1. No category

Yara International ASA
2016 third quarter
results
21 October 2016
Safe operations is our first priority
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
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 – 21 October 2016
2
Summary third quarter

Weaker results due to lower fertilizer commodity prices

Strong growth in premium product deliveries, especially in Brazil

Strong Industrial result
IR – 21 October 2016
3
Earnings per share*
EPS excluding currency and
special items
14.56
7.41
10.51
8.52
8.04
2.65
8.26
7.97
7.03
6.69
5.66
7.74
7.62
6.18
11.23
10.59
10.22
9.58
6.37
9.14
8.17
6.74
6.40
5.62
3.97
2.65
3.46
3.00
1.58
0.23
Annual
NOK
2013
20.67
2014
2015
27.59
29.38
2016
24.46
*Average number of shares for 3Q 2016: 273.2 million (3Q 2015: 275.1 million).
IR – 21 October 2016
4
Normal start to the European season, slow in the US
Million tons N
West Europe
1.8
+2%
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
3Q11
3Q12
3Q13
3Q14
Domestic production
3Q15
Imports
3Q16
Million tons N
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
3Q11
US
-13%
3Q12
3Q13
3Q14
Domestic production
3Q15
3Q16
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
IR – 21 October 2016
5
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
IR – 21 October 2016
6
Example: Production
Plant productivity improvement and portfolio optimization
will make our upstream positioning more robust
Systemic assessment across Yara Production
organization identified a number of improvement areas
across all sites
Intensive rollout with up to three parallel groups of
implementations for the next 2.5 years, starting with
Sluiskil
• Implement global best practices
• Improve maintenance execution
• Reduce energy consumption
• Enhance product quality
• Further strengthen safety
culture
• Improve capex efficiency
• Optimize asset footprint
IR – 21 October 2016
7
Brazil: focus on premium products and solutions drives growth
Brazil 3Q fertilizer deliveries
Yara Brazil 3Q premium product deliveries
Thousands
Kilotons
12,000
10,000
8,000
6,000
4,000
2,000
0
Thousands
Kilotons
Kilotons
600
+6%
500
+100%
400
3Q12
3Q13
3Q14
3Q15
4,000
3Q16
300
+11%
200
3,000
2,000
100
1,000
0
0
3Q12
3Q13
Industry
IR – 21 October 2016
3Q14
Yara Brazil
3Q15
3Q16
Galvani
Trade
3Q07 3Q08 3Q09 3Q10 3Q11 3Q12 3Q13 3Q14 3Q15 3Q16
Source: ANDA, Yara
8
Brazil: unrivalled market presence and farmer-centric strategy
Unrivalled presence: 28 sites in 11 states
Farmer-centric strategy drives growth
> 20,000 growers using Yara solutions
Yara (offices,
production, blending
and distribution of
fertilizers, port
operation)
> 200 Yara agronomists and 600 sales
representatives
> 55% of Yara deliveries are direct to farmer
Galvani (fertilizer
production, mining
and port operation)
IR – 21 October 2016
> 55,000 interactions with growers p.a.
9
Earnings before interest, tax, depreciation and amortization
(EBITDA)
EBITDA excluding special
items
NOK millions
4,184
4,149
7,884
4,614
4,227
4,103
4,039
4,625
3,830
3,318
3,223
3,591
4,185
4,002
3,964
5,742
4,794 5,179
5,055
5,055
5,050
4,528
3,508
3,504
2,363
1,858
2013
2014
13,399
16,407
2015
5,489
3,958
3,004
2,968
2016
Annual
NOK
millions
IR – 21 October 2016
21,361
13,548
10
EBITDA development
NOK millions
7,884
3,233
223
2,641
156
241
Currency
translation
Other
3,004
857
EBITDA 3Q15
Special
items
IR – 21 October 2016
Volume
Price/Margin Energy costs
EBITDA 3Q16
11
Lower prices mainly impact Production segment
6,221
2,937
EBITDA
(NOK millions)
EBITDA excluding special items
1,534
1,519
1,502
1,502
432
432
Crop Nutrition
IR – 21 October 2016
894
857
403
403
Industrial
3Q15
3Q16
Production
12
Natural gas cost in Europe
Change in spot energy cost
Yara European gas & oil cost
USD/
MMBtu
NOK
millions
350
400
8.0
200
7.0
0
6.0
(200)
(151)
(400)
5.0
(300)
(600)
4.0
(588)
(800)
3.0
(1,000)
2.0
(704)
(923)
(1,042)
(1,200)
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
TTF (1-month lag)
Yara Europe
*Dotted lines denote forward prices as of 13 October 2016
Source: Yara, World Bank, Argus/ICIS Heren
IR – 21 October 2016
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
Actual
October 2016 estimate*
13
Lower European nitrate premiums in new season
Nitrogen upgrading margins1
(monthly publication prices)
USD/t
700
European nitrate premium2
(quarterly Yara realized)
USD/t
100
90
600
80
500
70
60
400
Nitrate
premium
above urea
300
200
100
50
40
Value above
ammonia
30
Value
above gas
20
10
Yara EU gas cost *20
0
3Q13
0
1Q14
CAN (46% N)
3Q14
1Q15
3Q15
NH3 CFR (46% N)
1) All prices in urea equivalents
IR – 21 October 2016
1Q16
3Q16
Urea Egypt CFR proxy
3Q13
1Q14
3Q14
1Q15
3Q15
1Q16
3Q16
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.
14
Lower commodity phosphate margins, solid compound NPK
premiums
NPK premium over blend1
Phosphate upgrading margins
USD/t
700
USD/t
600
600
500
500
400
400
Value above
raw material
300
Weighted average global
premium above blend cost
Nitrate premium, CIF inland Germany
300
Urea, CIF inland Germany
NH3, fob Black Sea *0.22
200
200
100
Rock, fob North Africa *1.4
0
3Q13
1Q14
3Q14
1Q15
DAP, fob USG
IR – 21 October 2016
3Q15
DAP, CIF inland Germany
100
1Q16
3Q16
0
3Q13
MOP, CIF inland Germany
1Q14
3Q14
1Q15
3Q15
1Q16
3Q16
1) Export NPK plants, average grade 19-10-13, net of
transport and handling cost.
15
Net interest-bearing debt development
NOK millions
9,698
2,836
Net debt
Jun 16
Cash earnings*
114
32
210
26
Yara dividend
and share
buy-backs
Net operating
capital change
Foreign
currency
translation loss
Other
10,390
3,146
Investments
(net)
Net debt
Sep 16
* Operating income plus depreciation and amortization, minus tax paid, net gain/loss on disposals, net interest expense and bank charges
IR – 21 October 2016
16
Yara growth project pipeline adds ~5 NOK earnings per share by
2020 at current market prices
Incremental earnings at current prices1 (NOK/share)
Profitable growth through expansions and M&A
Expand premium products
sales and supply

