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Yara International ASA
Yves Bonte, EVP Industrial
SEB Nordic Seminar 2018
Copenhagen, 9 January 2018
IR – January 2018
Our planet faces massive challenges – Yara is part of the solution
Our Mission
Responsibly feed the world and protect the planet.
Source: OECD and FAO
*To stay within the 2°C goal by 2050
9.7 billion
people
+ 50 %
Increased food production
-40 to -70%
Reduced greenhouse gas
emissions*
Our Values
Ambition, Curiosity, Collaboration and Accountability
2
IR – January 2018
Yara drives sustainable agriculture with the right nitrogen fertilizer
products and precision farming tools
3
19.9
10.8
3.0 1.8
0.7
Urea UAN AN CAN CN
% N
H3
-N p
er
un
it N
ap
plie
d
N fertilizer
Lower volatilization losses* with Yara’s premium
fertilizers
Precision farming tools promote sustainable
agriculture
• Precision farming promotes best agricultural practices
• Yara’s N-sensor, N-tester and water sensor help optimize
application rates and water use
• Yara’s solutions help farmers comply with environmental
legislation while supporting their competitiveness
Agriculture is responsible for about a quarter of global greenhouse gas emissions. Yara contributes to lower emissions
through promoting premium fertilizers and sustainable farming
Reference: EMEP/EEA emission inventory guidebook 2013
*Nitrogen is changed to ammonia gas (NH3) and lost into the atmosphere
IR – January 2018
Yara delivers environmental products and solutions to reduce
emissions from vehicles, ships and industrial plants
Challenge
• Global population growth is increasing
demand for energy and transportation
which is still heavily relying on fossil fuels
• Current emission levels are not
sustainable
• 1.3 million people die globally every year
from urban air pollution
Our approach
• Technological solutions that reduce harmful
exhaust gas emissions, thereby helping to
fight air pollution
• We offer complete solutions to clean NOx
emissions from vehicles, ships and
industrial plants along with a highly efficient
SOx scrubber solution for seagoing vessels
Results
• In 2015 we helped our customers cleanse
a total of 1.4 million tonnes NOx
emissions. Or around the total annual
emissions in France or Germany.
4
IR – January 2018
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Jan'16
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan'17
Feb Mar Apr May Jun Jul Aug Sep
TRI (Total recordable injuries 12-month rolling)1
Safe operations is our first priority
5
1) TRI: Total recordable injuries, lost time (absence from work), restricted work and medical treatment cases per one million work hours.
IR – January 2018
Integrated business model creates value through scale, flexibility
and value chain presence
6
IR – January 2018
Industrial segment delivers growth and offsets fertilizer cyclicality
and seasonality
7
Mining Applications Industrial Applications1 Base Chemicals Environmental Solutions
Key product and
service offering
Strategic fit
Geographical
market
Market drivers
EBITDA 2014-
2016 (MNOK)
Chemical applications for food,
automotive, space,
pharmaceutical and construction
industries
NOx and SOx abatement of
emissions from heavy duty
vehicles and industry
Technical nitrates and solutions
for mining and construction
industries
CN and associated solutions for
industrial applications
Feed urea and phosphates for
Animal nutrition
Optimization of Upstream assets Utilize logistics advantage and
infrastructure footprint
Utilize technology, logistics and
infrastructure advantage Monetize products into higher
value markets
Europe Global Global Global
GDP growth Legislations, GDP growth GDP growth, mining industry GDP growth, standard of living
2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014
551 713
544 584 468
226 153 198 176 337 296 314
1) Excluding CO2 gas, liquid and dry ice which was divested in Q2 2016, 2014-2016 EBITDA figures restated to exclude divested business
