Growing on challenges. Annual General Meeting Oslo, 11 May 2006

Transcription

1 Growing on challenges Annual General Meeting Oslo, 11 May 26

2 2 Who we are and what we do We are a chemical company with fertilizer application as our biggest market Nitric Acid Fertilizer Energy Ammonia Urea Industrial We convert energy and nitrogen from the air into useful products for farmers and industrial customers

3 Drivers of increased demand for Yara s products 3 Fertilizer demand drivers Population growth/reduction of hunger Economic growth More meat consumption in developing countries Focus on diets rich in proteins Higher consumption of fruit and vegetables Biofuels High energy prices increase demand for biofuels Industrial products demand drivers Economic growth Environmental regulation (e.g. reduction of NO x emissions)

4 Yara has a unique business model Downstream / Industrial Added-value market pull Business concepts that exploit combined strength Upstream Low cost product push Scale advantage Balanced fertilization Unique market position Strong brand value Crop/application focus Dedicated ownership Change mgmt skills Arbitration opportunities Favourable gas cost Scale advantage Ammonia market share Timing discipline Capacity utilization New business opportunities based on Scale, Synergy and Timing

5 5 Yara creates value in three different ways EBITDA, pro forma until 24 USD millions 1,2 1, Upstream Downstream Industrial Yara... The Knowledge Margin Local market knowledge Deep customer relations Agronomic competence Differentiation and branding The Logistics Leverage Scale in distribution Third party volumes Long-standing partnerships Global presence and optimization The Global Commodity Game Economies of scale Low-cost gas Simplification and productivity improvement

6 Strong profitability despite increasing energy costs 6 USD millions 1,2 1, Yara EBITDA 99 1,33 USD millions 1,2 1, Yara European energy cost 1, * * Annualized based on energy estimates until 3Q 26

7 Robust Upstream performance in Europe and increasing share in low-cost gas areas EBITDA*, pro forma until 25 7 USD millions % Europe, incl. ATS 8% 35% Low-cost gas 28% 36% * Upstream European EBITDA on an after-tax basis; European tax rate assumed to be 34%

8 8 Our production system creates economies of scale Global no 1 in ammonia Global no 1 in nitrates Production capacity* (mill t) Global no 1 in NPK complex fertilizer Production capacity (mill t) Production capacity* (mill t) Yara Agrium Terra PCS Koch Yara Acron DSM Cherkassy Kemira Yara Kemira Acron GP BASF * Incl. companies shares of JVs Source: Fertecon Source: British Sulphur, EFMA Source: Nitrex-Complex

9 9 Strong peer group performance Yara stable Gross return on assets*, percent Yara** BASF 21.7 Agrium Agrium 17.4 Yara** 21.4 BASF 23.9 BASF Air Products K+S Kemira Syngenta Agrium Air Products PCS Kemira GrowHow K+S PCS Yara Dow Air Products DuPont Dow 1.2 Dow 12.4 K+S 13.8 DuPont PCS IMC DuPont Syngenta Mosaic*** Syngenta Kemira GrowHow Mosaic*** * Gross return on assets defined as EBITDA (excluding non recurring items) divided by Total assets (book value) ** Yara pro forma numbers for years 23 and 24 *** Mosaic from June 1, 23 to May 31, 24, pro forma Source: Company reports

10 After turnaround Yara compares favorably with Norwegian peers Gross return on assets* Tomra Yara Elkem Orkla Norske Skog Hydro Aluminium Aker Kværner Yara Elkem Tomra Orkla Norske Skog Hydro Aluminium Aker Kværner Yara Hydro Aluminium Orkla Elkem Tomra Norske Skog Aker Kværner Yara Tomra Orkla Hydro Aluminium Aker Kværner Norske Skog * Gross return on assets defined as EBITDA (excluding non recurring items) divided by Total assets (book value) ** Yara pro forma numbers for years 23-24

11 Yara s 5-year average return on capital significantly above cost of capital CROGI = (EBITDA tax) / Gross Investment 11 Percent Cash Return On Gross Investment 14.1% 14.4% 1.6% 9.4% 9.2% Average = 11.5%

