Strong position in an attractive market Annual General Meeting, Oslo 10 May 2007 President and CEO Thorleif Enger
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 Yara share with 59%* return p.a. since IPO Index (25.03.2004 = 100) 400 350 Shareholders as of 2 May 2006 14,2 % 300 Yara 8,8 % Other 36,2 % 250 US Norwegian state 200 UK 150 100 Oslo Stock Exchange 15,7 % Norway 50 25,1 % 25.03.2004 25.09.2004 25.03.2005 25.09.2005 25.03.2006 25.09.2006 25.03.2007 * As of 9 May 2007
4 Net income after minority interest NOK millions 1,600 1,400 1,200 1,000 800 600 400 200 0 917 1,403 1,041 1,085 846 846 853 891 588 2005 2006 2007 Accumulated NOK mill USD mill 3,198 4,188 1,085 500 657 175
Strong balance sheet to achieve growth objectives Net interest-bearing debt-to-equity ratio at end of first quarter 2007 5 0.80 0.70 0.69 0.60 0.50 0.40 0.30 0.45 0.46 0.38 0.36 0.35 0.37 0.39 0.31 0.34 0.27 0.33 0.34 0.20 0.10 0.00 1Q 2004 2Q 2004 3Q 2004 4Q 2004 1Q 2005 2Q 2005 3Q 2005 4Q 2005 1Q 2006 2Q 2006 3Q 2006 4Q 2006 1Q 2007
Strong earnings significantly above cost of capital CROGI = (EBITDA tax) / Gross Investment 6 Percent 16 14 12 10 8 6 4 2 0 Cash Return On Gross Investment 14.1% 14.4% 14.1% 10.6% 9.4% 9.2% 2001 2002 2003 2004 2005 2006 Average = 12%
7 Yara earnings volatility below fertilizer peers EBITDA volatility* 60 50 40 30 Average = 34 26 35 36 36 38 44 50 53 20 10 10 13 0 Air Products Syngenta DuPont K+S Yara Kemira BASF Dow Chemical PCS Agrium *Standard deviation divided by average EBITDA 2000 2005 (excl. special items)
Operational improvements and safety go hand in hand 8 LTI-rate for employees and contractors 0 2 4 6 8 Shell (05) Yara (06) BASF* (06) PCS* (05) Kemira Growhow* (05) Hydro* (05) Total (05) 0.9 1.3 1.7 1.8 2.0 2.7 3.6 EFMA snitt (06) EFMA ekskl. Yara (06) EIGA* (05) CEFIC (2004) * Only employees 3.7 4.0 4.8 7.0
9 Yara s production productivity a key to attract JV partners Indexed production cost: 100 = European EFMA average exclusive Yara Ammonia cost position Nitrate cost position NPK cost position Index Index Index 100 80 60 40 20 0 102 2000 2001 91 90 93 89 93 2002 2003 2004 2005 100 80 60 40 20 Average cost Yara s European plants European average (excl. Yara) 0 87 87 2000 2001 80 91 88 90 2002 2003 2004 2005 100 80 60 40 20 0 100 2000 2001 90 89 85 85 2002 2003 2004 2005 92 Source: EFMA
Global optimization a robust and adaptable business model 2006 fertilizer and nitrogen chemicals volumes in million tonnes Product source* Yara production Europe Yara production outside Europe Purchased from JV companies 12.7 2.3 2.8 Global optimization Sourcing Allocation Logistics 21.6 Business units & Front offices Marketing and Sales Fertilizer Europe 9.9 Latin America 3.4 Asia 2.2 North America 1.9 10 Change from last year -2% +21% +7% -20% Purchased from third parties * Including bulk blends 3.8 Africa 1.7 Industrial products 2.4-1% +9%
Yara is a leading player in an attractive industry 11 Fertilizer and agricultural commodities are attractive parts of the chemical industry Strong grain market fundamentals via high prices and low inventories Increased demand for biofuels underpins nitrogen demand Healthy supply-demand balance for nitrogen Economic growth and environmental regulations drive industrial applications
12 Strong increase in grain production needed to avoid further inventory drop* Million tonnes 2,100 2,050 2,000 1,950 1,900 1,850 1,800 1,750 1,700 Consumption 108 mill tonnes (5.5%) Production 1995 1997 1999 2001 2003 2005 2007E 35% 30% 25% 20% 15% 10% 5% 0% 115 days inventory 57 days inventory 1995 1997 1999 2001 2003 2005 2007E *Assuming 1.5% annual consumption growth Source: USDA, update January 2007