CN/NPK expansion Porsgrunn (2H 2017)

NPK expansion Uusikaupunki (2H 2016)

Urea 8 Sluiskil (2H 2017)

Rio Grande expansion (2H 2020)

Freeport ammonia JV (4Q 2017)

New ammonia vessels (2016)

Babrala urea asset (2H 2017)

Pilbara – TAN (4Q 2016)

Köping – TAN (1H 2018)
5.3
4.0
1.8
0.5
2017
Expand commodity scale
based on attractive fullcost growth opportunities
2018
2019
2020
Impact2 of +100 USD/t price change (NOK/share)
1.5
Act on attractive
opportunities to grow
industrial sales and supply
Structurally secure P and K
supply
1.2
0.8
Urea

DAP
3
Galvani, Salitre (mining: 2H17, chemical 1H18)
1 Urea
2
3
IR – 21 October 2016
Ammonia
fob Yuzhny 190 USD/t, Ammonia fob Yuzhny 170 USD/t, DAP fob Morocco 345 USD/t
At full capacity (2019 for urea and ammonia, 2020 for DAP)
Phosphate-driven price change, equivalent to 138 USD/t phosphate rock (72 bpl)
17
Prospects

Supportive farm margin outlook overall, with higher prices for several crops

Urea capacity increases in US and North Africa partially displacing Chinese exports

Improved pre-buying incentives in Europe, but some markets impacted by poor harvests

Continued growth in Brazil, but fourth quarter industry deliveries expected to be broadly in
line with a year earlier

