Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — SEB Enskilda Nordic Metals & Mining Seminar 2011
24 slides from Norsk Hydro Asa's conference presentation, Sep 27, 2011
Slide 1: Hydro - resource rich and fully integrated
Hydro - resource rich and fully integrated Stefan Solberg, Vice President and Head of Investor Relations SEB Enskilda Nordic Metals & Mining Seminar, September 27 2011
Slide 2: Strong positions across aluminium value chain
Strong positions across aluminium value chain Raw materials processing Primary aluminium production, Aluminium in products and energy marketing and recycling Bauxite Primary Metal Rolled Extruded & Alumina Energy Metal Markets Products Products • Long-term power • 2.4 million tonnes • 3.8 million to
Slide 3: Attractively positioned, global reach
Attractively positioned, global reach Norway • 900 000 tonnes hydro-powered aluminium production Continental Europe • Technology centre, R&D for next-generation smelter • Leading mid and downstream position • Hydropower developments (Holsbru) • New recycling centre (Karmøy) North America Asia • Alou
Slide 4: Vale transaction completed February 28, 2011
Vale transaction completed February 28, 2011 • Platform for further growth as fully integrated resource-rich aluminium company • Positions Hydro as a leading global bauxite and alumina player • Integration process well under way • Key priority: increase production towards nameplate capacity • improv
Slide 5: Hydro becomes long in bauxite and alumina
Hydro becomes long in bauxite and alumina Aluminium equivalent equity capacity, million tonnes • Hydro’s position Hydro end-2010 Pro forma end-2010 Pro forma 2016 transformed from large (Before Vale transaction) (60% Paragominas) (100% Paragominas) share of long-term 4.2 contract sourcing to full re
Slide 6: 66% of bauxite availability concentrated in 3 countries
66% of bauxite availability concentrated in 3 countries Billion tonnes Guinea 14.9 China 2.1 Mali 0.9 1.2 0.0 4.0 India Vietnam Jamaica Venezuela 1.6 2.3 1.1 0.5 1.8 0.4 0.3 0.0 Indonesia Cameroon 1.0 0.1 1.2 0.0 Brazil Australia 8.2 9.5 5.9 2.0 Big-league (Top- 3) Total bauxite, billion tonnes: res
Slide 7: Alumina market is consolidating
Alumina market is consolidating Equity alumina production less equity alumina requirement, million tonnes Alcoa 4.3 Alcoa 8.0 Vale 3.0 Chalco 2.8 Glencore 2.4 BHP Billiton 2.1 Chalco 2.0 Hydro 1.5 BHP Billiton 1.9 Glencore 1.5 Kaiser 1.0 Rio Tinto 0.7 Alcan 0.8 Klesch -0.5 Sual 0.7 Rusal -0.6 Rio Ti
Slide 8: Shift towards shorter contract durations
Shift towards shorter contract durations % of LME per tonne alumina Contract durations Platts index in USD 1) for long-term contracts 500 <2000 2011 13.0- 13.25- 13.8% 14.75% 450 12.2- 12.7% 15% 400 25% 25% 45% 350 30% 60% 300 250 200 16-aug 15-sep 13-okt 11-nov 10-des 10-jan 09-feb 01-mar 21-mar 26
Slide 9: Attractive commercial foundation for alumina
Attractive commercial foundation for alumina Alumina market appears balanced • Scarcity of high-quality bauxite World outside China, million tonnes 70 • Large alumina and bauxite deficit 62 64 in China seems to continue 58 60 60 56 • Growth expectations for aluminium 50 requires new alumina capacity
Slide 10: Bauxite and alumina production improvements
Bauxite and alumina production improvements Annualized production million mt • Paragominas production up 12% from Q1 9.0 • Improved performance in beneficiation plant 8.0 • Alunorte production up 8% from Q1 7.0 • Improvement in older lines • Increased utilization in coal boilers 6.0 5.0 • Focus on h
Slide 11: Substantial values in long-term assets in Norway
Substantial values in long-term assets in Norway • Stable and solid cash generation Power production capacity (TWh) • Indicative annual EBITDA NOK 1.6 – 1.8 billion per region and reversion year • Hydro’s power balance, normal year Telemark • Normal production ~9.4 TW 3.0 0.5 • Sourcing on long-term
Slide 12: Sale of non-strategic stake in power producer