13 Higher demand for meat requires more feed grain Significant potential for increasing meat consumption in emerging countries Feed grain multipliers for meat production World EU Poultry 2X North America Latin America Pork 4X Asia Africa Beef 7X 0 20 40 60 80 100 120 140 Kg/capita/year 0 1 2 3 4 5 6 7 8 9 Kilograms of grain to produce 1kg of meat Source: FAO
Biofuel production is expected to show strong growth, driven by the US 14 Billion gallons 8 US ethanol production In the US, 19% of corn crop is used for ethanol production this year 7 6 5 4 3 32% 28% EU target* is 5.75% for 2010. This could require more than 10% of EU agricultural area Energy efficiency for ethanol US: 1.2x 1.4x fossil fuel input Brazil: 8x fossil fuel input 2 2001 2002 2003 2004 2005 2006E 2007E * Transport fuel as biofuel Source: Data and chart used with permission of North America Risk Management Services Inc., CERA, IEA
Agricultural commodity prices strong 15 Corn Wheat Soybeans Rice Source: Chicago Board of Trade, 7 May 2007; July contracts
Grain prices have improved farm profitability Average US farmer net returns 16 Net return $ per acre 350.0 CORN 324 Net return $ per acre 250.0 SOYBEANS 300.0 200.0 200 250.0 159% 200.0 150.0 167% 150.0 100.0 125 100.0 75 50.0 50.0 0.0 2006 2007e 0.0 2006 2007e Source: USDA estimates
17 Strong sales growth to NOx embatement 400 300 200 100 0 Sales volume (kt) 2002 2003 2004 2005 2006 Power plants - main growth Legislation in place Europe : France new market for 2007 North America Clear skies initiative 2008/2010 Automotive - new growth area Legislation in place for Europe/North America Europe 3.5 million tonnes AdBlue (ACEA) North America legislation in place for 2009/2010 Truck manufacturers pursuing new markets (Asia, South America) Cement and Incineration Maritime market Norway pursuing Gothenburg protocol targets for 2010 China recent reports on first installation
18 Further delays to urea capacity Year Global urea capacity growth estimate* Driving regions World Excluding China World Ex. China 2006 4.5% (4.5%) 3.0% (2.9%) China 61% Oman 11% 2007 4.7% (5.3%) 3.8% (4.7%) China 46% Egypt 16% 2008 4.9% (4.2%) 4.1% (3.0%) China 47% Iran 20% 2009 3.2% (3.6%) 1.2% (1.8%) China 77% Egypt 9% Average urea consumption growth has been 3.6% last 10 years, 2.5% excluding China * Including announced closures only Source: Fertecon update April 2007; ( ) = Fertecon update January 2007, used in Yara s 4Q presentation Oman 29% S. Arabia 22% Egypt 30% Iran 27% Iran 38% Oman 24% Egypt 38% Oman 12% 2010 1.9% (0.9%) Egypt 31% Qatar 16%
19 Growth projects will be focused on Organic growth: Yara has historically achieved 3-4% growth p.a. Step growth: Increased production in gas regions with competitive cost level Market positions in regions and segments with high growth Attractive acqusitions in mature regions
20 Yara s growth projects initiated the last year Growth markets: Fertibras, Brazil China BlueChemical Kribhco, India Olemeca, speciality fertilizer Mexico Phosyn, folie fertilizer Balderton, trade supply Competitive gas: Started Burrup, Australia Decided Qafco-5 Trinidad feasability study Libya JV European repositioning: TAN Køping, Sweden
21 Brazil has big potential to increase arable land acreage Max potential farm land (million ha) Fertilizer consumption per harvest area Brazil United States Russia EU India 58 188 132 116 169 160 88 60 81 300 250 200 150 277 272 149 127 China Canada Argentina 96 42 45 27 31 44 0 100 200 300 100 50 0 China France Brazil India Used Potential Source: FAO/IBGE, MB Associates, EMBRAPA Source: IFA