Yara expansion projects will deliver NOK 5 per share incremental earnings by 2020,
based on today’s market prices

Yara improvement program entering implementation phase
IR – 21 October 2016
18
Acquisition of Tata Chemicals’ urea and distribution business in
India provides footprint to accelerate premium product growth
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 – 21 October 2016
19
Additional information
IR – 21 October 2016
Strong growth pipeline
Capex plan1
NOK bn
14.4
0.9
14.2
1.4
0.4
16.2
1.3
Production growth 2015 - end 20185
Cost&capacity improvements
Finished fertilizer
M&A
3.3
3.3
Committed growth
Maintenance
Ammonia
23.3
Mill.tons
9.0
0.7
9.0
7.0
4.2
6.2
2.3
7.2
1.3
0.5
0.7
2.1
1.2
6.0
5.5
5.4
5.6
2015
2016
2017
2018
18.9
0.8
Production
Regularity
20152
improvement
2)
3)
4)
5)
1)
Babrala
Committed
growth3
Production
end 2018
Production Regularity BASF JV
20154 improvement
Babrala
Production
end 2018
Finished fertilizer and industrial products, excl. bulk blends. Including Yara share of production in
JVs. 2015 numbers excl. Growhow UK (~300 kt)
Committed projects only. TAN Pilbara: 160 kt, Porsgrunn: 250kt, Glomfjord: 185kt, Uusikapunki:
250kt, Köping: 90kt, Sluiskil: net 160kt, Galvani (Salitre - 60% of ~ 2 mill.tons)
Excl. Growhow UK (~200 kt). Including 100% ownership in Pilbara NH3 plant
Rio Grande expansion ads 0.5 million tons SSP and 1 million ton blends by 2020
Yara’s share of capex
IR – 21 October 2016
21
Production
Finished fertilizer & industrial products1
Ammonia1
Kilotons
2,500
Kilotons
6,000
5,000
2,000
4,000
1,500
3,000
1,000
2,000
500
1,000
0
2013
2014
2015
2016
0
2013
Urea
2014
Nitrates
NPK
2015
CN
UAN
2016
SSP - based fertilizer
1) Including share of equity-accounted investees
IR – 21 October 2016
22
Yara 3Q fertilizer sales by market and product
Kilotons
2,930
2,085
3Q15
3,190
2,100
582
Europe
1,101
3Q16
1,419
Brazil
1,603
1,750
619
526
Latin America
1,415
North America
1,448
1,347
998
913
591
577
427
Asia
Africa
1,210
236
Compound NPK1
Blend NPK
Nitrate
Urea
322
235
Other products
229
UAN
279
234
CN
1) Yara-produced compound NPK and third party sourced (Total NPK minus blend NPK)
IR – 21 October 2016
23
Fertilizer deliveries
Kilotons
7,000
6,500
6,000
5,500
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2009
2010
2011
2012
Europe
IR – 21 October 2016
2013
2014
2015
2016
Outside Europe
24
Fertilizer deliveries by product and source
Kilotons
1,750
1,603
1,415 1,448
1,582
1,419
1,101
998
913
236
229
3Q15 3Q16
3Q15 3Q16
3Q15 3Q16
3Q15 3Q16
3Q15 3Q16
Nitrate
NPK compounds
NPK blends
Urea
UAN
Yara-produced deliveries
IR – 21 October 2016
1,488
3Q15 3Q16
Other
Joint venture & third party sourced
25
YaraMila (compound NPK) and YaraBela (nitrate) deliveries
Kilotons
Yara-produced YaraMila deliveries
Kilotons
1,600
1,600
1,400
1,400
1,200
1,200
1,000
1,000
800
800
600
600
400
400
200
200
Yara-produced YaraBela deliveries
-
0
3Q12
3Q13
3Q14
Outside Europe
IR – 21 October 2016
3Q15
3Q16
Europe
3Q12
3Q13
3Q14
Outside Europe
3Q15
3Q16
Europe
26
Strong premium product deliveries
Value-added fertilizer deliveries1
Value-added fertilizer deliveries1
3,500
499
