Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Q4 2023 Earnings Presentation
199 slides from Norsk Hydro Asa's earnings presentation, Feb 14, 2024
Slide 1: Fourth quarter 2023 Investor presentation
Fourth quarter 2023 Investor presentation February 14, 2024
Slide 2: Table of contents and cautionary note
Table of contents Cautionary noteresults 2023 Fourth quarter 3 Cautionary note Certain statements included in this announcement contain forward-looking information, Certain statements included in this announcement contain forward-looking information, Position, including, Strategy without andinformat
Slide 3: Changing the aluminium game: Strengthening position in challenging markets
Changing the aluminium game: Strengthening position in challenging markets Pål Kildemo Chief Financial Officer February 14, 2024
Slide 4: Q4 2023 Adjusted EBITDA NOK 3,737 billion
Q4 2023 Adjusted EBITDA NOK 3,737 billion Free cash flow NOK (1.5) billion, adjusted RoaCE 7.1% Weaker results in challenging markets, managing short term volatility and freeing up cash Exceeding 2023 improvement targets and commercial ambitions Growing in recycling by increasing capacity and post-
Slide 5: Challenging alumina markets in Q4
Challenging alumina markets in Q4 Tightening at year-end on industry curtailments Three key events impacting alumina Platts alumina index (PAX) Regional alumina market balances USD/t Million mt market dynamics 450 20% 1,0 01 Chinese bauxite sourcing 18% • Domestic bauxite sourcing constraints causin
Slide 6: Rangebound aluminium prices, slower decline in demand
Rangebound aluminium prices, slower decline in demand Expected improved market balance in 2024 Rangebound all-in metal Growing Russian % of metal Tightening estimated global Large demand drop in B&C prices in LME warehouses balance drives down billet demand LME Share of Russian metal, % Primary prod
Slide 7: Margin pressure and challenging demand impact recycling profitability
Margin pressure and challenging Capacity utilization demand impact recycling profitability % production vs capacity, recyclers in Metal Markets 110 100 90 Average CU 80 70 Margin pressure 60 Monthly CU 50 USD/mt, Europe 40 Oct-23 Oct-20 Oct-21 Oct-22 Apr-20 Jul-20 Apr-21 Jul-21 Apr-22 Jul-22 Apr-23
Slide 8: Managing short-term volatility, freeing up cash
Managing short-term volatility, freeing up cash Large NOC release in Q4 Short and medium-term mitigation NOK 7 billion cash effective NOC release in 2023 2024 • Electrolysis production curtailed (~130kt Net operating capital, NOK billion Norwegian smelters) guiding 34 NOK 1 billion Aluminium • Volum
Slide 9: Exceeding 2023 improvement targets
Exceeding 2023 improvement targets 2030 ambitions strengthened through greener premiums and digitalization Improvement program Ambitions extended with additional NOK 1 billion until 2030 New digitalization Key achievements 2023: Digitalization initiatives ~1.0 ~1 • 2023 NOK 0.4 billion above target
Slide 10: Hydro 2030: Pioneering the green aluminium transition
Hydro 2030: Pioneering the green aluminium transition, powered by renewable energy Key priorities towards 2030 Step up growth investments in Recycling and Step up ambitions within 1 Extrusions to take lead in the market opportunities emerging from the green transition 2 renewable power generation Ex
Slide 11: Growing recycling capacity, and securing scrap, supports 2030 targets
Growing recycling capacity, and securing scrap, supports 2030 targets Recycling targets 20301) PCS usage capacity Tonnes (‘000) 850-1,200 Growing and extracting value from Increasing green field capacity post-consumer scrap 520-670 560 280 2020 2023 2025 2030 Recycling EBITDA NOK billion 5-8 Product
Slide 12: Executing on ambitious decarbonization roadmap
Executing on ambitious decarbonization roadmap 2018 2025 2030 2050 (or earlier) 10% carbon emission 30% carbon emission Zero carbon reduction reduction emissions HalZero test facility at Herøya, Testing emission-free plasma Hydro CIRCAL, from 2.3 to 1.9 Alunorte fuel switch Norway approved technolog
Slide 13: Shaping the market for greener aluminium