22 Yara is part of the solution Feeding the world Balanced fertilization essential for global food security High-tech tools optimize fertilizer application and crop production Enhanced crop quality and nutritional content Environmental Care Higher yields reduce land use Energy-efficient plants with low emissions New Yara technology reduces greenhouse gas emissions Yara s environmental applications improve air and water quality Bioenergy Crops Adding biomass production Energy crop productivity and conversion efficiency CO 2 emission savings
23 Yara greenhouse gas emissions 2005 data Mill. tonnes CO 2 -e 12 10 8 6. 2 main sources:. Ammonia plants CO 2 Nitric Acid plants N 2 O N 2 O emissions greenhouse effect is 300 times that of CO 2 per unit of weight 4 2. Reducing emissions: CO 2 energy efficiency N 2 O catalyst technology 0 CO 2 NH 3 plants 10 + JVs N 2 O Nitric acid plants 19 + JVs
24 New technology from Yara (nitric acid plants) Potential reduction: Yara Potential reduction: Industry Mill. tonnes CO 2 -e 12 10 10 Mill. tonnes CO 2 -e 60 50 75 54 8 40 6 5 30 30 4 3 20 2 10 0 N 2 O emissions Yara 2005 Target 2008 Further potential 0 Europe 100 plants Global potential Norway CO 2 -e 2005
25 Operational excellence in Yara ammonia plants Energy consumption per tonne ammonia (relative index) 140 120 100 100 108 109 118 122 China s coal-fired ammonia plants use 70% more energy and emit 2.5 times more CO 2 80 60 40 20 0 Yara Europe Europe ex Yara US Romania & Bulgaria Russia
26 Outlook 2007 Grain prices have softened recently, but continued high price levels support strong farm profitability and fertilizer demand Market rebound and strengthened position in Brazil New Middle East urea capacity delayed Growth in Chinese production could limit price increases in demanddriven periods
27 Yara the Industry Shaper The no.1 fertilizer company Market and product leadership Positioned for industry leadership Strong and stable financial performance Business strength from environmental sustainability Solid growth foundation
Additional information 28
Energy prices reflected in nitrogen players performance Gross return on assets*, percent 29 2004 2005 2006 Yara** 21.4 Agrium 24.3 PCS 19.6 Agrium 20.2 PCS 22.3 Air Products 17.9 Air Products 16.6 Yara 21.6 Dow 17.6 Akzo Nobel 14.9 Dow 18.8 Yara 16.6 PCS 14.1 Air Products 17.9 DuPont 16.2 Kemira GrowHow 13.9 Akzo Nobel 13.9 Akzo Nobel 15.3 K+S 13.5 DuPont 14.1 K+S 14.2 Dow 12.4 K+S 13.8 Syngenta 13.0 DuPont 12.4 Syngenta 13.3 Agrium 11.1 Syngenta 12.2 Kemira GrowHow 11.1 Mosaic*** 8.3 Mosaic*** 7.8 Mosaic*** 7.3 Kemira GrowHow 5.4 0 10 20 30 0 10 20 30 0 10 20 30 * Gross return on assets defined as EBITDA (excluding non recurring items) divided by Total assets (book value) ** Yara pro forma numbers for years 2003 and 2004 *** Mosaic from June 1, 2003 to May 31, 2004, pro forma Source: Company reports
Post-turnaround Yara compares favorably with Norwegian peers Gross return on assets*, percent 30 2003 2004 2005 2006 Yara Elkem Tomra Orkla Norske Skog Hydro Aluminium Aker Kværner 7.5 10.5 9.9 9.8 17.3 Yara Hydro 13.6 Aluminium 12.3 Orkla Elkem Tomra Norske Skog Aker Kværner 7.1 11.0 10.7 10.4 10.4 13.7 21.1 Yara Tomra Orkla Hydro Aluminium Aker Kværner Norske Skog 8.2 7.6 15.3 13.6 13.4 21.6 Tomra Yara Hydro Aluminium Orkla Norske Skog Aker Kværner 16.6 15.0 13.6 10.4 8.9 23.2 0 5 10 15 20 0 5 10 15 20 25 0 5 10 15 20 25 0 5 10 15 20 25 * Gross return on assets defined as EBITDA (excluding non recurring items) divided by Total assets (book value) ** Yara pro forma numbers for years 2003-2004 Source: Company reports