3,000
2,500
303 305 300
2,000
302
231
1,500
250
CAGR
8%
1,000
236
148
128
84 85 84
500
41 37
0
3Q12
3Q13
3Q14
3Q15
Outside Europe
1) YaraBela, YaraMila and YaraLiva deliveries
IR – 21 October 2016
3Q16
Asia
Brazil
Latin
America excl.
Brazil
Africa
3Q14
3Q15
3Q16
Europe
North
America
27
Value-added and distribution make up larger part of Yara’s
contribution
Total Yara contribution
11,000
10,000
9,000
8,000
Trade
7,000
6,000
5,000
Upgrade & distribution
4,000
3,000
2,000
Commodity overseas
1,000
0
1Q10
Commodity Europe
3Q10
1Q11
IR – 21 October 2016
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
1Q15
3Q15
1Q16
3Q16
28
AdBlue deliveries
Kilotons
500
450
400
350
300
250
200
150
100
50
0
3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
IR – 21 October 2016
29
Industrial volume development
Kilotons
866
819
849
816
864
852
432
374 364
367
382
339
361
889
540
438
380
541
893
847
829
815
511
456
892
859
577
538
571
482
346
333
385
364
328
308
242
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
Industrial N-chemicals
IR – 21 October 2016
572
1Q15
2Q15
3Q15
Environmental products
4Q15
1Q16
2Q16
207
3Q16
Other
30
Debt/equity ratio
Net interest-bearing debt / equity ratio (end of period)
0.22
0.20
0.17
0.16
0.15
0.13
0.13
0.12 0.12
0.14
0.11
0.07
0.08
0.08
0.06
0.06 0.06
0.06
0.06
0.05
0.02
0.01
-0.04
2011
IR – 21 October 2016
2012
2013
2014
2015
2016
31
Yara stocks
Kilotons
Finished fertilizer
Bunge Fertilizer
included from 3Q 2013
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
Urea
IR – 21 October 2016
Nitrates
Compound NPK
Other
32
Reduced exports from China amid lower prices…
Declining urea pricing
Chinese exports and urea price
Kilotons
2,400
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
USD/t
450
430
410
390
370
350
330
310
290
270
250
230
210
190
170
Urea fob Black Sea
Urea granular fob Egypt
IR – 21 October 2016
Black Sea
USD/t
550
500
450
400
350
300
250
200
150
100
50
0
Urea prilled fob China
Source: BOABC, CFMW
33
…and increased production elsewhere
Gross capacity additions, excl. China
(mill. tonnes urea1)
7.4
6.9
Nigeria 0.7
Russia 0.3
Iran 0.5
Nigeria 0.7
Russia 0.3
Iran 0.5
Algeria 1.2
4.5
Algeria 1.2
Russia 0.3
Iran 0.5
USA 2.5
USA 1.7
4.1
Nigeria 1.3
USA 0.9
Russia 0.4
Indonesia 0.7
Egypt 0.6
Malaysia 0.6
Saudi Arabia 0.5
Bangladesh 0.2
2016
India 0.7
Malaysia 0.6
Indonesia 0.5
Mexico 0.5
Bolivia 0.3
Bangladesh 0.3
Canada 0.1
2017
India 0.7
Brazil 0.6
Turkmenistan 0.6
Mexico 0.5
Azerbaijan 0.4
Indonesia 0.3
Bolivia 0.3
Canada 0.1
2018
India 0.7
Brazil 0.6
Turkmenistan 0.6
Azerbaijan 0.4
Indonesia 0.3
2.0
~3 Mt
consumption
growth
Nigeria 1.3
Russia 0.1
India 0.6
2019
2020
Source: CRU, gross capacities, September 2016
1) Using 50% operating rate in new plants’ first year of production
IR – 21 October 2016
34
The new season starts with reduced Chinese urea production
Million tons
Domestic urea balance
Million tons
14
12.9
-11%
12
15/16
14/15
11.6
11.1
9.9
1.8
10
1.7
8
16/17
6
4
2
Source: CFMW
IR – 21 October 2016
Jul-Aug 15/16
Production
Export
Domestic
Domestic
Export
0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Production
7.0
6.8
6.6
6.4
6.2
6.0