IR – January 2018
Yara’s leading global position and differentiated product portfolio
represent key sources of competitive edge
Global #1 in Nitrates1
1) Including TAN and CN – Including companies’ share of JVs 2016YE
2) Compound NPK, excluding blends
3) 2016/2017 season volume
*Ammonia trade not included in chart above
8
7.4
4.5 3.2 2.7 2.3
Yara Eurochem Ostchem Uraichem Borealis
Global #1 in NPK2
5.3
3.3 2.7 2.7
1.9
Yara C. mandel Gresik Iffco Phosagro
0.3
1.2
Africa 4.4%
1.0
3.1
NorthAmerica12.1%
0.2
2.1
Asia 6.6%
0.3
2.2
LatAm ex.Brazil 7.3%
4.7
9.4
Europe41.4%
0.4
9.2
Brazil28.2%
Industrial products & solutions Fertilizers % = total sales 2016/ sales figures in mill. tonnes
Fertilizer product portfolio3
Standard products
(Urea, UAN, Ammonia)
34%
Differentiated products
(CAN, AN)
21%
Specialty (CN,
Compound NPK,
Fertigation)
26%
NPK blends
19%
IR – January 2018
14.1% 14.4%
14.1%
16.1%
22.8%
8.5%
17.4%
20.9%
17.3%
12.6% 13.3% 14.0%
9.5 %
0
20
40
60
80
100
120
140
160
0
0
0
0
0
0
2004 '06 '08 '10 '12 '14 16
Ex special items Yara avg. gross investment, 12M rolling
Strong growth and profitability through the cycle
1) Share price appreciation (end 2016) plus dividend payments
Average cash return on gross investment (CROGI)
well above the Yara CROGI target of 10% Average annual shareholder return of 23%1
10% target
0
50
100
150
200
250
300
350
400
NOK/share
16 15 14 13 12 11 10 09 08 07 06 05 IPO
2004
Share price 19 Oct 2017
Average annual share price
Book equity
Accumulated cash dividend payments
9
IR – January 2018
'14 '15 '16 '17 '18 '19 '20 '21 '22
Urea oversupply outside China is offset by lower Chinese exports
13.7 13.7
8.9
3.5
0
2
4
6
8
10
12
14
16
2014 2015 2016 2017YTD
Source: CRU, September 2017. Numbers include both additions and closures of capacity 10
Capacity additions, excluding China (Mt urea) Urea exports from China (Mt urea)
• Market is currently dominated by oversupply outside China, however lower China exports balance the urea market
• Urea market price is set by Chinese swing producers
3.1
4.7
7.2
3.8
2.1
1.6 2.0 2.1
~3Mt = 10 year historical
trend consumption growth
0.9
Other Nigeria USA Iran Russia
IR – January 2018
Increased coal prices in China have driven nitrogen prices higher
1) Source: IHS, CFMW 11
China anthracite and urea prices (RMB/mt)1 Increasing urea prices
170
190
210
230
250
270
290
310
330
350
Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17
US
D/tons
Urea fob Black Sea Urea prilled fob China
Urea inland proxy China
IR – January 2018
Western Europe producers have clear cost advantage over China
• Production based on European natural gas has a
cost advantage over China up to a gas price of 10
USD /MMBTU1
1) Based on an FOB China export price of 295 USD/t
2) IHS forecast – TTF (USD/MMBTU)
Source: IHS, Yara internal analysis 12
Urea pricing derived from a Chinese export price European gas cost2
• China as the swing producer defines the Urea
market prices for Western Europe
0
2
4
6
8
10
12
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22
10 USD/
MMBTU
1,750 RMB/t
(265 USD/t)
RMB/mt = 6.6 * USD/mt
285 USD/t
+ (X+10) = 1,950 RMB/t
(295 USD/t)
+ 200
+ 30 315
USD/t
# Logistics cost / t # FOB product cost / t
FOB Black Sea prices typically at ~10
USD below FOB China; EU prices in turn
correspond to FOB Black Sea + freight
+ X
IR – January 2018
Yara has expected commodity nitrogen oversupply, and has
focused its growth pipeline on premium & industrial products
Uusikaupunki NPK (3Q 2016)
Porsgrunn/Glomfjord CN/NPK (4Q 2017)
Sluiskil urea+S (4Q 2017)
Rio Grande NPK/NPK blends (2H 2020)
Expand premium products
sales and supply
Freeport ammonia JV (1Q 2018)
Babrala urea acquisition (4Q 2017)
Expand commodity scale
based on attractive full-cost
growth opportunities
Act on attractive
opportunities to grow
industrial sales and supply
Galvani / Salitre
(mining: 1Q18, chemical 1H19)
Structurally secure P and K
supply
Pilbara – TAN (1H 2017)
Köping – TAN (2Q 2018)
