Yara International ASA
SEB Investment Grade seminar
1 September 2016
Thor Giæver, Investor Relations
2
Agenda
Industry and markets
Financial policy and funding
Additional information
Strategy and focus areas
1. Operations
Global leader by growing knowledge for 110 years
• Established as Norsk Hydro in 1905, demerged as Yara International ASA and listed on the Oslo Stock
Exchange in 2004
• Today, Yara International ASA is a global fertilizer and chemicals company headquartered in Oslo,
Norway, that delivers solutions for Agriculture and the Environment
• President and CEO since September 2015: Svein Tore Holsether
• Stable ownership structure:
- Norwegian State 36.2%, Norway is rated Aaa/AAA (stable/stable)
- Norwegian National Insurance Scheme Fund 5.8%
• Long term credit rating of Baa2/BBB (stable/stable)
- Moody’s Baa2 rating has been unchanged since 2004
- S&P’s was BBB in 2004, BBB+ between 2005 and 2007 and BBB thereafter
• Global presence with operations and offices in more than 60 countries and sales to more than 150 countries
with close to 13,000 employees
• Key metrics (2015):
- Revenues and other income of USD 13.4bn; EBITDA of USD 2.6bn
- Total deliveries of 35.7mm tons, fertilizer sales of 26.5mm tons, industrial sales of 7.0mm tons and
ammonia trade of 2.1mm tons
3
USD translations use USD/NOK exchange rate of 8.37 as of 24th May 2016 (source: Bloomberg)
Three operating segments supported by a global supply chain
function cover the value chain
4
Provides worldwide sales, marketing and
distribution of a range of crop nutrition
products and programs
Crop Nutrition
Develops and markets environmental
solutions and products for industrial
applications
Industrial
Runs large-scale production of nitrogen-
based products, the starting point for our crop
nutrition and industrial solutions
Production
• A global function responsible for optimization of energy, raw materials and third party sourcing
• Sourcing and trade of 3,909 kilotons of ammonia and purchases of 289mm MMBtu of energy, 3,303
kilotons of potassium and 997 kilotons of phosphate rock
Crop Nutrition creates resilience in earnings by adding distribution and agronomic
competence
Industrial segment reduces cyclicality and seasonality
Production has plants and mines globally, providing scale and flexibility
NOK 80.2bn (USD 9.6bn)
72%
NOK 17.2bn (USD 2.1bn)
15%
NOK 14.4bn (USD 1.7bn)
13%
NOK 6.2bn (USD 0.7bn)
29%
NOK 1.5bn (USD 0.2bn)
7%
NOK 14.4bn (USD 1.7bn)
65%
Supply Chain
Description
Business profile
2015 Revenues1
2015 EBITDA2
1 External revenues and other income 2 Excluding other and eliminations
USD translations use USD/NOK exchange rate of 8.37 as of 24th May 2016 (source: Bloomberg)
5
2 Revenues are identified by customer region 3 No sanctioned countries represent significant sales
Revenues2 by region
Europe 37%
Brazil 24%
North-America
12%
Asia & Oceania
11%
Latam ex Brazil
9%
Africa 6%
USD 13.4bn
2015
A global footprint with an integrated business model…
USD translations use USD/NOK exchange rate of 8.37 as of 24th May 2016 (source: Bloomberg)
3
… which creates value above competitors through scale, flexibility
and value chain presence
6
Debt to equity ratio
Summary financials
7
Summary P&L
(NOKm) 1H 2016 1H 2015 Change YE 2015
Revenue 50,919 55,697 (4,778) 111,897
EBIT 7,367 7,311 66 14,398
EBITDA 10,544 9,973 571 21,361
% margin 20.7% 17.9% N/A 19.1%
Net income 5,872 3,645 2,227 8,435
2015 was another eventful year for Yara
We continued to invest in our production facilities and
develop our markets, serving growing global demand
and helping farmers improve both yield and crop quality
We delivered strong results with a return on investment
of 14% driven by growing sales volumes, lower energy
cost and a stronger US dollar
- Svein Tore Holsether, Yara President and CEO
Highlights
0,12
0,02
0,06
0,17 0,16 0,13
2011 2012 2013 2014 2015 2Q 2016
Debt to equity ratio
Net Debt Development (NOKm)
6,271
4,245
3,833
2,758
5,778
9,69811,868
Net debt
Jun 16
Other
495
Currency
translation
471
Sale of
CO2
business
Net
operating
capital
Dividends
received
342
Cash
earnings
Dividend
& buy-
backs
Investments
(net)
Net debt
YE2015
2015 Highlights
Crop Nutrition creates resilience in earnings…
Share of fertilizer volumes by product
Offers the industry’s most comprehensive product portfolio and
has a strong position in value-adding crop solutions.
