Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Presentation (July 2013)
99 slides from Norsk Hydro Asa's investor presentation, July 2013
Slide 1: Investor presentation July 2013
2013 Investor presentation July 2013 (1)
Slide 2: Table of contents / Cautionary note
Table of contents Second quarter results 2013 3 Cautionary note Certain statements included within this announcement contain forward- looking information, including, without limitation, those relating to (a) Market 34 forecasts, projections and estimates, (b) statements of management’s plans, object
Slide 3: Q2 2013
Q2 2013 (3)
Slide 4: Q2 highlights
Q2 highlights • Underlying EBIT NOK 518 million • Lower alumina and aluminium prices • Lower result in Energy, mainly from seasonally lower production • Production in Bauxite & Alumina affected by power outages • Increased volumes lift result in Rolled Products (4)
Slide 5: Solid aluminium demand growth, despite challenging macroeconomy
Solid aluminium demand growth, despite challenging global macroeconomy Europe United States China • Continued weak markets • Modest 2013 growth expected • Growth slowing down from Macro high levels • High unemployment rates • Business and consumer sentiment resilient to federal • Economic rebalancin
Slide 6: Increased demand in seasonally stronger quarter
Increased demand in seasonally stronger quarter World outside China (quarterly annualized) • 2013 aluminium demand growth 1 000 mt expected at 2-4 % in world outside 30 000 China 25 000 • New and potential curtailments 20 000 announced 15 000 • Expect balanced market in 2013 10 000 5 000 0 Jan-08Jul
Slide 7: Aluminium prices reach lowest levels since 2009
Aluminium prices reach lowest levels since 2009 USD per tonne 3 400 • Aluminium prices trading in range of USD 1 750 – 2 000 per mt during Q2 3 000 • 8 % decrease, quarter-on-quarter, in 2 600 average USD prices 2 200 • LME decrease partly offset by weaker NOK and BRL vs. USD 1 800 Primary aluminium
Slide 8: Ingot premiums stable at historically high levels
Ingot premiums stable at historically high levels Regional ingot premiums USD per mt 350 300 250 200 150 100 50 0 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 US Mid West Japan Europe (duty-paid) Source: Metal Bulletin, MW/MJP: Platts (8)
Slide 9: Inventories remain at high levels
Inventories remain at high levels World reported primary aluminium inventories • Total inventories stable 1 000 mt Days 8 000 80 − Due to balanced global primary metal market in first half 2013 7 000 70 6 000 60 • Reported inventories increased, offset 5 000 50 by apparent decrease in unreported inv
Slide 10: Alumina price strengthening relative to LME
Alumina price strengthening relative to LME Platts alumina index (PAX)* • Average Platts alumina index (PAX) USD per mt Percent declined during second quarter 450 20 − Down to USD 326 per mt from USD 340 per mt in Q1 2013 400 18 • PAX decreased less than LME, increasing alumina price compared to 350
Slide 11: China bauxite imports at all-time-high
China bauxite imports at all-time-high Annualized aluminium equivalents*, million mt 2011 2012 2013** • Bauxite and alumina 20 − Increased bauxite imports, preparing for Indonesia export China import 15 restrictions − Declining alumina imports 10 • Primary aluminium 5 − No significant import or expo
Slide 12: Declining raw material prices, still high relative to LME
Declining raw material prices, still high relative to LME Indexed (Q1 2010=100) 3-month LME Caustic price Coal price Fuel oil price* Pet coke price +127% +120% +112% +87% +87% +84% +67% +50% +44% +44% +30% +15% +18% +17% +10% +9% +1% +4% -7% -15% Q1 Q1 Q1 Q1 Q2 Q1 Q1 Q1 Q1 Q2 Q1 Q1 Q1 Q1 Q2 Q1 Q1 Q1
