Yara International : 4Q 2020 Presentation

Yara International ASA 2020 Fourth quarter results

9 February 2021

Cautionary note

This presentation contains forward-looking information and statements relating to the business, financial performance and results of Yara and/or industry and markets in which it operates. Forward-looking statements are statements that are not historical facts and may be identified by words such as "aims", "anticipates", "believes", "estimates", "expects", "foresees", "intends", "plans", "predicts", "projects", "targets", and similar expressions. Such forward-looking statements are based on current expectations, estimates and projections, reflect current views with respect to future events, and are subject to risks, uncertainties and assumptions. Forward-looking statements are not guarantees of future performance, and risks, uncertainties and other important factors could cause the actual business, financial performance, results or the industry and markets in which Yara operates to differ materially from the statements expressed or implied in this presentation by such forward-looking statements. No representation is made that any of these forward-looking statements or forecasts will come to pass or that any forecasted results will be achieved, and you are cautioned not to place any undue reliance on any forward-looking statements.

2

Our ambition is zero injuries

People

TRI1 (12-month rolling)

5
4
3
2
1	1.3
0
4Q16	4Q20

1 Total Recordable Injuries per 1 million working hours

3

4Q highlights: 10th consecutive quarter of ROIC increase

ROIC2 12M rolling

• Improved deliveries and production offset energy cost

increase

•

NOK 20 per share annual dividend proposed

• Total NOK 52 per share cash returns1 paid and

proposed for 2020

•

Taking steps to enable the hydrogen economy,

establishing Clean Ammonia unit

•

8.0% ROIC2, up from 6.6% a year earlier

1)	Including NOK 18 additional dividend paid 4Q 2020 and share buybacks (included in the year of purchase, including the corresponding pro-rata redemption of shares from the Norwegian state)	4
2)	For definition and reconciliation of ROIC, see APM section in 4Q report, page 35-40

USD 2.3 billion free cash flow1 rolling 4 quarters

Free cash flow before financing activities1

Comments

• Strategy execution and capital discipline driving improved earnings and cash flow
• USD 1.4 billion free cash flow1 increase last 4 quarters compared with a year earlier
• Strong deliveries in 4Q generated increase in receivables

1)

Net cash provided by operating activities minus net cash used in investment activities (see cash flow statement page 20 in Yara 4Q report)

5

Proposed dividend of 20 NOK per share

Dividend and buy back per share1

Comments

• The Yara Board will propose to the Annual General Meeting a 2020 dividend of NOK 20 per share
• Ongoing share buybacks and redemptions already committed in 2020 will amount to NOK ~11 per share in 2021
• Improving returns and cash flow may lead to increased payout capacity in line with capital allocation policy

1)

Including NOK 18 additional dividend paid 4Q 2020 and share buybacks (included in the year of purchase, including the corresponding pro-rata redemption of shares from the Norwegian state)

6

Yara is taking steps to enable the hydrogen economy

• Energy distribution is the key challenge for the hydrogen economy
• Ammonia is the best suited long-distance hydrogen carrier
• Hydrogen production in existing ammonia plants can be made carbon-free, at significantly lower cost than greenfield projects
• Global ammonia shipping and distribution exists to enable the hydrogen economy and zero-carbon shipping
• Yara's ammonia position is unique, with leading positions across production, shipping and distribution
• Yara is establishing a new Clean Ammonia unit to capture growth opportunities within green hydrogen and ammonia production, transport and distribution

7

Ammonia is the best suited hydrogen energy carrier

Attractive storage & transport properties

Hydrogen	Ammonia
H2	NH3

Energy

content

-253° C

-33° C

Temp.