250
TAN
500
1,200
Ammonia Urea
400 Nordic
250 160
1,000
500 Rio Gr.
NPK CN Urea+S NPK Blends
Pipeline tonnes by product (kt)1 Growth focused on premium & industrial
Medium Low High Exposure to commodity nitrogen prices:
1 Including Yara’s share of volume in non-consolidated investees. Fully consolidated entities presented at 100% basis
1,000
SSP/NP
13
IR – January 2018
Yara Improvement Program targets minimum USD 500 million
sustained annual EBITDA improvement by 2020
14
Improvement categories:
• Volume: increasing production in existing plants by improving reliability
• Consumption factor: reducing spend, primarily on energy, through better reliability and new technology
• Variable unit cost: leverage global scale, advanced category management and collaborative procurement approaches
• Fixed cost: improve support function standardization and realize scale benefits
1) Versus 2015 baseline, at 2015 prices
Today Start:
2016
End:
2020
2017 2018 2019 2020
64 90 120
210 150
500
2017 2018 2019 2020 2021 20222020
target
2017
target
Status as
of 3Q17
Status as
of 2Q17
Status as
of 1Q17
Status as
of 4Q16
USD 500m Improvement Program Progress Annualized EBITDA improvement, USDm1
IR – January 2018
2020 2019
1.1
0.4
0.7
2018
4.3
3.0
1.3
2017
11.4
10.1
1.3
2016
7.9
7.3
0.6
Committed expansions + M&A
Improvement program
2020
1,100
600
500
2019
850
400
450
2018
600
300
300
2017
250
100
150
2016
104
40
2020
16
6
10
2019
12
3
9
2018
7
1
6
2017
3
3
2016
1
1
1 Currency assumptions for 2017 onwards: USD/NOK 7.90, EUR/NOK: 9.32 , USD/BRL: 3.15 2.Excluding maintenance capex on existing assets – see page 21. Yara’s share of capex. Fully consolidated entities presented at 100% basis 3 Measured at 2015 conditions. Main average market prices: Ammonia fob Yuzhny 390 USD/t, Urea fob Yuzhny 275 USD/t, DAP fob Morocco 495 USD/t
Improvement program:
+ 350 MUSD cost improvement
+150 MUSD volume improvement:
-> 0.4 mill. tonnes ammonia
-> 0.7 mill. tonnes fertilizer
Committed expansions + M&A:
+ 1.2 mill. tonnes ammonia
+ 3.5 mill. tonnes fertilizer
Major improvement and growth investments in 2017;
main earnings improvement from 2018 onwards1
EBITDA improvement3 (MUSD)
Earnings improvement3 (NOK per share)
Improvement and growth capex2 (BNOK)
15
IR – January 2018
Additional information
IR – January 2018
Global leadership by growing knowledge for 112 years
17
About the company:
• Headquarters in Norway
• President and CEO: Svein Tore Holsether
• Present in more than 60 countries, sales to ~160 countries
• Close to 15,000 employees
• Established as Norsk Hydro in 1905, demerged and listed
on Oslo Børs as Yara International ASA in 2004
Stable ownership structure:
• Norwegian State 36.2%
• Norwegian National Insurance Scheme Fund 5.3%
• Other Norway 14%
• Outside Norway 44.5%
Key metrics 2016 / YTD 2017:
• Operating revenues: 95.2 BNOK / 69.8 BNOK
• EBITDA: 15.6 BNOK / 8.6 BNOK
• CROGI: 9.5% / 6.5%
• Total deliveries (in million tonnes):
• Fertilizers: 27.2 / 20.8
• Industrial products: 6.9 / 5.3
• Ammonia trade: 2.0 / 1.5
Strong and stable credit position:
• S&P: BBB (stable), BBB+ between 2005 and 2007
• Moody’s: Baa2 (stable), unchanged since 2004
• Clear commitment to BBB/Baa2 rating
• Financial ratios as of 3Q 2017:
• Debt/equity: 0.22
• Net debt/L12M EBITDA: 1.55x
IR – January 2018
Three operating segments supported by a global supply chain
function cover the value chain
1) External revenues and other income
2) Excluding other and eliminations
USD translations use USD/NOK exchange rate of 8.18 as of 15 November 2017 (Source: Bloomberg) 18
Crop Nutrition Industrial Production
Supply Chain