Increased market presence in Africa and North America by
signing agreements to acquire the Greenbelt Fertilizer and the
Sacramento Terminal
Continued investments in solutions for precision farming and
water scarcity. Investments in 2015 amounted to a total of NOK
1.5 bn
8
Key financials
Fertilizer volumes by region
(NOKm) 1H 2016 1H 2015 Change YE 2015
Revenue and other income1 37,760 41,950 (4,190) 80,189
EBITDA 3,108 3,415 (307) 6,188
Operating income 2,476 2,854 (378) 4,973
% margin 6.6% 6.8% N/A 6.1%
CROGI (12-month rolling avg.) 16.3% 17.9% N/A 17.5%
0
5 000
10 000
15 000
20 000
25 000
2013 2014 2015
Europe Latin America North America Asia AfricaKilotons
26,317 26,544 23,668
0 %
20 %
40 %
60 %
80 %
100 %
2013 2014 2015
NPK OTHFER UREA CN NITRA UAN
1 External revenue and other income
… by adding distribution and agronomic competence
Time
Mark
et depth
Sell what we produce
• Place new capacity
• Manage seasonality
Build product
reputation
• High quality products
• Viking ship brand
Farmer centric solutions and
tools
• Our next strategic step to
build Yara’s knowledge
margin
Asset
Product
Crop
Farmer
Build crop
solutions
• Crop knowledge
• Product portfolio
• Application competence
Evolved focus and aspiration
9
2015 Highlights
Industrial segment reduces cyclicality and seasonality…
Significantly expansion of terminal and logistics network in North
America and Brazil to better and more efficiently serve the
automotive Nox abatement markets with respectively DEF (Diesel
Exhaust Fluid) and Arla 32 reagent
Increased deliveries of air pollution abatement products by 20% and
achieved strong growth parameters for Nutriox business (waste
water treatment) and increasing demand for related services and
monitoring technologies
Agreement to sell European CO2 business
10
Key financials
(NOKm) 1H 2016 1H 2015 Change YE 2015
Revenue and other income1 9,085 8,520 565 17,233
EBITDA 2,116 749 1,367 1,489
Operating income 2,030 602 1,428 1,174
% margin 22.3% 7.1% N/A 6.8%
CROGI (12-month rolling avg.) 43.6% 18.8% N/A 22.0%
1 External revenue and other income 2 Including Yara share of production in equity-accounted investees 3 Including share of JVs
Industrial sales by product2
Kilotons
6 255 6 593 7 030
0
1 500
3 000
4 500
6 000
2013 2014 2015
Environmental products Base ChemicalsMining Applications Animal NutritionCO2 and feed phosphates
…by securing stable off-take from production plants and the
unseasonal nature of its businesses
Chemical applications for
food, feed, automotive, space,
pharmaceutical and
construction industries
Abatement of emissions from
heavy duty vehicles
NOx and SOx abatement for
maritime sector
Solutions to the Civil explosives
industry
Based on Technical nitrates for
mining and construction
CO2 as gas, liquid and Dry ice
CN for Industrial Applications
Animal nutrition
Key product and
service offering
EBITDA 2013- 20151
(NOKm)
Market drivers GDP growth Legislation, GDP growth GDP growth, infrastructure
projects, supply security GDP growth, standard of living
Strategic fit Optimization of Upstream
assets
Utilize technology, logistic
advantage and infrastructure
footprint
Handling, storage and
economies of scale Monetize secondary products into
primary markets applications
Geographical market Europe Global Global Global
Four business lines with focused strategy and operations
11
Base Chemicals Environmental Solutions Mining Applications Gas and Industrial
applications
2015
515
2014
533
2013
426 303
2014 2013
237 447
2015 2014 2015
147 223
2013
225
2015
513
2014
492
2013
337
1 EBITDA not adjusted for eliminations between Business Units
2015 Highlights
Production segment has plants and mines across the globe which
provide scale and flexibility…
In the US, Yara and BASF started construction of a world-scale
ammonia plant in Freeport. In Australia, Yara secured full ownership of
the Pilbara ammonia plant and increased ownership in the Pilbara TAN
plant. Construction started on the project to increase the capacity of
value-added production in Sluiskil, the Netherlands. Yara sold its 50%
stake in GrowHow UK.