Multiple growth drivers

Zero-carbon fuel for the maritime sector

Carbon-free fertilizer and food

Best suited long-distance hydrogen carrier

Preferred substitute for coal in renewable energy constrained countries

Industrial applications in automotive, construction and food additives

8

Existing ammonia plants can be retrofitted, at significantly lower cost than greenfield projects

Ammonia production plant

Shipping and storage

Steam Methane

Ammonia

Site

Export facilities and captive

Reforming

production

Infrastructure

use of ammonia (incl. nitrate-

(Haber-Bosch)

and utilities

based fertilizers)

Nat gas (CH4)

H2

NH3

Existing infrastructure

Retrofit

Water (H2O)

Electrolysis

9

Utilizing existing ammonia infrastructure is the only realistic way to EU hydrogen goals

EU Power to Hydrogen projects			40 GW
(cumulative planned)
											9				EU targets:
			6 GW										6 GW by 2024
						5	5					40 GW by 2030
			2	2	3	3	3					Planned Capacity (GW)
	0	1
	2021	2022	2023	2024	2025	2026	2027	2028	2029	2030

Current EU Hydrogen demand

		Ammonia
34%		Refinery
		Methanol
		Other chemicals

Energy

Other

Source: "Clean Hydrogen Monitor 2020", Hydrogen Europe

Yara's ammonia position is unique, with leading positions across production, trade and shipping

Yara production plants & infrastructure		Yara main trade eco-systems
Major bunkering hubs1		Yara Ammonia Trade & Shipping operations

Production

• 8.5 mt capacity across 17 units
• Proximity to major bunkering sites
• Electrolysis can replace SMR step; rest of infrastructure can be utilized
• Three green ammonia pilots, start-ups scheduled for 2023-25

Trade

• Global trader with > 20% market share
• ~3.7 mt of global export capacity with multiple downstream outlets
• Industrial solutions land logistics expertise

Shipping & storage

• +200 kt maritime transport (11 ships)
• 580 kt ammonia storage capacity
• 18 marine ammonia terminals
• Connecting green supply and demand

1 Oil & LNG bunkering hubs (not owned or operated by Yara)

11

Yara is establishing a new Clean Ammonia unit

Effective 9 February; external financial reporting from 1Q 2021 results

Yara Clean Ammonia

Green & blue project	Existing end-to-end infrastructure and trade
development

H2

Hydrogen
Green ammonia		Logistics and trade	Marketing and
production	production		distribution
- Upstream partnerships	- Projects & technology	- Existing Yara Ammonia	- Marketing & customer
- Clean energy sourcing	team	Trade & Shipping1unit	development
	- Existing pilot projects	- 2020 results:	- Application development
	- Potential full-scale	• Revenues ~1 BUSD
	projects (e.g. Porsgrunn)	• EBITDA ~125 MUSD

12

Clean Ammonia unit reporting directly to CEO

Clean Ammonia		Industrial Solutions
Magnus Ankarstrand		Jorge Noval

Yara International

Svein Tore Holsether

Chief Financial Officer

Legal & HR

Lars Røsæg

Kristine Ryssdal

Farming Solutions

Communications & Procurement

Terje Knutsen

Pablo Barrera Lopez

Regional units:

Europe

Africa & Asia

Americas

Global Plants &

Tove Andersen

Fernanda Lopes Larsen

Chrystel Monthean

Operational Excellence

Pål Hestad

13

World-scale project possible in Porsgrunn, with the right partners and regulation

• Full electrification of ~500 kt ammonia unit (removing ~800 kt CO2) possible with limited infrastructure investments
• • Renewable power supply from Norwegian grid, leading to 100 % hydrogen asset utilization
  • Deep sea coastal location, enabling global exports
• Public funding required to bridge the cost gap in first projects
• • Cost of green ammonia estimated to be 2-4x higher than conventional product
• Project would eliminate one of Norway's largest stationary CO2 sources
• • Would make a significant contribution to Norway reaching its Paris agreement commitments

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Disruptive innovation since 1905

15

Our legacy is also our future

16

Financial performance

-0.05

Prosperity

1) Change in net operating capital as presented in the cash flow statement, page 20 of 4Q report	17

Alternative performance measures are defined, explained and reconciled to the Financial statements in the APM section of the 4Q report on pages 35-40

Stable revenues as improved deliveries offset lower commodity prices

Total revenues1

MUSD

Nitrate revenues2		Compound NPK
	revenues3

MUSD

MUSD

1. Total revenues for segments Europe, Americas and Africa & Asia (page 24, 27-284Q report). Grey area represents nutrient content valued at Urea Granular FOB Egypt, DAP FOB Morocco and MOP FOB Vancouver equivalents.
2. Nitrate revenues for segments Europe, Americas and Africa & Asia. Grey area represents the nutrient content valued at Urea Granular FOB Egypt equivalents

3) Compond NPK revenues for segments Europe, Americas and Africa & Asia. Grey area represents the nutrient content valued at Urea Granular FOB Egypt, DAP FOB	18
Morocco and MOP FOB Vancouver equivalents.