Description
Credit highlight
2016 Revenues1
2016 EBITDA2
• Global function responsible for optimization of energy, raw materials and third party sourcing
• Sourcing and trade of 3,864 kilotons of ammonia and purchases of 293mm MMBtu of energy, 3,408
kilotons of potassium and 969 kilotons of phosphate rock
Provides worldwide sales, marketing and
distribution of a range of crop nutrition
products and programs
Develops and markets environmental
solutions and products for industrial
applications
Runs large-scale production of nitrogen-
based products, the starting point for our crop
nutrition and industrial solutions
Crop Nutrition creates resilience in earnings with distribution and agronomic competence
Industrial segment reduces cyclicality and seasonality
Production has plants and mines globally, providing scale and flexibility
72.7 BNOK (8.9 BUSD)
75%
16.0 BNOK (2.0 BUSD)
16%
5.5 BNOK (0.7 BUSD)
36%
2.9 BNOK (0.4 BUSD)
19%
8.5 BNOK (1.0 BUSD)
9%
6.7 BNOK (0.8 BUSD)
44%
IR – January 2018
Supply Chain delivers industry-leading economies of scale
19
Biggest industrial buyer of natural gas in Europe Third single biggest buyer of P&K globally
2016 gas consumption, Million MMBtu* 2016 P&K purchases (mt)
157
22
109
Europe Canada RoW
7.0
3.9 3.4
Potash, MOP
7.0
1.1
Phosphate**
China India Yara
*Including share of JVs
** In P2O5 equivalents
IR – January 2018
Yara has strong cost and market positions globally
Source: Fertilizer Europe
*Production cost index: 100 = European FE average excluding Yara 20
Leading cost position in Europe Strong competitive positions outside Europe
50
60
70
80
90
100
110
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
European
average*
• North America: World class low-cost
production assets in core agriculture market
• Brazil: Unrivalled distribution network with 28
sites in 11 states. Limited commodity margin
exposure due to (1) strong premium product
positions and (2) third-party sourcing for blend
business
• Asia: Export market for Yara premium
products for more than 100 years. Strong
knowledge margin and brand awareness.
Ammonia
IR – January 2018
Production scale advantage and variable cost flexibility due to asset
set-up and product mix
Mill tons 2016FY
21
Diversified product portfolio1 High ammonia flexibility Yara’s operating cash costs are
mainly variable
1) Including Yara’s share of joint venture plants
Source: Yara internal accounts
Urea
Nitrates
Ammonia
Phos. Rock
CN
SSP
UAN
NPK
5
6
8
1
1
1
1
5
Mill tons 2016FY NOK billions, 2016FY
4.9
2.9
0.4
1.6
Non flexible Flexible European
ammonia
capacity
Land-locked nitrates Urea Rest of the World Europe
12.4
69.6
Variable costs (85%)
Dry raw materials
Energy
Freight
3rd party finished fertilizer
Fixed cash cost (15%)
~90% of nitrate and NPK production can operate independently of ammonia production
IR – January 2018
Yara has a strong position in value-added fertilizer, while urea is the
main reference product for nitrogen pricing
22
Nitrogen – The most important nutrient1 Urea is the key commodity N-product2
57%
24%
19% Potassium (K)
Phosphorus (P)
Nitrogen (N)
Total 186 million
tons nutrients
107 million
tons
1) Source: IFA 2016/2017 season (June 2017 estimates)
2) Source: IFA 2016 (nutrient totals) and 2015 (product split)
Urea
50%
UAN
5%
AN/CAN
9%
NPK
15%
DAP/MAP
7%
Ammonia
4%
Other
10%
IR – January 2018
Growth and capex pipeline
23
2019
7.5
5.8
0.4 1.3
2018
10.9
6.3
3.0
1.6
2017
16.5
5.3
6.3
3.5
1.5
2016
14.2
5.3
6.9
0.4 1.5
Maintenance
Committed growth
M&A
Cost&capacity improvements 2) NOK bn
Capex plan1
1) Yara’s share of capex. Fully consolidated entities presented at 100% basis.