Total production ended at 26.5mm tons, ammonia production
decreased by 1% and finished fertilizer and industrial products
increased by 2%
Gas consumption by region in 20152
1 Including Yara share of production in equity-accounted investees; 2 Including share of JVs
12
22
Europe
159
RoW Canada
109
Million MMBtu
Key financials
Production volumes by product2
(NOKm) 1H 2016 1H 2015 Change YE 2015
Revenue and other income1 22,881 28,266 (5,385) 55,812
EBITDA 4,965 6,017 (1,052) 14,414
Operating income 2,132 4,364 (-2,232) 8,842
% margin 9.3% 15.4% N/A 15.8%
CROGI (12-month rolling avg.) 11.0% 11.4% N/A 12.1%
26 009 25 924 26 259
0
5 000
10 000
15 000
20 000
25 000
30 000
2013 2014 2015
Ammonia Urea Nitrate NPK CN UAN SSPKilotons
… ca.60% of European ammonia production is flexible
without affecting fertilizer or Industrial production
1 Including Yara's share of joint venture plants
Source: Yara internal accounts
6
2
Urea 6
Nitrates
Ammonia 9
Phos. Rock
Europe ROW
CN
1
SSP
1
UAN 1
NPK 5
Mm tons
Diversified product portfolio1
11,8
79,1
0
10
20
30
40
50
60
70
80
Variable costs (87%)
Dry raw materials
Energy
Freight
3rd party finished
fertilizer
Fixed cash cost (13%)
Yara’s operating cash costs are
mainly variable
NOK billions, year ended 2015
13
4,5
2,6
0,4
1,5
Mm tons
High ammonia flexibility
Non flexible Flexible European
ammonia
capacity Land-locked nitrates
Urea
Key highlights1
Supply Chain continuously looks for cost optimization
Purchase of energy
Supply Chain is generating value by realizing the
benefits of Yara’s knowledge and scale in
procurement and through an optimal use of assets
by global optimization and efficient supply chain
operations
The Supply Chain segment harvests economies
of scale:
Biggest industrial buyer of natural gas in Europe
Third single biggest buyer of P and K globally
625,000 orders and 890,000 deliveries
675 contracts and 1,100 suppliers
14 ammonia vessels
2,400 fixing of vessels per year (dry bulk)
21mm tons raw materials and fertilizer shipped
P and K purchases
1 2015 figures; 2 Weighted average, Yara and JV plants; 3 L12M ending September 2015;; 4 L12M ending June 2015
8.24
4.84
3,3
4.3
24.13
Potash, MOP Phosphate
(rock equivalents 70 BPL)
China India Yara
14
2011
European Gas (Zeebrugge)
Yara’s global gas & oil costs2
Yara’s European gas & oil costs2
US gas (Henry Hub)
2015 2014 2013 2012
USD/MMBtu mt
2
12
10
8
6
4
8,2 10,8
16,4
20,2 24,5
30,2
0
5
10
15
20
25
30
35
1990 1995 2000 2005 2010 2015
Highlights Brazil Highlights Yara Brazil
Brazil – Agribusiness is one of the key pillars in the economy and
is healthy despite the current political and economical situation
Yara volume
The agricultural sector is important for the Brazilian economy, with
significant impact on GDP, exports and labor force
The Brazilian agricultural sector is export oriented implying that it is less
exposed to the current political and economical crisis in Brazil
compared to other sectors
Despite the 6% reduction (2 million tonnes) in 2015 deliveries, Brazil
will have a record grain harvest implying that nutrient soil reserves were
used. As the competitiveness of Brazilian farming is further improved,
the fertilizer sector should regain momentum.
Brazilian Trade Balance1
0
200
400
600
800
1 000
1 200
2008 2009 2010 2011 2012 2013 2014 2015
Volume kt
In house development Bunge acquisition effect
15
-7 -1 -0
6 4
-10
-35 -30 -43 -48 -60
-80 -84 -55
20 26 34 39 43 50
60 55 63 77 79 83 80 75
-100
-50
0
50
100
02 03 04 05 06 07 08 09 10 11 12 13 14 15
Agribusiness Other sectors (net)
Balance of trade
USD bn
Fertilizer Deliveries2
The leading position in Brazil enable Yara to grow sales of own
produced products in Brazil
Brazilian fertilizer season complement well with the northern
hemisphere fertilizer season
Yara has a farmer centric approach with dedicated Yara sales &
marketing agronomists, sales representatives, >22.000 customers
and with high intensity of one-to-one farmer interactions, enabling a
large share of sales to be done directly with farmers
M tonnes
Source1: Brazilian Governmental data (SECEX / MDIC, MAPA ), Source2: ANDA
Operations
2. Industry and markets
16
Agenda
Financial policy and funding
Additional information
Strategy and focus areas
Weaker farm economics, affecting P and K demand in particular
0
50
100
150
200
250
300
1/2004 1/2005 1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012 1/2013 1/2014 1/2015 1/2016
Index
FAO price index
Cereals Price Index Cereals 5 year avg. Food Price Index Food 5 year avg.