Slide 13: Top priority: stabilizing and lifting Alunorte production
Top priority: stabilizing and lifting Alunorte production • Sequential power outages disrupt alumina production, driven by external factors − Resulting in reduced production levels in Paragominas • Mitigating actions − Strengthening existing and installing additional backup power systems − Increased
Slide 14: Strong Qatalum performance
Strong Qatalum performance • Continued strong production performance − Consistently above nameplate capacity • Cash cost position improved − Reduced fixed cost level − Further improvement efforts being executed − Supported by higher premiums • Attractive geographic position verified − Sales to US, A
Slide 15: Primary Metal delivers on improvement efforts
Primary Metal delivers on improvement efforts Estimated primary aluminium cash cost and margin • USD 300 program to be concluded USD/mt 1) according to plan by end-2013 475 475 425 300 • Improvement efforts in joint ventures 375 2 000 contributing to improved cost level 1 775 1 600 1 375 • Decreasin
Slide 16: Foil and Can lift Rolled Products shipments
Foil and Can lift Rolled Products shipments Rolled Products sales by segment Rolled Products total sales Q2 2013 vs Q1 2013 Foil & Can Litho & Auto General engineering Q2 2013 Q2 2013 YTD 2013 & Other vs Q1 2013 vs Q2 2012 vs YTD 2012 13% 8% 6% 4% 1% -3% (16)
Slide 17: High precipitation lifts reservoirs, energy prices decline
High precipitation lifts reservoirs, energy prices decline Market price Southwestern Norway (NO2) Water reservoir levels Southwestern Norway (NO2) NOK/MWh Percent 700 100 2012 2013 600 90 80 500 70 400 60 50 300 40 200 30 20 2012 100 10 2013 10 year average 0 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40
Slide 18: Acquisition of high-purity asset and hydropower plant
Acquisition of high-purity asset and hydropower plant • Integrated high-purity metal and power production • Hydro is the sole offtaker of metal from the metal refinery • Transaction closed 9 July Vigeland Metal Refinery • Annual capacity of 8 500 tonnes of high-purity aluminium Vigelands Brug • 180
Slide 19: Underlying EBIT
Underlying EBIT 1 810 1 606 1 343 1 223 1 077 578 531 518 172 16 NOK million Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Bauxite & Alumina 155 272 302 159 (144) (188) (386) (73) (63) (244) Primary Metal 583 765 653 484 36 245 (4) 58 364 237 Metal Markets 143 244 9
Slide 20: High-level quarterly result development
High-level quarterly result development NOK billion 1.1 0.3 0.2 0.1 0.5 Underlying EBIT Q1 2013 Energy volume and price Alumina and aluminium Other Underlying EBIT Q2 2013 price (20)
Slide 21: Key financials
Key financials NOK million Q2 2013 Q1 2013 Q2 2012 First Half 2013 First Half 2012 Revenue 16 053 16 111 16 829 32 163 33 873 Underlying EBIT 518 1 077 531 1 596 1 109 Items excluded from underlying EBIT 144 372 1 141 516 1 008 Reported EBIT 375 705 (610) 1 080 100 Financial income (expense) (1 367)
Slide 22: Financial income (expense)
Financial income (expense) Finance NOK million Q2 2013 Q1 2013 Interest income 54 62 Dividends received and net gain (loss) on 42 39 securities Financial income 96 102 Interest expense (103) (93) Net foreign exchange gain (loss) (1 291) (115) Net interest on pension liability (41) (32) Other (28) (3
Slide 23: Items excluded from underlying EBIT
Items excluded from underlying EBIT NOK million Q2 2013 Q1 2013 Q2 2012 First half 2013 First half 2012 Underlying EBIT 518 1 077 531 1 596 1 109 Unrealized effects on power and raw material contracts 155 (269) 335 (114) 588 Unrealized derivative effects on LME related contracts (129) (30) (13) (159
Slide 24: Bauxite & Alumina