2) Includes Yara Improvement program Capex and other improvements
3) Rio Grande expansion also adds 1 million tonnes NPK blends by 2020
4) Finished fertilizer and industrial products, excl. bulk blends
5) Including Yara share of production in non-consolidated investees
6) Adjustment to normalized / 2016 turnaround level 7) Committed projects only. TAN Pilbara: 160 kt, Porsgrunn: 235kt, Glomfjord: 105kt, Uusikapunki: 250kt,
Köping: 90kt, Sluiskil: net 160kt, Galvani (Salitre ~ 0.8 mill.tonnes, reaching 1.1 mill.tonnes in 2022), Rio
Grande: 500kt
8) Including 100% ownership in Pilbara NH3 plant
Production growth 2015 - 20203
Finished products4 Ammonia
Mill.tons
0.70.7
1.2
2.3
1.6
Est. 2020
23.8
Other
growth7
Babrala Regularity T/R6 20155
19.2
17.3
0.3
0.40.3
1.2
1.1
Est. 2020
9.0
Freeport
& Babrala
Pilbara8 Regularity T/R6
0.2
20155
7.0
5.8
0.2
Yara-operated
Yara share of Qafco & Lifeco
GrowHow UK (divested mid-2015) Porsgrunn 1.2 0.7 -
Köping 0.4 0.5 0.1
Sluiskil 0.7 0.7 0,0
BASF JV 1.6 0.9 0.5
Rio Grande 0.1 1.2 0.7 0.4
Salitre 0.8 2.0 1.6
Other projects 2.1 0.3 0.1
Total 6.9 6.3 3.0 0.4
Committed growth (NOK bn):
IR – January 2018
300
2017
100
104 300
600
250
2018
450
150
2016
850
600
1,100
2019
500
2020
400
40
2016
1
1
2020
12
3
9
2019
3
1
6
7
2018 2017
3
10
6
16
Improvement and growth investments; earnings and sensitivities1
EBITDA improvement2 (MUSD)
Earnings improvement2 (NOK per share)
0.7 0.7
1.4
Ammonia Urea DAP
Growth: Impact3 of +100 USD/t price change (NOK/share)
1 Currencies for all amounts from 2017: USD/NOK 7.90, EUR/NOK: 9.32, USD/BRL: 3.15
2 Measured at 2015 conditions. Main average market prices: Ammonia fob Yuzhny 390 USD/t, Urea fob
Yuzhny 275 USD/t, DAP fob Morocco 495 USD/t. 3 Improvement: 2020 numbers. Growth: At full capacity (2019 for urea and ammonia, 2020 for DAP). 4 Phosphate-driven price change, equivalent to 138 USD/t phosphate rock (72 bpl)
Improvement program: Impact3 of +100 USD/t price change
(NOK/share)
0.4
0.7
Ammonia Urea
4
24
IR – January 2018
Yara Improvement Program targets sustained improvement of
minimum $500MM EBITDA, plus cash benefits
Fixed cost
Variable unit cost
Consumption factor
Production volume
500
~25%
~30%
~15%
~30% ~450
~300
~150
641
USD$MM, vs. 2015 baseline and 2015 prices
Sustained
EBITDA
improvement
Sustained capex
improvement
One-off working
capital release (~125MM total) ~15 ~15 ~15 ~40 ~40
One-off cost
One-off capex
EBITDA impact (~80MM total) ~10 ~10 ~20 ~30 ~10
(~500M total)
2020 2019 2018
~170
2017
~170
2016
~70 ~90
Sustained capex improvement: Target under development
1 Effects calculated on 2015 prices. If actual prices in 2016 are applied, the total is $25M; Only confirmed 2016 benefits included 25
IR – January 2018
The improvement program is organized into concrete projects
across the company
Improve safety, customer
responsiveness, reliability, cost,
productivity and quality on our
sites as well as the ability to
assess and integrate acquired
assets
Improve working capital
management in selected
countries
Realize sustainable, incremental
savings based on advanced
category management and
collaborative procurement
Standardize processes in supply
chain and finance to improve
customer experience and
efficiency
Improve project execution and
cost position of basic IT services
while increasing customer and
business orientation
Yara Productivity
System
Working Capital
Procurement
Excellence
Support function
efficiency and
quality
IT Optimization
Better Cheaper
Faster
Improve quality, cost and
speed of construction through
standard specifications, by
challenging requirements and
focus on execution strategy
EB
ITD
A ta
rget1
C
ash
effe
cts
Improve our commercial activities in Crop
Nutrition and Industrial segments through
being more focused, efficient and effective in
developing our sales & marketing channels
Sales & Marketing
enhancement
More
for less
Added
value
1) Projects contribute primarily towards EBITDA, but also contain elements of capex improvement
26
IR – January 2018
Volume and energy consumption improvement targets
243
~400
2020
~6,4001
2016
6,471
2015
5,755
697
~18,7001
~700
2020 2016
17,961
2015
17,348
Production
volume
Consumpt-
ion factor 35.4
-3%
2020 2016
36.0
2015
36.4
Ammonia production,
thousand tonnes
Finished fertilizers production,
thousand tonnes
Energy consumption,
Mmbtu (HHV2) per tonne Ammonia
(weighted average)
Ammonia production (excl. pipeline growth)
Finished fertilizers production
Adjustment to normalized / 2016 turnaround level
Pilbara acquisition effect (last 49%)
Improvement program target
Note: Volume and energy targets are not final; they
are subject to change as additional plant
assessment deep-dives are completed
1 Indicative target based on improvements to the baseline (improvement program target), and known turnarounds and expansions in 2016; 2 Higher Heating Value 27
IR – January 2018
Uusikaupunki
Sluiskil
Yara Productivity System in practice
262292 3321