Strong premium product growth

Premium product deliveries

Full year

• Growth in all regions: Africa & Asia 11%, Americas 9% and Europe 5%
• Compound NPK deliveries increased ~530 kt, nitrates ~320 kt

Fourth quarter

• Growth in all regions: Africa & Asia 15%, Americas 11% and Europe 13%
• Compound NPK deliveries increased ~250 kt, nitrates ~60 kt

19

Stable earnings as improved deliveries offset energy cost increase and cost phasing

Fixed costs: -26

EBITDA ex. special items (MUSD)1Portfolio: -16

Other: -8ROIC2

1)	EBITDA ex. special items. For definition and reconciliation see APM section of 4Q report, page 35	20
2)	Quarterly ROIC, annualized. For definition and reconciliation see APM section of 4Q report, page 36-37

Strong quarter in Africa and Asia, premium product growth in all regions

Europe

Americas

Africa and Asia

Industrial Solutions

Global Plants

EBITDA ex. special

EBITDA ex. special

EBITDA ex. special

EBITDA ex. special

EBITDA ex. special

items (MUSD)1

items (MUSD)1

items (MUSD)1

items (MUSD)1

items (MUSD)1

•	Higher deliveries	• Weaker margins,	•	Volume/mix
	offset temporary	partially offset by		improvements and
	pressure on	higher premium		higher production
	premiums	deliveries		margins
•	Positive impact		•	Production volume
	from lower			increase from
	feedstock costs​			better reliability
				and ramp-up of
				TAN production

1) EBITDA ex. special items. For definition and reconciliation see APM section of 4Q report, page 35

• Stable earnings despite challenging market
• Positive trend except Maritime
• 10 MUSD positive effect mainly from revision of cost estimates on projects

• Lower commodity margins for European integrated nitrogen production
• Higher gas prices not fully compensated by increased urea prices​
• Qafco divestment effect -16 MUSD

21

Positive improvement program trend

Ammonia production	Finished product production	Ammonia energy consumption
Million tonnes	Million tonnes	GJ/ton

Fixed costs1		Operating capital2			Comments:
MUSD	Days	•	Continued positive production volume trend
				•	Covid-19 impacts Salitre project schedule

• 2020 energy efficiency improvement driven by closure of Trinidad plant

• Fixed costs up in 4Q20, full year spend in line with 2023 target

• 4 days op. capital improvement since 3Q

1)	For reconciliation of Fixed costs to Operating costs and expenses, see APM section of 4Q report, page 38	22
2)	Operating capital adjusted for prepayments from customers. For reconciliation of Operating capital days, see APM section of 4Q report, page 39

Unchanged total capex for 2020/21, phasing into 2021 as previously communicated

Committed investments1 (BUSD)	Comments

• 2020 capex at USD 0.8bn (previously indicated at USD 0.9-1.1bn), driving expected phasing into 2021

• Total commitments for 2020/21 unchanged at USD 2.2 billion

o USD 100m reduction in planned capex, offset by a temporary fixed cost increase from growth initiatives

o Fixed cost base will revert to long- term target in 2022

• Total capex of max USD 1.2bn p.a. (incl. both maintenance and growth) from 2022 and onwards

1) Committed investments as of end 4Q20	23

Solid cash earnings more than fund investments; strong cash distribution in line with capital allocation policy

4Q development

Comments

MUSD

• Solid cash earnings more than fund investments

• Strong deliveries in 4Q generated increase in receivables

• Net debt/EBITDA3 ratio at 1.4, up from 1.0 in 3Q

• Yara's targeted capital structure is a mid- to long-term Net debt/EBITDA range of 1.5-2.0 and a net debt/equity ratio below 0.60

1)	Operating income plus depreciation and amortization, minus tax paid, net gain/(loss) on disposals, net interest expense and bank charges	24
2)	Other includes new leases, foreign currency translation gain/loss, and dividends from EAI = Equity Accounted Investees
3)	For definition and reconciliation see APM section of 4Q report, page 40