Bauxite & Alumina Q2 Q1 Q2 Key figures 2013 2013 2012 Alumina production, kmt 1 248 1 361 1 491 Total alumina sales, kmt 1 696 1 874 1 888 Realized alumina price, USD/mt 275 296 296 Apparent alumina cash cost, USD/mt 252 257 268 Bauxite production, kmt 1 765 2 210 2 115 Underlying EBITDA, NOK millio
Slide 25: Primary Metal
Primary Metal Q2 Q1 Q2 Key figures 2013 2013 2012 Primary aluminium production, kmt 483 478 502 Total sales, kmt 531 541 615 Realized LME price, USD/mt 1 926 2 043 2 167 Realized LME price, NOK/mt 11 217 11 533 12 637 Underlying EBITDA, NOK million 713 838 741 Underlying EBIT, NOK million 237 364 24
Slide 26: Lower result for Qatalum, mainly due to lower prices
Lower result for Qatalum, mainly due to lower prices Key figures – Qatalum (50%) Q2 2013 Q1 2013 Q2 2012 • High and stable production volumes Revenue, NOK million 1 080 1 125 1 166 • Underlying net income down NOK 21 million from Q1 2013 Underlying EBITDA, NOK million 338 349 343 • Lower sales price
Slide 27: Metal Markets
Metal Markets Q2 Q1 Q2 Key figures 2013 2013 2012 Remelt production, kmt 132 135 142 Metal products sales, kmt 682 701 777 Underlying EBITDA, NOK million 165 163 70 Underlying EBIT excl currency and inventory 109 110 118 valuation effects, NOK million Underlying EBIT, NOK million 147 146 45 Underlyi
Slide 28: Rolled Products
Rolled Products Q2 Q1 Q2 Key figures 2013 2013 2012 External sales volumes, kmt 245 236 228 Underlying EBITDA, NOK million 296 265 315 Underlying EBIT, NOK million 181 153 203 Underlying EBIT NOK million 637 334 Q2 results • Seasonally higher shipments 203 213 • Somewhat lower margins, partly driven
Slide 29: Energy
Energy Q2 Q1 Q2 Key figures 2013 2013 2012 Power production, GWh 2 090 2 904 2 513 Net spot sales, GWh 829 1 518 1 284 Southwest Norway spot price (NO2), 296 311 203 NOK/MWh Underlying EBITDA, NOK million 302 557 391 Underlying EBIT, NOK million 268 517 362 Underlying EBIT Q2 results NOK million • R
Slide 30: Discontinued operations – Extruded Products
Discontinued operations – Extruded Products • Underlying income from discontinued operations NOK 112 million • Pro-forma underlying EBIT NOK 50 million1) • Higher volumes compared to Q1 2013, although below Q2 2012 levels • Weak European extrusion markets • Stand-alone financing secured for new comp
Slide 31: Net cash/(debt) development Q2 2013
Net cash/(debt) development Q2 2013 NOK billion Net cash flow from operations NOK 1.0 billion 0.5 (1.0) 1.6 (0.5) (1.7) 0.4 (1.3) (0.5) Net cash Q1 Underlying Operating capital Other Investments Dividends Other Net debt Q2 2013 2013 EBITDA adjustments (31)
Slide 32: Net USD/BRL exposure partly hedged
Net USD/BRL exposure partly hedged USD/BRL • Share of Alunorte and Albras USD/BRL 2.6 currency exposure hedged for second half 2013 and in 2014 2.4 • Securing cost position 2.2 − Mitigates risk of stronger BRL vs USD 2.0 − Creates stability and ensures focus on improving operational performance 1.8
Slide 33: Outlook priorities
• Stabilize and increase Alunorte production • Deliver on improvement efforts • Continued tight capital discipline • Macroeconomic uncertainty, regional differences • Balanced primary market (33)
Slide 34: Market
Market (34)
Slide 35: Aluminium is part of the solution
Aluminium is part of the solution Demand for semis Share of semis consumption Million mt 2012 – 65 million mt Global trends 120 4-6% annual growth Consumer durables 6% 100 Electrical 12% Packaging 9% 80 53 Foil stock 8% Machinery & equipment 10% 41 Other 6% 60 27 40 Transport 25% Capabilities Constr
Slide 36: Aluminium is the metal of the future