Source: FAO
17
Strong increase in global urea capacity
2018 2017
3.0
2019 2020
3.5
2016
7.8 7.6
2.0
~3 Mt
consumption
growth
Gross capacity additions, excl. China
(mill. tonnes urea1)
Source: CRU, gross capacities, June 2016 1) Using 50% operating rate in new plants’ first year of production
Indonesia 0.7
India 0.7
Egypt 0.6
Malaysia 0.6
Mexico 0.5
Bangladesh 0.3
USA 1.7
Algeria 1.2
Nigeria 0.7
Iran 0.5
Russia 0.3
India 0.7
Malaysia 0.5
Indonesia 0.5
Mexico 0.5
Azerbaijan 0.4
Bolivia 0.3
Bangladesh 0.3
USA 2.5
Nigeria 0.7
Iran 0.5
Russia 0.3
USA 0.9
Brazil 0.6
Turkmenistan 0.6
Azerbaijan 0.4
Bolivia 0.3
Iran 0.5
Russia 0.3
Brazil 0.6
Turkmenistan 0.6
Russia 1.0
Nigeria 1.3
Algeria 1.2
Russia 0.7
Nigeria 1.3
18
Industry and markets
3. Strategy and focus areas
Operations
19
Agenda
Financial policy and funding
Additional information
Four main sources of competitive edge
CROP NUTRITION EXPERTISE
KNOWLEDGE-BASED INDUSTRIAL APPLICATIONS
KNOWLEDGE
MARGIN
SCALE IN RAW MATERIAL PROCUREMENT
COMPETITIVELY SOURCED GAS AND OTHER RAW MATERIALS
COMPETITIVE
RAW MATERIAL
COST
COMPETITIVE
EDGE
GLOBAL PRESENCE AND SCALE
PRODUCT STREAM OPTIMIZATION
OPERATIONAL
EXCELLENCE
GLOBAL
OPTIMIZATION
AND SCALE
RAW MATERIAL EFFICIENCY
PROCESS EFFICIENCY
LEAN SUPPLY CHAIN
20
Sustaining profitable growth and competitive edge within three
focus areas
Organic growth and
market development
Cost optimization
Profitable step growth
Shape the markets where we are
present and grow our positions
Improve productivity through
central and local initiatives
Drive growth through M&A, as
well as capacity expansions and
new builds
Implications of market
outlook Strategic response
• Increased relative strength of integrated
business model
• Reduced trade liquidity; market positions
are key
• Timing of investments is critical
• Pressure on commodity crop margins
• Significant fertilizer market growth
opportunities in emerging markets
21
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
22
Farmer centric approach, Northern Germany
Integrating farm data in and farmer-centric strategy
TARGET
SPECIFIC
FARMER
SEGMENTS
CROP
PROGRAM
(products)
TOOLS
& SERVICES
(application)
TARGETED VALUE PROPOSITION
23
Strategic growth with financial discipline: Profitable growth through brownfield expansion and M&A, while maintaining credit rating
OFD (Latin America)
CN/NPK expansion Porsgrunn (Europe)
NPK expansion Uusikapuunki (Europe)
Greenbelt Fertilizers (Africa)
West Sacramento import terminal (USA)
Expand premium products
sales and supply
Bunge (Crop Nutrition) (Brazil)
Freeport ammonia JV (newbuild in USA)
Pilbara (acq. of remaining 49% stake)(Australia)
New ammonia vessels
Expand commodity scale
based on attractive full-
cost growth opportunities
Act on attractive
opportunities to grow
industrial sales and supply
Galvani (Brazil)
Dallol1 (Africa) Structurally secure P and K
supply
OFD (Latin America)
Pilbara – TAN (newbuild in Australia)
Köping – TAN (Europe)
Small-scale TAN
Le Havre (Europe)
Environmental solution bolt-on (Europe)
1 Not yet committed
Net debt / EBITDA evolution
0,96
0,35
0,07 0,29
0,72 0,63
0,0
0,5
1,0
1,5
2,0
2,5
2010 2011 2012 2013 2014 2015
Net debt/EBITDABBB
rating
≤~ 2x
GrowHow UK (50% stake)
European CO2 business Divest non-core
businesses
24
2010 2011 2012 2013 2014 2015 2016
S&P Moody'sBaa3/BBB-
Baa2/BBB
Baa1/BBB+
A3/A-
Credit Ratings Development
Strategy and focus areas
4. Financial policy and funding
Industry and markets
Operations
25
Agenda
Additional information
0%
5%
10%
15%
20%
25%
2007 2008 2009 2010 2011 2012 2013 2014 2015
Track record of consistently strong returns and stable rating
Strong returns and solid balance
sheet through the cycle
26
CROGI1
Historical stable BBB rating in line
with established strategy
jan.04 jan.06 jan.08 jan.10 jan.12 jan.14 jan.16
S&P Moody's
Baa3/BBB-
Baa2/BBB
Baa1/BBB+
A3/A-
1) Cash return on Gross Investment
10% long-term target
“Yara aims to maintain a long-term mid-
investment grade rating level, i.e. BBB
according to Standard & Poor’s methodology
and Baa2 according to Moody’s methodology.