+14%
Total production at site, thousand tonnes
1 Includes 58kt production volume related to expansions (not counted in overall benefits realization); Producing more high-N NPK grades in 2017 compared to 2016 and 2015
Base production (excluding effect of
planned maintenance stops)
1,5051,4441,476+2%
Belle Plaine 535439490
3Q17 3Q16 3Q15
+9%
28
IR – January 2018
0
100
200
300
400
500
600
3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17
USD/t
Nitrogen upgrading margins1 (monthly publication prices)
CAN (46% N) NH3 CFR (46% N) Urea Egypt CFR proxy
Yara EU gas cost *20
Higher European nitrate premiums
29
Nitrate
premium
above urea
Value above
ammonia
Value
above gas
0
10
20
30
40
50
60
70
80
90
3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17
European nitrate premium2 (quarterly Yara realized) USD/t
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. 1) All prices in urea equivalents
Source: Fertilizer Market Publications
IR – January 2018
Weighted average global
premium above blend cost
0
100
200
300
400
500
600
700
3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17
USD/t NPK premium over blend1
Value above
raw material
0
100
200
300
400
500
600
3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17
USD/t Phosphate upgrading margins
DAP, fob USG
Solid commodity phosphate margins and compound NPK premiums
1) Export NPK plants, average grade 19-10-13, net of
transport and handling cost.
Rock, fob North Africa *1.4
NH3, fob Black Sea *0.22
DAP, CIF inland Germany
MOP, CIF inland Germany
Urea, CIF inland Germany
Nitrate premium, CIF inland Germany
Source: Fertilizer Market Publications
30
IR – January 2018
Yara has invested for the long term in Brazil; Bunge acquisition
brought critical mass in distribution
31
Acquisition
Acquisition
Divestment
Acquisition
Acquisition 60%
Volume
(MM tons) 9.3
8.27.8
3.33.22.7
2.22.22.42.8
1.81.72.01.81.51.3
0.80.5
99 00 01 04 05 06 14 08 09 10 11 12 13 15 16 02 03 07
IR – January 2018
Yara Brazil today: unrivalled market presence and farmer-centric
strategy
> 20,000 growers using Yara solutions
> 200 Yara agronomists and 600 sales
representatives
> 55% of Yara deliveries are direct to farmer
> 55,000 interactions with growers p.a.
Unrivalled presence: 28 sites in 11 states Farmer-centric strategy drives growth
Galvani (fertilizer
production, mining
and port operation)
Yara (offices,
production, blending
and distribution of
fertilizers, port
operation)
32
IR – January 2018
Crop Value Index – a key guide to our approach What is CVI:
Crop revenue
Fertilizer costs
Low value - High volume
Limited price premiums for quality
Nutrient use efficiency is key
+1200 USD/ha = 50% yield increase
CV
I
Global area grown (ha)
High value, Low volume
Double price premium for high quality
2% yield increase= +1200 USD/ha
Optimal cost position for lower value segments
Low level of differentiation
Build positions for crop with both value and scale
Yield, quality and productivity
Take the position in cash crop – but not enough scale
Key parameters: Quality and yield
33
IR – January 2018
0
200
400
600
800
1,000
1,200
1,400
1,600
08 09 10 11 12 13 14 15 16 17
+21%
0
5,000
10,000
15,000
20,000
25,000
30,000
2013 2014 2015 2016 2017
Th
ou
san
ds
+1%
Kilotons Kilotons
0
2,000
4,000
6,000
8,000
2013 2014 2015 2016 2017
+5%
Kilotons
Yara Brazil Industry (ANDA)
Brazil season-to-date premium product deliveries Brazil season-to-date fertilizer deliveries
Brazil: focus on premium products and solutions drives growth
34
3Q
1H
1H
3Q
1H
3Q
IR – January 2018
Earnings before interest, tax, depreciation and amortization
(EBITDA)
35
3,591
4,227
3,964
4,625
4,794 5,179
7,884
3,504
5,055 5,489
3,004
2,015
3,216
2,992
2,386
3,830 4,185
4,002 4,528
5,742
5,055
4,614
3,508
5,050 3,958
2,968 2,474
3,335
2,873 2,728
2014 2016 2015 YTD 2017
NOK millions
EBITDA excluding special
items
NOK
millions 16,407 21,361 15,563 8,594
Annual
IR – January 2018
Debt/equity ratio
36
0.07
-0.04
0.05
0.13
0.11
0.18
0.08
0.01
0.06
0.15
0.13
0.22
0.06 0.06 0.08
0.06
0.14
0.22
0.02
0.06
0.17 0.16
0.17
2012 2013 2014 2015 2016 2017
Net interest-bearing debt / equity ratio (end of period)
IR – January 2018
Fertilizer deliveries
37
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
7,000
Europe Outside Europe
Kilotons
2013 2010 2011 2012 2014 2015 2016 2017
IR – January 2018
Higher finished fertilizer and ammonia production
38
0
500
1,000
1,500
2,000
2,500
Kilotons
2017 2016 2014 2015
Ammonia1
+7%
1) Including share of equity-accounted investees
0
1,000
2,000
3,000
4,000
5,000
6,000
Kilotons
Urea Nitrates NPK CN UAN SSP - based fertilizer
2016 2014 2015 2017
Finished fertilizer & industrial products1
+8%
IR – January 2018
Strong premium product deliveries
39
1) YaraBela, YaraMila and YaraLiva deliveries
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
3Q13 3Q14 3Q15 3Q16 3Q17
305
250 236
37
85
300
517
302
128 84
268
618
398
117 78
Asia Brazil LatinAmerica excl.