Aluminium is the metal of the future • Lightweight • Corrosion resistant • Excellent conductivity − 1/3 density of steel − Oxide layer − Thermal – electrical • Recyclability • Formability • Alloying technology − 5% of original energy − Extrusion, rolling, casting − Gives wide range of physical consu
Slide 37: Increased bauxite imports into China
Increased bauxite imports into China Annualized aluminium equivalents*, million mt 2006 2007 2008 2009 2010 2011 2012 2013** 20 to China Import 15 10 5 from China 0 Export -5 Source: CRU/Antaike/Hydro Bauxite Alumina Scrap Primary aluminium Fabricated Semis * Bauxite/alumina to aluminium conversion
Slide 38: 66% of available bauxite in 3 countries
66% of available bauxite in 3 countries Billion mt Guinea 41.0 China1) 3.8 0.9 Jamaica Mali Vietnam 1.1 4.0 1.2 4.7 0.5 Venezuela 0.0 India 1.8 1.6 0.3 0.4 0.4 Indonesia Cameroon 1.0 1.2 0.5 0.0 Australia Brazil 9.5 8.2 5.9 2.0 Atlantic Pacific Big-league (Top- 3) Total bauxite, billion tonnes: rese
Slide 39: Alumina market is consolidating
Alumina market is consolidating Net long equity alumina position, million tonnes Alcoa 4.3 Alcoa/AWAC 8.6 Vale 3.0 Rio Tinto Alcan 2.5 Glencore 2.4 BHP Billiton 2.3 BHP Billiton 1.9 Hydro 2.0 Kaiser 1.0 Hindalco 0.3 Alcan 0.8 Glencore/Century 0.2 Sual 0.7 Vedanta (0.3) Rio Tinto 0.5 UC Rusal (1.1) P
Slide 40: Commodity prices drive industry costs
Commodity prices drive industry costs Fuel oil A1 (USD/mt) Steam coal (USD/mt) Petroleum coke FOB USG (USD/mt) 900 180 600 750 150 500 600 120 400 450 90 300 300 60 200 150 30 100 0 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2006 2007 2008 2009 2010 2011 2012 2013 2006 2007 2008 2009 2010 2011 2012
Slide 41: Business overview
Business overview (41)
Slide 42: Hydro - Group
Hydro - Group (42)
Slide 43: Hydro: a resource rich global aluminium company
Hydro: a resource rich global aluminium company • Based in Norway with operations Hydro underlying EBIT quarterly, NOK million* in 40 countries (2 555) 3 551 5 982 1 297 1 569 2 200 • 22 000 employees • Operating revenues* 1 700 − 2011: NOK 72 billion 1 200 − 2012: NOK 64 billion 700 • Current marke
Slide 44: 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 Rolled Extruded Energy Primary Metal Metal Markets & Alumina Products Products • Bauxite capacity • Long-term power supply • 2.5 milli
Slide 45: Hydro - a first tier aluminium company
Hydro - a first tier aluminium company Equity production in 2012 in aluminium equivalents excl. China, thousand mt 9 000 Alumina Aluminium 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 Alcoa/AWAC Rio Tinto UC Rusal Norsk Hydro BHP Billiton Glencore / Hindalco Vedanta Aluminium Dubal + Alcan Cent
Slide 46: Raw material is key to our aluminium future
Raw material is key to our aluminium future Aluminium equivalent consolidated capacity, million tonnes End-2010 End-2012 Post-CAP 4.3 • Long position in bauxite and alumina creates 3.4 flexibility 3.3 • Strategically attractive 2.3 2.5 2.5 assets 1.9 • New business 1.4 opportunities 0.5 • Resource c
Slide 47: Hydro's path towards global leadership
Hydro’s path towards global leadership Curtailing 26% of Launching USD Climb 1010 Climb From B to A primary metal capacity 300 program 2009 2010 2011 2012 Announcing SAPA JV Acquiring bauxite Starting up Qatalum Announcing SAPA JV and alumina assets (47)
Slide 48: Strategy for further value creation
Strategy for further value creation Bauxite & Alumina Primary Metal Energy Mid- and downstream • Improvement efforts and • Reposition • Increase value of energy • Adjust capacity and cost cost reduction • Keep solid cash flow in business base to market • Commercialize current assets • Develop curren
Slide 49: Ideally positioned for future growth