Shaping the market for greener aluminium Joining the First Movers Coalition (FMC) Greener product capability from total aluminium portfolio1) Million tonnes capacity potential • Hydro and Volvo Group will Joining work together to accelerate forces with net-zero transportation through Volvo establish
Slide 14: Powering the green aluminium transition
Powering the green aluminium transition Project portfolio with robust return potential Positive development on Concession application for new Hydro Rein and Årdal Energi resource rent tax onshore wind hydropower plants collaboration • The Norwegian Parliament has reached • Hydro and Lyse have applie
Slide 15: Adj. EBITDA down on lower upstream prices
Adj. EBITDA down on lower upstream prices Marginally offset by FX, lower raw material cost and Extrusions margins 2023 vs 2022 39.7 16.2 1.6 3.1 0.7 0.3 2.1 3.5 1.6 3.4 22.3 -3.8 Slovalco effects Power sales Other & eliminations Adj. EBITDA 2022 Realized aluminium Raw material cost Extrusion and Ext
Slide 16: Adj. EBITDA down on lower prices and Extrusions results
Adj. EBITDA down on lower prices and Extrusions results Partially offset by lower raw material cost, CO2 compensation adjustment and TerPaz Q4 2023 vs Q3 2023 0.9 3.9 0.5 3.7 0.7 0.6 0.5 0.8 0.7 0.3 0.4 CO2 compensation TerPaz program Other & eliminations Adj. EBITDA Q3 2023 Realized aluminium Raw m
Slide 17: Key financials
Key financials NOK million Q4 2023 Q4 2022 Q3 2023 Year 2022 Year 2023 Revenue 46 754 44 075 44 702 207 929 193 619 Reported EBITDA 4 673 3 930 1 975 39 536 23 291 Adjusting items to EBITDA (936) 3 254 1 923 128 (1 033) Adjusted EBITDA 3 737 7 184 3 899 39 664 22 258 Reported EBIT (2 256) 1 405 (323
Slide 18: Hydro Bauxite & Alumina
Hydro Bauxite & Alumina Implied alumina cost and margin USD/mt1) 18 4 4 Results up, mainly driven by lower raw material prices, partly offset by currency effects, lower bauxite production and higher fixed costs 331 337 345 Key figures Q4 2023 Q4 2022 Q3 2023 Q4 23 Q4 22 Q3 23 Alumina production, kmt
Slide 19: Hydro Aluminium Metal
Hydro Aluminium Metal All-in implied primary cost and margin USD/mt1,4) 350 575 350 Results down on lower all-in metal prices, reduced contribution from power sales and lower sales volume, partly 2 1259) 2 2759) 2 2509) 2 450 2 2259) 2 2509) offset by reduced raw material cost, adjusted CO2 1 775 1
Slide 20: Metal Markets
Metal Markets Increased results from sourcing and trading activities, and positive inventory valuation and currency effects, partly offset by lower results from recyclers Key figures Q4 2023 Q4 2022 Q3 2023 Recycling production, kmt 166 115 176 Metal products sales, kmt 1) 645 614 652 Adjusted EBITD
Slide 21: Softer extrusion demand in industrial and transport segments
Softer extrusion demand in industrial and transport segments Expected demand improvement in second half of 2024 in both Europe and North America External market forecasts* Extrusion sales volumes Year over Year Q4 2023 vs Q4 2022 Extrusion market growth per quarter and annually Hydro Extrusions segm
Slide 22: Hydro Extrusions
Hydro Extrusions Stable results, lower sales volume and higher costs, offset by higher sales margins and currency Key figures Q4 2023 Q4 2022 Q3 2023 External sales volumes, kmt 236 265 260 Adjusted EBITDA, NOK million 923 939 1 322 Adjusted EBIT, NOK million 90 168 548 Adjusted RoaCE, % LTM1) 8.8%
Slide 23: Hydro Energy
Hydro Energy Lower results due to lower prices and lower gain on price area differences, partly offset by higher production and no loss from internal contract Key figures Q4 2023 Q4 2022 Q3 2023 Power production, GWh 2 440 2 002 2 216 Net spot sales, GWh 3) 101 511 24 Southwest Norway spot price (NO
Slide 24: Net debt decrease driven by sale of shares in Alunorte
Net debt decrease driven by sale of shares in Alunorte Negative FCF due to taxes and investments offsetting EBITDA contribution and NOC release NOK billion 8.4 BNOK in proceeds from sale of shares in Alunorte to Glencore Free cash flow: Excludes hedging collateral (LT/ST restricted cash) and net pur
Slide 25: Board of Directors propose higher distribution than guided