Full year condensed profit and loss statement

Comments

• Lower revenues reflect lower market prices

• Operating income increase due to lower gas prices, increased premium products deliveries and a stronger US dollar

• Foreign currency translation loss reflects loss on the US dollar denominated debt positions and internal positions in other currencies than USD

• Interest expense decrease driven mainly by lower interest-bearing debt

25

Condensed balance sheet

Comments

• Change in cash position mainly due to divestment proceeds, payment of dividends and share buybacks

• Non-current-liabilities increased due to new 750 MUSD bond issued in 2Q 2020

26

Yara is committed to food system transformation

World Benchmarking Alliance		Sustainalytics2 ESG risk rating update

Planet

1. • Yara recognized among 12 top performers in the World Benchmarking Alliance Food & Agriculture Baseline Assessment in December, a study covering the 350 most influential food and agriculture companies
2. Assessing the world's 350 most influential food and agriculture companies (worldbenchmarkingalliance.org)

1. • Improved risk rating from Sustainalytics (25
     - Medium risk), down from 31 in 2019
   • Yara ranked top 1 of 55 in Agricultural Chemicals and top 10% in Chemicals
2. Copyright ©2020 Sustainalytics. All rights reserved. This section contains information developed by Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of Sustainalytics and/or its third party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an endorsement of any

product or project, nor an investment advice and are not warranted to be complete, timely, accurate or suitable for a	27
particular purpose. Their use is subject to conditions available at https://www.sustainalytics.com/legal-disclaimers

Our employees are key to delivering results in a demanding environment

KEY INITIATIVES 2020

Income security​

• Introduced global paid sick leave and guaranteed three months' pay in the event of temporary layoffs during Covid-19 for all Yara employees and full-time contractors​

Mental health​

• Employees in all locations have access to counselling​
• Training for managers on managing fatigue and stress in their teams​

An inclusive workplace​

• Global parental leave standard at six months pay for primary carer and one month's pay for secondary carer
• Flexible working, updated travel policy​
• Family caregiver leave​

Rewarding extraordinary efforts during the pandemic​

• USD 1,000 bonus paid to all employees globally​

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Attractive Yara prospects

Attractive opportunities

• Resource and environment challenges require strong agri productivity improvement
• Attractive Yara growth opportunities within sustainable food solutions and green ammonia
• Improving market fundamentals

Focused strategy

• Crop nutrition leader; #1 premium product and market presence
• Transitioning towards sustainable solutions for the global food system
• Operational improvement and innovation focus

Strong shareholder returns

• Strict capital discipline with clear capital allocation policy
• Ten consecutive quarters of ROIC growth, with USD 2.3 billion free cash flow1 from operations last 4 quarters

1)

Net cash provided by operating activities minus net cash used in investment activities (see cash flow statement page 20 in Yara 4Q report)

29

Additional information

30

Europe: higher deliveries and revenues

Revenues (MUSD)

EBITDA ex SI (MUSD)

ROIC (12-month rolling)

• 4Q deliveries 15% up driven by a firming global nitrogen market and improved own production
• Increase driven by urea, nitrates and NPK​

• Volume increase offset by lower margins, as higher nitrogen prices are not yet realized due to normal order book time lag​
• Positive impact from lower feedstock costs​

• L12M ROIC lower compared with a year​ earlier
• ~60% improvement in cash flow from operations versus last year​

Alternative performance measures are defined, explained and reconciled to the Financial statements in the APM section of the 4Q report on pages 35-40	31

Americas: revenues and earnings impacted by lower market prices

Revenues (MUSD)

EBITDA ex SI (MUSD)

ROIC (12-month rolling)

• 4Q deliveries up 2%, driven by higher premium fertilizer deliveries (+16%)
• Realized prices down, driven by lower commodity prices and commercial margins

• Lower margins impacted EBITDA
• Margin reduction partially offset by improved premium product deliveries

• NOPAT up 9% versus 2019
• Stable EBITDA, but lower depreciation in USD terms
• Invested capital down 13%, driven partly by improved working capital performance and BRL depreciation.