Ideally positioned for future growth Attractive growth Partnerships and project portfolio joint ventures Hydro Financial Structural strength and changes flexibility (49)
Slide 50: Safe and responsible operations is a top priority
Safe and responsible operations is a top priority TRI rate 10.3 7.0 6.0 5.4 4.0 4.1 3.9 3.7 3.8 3.6 3.4 2.9 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD2013 (50)
Slide 51: Hydro's value proposition
Hydro’s value proposition • Improve relative industry position • Capitalize on raw material positions • Maintain financial strength and flexibility • Ensure competitive shareholder return (51)
Slide 52: Bauxite & Alumina
Bauxite & Alumina (52)
Slide 53: High-quality asset portfolio
High-quality asset portfolio MRN Paragominas Alunorte alumina CAP alumina bauxite mine bauxite mine refinery refinery project • 5% ownership • Full financial exposure, increase • 92% ownership • 81% ownership • Volume off-take agreement for ownership to 100% by 2016 • World’s largest alumina refiner
Slide 54: Strengthening the competitiveness of Bauxite & Alumina
Strengthening the competitiveness of Bauxite & Alumina From B to A Alunorte • Increase productivity and rightsize organization • Stabilize performance at nameplate capacity • Improve logistics efficiency Paragominas • Increase productivity and rightsize organization • New methods to support producti
Slide 55: Paragominas – One of the world's largest bauxite mines
Paragominas – One of the world’s largest bauxite mines • 2012 production: 9.2 million mt • Target to stabilize and continue to deliver production increases • Possible expansion: up to 15 million mt • Current reserve life: 30 years − ~300 million mt − Long-life resource (55)
Slide 56: Bauxite operational mining costs in Paragominas
Bauxite operational mining costs in Paragominas • Energy cost - Power and fuel Paragominas bauxite mining costs 2012 • Labor cost − Influenced by Brazilian wage level 19% 16% − Productivity improvements • Maintenance and consumables − Influenced by Brazilian inflation 20% 21% • Large fixed cost base
Slide 57: Alunorte – World's largest alumina refinery
Alunorte – World’s largest alumina refinery • 2012 production: 5.8 million mt • Targeting stable production above 6 million tonnes • World-class conversion cost position • Modern technology • Bauxite supplied from Paragominas and MRN (57)
Slide 58: Favorable integrated alumina cash cost position
Favorable integrated alumina cash cost position • Integrated alumina cash cost position 2013 Integrated alumina cash cost position 2012 − USD 255 per mt − Alunorte, Paragominas and sourced alumina 2% • Bauxite 10% − Internal bauxite from Paragominas at cost, sourced bauxite from MRN 35% • Energy − F
Slide 59: External alumina sourcing
External alumina sourcing • 1.4 million mt of external alumina sourcing in 2012 • Long term off-take agreement with Rio Tinto − Increasing with 400 000 mt annually, linked to Yarwun expansion • Short- and medium term contracts − To balance and optimize position geographically − Various pricing mecha
Slide 60: Alumina pricing shifting from LME-link to market fundamentals
Alumina pricing shifting from LME-link to market fundamentals • Future pricing should reflect fundamentals of bauxite and alumina value chain • New norm for the industry − Index pricing and short to medium-term contracts − Getting wider acceptance in the market • Hydro’s commercial strategy − Move t
Slide 61: Primary Metal
Primary Metal (61) W) HYDRO
Slide 62: World-wide production network
World-wide production network Primary aluminium annual production capacity 43% Norway, 925 000 tonnes • Sunndal (100%) : 390 000 tonnes • Årdal (100%): 190 000 tonnes 6% • Karmøy (100%): 190 000 tonnes Canada, 120 000 tonnes • Høyanger (100%): 65 000 tonnes • Alouette (20%): 120 000 tonnes • Søral (
