 14– Dec 14 Jan 15– Dec 15

Kilotons


Brazil 2015 industry deliveries 6% lower than last year,

Yara Brazil -5% Brazil 2015 fertilizer deliveries

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2011 2012 2013 2014 2015

Th

ou

san

ds

-5%

-6%

Kilotons Kilotons

Source: ANDA, Yara

Yara Brazil value-added product 2015 deliveries

0

200

400

600

800

1,000

1,200

2007 2008 2009 2010 2011 2012 2013 2014 2015

Yara Brazil deliveries Brazil industry

deliveries


Yara 4Q fertilizer sales by market and product

2,267 2,667

766 477 408

2,084

2,784

549 445 286

Europe Latin America North America Asia Africa

4Q14 4Q15

1,099 1,315 1,464 1,426

849

233 203

1,114 1,358 1,342

1,006 923

203 200

Nitrate Urea Other products UAN CNNPK compounds1 NPK blends1

Kilotons

1) Yara produced NPK compound and NPK blends


YaraMila and YaraBela deliveries

0

200

400

600

800

1,000

1,200

1,400

1,600

4Q11 4Q12 4Q13 4Q14 4Q15

Kilotons

-

200

400

600

800

1,000

1,200

1,400

1,600

4Q11 4Q12 4Q13 4Q14 4Q15

Yara-produced YaraBela deliveries Kilotons

Yara-produced YaraMila deliveries

Outside Europe Europe Outside Europe Europe


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

Commodity Europe

Commodity overseas

Upgrade & distribution

Trade

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


Industrial volume development

829815

892859864852849

816

866819

844

792

577541540

482511

438456432

328

385364333346

380361339

367364358328

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

382

4Q13 3Q13

374

2Q13

368

1Q13

343

Other Industrial N-chemicals Environmental products

Kilotons


0

50

100

150

200

250

300

350

400

450

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

AdBlue deliveries

Kilotons


Debt/equity ratio

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 0.16

2010 2011 2012 2013 2014 2015

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


Yara stocks

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Urea Nitrates Compound NPK Other

Bunge Fertilizer

included from 3Q 2013

Kilotons

Finished fertilizer


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

European producers’ nitrate stocks

Index

June 2007 = 1


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 2.1 2.1 2.2

4.8

5.7

8.2 8.0 8.0 8.1

6.9

6.1 6.5

6.0 5.7

5.3 5.2 4.1

3.9

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 4.1

6.6

7.6

10.7 11.0 11.4 11.3

9.2

7.5

8.5

7.6 7.5 7.0

6.2

5.0 4.6

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

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 1Q16 and 2Q16.

*Dotted lines denote forward prices as of 13 October 2015


Currency exposure affecting Profit & Loss

At the beginning of the first quarter 2016

1. The US dollar debt generating Profit & Loss exposure was USD 1,800 million

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

• Exposure mainly towards EUR (40 %), AUD and BRL (20 % each) 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

• Payables mainly CAD (150 million) vs. NOK

• Receivables mainly EUR (700 million) vs. NOK and BRL (1,750 million) vs. EUR


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

90

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

Days

Source: USDA February 2016


-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 Jan-16

Thousand contracts

Source: US Commodity Futures Trading Commission

Non-commercials’ net long position in corn


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 26%

Saudi Arabia 24% 1.8% (2.6%)

2016 USA 33%

Algeria 14% 3.1% (3.0%)

2017 USA 35%

Nigeria 10% 2.3% (1.6%)

2018 Nigeria 30%

Russia 20% 1.5% (1.5%)

2019 Nigeria 36%

Russia 29% 1.2% (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 2004 2.0%

Projected nitrogen capacity additions outside China


Key value drivers – quarterly averages

315 295 277 268 250

355 337 297 281 270

4Q14 1Q15 2Q15 3Q15 4Q14

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

310 295 273 257 255

4Q14 1Q15 2Q15 3Q15 4Q15

CAN cif Germany (USD/t)

3.8

2.9 2.7 2.7

2.1

4Q14 1Q15 2Q15 3Q15 4Q15

US gas price Henry Hub (USD/MMBtu)

8.1 7.0 6.8 6.4

5.5

4Q14 1Q15 2Q15 3Q15 4Q15

TTF day ahead (USD/MMBtu)

6.9 7.7 7.8 8.2 8.5

4Q14 1Q15 2Q15 3Q15 4Q15

NOK/USD exchange rate

572

413 393 388 355

4Q14 1Q15 2Q15 3Q15 4Q15

Ammonia fob Black Sea (USD/t)

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


10-year fertilizer prices – monthly averages

Source: Average of international publications

0

200

400

600

800

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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

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

USD/t CAN cif Germany

0

200

400

600

800

1,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

USD/t Ammonia fob Black Sea

yara international asa 2015 fourth quarter results4q13 4q14 4q15 0 500 1,000 1,500 2,000 2,500 3,000...

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