Board of Directors propose higher distribution than guided, on large NOC release in Q4 Healthy working capital release and a robust balance sheet Dividend 3.2% 3.8% 3.1% 9.9% 7.7% 3.7% enables another year of solid shareholder distribution yield1) Shareholder distribution proposal 240% 15 250 • NOK
Slide 26: Our priorities
Our priorities 1 2 3 4 5 Deliver on Seize Maintain Recycling, Execute on opportunities in Health and robustness and Extrusions, and decarbonization greener safety first mitigate weaker Renewable and technology aluminium at markets growth road map premium ambitions pricing Pioneering the green alumin
Slide 27: Additional slides
») Hydro Additional slides
Slide 28: Position, Strategy and Ambitions
Position, Strategy and Ambitions
Slide 29: Why invest in Hydro
Why invest in Hydro Portfolio of profitable growth projects Pathway to net-zero aluminium Greener earnings uplift potential 2030 products supported by partnerships as key enablers for the green transition 2030: NOK 2 billion Refurbishment of buildings Electrical vehicle transition Renewable Copper s
Slide 30: Hydro has a unique position to succeed in the new reality
Frida – se på alternative bilder? Hydro has a unique position to succeed in the new reality 118 years of industrial experience, solving global challenges through innovation, technological advances and strong commercial mindset • Market leading position in low-carbon aluminium with a concrete roadmap
Slide 31: Strong global presence throughout the aluminium value chain
Strong global presence throughout the aluminium value chain Built on market understanding, customer closeness and competence The complete North America Europe aluminium company Aluminium Metal • Market leader in low-carbon aluminium 9.4 TWh in Energy #1 position #1 position #1 position with clear ro
Slide 32: Unique value proposition in aluminium
Unique value proposition in Providing products with low emissions aluminium Primary aluminium produced on renewable energy Recycled aluminium from Hydro Combined offering of primary and recycled aluminium with a full 4-6 times More than 8 times for 75R, and product spectrum and with tailor-made allo
Slide 33: Uniquely positioned with an integrated value chain
Uniquely positioned with an integrated value chain Hydro’s control of integrated value chain drives key decarbonization capabilities Business Bauxite & Alumina Aluminium Metal Recycling Energy Extrusions World’s largest extrusion Primary production with Leading in PCS recycling for Strong starting C
Slide 34: Pioneering the green aluminium transition, powered by renewable energy
Pioneering the green aluminium transition, powered by renewable energy Hydro’s energy consumption1) 18.3 Hydropower Europe Onshore Wind2) 1.5 Electricity 18.3 TWh Solar PV2) North America Natural gas 1.5 TWh Electricity 2.3 TWh 2.3 1.9 12,0 Energy Solutions3) Natural gas 1.9 TWh Green hydrogen3) Mid
Slide 35: Long term renewable power contracts ensure robustness
Long term renewable power Power sourcing for smelters in Europe Power sourcing for Hydro smelters in Norway1) TWh contracts ensure robustness 18 Total consumption 16 14 12 Smelter business operating cost 10 curve 2023 8 USD/tonne 6 4 3 000 2 0 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2 500
Slide 36: Steeper cost curve, low-carbon demand and robust position drive margin potential
Steeper cost curve, low-carbon demand and robust position drive margin potential Bauxite & Alumina Aluminium Metal Alumina Business Operating Cost curve (2023) Smelter Business Operating Cost curve1) (2023) 1000 5000 -240 USD/t , -265 USD/t 4000 post fuel switch ~1700 3000 USD/t 500 -150 USD/t , -17
Slide 37: Aluminium is a key enabler for the entire green transition
Aluminium is a key enabler for the entire green transition 2030 energy transition will require 15-22 million tonnes aluminium, increasing to 25-42 million tonnes by 2050 Additional aluminium demand from green transition enablers1) E-mobility transition Circular building & Heating & cooling Million t
Slide 38: Shifting gear to capture opportunities in a new reality