Brazil
Africa NorthAmerica
Value-added fertilizer deliveries1 Value-added fertilizer deliveries1
CAGR
16%
Outside Europe Europe
3Q17 3Q16 3Q15
IR – January 2018
YaraMila (compound NPK) and YaraBela (nitrate) deliveries
40
0
200
400
600
800
1,000
1,200
1,400
1,600
3Q13 3Q14 3Q15 3Q16 3Q17
Yara-produced YaraMila deliveries
0
200
400
600
800
1000
1200
1400
1600
3Q13 3Q14 3Q15 3Q16 3Q17
Yara-produced YaraBela deliveries Kilotons
Outside Europe Europe Outside Europe Europe
Kilotons
IR – January 2018
AdBlue deliveries
41
0
100
200
300
400
500
600
1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17
Kilotons
IR – January 2018
Industrial volume development
938939967
912900866847829815
892859864852849
816866
618640637663
572571538
577541540
482511
438456
382432
172135
171177152
299310328
385364333346
380361339367
2Q17 3Q17 1Q17 2Q16 1Q16 3Q16 4Q16 4Q13 4Q14 3Q14 4Q15 3Q15 2Q14 1Q14 2Q15 1Q15
Other Industrial N-chemicals Environmental products
Kilotons
1 European CO2 business divested 1 June 2016
1
42
IR – January 2018
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Urea Nitrates Compound NPK Other
Yara stocks
Kilotons
Finished fertilizer Bunge Fertilizer
included from 3Q 2013
43
IR – January 2018
Food demand drives fertilizer consumption –
Grain is the key driver for nitrogen consumption growth
Grain consumption and production1
1) Source: USDA October 2017
2) Source: International Fertilizer Association (IFA) 2017. Per season actual and forecast. 44
Global nitrogen consumption growth2
1,950
2,050
2,150
2,250
2,350
2,450
2,550
2,650
08 09 10 11 12 13 14 15 16 17E 18F
Mill
ion tons
Consumption Production
Food demand drives fertilizer consumption
• Population growth of about 80 million each year
• Economic growth also changes diets
63 61 62 63 63 64 64 65 66
16 16 16 17 17 17 17 17 17
15 14 15 14 14 15 15 15 15 8 8 8 9 9 9 10 10 10
120
60
80
mt
100
40
0
20
4 4 104
4
1.3%
4 105 106
5
112 111
4
110 107
4 103
3
109
3
North America Latin America Africa Asia/Oceania Europe
13/14 14/15 15/16 16/17 F17/18 F18/19 F19/20 F20/21 F21/22
IR – January 2018
Strong urea oversupply outside China
Source: CRU, September 2017. Numbers include both additions and closures of capacity.