5.8
5.6
5.4
5.2
5.0
Chinese urea production
Jul-Aug 16/17
35
Increasing coal prices
CIF ARA1 December 2016 ($/mt)
China anthracite prices September 2016 (RMB/mt)
1) Amsterdam, Rotterdam, Antwerp
Source: CME Group, China Fertilizer Market Weekly
IR – 21 October 2016
36
European producers’ nitrate stocks
Index
June 2007 = 1
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
Jul
Aug
16/17
Sep
Oct
10/11
Nov
11/12
Dec
12/13
Jan
Feb
13/14
Mar
14/15
Apr
May
Jun
15/16
Source: Fertilizers Europe, Yara estimate for September
IR – 21 October 2016
37
Energy cost
Yearly averages 2009 – 2013, quarterly averages for 2014-16 with forward prices* for 4Q16 and 1Q17.
10.7
11.0 11.4
10.5
9.2
7.6
9.4
11.3
9.8
8.5
7.5
8.2
6.6
8.0
8.0
8.1
6.6
4.4
7.0
6.1
5.2
4.0
3.7
7.6
7.5
7.0
6.8
8.1
7.6
6.9
4.7 5.7
4.8
4.0
9.2
6.5
5.9
5.7
7.0
6.2
6.5
5.3
4.6
3.9
5.2
4.6
4.2
4.4
3.8
2.7
4.9
4.2
2.8
2.0
5.1
4.0
2.7
2.1
5.2
5.8
5.3
4.9
4.3
4.1
2.9
2.8
5.4
5.0
3.3
3.6
2.1
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
*Dotted lines denote forward prices as of 13 October 2016
Source: Yara, World Bank, Argus/ICIS Heren
IR – 21 October 2016
38
Global grain balance
Grain consumption and production
Million tons
2,600
2,550
2,500
2,450
2,400
2,350
2,300
2,250
2,200
2,150
2,100
2,050
2,000
1,950
07 08
Days of consumption in stocks
Days
95
90
85
80
75
70
65
60
55
09
10
11
12
Consumption
13
14
15
16E 17F
07
08
09
10
11
12
13
14
15
16E 17F
Production
Source: USDA October 2016
IR – 21 October 2016
39
Non-commercials’ net long position in corn
Thousand contracts
500
400
300
200
100
0
-100
-200
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Source: US Commodity Futures Trading Commission
IR – 21 October 2016
40
Weak grain production economics, affecting particularly P and K
demand
FAO price index
Index
300
250
200
150
100
50
0
1/2006
1/2007
1/2008
Cereals Price Index
1/2009
1/2010
1/2011
Cereals 5 year avg.
1/2012
1/2013
1/2014
Food Price Index
1/2015
1/2016
Food 5 year avg.
Source: FAO
IR – 21 October 2016
41
Key value drivers – quarterly averages
Urea prilled fob Black Sea (USD/t)/Urea
granular fob Egypt (dotted line, USD/t)
TTF day ahead (USD/MMBtu)
6.4
CAN cif Germany (USD/t)
5.5
4.1
3Q15
4Q15
1Q16
4.3
4.2
268 281
250 270
207
2Q16
3Q16
US gas price Henry Hub (USD/MMBtu)
3Q15
4Q15
233
257
198 208
183 193
2Q16
3Q16
1Q16
Ammonia fob Black Sea (USD/t)
255
249
197
3Q15
4Q15
1Q16
2Q16
166
3Q16
NOK/USD exchange rate
8.7
2.9
2.7
2.1
2.0
388
8.5
355
2.1
270
274
210
8.3
8.2
3Q15
4Q15
1Q16
2Q16
3Q16
3Q15
4Q15
1Q16
2Q16
3Q16
3Q15
4Q15
1Q16
2Q16
8.3
3Q16
Source: Fertilizer Market Publications, CERA, World Bank, Norges Bank
IR – 21 October 2016
42
10-year fertilizer prices – monthly averages
USD/t
Ammonia fob Black Sea
USD/t
1,000
500
800
400
600
300
400
200
200
100
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
USD/t
Urea prilled fob Black Sea/Urea granular fob Egypt
CAN cif Germany
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
USD/t
DAP fob US Gulf/MOP granular fob Vancouver
1,200
800
1,000
600
800
600
400
400
200
200
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Average prices 2006 - 2015
IR – 21 October 2016
43