Slide 63: Primary Metal improvement program continues
Primary Metal improvement program continues USD 300 per mt to be realized within 2013 300 Operational improvements • Improved current efficiency • Reduced power consumption 65 • Reduced anode consumption Fixed cost reductions and lean operations 200 Further operational improvements Technology costs/
Slide 64: Develop technology to fulfill ambitions
Develop technology to fulfill ambitions HAL 300 HAL4e R&D portfolio • Operating for several years in • Benchmark technology • HAL4e optimization – to be Sunndal – process parameters and ready for next project environment • Ramping up in Qatar • HAL Ultra – future vision • 30 months of operations in
Slide 65: Metal Markets
Metal Markets (65)
Slide 66: Preferred partner in casthouse products
Preferred partner in casthouse products • Capitalizing on value-added casthouse products portfolio • Extensive multi-sourcing system Extrusion ingot including fully- and part-owned 1.5 million mt primary casthouses and stand- alone remelters • Flexible sourcing system enabling rapid and cost effecti
Slide 67: Metal Markets earnings drivers
Metal Markets earnings drivers • Remelters Underlying EBIT excluding currency effects and − Revenue impact – volume and product ingot stock valuation effect, NOK million premiums above LME 250 − Cost impact − Scrap and standard ingot premiums 200 above LME − Raw material mix 150 − Freight cost – pro
Slide 68: Rolled Products
Rolled Products (68) Q) HYDRO
Slide 69: No. 1 flat rolled products producer in Europe
No. 1 flat rolled products producer in Europe External sales in tonnages • World leader in high-end products Foil foil and litho Litho 13% 20% • Strategy of high-grading product portfolio − Margin management and cash generation − Portfolio adjustment towards higher margins − Focus production system
Slide 70: Attractive market position and customers
Attractive market position and customers More than 50% of products with global reach Our products Our customers Our position Litho World market leader Global reach Foil Can Leading position in Europe Auto Regional reach Leading position in Europe GE/ Building (70)
Slide 71: Rolled Products earnings drivers
Rolled Products earnings drivers Underlying EBIT per tonne, NOK 1 400 • Contract structure − Margin business based on conversion price 1 200 − LME element passed on to customers 1 000 − Range from spot contracts to multi-year contracts 800 600 • High share of fixed costs - volume sensitive 400 200 •
Slide 72: Extruded Products – Discontinued operations
Extruded Products – Discontinued operations (72)
Slide 73: Hydro and Orkla combine extruded aluminium assets
Hydro and Orkla combine extruded aluminium assets Sapa joint venture - facts • 50/50 joint venture between Hydro and Orkla, to be named Sapa • Creating a stronger company better positioned for value creation − No. 1 position in North America and Europe − Positioned for restructuring and value creati
Slide 74: Hydro's Extruded Products: European leader with global presence
Hydro’s Extruded Products: European leader with global presence • Leading position in Europe External sales in tonnages (2012) • Strong position in US and Brazil Other 17% • Global leader in precision tubing Building & construction • Strategy of solidifying leading positions General Engineering 37%
Slide 75: Hydro innovation drives product demand
Hydro innovation drives product demand Foil packaging Automotive Beverage cans Solar parks Building & construction Consumer electronics Lithographic plates (75)