Sale of non-strategic stake in power producer • Divestment of 20.86% stake in Norwegian power company SKS Produksjon to Salten Kraftsamband • SKS Produksjon production: ~1.8 TWh • ~1.5 TWh excluding quota power sold at cost • No synergies with Hydro’s industrial activity • Sale does not affect Hydro
Slide 13: Primary Metal improvement program on target
Primary Metal improvement program on target Estimated primary aluminium cash cost and margin • USD 300 per mt cost improvement USD/mt 1) • USD 50 per mt realized in 2010 475 475 • Further USD 125 per mt targeted in 2011 425 500 375 2 175 25 375 • Cash cost up ~USD 200 from 2010 on 1 950 raw material
Slide 14: Qatalum in full production
Qatalum in full production • 704 of 704 cells producing from Sep 21 • 100 000 mt produced in Q2 (100%) • Annual capacity: 585 000 mt (100%) • 50/50 joint venture between Qatar Petroleum and Hydro • Fully integrated with casthouse, carbon plant, port and storage facilities, and captive power plant •
Slide 15: Leading metal products supplier in Europe
Leading metal products supplier in Europe • Growing marketing position in U.S. and Asia through Qatalum volumes The preferred partner in casthouse • Enhance value of market system and products and services Extrusion ingot optimize value on top of LME price 1 550 000 tonnes • Strengthen margin manage
Slide 16: No. 1 flat rolled products producer in Europe
No. 1 flat rolled products producer in Europe • World leading positions in high-end Packaging products: foil, litho and automotive & building Revenues: • Solid cash generation NOK 11.3 billion • Record results in 2010 Automotive, heat • Technology leadership and innovation exchangers & general engin
Slide 17: Strong extrusion position in Europe, U.S. and Brazil
Strong extrusion position in Europe, U.S. and Brazil • Leading position in Europe in Extrusion and Building Systems • Strong position in the U.S. and Brazil Extrusion Eurasia Building Systems Revenues: NOK 8.8 billion Revenues: NOK 5.6 billion • Global leader in precision tubing • Strategy • Reinfor
Slide 18: Strategy for further value creation
Strategy for further value creation Bauxite & Alumina • Integrate • Expand • Commercialize Primary Metal • Reposition • Keep solid cash flow in current assets • Expand in high-class assets Energy • Increase value of business and competence • Focus on operation and commercialization of current assets
Slide 19: Fabricated products sales stable
Fabricated products sales stable Hydro’s fabricated products sales Q2 2011 vs Q1 2011 Total fabricated products sales Foil Litho Can Packaging Auto General Extrusion Building Extrusion Extrusion Precision Q2 11 vs Q2 11 vs H1 11 vs beverage & building & heat engineering Eurasia Systems North South T
Slide 20: Global inventory days trending down
Global inventory days trending down World reported primary aluminium inventories • Inventory days reduction driven by 1 000 mt Days increased consumption 7 000 80 70 • High inventories well known in market 6 000 • Different views on unreported inventories 60 5 000 50 • Estimated total reported and u
Slide 21: 2011 market outlook unchanged
2011 market outlook unchanged World outside China (quarterly annualized) • Annualized demand at 25.1 million mt 1 000 mt in July/August 30 000 28 000 26 000 • ~7% demand growth estimated for 2011 24 000 22 000 • Capacity development 20 000 18 000 • 1.2 million mt curtailed capacity restarted 16 000
Slide 22: Situation in China
Situation in China Primary aluminium • Annualized demand at 20.2 million mt in Q2 • Up 20% vs Q1 2011 • Corresponding higher production • ~10% demand growth estimated for 2011 • China expected to be balanced in primary aluminium in short to medium term Bauxite and alumina • Quality of domestic bauxi
Slide 23: Priorities 2011
Priorities 2011 • Successful integration and improved performance in Bauxite & Alumina • Primary Metal repositioning through USD 300 program and Qatalum ramp-up • Solid operations with firm cost control and strong market focus
Slide 24: www.hydro.com
www.hydro.com
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