Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — SEB Nordic Seminar 2016
21 slides from Norsk Hydro Asa's conference presentation, Jan 8, 2016
Slide 1: Well-positioned in challenging markets
Well-positioned in challenging markets CFO, Eivind Kallevik SEB Nordic Seminar Copenhagen 2016
Slide 2: Cautionary note in relation to certain forward-looking statements
Cautionary note in relation to certain forward-looking statements Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management’s plans, objectives and
Slide 3: Attractively positioned world-class assets with global reach
Attractively positioned world-class assets with global reach Now in a first-quartile position on the industry cost curve Norway’s North America Norway 2nd largest • 1,015,000 tpy hydro-powered • Alouette aluminium smelter in hydropower Europe’s aluminium capacity Canada, expansion potential producer
Slide 4: Strong demand growth, near-term supply overhang
Strong demand growth, near-term supply overhang 4
Slide 5: Primary demand growth of 4-5% expected in 2016
Primary demand growth of 4-5% expected in 2016 Mixed developments in mature regions, softening in emerging markets Europe Mixed demand development, solid uptake within the China automotive industry Softer demand, strong supply North America ~2% growth creating Emerging markets surplus Strong demand
Slide 6: Aluminium price falls on global oversupply and lower cost curve
Aluminium price falls on global oversupply and lower cost curve Disrupting the strong correlation between LME and 90th percentile smelters World ex-China China Market balance in thousand tonnes* Nominal USD/t Market balance in thousand tonnes* Nominal USD/t 10,000 Current LME 2800 10,000 2800 (~1475
Slide 7: 2016 to remain oversupplied due to capacity additions
2016 to remain oversupplied due to capacity additions But expected to moderate as a result of curtailments and slower supply growth of 2-4% globally Supply development 2016* Million tonnes World ~3.4 China ex-China 4-6 % supply 0-2 % supply growth growth ~1.0 ~0.5 ~0.5 ~1.0 ~0.8 Potential Effect of
Slide 8: 2016 to remain oversupplied due to capacity additions
2016 to remain oversupplied due to capacity additions But expected to moderate as a result of curtailments and slower supply growth of 2-4% globally Supply development 2016* Market balance 2016** Million tonnes Million tonnes 2 – 2.5 Mill t ~3.6 World Oversupply China ex-China 4-6 % supply 0-2 % sup
Slide 9: Alumina prices falling on the back of oversupply and lower costs
Alumina prices falling on the back of oversupply and lower costs Loss making capacity and limited storage activity increases probability of further curtailments Lower Chinese alumina imports Cost curves shifting down Alumina price falling creating oversupply ex. China USD/tonne Share of LME Chinese
Slide 10: Our path towards realizing the aspiration
Our path towards realizing the aspiration 10
Slide 11: Stepping up improvements throughout the value chain
Stepping up improvements throughout the value chain Better Better Better Bauxite & Primary Rolled Alumina Metal Products BNOK 1.0 BNOK 1.0 BNOK 0.9 * Includes some larger investments of 3.2 billion NOK in 2015-2019: AL3 and UBC in Rolled Products, 100+100kt capacity creep in Primary Metal, Alunorte
Slide 12: Strengthening aluminium cluster in Pará by lifting equity bauxite production
Strenghtening aluminium cluster in Parã by lifting equity bauxite production Ensuring optimal long-term development of Hydro Alunorte’s second source of high-quality bauxite Alunorte Capacity: 6.6 million tonnes 92% Hydro ownership Hydro entered LoI Albras* with Vale to raise MRN Capacity: 460 000 t
Slide 13: Establishing a new efficiency standard with the Karmøy technology pilot
Establishing a new efficiency standard with the Karmøy technology pilot • Karmøy technology pilot with annual production of 75 000 mt − 48 cells HAL4e technology,12 cells HAL4e Ultra • Pilot also responding to need for improved performance of existing smelters in challenging market conditions − New
Slide 14: Optimizing product portfolio by expanding in higher-margin segments
Optimizing product portfolio by expanding in higher-margin segments Pursuing attractive automotive growth opportunity Sales by segment 2010 2015 2020 12% 14% 20% Auto Foil Bev Can Litho Special Products 14
Slide 15: Hydro's climate strategy is to be carbon-neutral from a life-cycle perspective by 2020
Hydro’s climate strategy is to be carbon-neutral from a life-cycle perspective by 2020 Integrated into business strategy in all business areas • Increasing energy-efficiency and reducing emissions in production processes in aluminium plants, rolling mills, and alumina refinery • Increasing productio
Slide 16: Strengthening relative industry position with ambitious targets
Strengthening relative industry position with ambitious targets 16
Slide 17: Prudent financial framework
Prudent financial framework Relative positioning and reliable dividend in cyclical industry Reliable Operating and Financial Disciplined shareholder Effective risk commercial strength capital remuneration management excellence and flexibility allocation policy Improving efficiency, Investment grade
Slide 18: Leading performance compared to aluminium peers
Leading performance compared to aluminium peers Strong relative position drives value-creation in challenging markets First-quartile aluminium producer Strongest balance sheet, USD/t Total Debt/Total Equity, 2010-2014 2,000 251 % 181 % 1,500 1,000 71 % 25 % 11 % 500 0 10,000 20,000 30,000 40,000 50,
Slide 19: Hydro's roadmap towards sustainable profitability
Hydro’s roadmap towards sustainable profitability Solid contribution from improvement efforts and currency tailwinds compensate for lower prices RoaCE (%) 12 9 6 3 0 Hydro excluding Delivered Remaining RoaCE improvement programs improvement efforts improvement efforts scenario LME USD/t 1 500, 2011-
Slide 20: Ambitious mid-term strategic goals within the Hydro aspiration
Ambitious mid-term strategic goals within the Hydro aspiration Ambitions Target Timeframe • Improve safety performance, strive for injury free environment TRI<2 2020 • Deliver on Better improvement ambition BNOK 2.9 2019 • Secure new competitive sourcing contracts in Norway post 2020 4-6 TWh 2020 •
Slide 21: Infinite Aluminium Hydro
INFINITE ALUMINIUM HYDRO