Slide 76: Extruded Products earnings drivers
Extruded Products earnings drivers Classified as discontinued operations • Contract structure Underlying EBIT per tonne*, NOK − Mainly short-term contracts − Large number of small orders to small/medium-sized 2 000 customers 1 750 − Produce to order - limited share of commodity type products 1 500 •
Slide 77: Energy
Energy (77)
Slide 78: Aiming to lift power production to 10 TWh
Aiming to lift power production to 10 TWh Power production capacity (TWh), per region and reversion year Telemark • Power producing assets and ongoing projects Normal − Maintain cost control in operations and projects production 3.0 0.5 − Holsbru and Vasstøl power plants into operation during 2012 9
Slide 79: Hydro's energy map
Hydro’s energy map Energy consumption in alumina refineries, smelters and rolling mills Europe Power 15.2 TWh North America Natural gas 2.4 TWh Power 1.6 TWh Middle East Power 4.6 TWh South America Power 4.2 TWh Australia/Asia Power 2.0 TWh Coal 5.6 TWh Natural gas 0.1 TWh Fuel oil 7.4 TWh Based on
Slide 80: Reversion regime secures Hydro's values
Reversion regime secures Hydro’s values • Pursue value enhancement strategy − Develop and enhance value of power assets − Power assets remain an integrated part of aluminium production in Norway − Power and smelter portfolio will be reviewed concurrently − Participate in restructuring of power secto
Slide 81: Energy earnings drivers
Energy earnings drivers Underlying EBIT* and spot price • Production and market prices strongly NOK million NOK/MWh 2 000 500 linked to hydrological conditions 1 500 400 • Relatively stable annual EBIT contribution 300 1 000 200 − Large quarterly variations due to volatile spot 500 100 sales and spo
Slide 82: Additional information
Additional information (82)
Slide 83: Adjusted net debt increased to NOK 11.3 billion
Adjusted net debt increased to NOK 11.3 billion Dec 31, Mar 31, Jun 30, Net cash/(debt), NOK billion NOK billion 2012 2013 2013 1.7 Cash and cash equivalents 7.0 6.4 7.4 Short-term investments 4.3 3.5 1.3 Short-term debt (6.0) (5.3) (5.8) Long-term debt (3.6) (4.2) (4.2) Net cash/(debt) 1.7 0.4 (1.3
Slide 84: Shareholder and financial policy
Shareholder and financial policy • Hydro aims to give its shareholders competitive returns compared to alternative investments in peers • Maintained dividend policy − Ordinary dividend: 30% of net income over the cycle − Average ordinary pay-out ratio 2008-2012 is ~170% − Share buybacks and extraord
Slide 85: Hedging policy
Hedging policy • Upstream − Remain primarily exposed to LME prices − Partly off-setting effects through raw material prices and negative currency correlations with LME − Operational LME hedging − One month forward sales − Currency exposure, mainly USD and BRL − Policy of maintaining long-term debt i
Slide 86: Capital allocation mainly upstream
Capital allocation mainly upstream NOK billion Debt-financed investments Qatalum Investments Qatalum • Sustaining capex NOK ~3 billion 10.2 Growth capex annually Sustaining capex • No major growth projects planned for 2013 6.2 • ~85% of capital to be allocated upstream in 2013 4.61 4.1 • Depreciatio
Slide 87: Price and currency sensitivities
Price and currency sensitivities Commodity price sensitivity +10%* Currency sensitivities +10%* NOK NOK Financial Income Net million EBIT million EBIT items before tax income** Aluminium 2 670 USD 2 130 (890) 1 240 900 Oil (180) BRL (760) 700 (60) (20) Pet coke (210) EUR (140) (1 100) (1 240) (880)
Slide 88: Items excluded from underlying results - 2013