CRU year-over-year production change
0.9
2018
3.8
2019
2.1
7.2
2017 2020
3.1
4.7
2015
1.6 2.0
2021
2.1
2022 2016 2014
Capacity additions, excl. China
(mill. tonnes urea)
Egypt 0.6
Indonesia 0.5
Saudi Arabia 0.5
Malaysia 0.3
Bangladesh 0.1
Vietnam 0.1
Romania -0.8
USA 3.0
Nigeria 0.7
Iran 1.4
India 0.7
Egypt 0.3
Uzbekistan 0.1
USA 1.6
India 0.9
Bolivia 0.5
Azerbaijan 0.5
Turkmenistan 0.3
Indonesia 0.1
Kuwait -1.2
Iran 0.6
Russia 0.4
Turkmenistan 0.9
Indonesia 0.4
Azerbaijan 0.2
Iran 0.5
India 0.7
Egypt 0.3
Uzbekistan 0.3
Tajikistan 0.2
~3 Mt = 10 year historical trend
consumption growth Algeria 0.8
Nigeria 0.7
Russia 0.7
USA 1.2
Malaysia 0.9
Bangladesh 0.5
India 0.4
Bolivia 0.2
Indonesia -0.1
Bangladesh -0,5
Romania -0.9
Indonesia -0,7
Bangladesh -0,1
Russia 0.2
Nigeria 0.6 Iran 0.5
Iran 0.5
Nigeria 0.6
Brunei 0.6
Tajikistan 0.2
Russia 0.1
45
IR – January 2018
9.9 9.7
11.8 12.1
Import catch-up need in India
46
20.8 19.7 20.1 20.0 20.7
21.5 22.0 22.3 23.0 22.7 23.7
24.4
22.6 23.5
25.5 26.9 26.4
27.3
29.4 29.6
31.5
29.7
32.5
30.2
+1.5%
2017 2016 2016
+2.7%
2005
Production Sales
Million
tonnes
+ 3%
- 2%
Season-to-date (Apr – Aug) Calendar year
Million
tonnes
IR – January 2018
Normal start to the European fertilizer season, slow in USA like
last season
47
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
3Q13 3Q14 3Q15 3Q16 3Q17
Domestic Imports
West Europe USA
Million tons N Million tons N +1%
Source: Yara estimate, TFI, US Customs.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
3Q13 3Q14 3Q15 3Q16 3Q17
Domestic Net imports
+0%
IR – January 2018
European producers’ nitrate stocks
48
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
17/18 12/13 13/14 14/15 15/16 16/17
Source: Fertilizers Europe, Yara estimate for September
Index
June 2007 = 1
IR – January 2018
Energy cost
49
4.0 4.4
4.0
2.8
3.7 4.4
2.6 2.0 2.1
2.8 3.0 3.0 3.0 2.9 2.9 3.2
4.8
5.7
8.2 8.0 8.0
6.9
5.5
4.1 3.8 4.0 4.3
5.3 4.7 4.6
5.1 5.4 4.7
6.6
9.2 9.4
10.5
8.1
6.4
4.2 4.4 4.2
5.4 5.8 5.0 5.5
6.2 6.3
6.6
7.6
10.7 11.0 11.4
9.1
7.1
5.0 4.6 4.9 5.3
6.5
5.6 5.7
6.5 6.9
2009 2010 2011 2012 2013 2014 2015 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18
US gas price (Henry Hub) Yara Global TTF day ahead (Zeebrugge 2009-2012) Yara Europe
Yearly averages 2009 – 2015, quarterly averages for 2016-18 with forward prices* for 4Q17 and 1Q18.
*Dotted lines denote forward prices as of 10 October 2017 Source: Yara, World Bank, Argus/ICIS Heren
IR – January 2018
Relatively weak grain economics
50
0
50
100
150
200
250
300
1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012 1/2013 1/2014 1/2015 1/2016 1/2017
Index FAO price index
Cereals Price Index Cereals 5 year avg. Food Price Index Food 5 year avg.
Source: FAO
IR – January 2018
Key value drivers – quarterly averages
51
183 206
242
190 207 193 233
265
201 234
3Q16 4Q16 1Q17 2Q17 3Q17
Urea prilled fob Black Sea (USD/t)/Urea granular fob Egypt (dotted line, USD/t)
166 184 231
198 205
3Q16 4Q16 1Q17 2Q17 3Q17
CAN cif Germany (USD/t)
2.9 3.0 3.0 3.0 2.9
3Q16 4Q16 1Q17 2Q17 3Q17
US gas price Henry Hub (USD/MMBtu)
4.2
5.4 5.8
5.0 5.5
3Q16 4Q16 1Q17 2Q17 3Q17
TTF day ahead (USD/MMBtu)
8.3 8.4
8.4 8.5
8.0
3Q16 4Q16 1Q17 2Q17 3Q17
NOK/USD exchange rate
210 190
301 282
198
3Q16 4Q16 1Q17 2Q17 3Q17
Ammonia fob Black Sea (USD/t)
Source: Fertilizer Market Publications, CERA, World Bank, Norges Bank