This implies that the company should normally
operate with a net debt below two times
EBITDA, and that larger acquisitions would
normally be accompanied by new equity
issuance.”
Report of the Board of Directors
Yara financial report 2015
Long-term credit rating target
Mid investment grade (minimum Baa2/BBB)
Relative competitiveness
EBITDA/Total assets in best quartile of peers
Solid profitability
CROGI over the cycle > 10% as average
New investment profitability
Hurdle rate: IRR nominal, after tax > 9%
Financial discipline will be the basis for the
development of Yara’s global leadership
position
Total cash return to shareholders expected to
average 40-45% of net income over the
business cycle
Ordinary dividend a minimum 30% of net
income over the business cycle
Share buyback will constitute the rest
Financial Targets Financial Policy
Financial discipline and active risk management will continue to
guide our growth strategy
27
Long-term gross debt1 overview per end 2Q 2016
NOK mm
Maturity profile long-term debt
28
953 246 338
6 570
178 943
5 224
0
2 000
4 000
6 000
2016 2017 2018 2019 2020 2021 >2021
Bonds Bank loans Capital lease and other LT loans
1) Long-term debt (excluding short term debt of approximately 343 MUSD)
-
5 000
10 000
15 000
20 000
25 000
30 000
Gross LT DebtJune 2016
2016 2017 2018 2019 2020 2021
Drawn debt Undrawn facility Available at year end
NOK mm
Drawn long-term debt and committed undrawn long term financing facility
100 MUSD term loan (Pilbara) maturing Sep '16
500 MUSD bonds maturing Jul '19 2,200 MNOK bonds maturing Dec '19
1,250 MUSD bank facility maturing Jul '20
700 MNOK bonds maturing Dec '21
Note: 7% of debt is secured whereof 80% matures in 2016
Thank you
29
Financial policy and funding
5. Additional information
Strategy and focus areas
Industry and markets
Operations
30
Agenda
Earnings before interest, tax, depreciation and amortization
(EBITDA), quarter by quarter
4 184 4 039
3 318
1 858
3 591
4 227 3 964
4 625 4 794 5 179
7 884
3 504
5 055 5 489
2013 2015 2014 2016
NOK mm
NOK mm 13,399 16,407 21,361 10,544
Annual / year to date
31
Source: Yara annual reports
Key market prices
32
277 268 250 207 198
297 281 270 233
208
2Q15 3Q15 4Q15 1Q16 2Q16
Urea prilled fob Black Sea (USD/t)/Urea granular fob Egypt (dotted line, USD/t)
273 257 255 249
197
2Q15 3Q15 4Q15 1Q16 2Q16
CAN cif Germany (USD/t)
2,7 2,7
2,1 2,0 2,1
2Q15 3Q15 4Q15 1Q16 2Q16
US gas price Henry Hub (USD/MMBtu)
6,8 6,4
5,5
4,1 4,3
2Q15 3Q15 4Q15 1Q16 2Q16
TTF day ahead (USD/MMBtu)
7,8
8,2
8,5 8,7
8,3
2Q15 3Q15 4Q15 1Q16 2Q16
NOK/USD exchange rate
393 388 355
270 274
2Q15 3Q15 4Q15 1Q16 2Q16
Ammonia fob Black Sea (USD/t)
Source: Fertilizer Market Publications, CERA, World Bank, Norges Bank
10-year fertilizer prices – monthly averages
33
0
200
400
600
800
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
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 2016
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 2016
USD/t CAN cif Germany
0
200
400
600
800
1 000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
USD/t Ammonia fob Black Sea