Items excluded from underlying results - 2013 NOK million (+=loss/()=gain) Q1 2013 Q2 2013 Unrealized derivative effects on LME related contracts Bauxite & Alumina 13 (3) Total impact Bauxite & Alumina 13 (3) Unrealized derivative effects on LME related contracts Primary Metal 72 55 Unrealized deriv
Slide 89: Items excluded from underlying results - 2012
Items excluded from underlying results - 2012 NOK million (+=loss/()=gain) Q1 2012 Q2 2012 Q3 2012 Q4 2012 2012 Unrealized derivative effects on LME related contracts Bauxite & Alumina (8) 11 1 (11) (8) Total impact Bauxite & Alumina (8) 11 1 (11) (8) Unrealized derivative effects on LME related con
Slide 90: Operating segment information
Operating segment information Underlying EBIT NOK million Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Year 2011 Year 2012 Bauxite & Alumina 237 272 302 159 (144) (188) (386) (73) (63) (244) 969 (791) Primary Metal 592 765 653 484 36 245 (4) 58 364 237 2 495 335 Me
Slide 91: Operating segment information
Operating segment information EBIT NOK million Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Year 2011 Year 2012 Bauxite & Alumina 213 339 326 620 (136) (199) (387) (62) (76) (241) 1 498 (783) Primary Metal 622 826 675 (760) (91) (1 227) (48) 112 19 122 1 363 (1 254
Slide 92: Operating segment information
Operating segment information Total revenue NOK million Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Year 2011 Year 2012 Bauxite & Alumina 2 183 4 271 4 227 3 790 3 195 3 573 3 032 3 465 3 304 3 147 14 471 13 265 Primary Metal 8 234 9 627 9 148 7 711 7 458 7 578 6
Slide 93: Operating segment information
Operating segment information Internal revenue NOK million Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Year 2011 Year 2012 Bauxite & Alumina 1 168 1 688 1 587 1 433 1 241 1 356 1 111 1 098 1 322 1 253 5 876 4 806 Primary Metal 7 582 8 283 7 892 6 501 6 331 6 341 5
Slide 94: Operating segment information
Operating segment information Depreciation, amortization and impairment NOK million Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Year 2011 Year 2012 Bauxite & Alumina 178 482 470 450 475 439 428 409 429 448 1 580 1 750 Primary Metal 467 543 548 1 577 542 1 645 482
Slide 95: Income statements
Income statements NOK million Q2 2013 Q1 2013 Q2 2012 First half 2013 First half 2012 Year 2012 Revenue 16 053 16 111 16 829 32 163 33 873 64 181 Share of the profit (loss) in equity accounted investments (90) 19 (20) (70) (137) (450) Other income, net 211 234 145 444 402 853 Total revenue and incom
Slide 96: Balance sheets
Balance sheets NOK million Jun 30 2013 Mar 31 2013 Dec 31 2012 Sep 30 2012 Jun 30 2012 Cash and cash equivalents 7 399 6 410 7 034 8 654 7 234 Short-term investments 1 273 3 572 4 343 2 465 1 743 Accounts receivable 10 009 10 228 8 761 12 681 14 320 Inventories 9 523 10 125 9 685 12 140 12 411 Other
Slide 97: Operational data
Operational data Pro forma Bauxite & Alumina Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Year 2011 Year 2012 Alumina production (kmt) 1 336 1 448 1 553 1 490 1 464 1 491 1 441 1 397 1 361 1 248 5 827 5 792 Sourced alumina (kmt) 436 523 581 418 324 332 399 335 476
Slide 98: Operational data
Operational data Year Year Metal Markets Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 2011 2012 Remelt production (1 000 mt) 150 151 133 131 152 142 136 119 135 132 565 548 Third-party metal products sales (1 000 mt) 38 47 59 73 76 82 81 85 84 78 217 323 Metal prod
Slide 99: Investor Relations in Hydro
Investor Relations in Hydro Rikard Lindqvist Head of Investor Relations t: +47 417 51 199 Next event e: rikard.lindqvist@hydro.com Third Quarter Results October 23, 2013 Pål Kildemo Investor Relations Officer For more information see t: +47 970 96 711 e: pal.kildemo@hydro.com www.hydro.com/ir (99)