12 12 Net income after minority interest NOK millions 1,4 1,251 1,2 1, Accumulated NOK mill 3,794 3, USD mill

13 Strong balance sheet to achieve growth objectives Net interest-bearing debt to-equity ratio at end of first quarter Q 24 2Q 24 3Q 24 4Q 24 1Q 25 2Q 25 3Q 25 4Q 25 1Q 26

14 Yara stays in top quartile of safety performance LTI-rate for employees and contractors Shell* 1. Yara 1. PCS* 1.1 Hydro* 2.7 Total* 3.9 Kemira GrowHow 3.8 BASF fertilizer 5.9 EFMA EFMA excl. Yara EIGA* * 24 data, for employees only

15 Yara is making a difference Quality of operations Product stewardship Positive HSE performance Increased energy efficiency Reduced emissions High quality products Food Security Fertilizers essential for global food security New tools and crop models optimize fertilizer application Enhanced crop quality Nutrition for health Shield the environment New Yara technology combats N 2 emissions Bio-fuels substitute for fossil fuels Industrial use of CO 2 Yara s Environmental Applications improve air quality

16 Fertilizers = Catalyst for clean energy and CO 2 reductions Use of fertilizers gives (1) more agricultural production = more solar energy is captured (2) less CO 2 emissions (if biomass is used for soil build-up or replacing fossil fuels) 1 unit of energy for production and use of fertilizers Solar energy 5-1 energy units stored in plants due to the use of fertilizers Food and feedstuff Plants for biofuel Plant residues Conversion to biofuel Soil organic build-up

17 New technology for climate gas reductions New technology for N 2 O reduction for nitric acid plants ready in 25 Developed by Yara over more than 1 years Installed in three Yara plants in France Plan to install it in all Yara plants next three years Will reduce Yara s overall climate gas emmissions with nearly 25% Technology is made available to others by licensing mill. tonnes CO2-equivalents Yara's emmisions of climate gases ( CO2 N2O

18 Yara s Environmental Applications Reduktan - Nox Prevention for ships, incinerators and power plants kt Reduktan removes more Nox than the combined emissions of Norway Source : Yara -1-2 VR - Date: Page: Prevented Nox for Reduktan customers 25 Total Nox emissions Norway 24 Results NOx emissions can be reduced by approximately 9% with SCR technology The SNCR efficiency is normally restricted to 5% NOx reduction, but infers lower investment costs

19 Reducing emissions from trucks with AdBlue: Yara s Air1 concept is catching on 19 ACEA forecasts rapid market growth for AdBlue solution Thousand tonnes 4, 3,5 3, Market position Agreements with truck manufacturers corresponding to 36% of first fill market for new trucks complying with EU regulations from October 25 Yara s Air1 is now available at ~1 locations around Europe 2,5 2, 1,5 1, 5 Urea equivalent Yara recently opened the world s largest AdBlue plant in Sluiskil (2kt capacity) Source: ACEA (European Automobile Manufacturers Association)

20 2 Continued strong growth in specialties Yara specialty fertilizer sales Acquisition USD millions Global Sales & Marketing Agreement Downstream Integration initiated Global Sales & Marketing Agreement 1, Nov 21 Jan 22 May 25 Mar ~18% annual growth

21 Growth objective: 1% global market share within a business cycle Simplicity Productivity Volume 1% market share Growth But: Financial discipline maintained ~6% Present Within a business cycle

22 22 Prospects 26 Low global grain inventories and increasing grain forward prices continue to support global fertilizer demand Expected urea capacity growth in 26 reduced due to project delays 3% Chinese export tax from 1 January to 3 September European supply-demand balance positively influenced by the announced closure of Grand Paroisse NPK production in France Yara s European energy costs expected to increase due to time lag in contracts and high European forward prices

23 Yara the Industry Shaper The global no. 1 fertilizer company Market and product leadership Strong platform for profitable growth Cyclicality management Profitability above peers Financial discipline

24 24 More information can be found at