Alternative performance measures are defined, explained and reconciled to the Financial statements in the APM section of the 4Q report on pages 35-40	32

Africa & Asia: Strong results driven by increased deliveries

Revenues (MUSD)

EBITDA ex SI (MUSD)

ROIC (12-month rolling)

• Stronger deliveries and realized price increases vs. last year
• Volumes up within both premium and commodities

• Strong improvement driven by volume and mix improvements, and higher production margins
• Higher production volumes reflect Pilbara ammonia stop in 2019 and ramp-up of TAN production

• Improvement driven by higher operating results and lower working capital

Alternative performance measures are defined, explained and reconciled to the Financial statements in the APM section of the 4Q report on pages 35-40	33

Global Plants: Lower results reflect reduced margins and Qafco divestment

Volumes (thousand tonnes)

EBITDA ex SI (MUSD)

ROIC (12-month rolling)

• Strong finished fertilizer production improvement in Porsgrunn
• Lower ammonia production due to higher turnaround activity

• Lower commodity margins for European integrated nitrogen production
• Higher gas prices not yet fully compensated by increased urea prices​
• Qafco divestment effect -16 MUSD

• Improvement mainly reflects positive impact from special items ​

Alternative performance measures are defined, explained and reconciled to the Financial statements in the APM section of the 4Q report on pages 35-40	34

Industrial Solutions: stable earnings in challenging market

Revenues (MUSD)

EBITDA ex SI (MUSD)

ROIC (12-month rolling)

• Continued overall volume recovery from April Covid-19 floor
• Continued challenging market for Yara Marine Technologies (YMT)

• Strong margin development
• Lower fixed cost
• 10 MUSD positive effect mainly from revision of cost estimates on projects

• Improved production compared with 2019
• Strong returns in Cubatão

Alternative performance measures are defined, explained and reconciled to the Financial statements in the APM section of the 4Q report on pages 35-40	35

Key product price developments

Urea price development1 (USD/t)

Spot gas prices1 (USD/Mmbtu)

Yara realized CAN2 and NPK price3 (USD/t)

1)	Source: BOABC, CFMW, Fertilizer publications, Argus. 1-month lag applied, as proxy for realized prices (delivery assumed 1 month after order)	36
2)	Yara's realized European nitrate price, CAN 27 CIF Germany equivalent ex. Sulphur
3)	Yara's realized global compound NPK price (average grade)

Short-term impact on premiums from increasing commodity nitrogen prices

Nitrogen upgrading margins1

USD/t (monthly publication prices)

500
CAN CFR
Urea Egypt	269	242
CFR proxy
Ammonia
CFR
Yara EU gas cost *20
0
4Q18	4Q19	4Q20

1 Upgrading margin from gas to nitrates in 46% N (USD/t): All prices in urea equivalents, with 1 month time lag

Source: Fertilizer Market publications

NPK premium over blend2

USD/t
450	Yara's NPK price
	148	118
Weighted average global
premium above blend cost
	Nitrate premium, CIF inland Germany
	Urea, CIF inland Germany
	DAP, CIF inland Germany
	MOP, CIF inland Germany
0
4Q18	4Q19	4Q20

2 Export NPK plants, average grade 19-10-13, net of transport and handling cost.

37

Strong deliveries in Europe and Asia; premium product growth in all regions

Fertilizer deliveries

Mill. tonnes

Commodity

Premium*

1) Premium defined as Differentiated N, NPK, CN, fertigation products and YaraVita

38

Energy cost

Quarterly averages for 2018-2020 with forward prices* for 1Q21 and 2Q21

Source: Yara, World Bank, Argus/ICIS Heren	39
*Dotted lines denote forward prices as of 2 February 2021, market prices (HH and TTF) are not lagged

**Yara Global restated from 2Q 2018 to include Cubatão gas cost

Yara stocks

Finished fertilizer

Mill. tonnes

8

Other

						Compound
						NPK
						Nitrates
0						Urea
Q4-16	Q4-17	Q4-18	Q4-19	Q4-20

40

European producers' nitrate stocks

Index
June 2007 = 1
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun
		20/21	14/15		15/16	16/17		17/18	18/19		19/20

Source: Fertilizers Europe

41

Higher nitrogen supply growth forecast in 2021, however higher than normal risk of project delays

Source: CRU November 2020

42

Alternative performance measures

Alternative performance measures are defined, explained and reconciled to the Financial statements in the APM section of the Quarterly report on pages 35-40

43