Shifting gear to capture opportunities in a new reality Key steps for Hydro to lead the green aluminium transition towards 2030 1 2 3 4 Step up growth investments Step up ambitions within Execute on ambitious Shape the market for in Recycling and Extrusions renewable power decarbonization and greene
Slide 39: Step up growth investments in Extrusions
Step up growth investments in Extrusions 1 2 3 4 • Increase market share in high-growth, non- commoditized segments leveraging innovation and solution offerings Extrusions EBITDA NOK billion (real 2023) 10.0-12.0 • Develop and grow capacity and capabilities through investments in new presses, fabric
Slide 40: Step up growth investments in Recycling
Step up growth investments in Recycling 1 2 3 4 Strengthen scrap sorting capabilities, secure feedstock PCS usage capacity1) Recycling EBITDA1) Tonnes (‘000) NOK billion 850-1,200 5-8 Expand global asset base across the value chain 770 520-670 560 Diversify product portfolio, develop innovative 3.5
Slide 41: Step up our ambitions and efforts in renewable power generation
Step up our ambitions and efforts in renewable power generation 1 2 3 4 Secure access to renewable power Hydro Rein to deliver onshore wind EBITDA 2030 Hydro Energy Classic and Hydro Rein through hydropower system and solar projects, main focus in the NOK billion2) upgrades and expansions Nordics an
Slide 42: Execute on ambitious decarbonization and technology road map
Execute on ambitious decarbonization and technology road map, step up to contribute to nature positive and a just transition Climate Nature Social Forcefully deliver on net-zero roadmap, Contribute to a nature positive future through Improve lives and livelihoods wherever Hydro decarbonizing value c
Slide 43: Shape market for greener aluminium, in partnership with customers
Shape market for greener aluminium, in partnership with customers 1 2 3 4 Utilize Hydro’s combined strengths as a fully integrated company from mine to metal Partner with strategic customers to grow market for greener aluminium Partner with Original Equipment Manufacturers to champion joint decarbon
Slide 44: Extended improvement ambitions
Extended improvement ambitions Strengthening future competitiveness and positioning with additional potential from digitalization, greener premiums and commercial improvements in Energy Improvement program Ambitions extended with additional NOK 1 billion until 2030 New digitalization Digitalization
Slide 45: Extending the improvement ambitions to 2030
Extending the improvement ambitions to 2030 Targeting NOK 14.0 billion in accumulated improvements and NOK 6.1 billion in commercial ambitions by 2030 Commercial ambition Strategic growth 2024-2030 incremental improvement potential of NOK 5.2 billion NOK 3.3 billion initiatives Recycling growth Comm
Slide 46: Greener earnings uplift potential 2030
Greener earnings uplift potential 2030 NOK 2 billion1) Greener product capability from total aluminium portfolio1) Hydro is Million tonnes capacity potential Tonnes CO2e per tonne Al. in High-potential Hydro pioneering the 5 product pending capital allocation CIRCAL <2.3t/t product potential green a
Slide 47: Market and trends
») Hydro Market and trends
Slide 48: Revenue drivers through Q4 2023
Revenue drivers through Q4 2023 Source: Bloomberg, Norges Bank, LME, Fastmarkets, Platts LME aluminium price Regional standard ingot premiums Platts alumina index (PAX) USD/mt USD/mt USD/mt % of LME 4,000 35,000 1,600 600 24,0 1,400 550 22,0 3,500 30,000 500 1,200 20,0 450 3,000 1,000 18,0 25,000 40
Slide 49: Market raw material costs in Q4 2023
0.5 1.0 1.5 2.0 2.5 3.0 3.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 0.0 Q4-19 Q4-19 Q1-20 Q1-20 Q2-20 Q2-20 Q3-20 Q3-20 Q4-20 Q4-20 Q1-21 Q1-21 Q2-21 Q2-21 Q3-21 Q3-21 Q4-21 Q4-21 Q1-22 Q1-22 Indication of current market prices Q2-22 Q2-22 Q3-22 Q3-22 Caustic soda (indexed) Q4-22 Q4-22 Q1-23 Q1-23 Source: Thoms
Slide 50: Macro trends and favorable properties drive aluminium demand
Macro trends and favorable properties drive aluminium demand Hydro’s strategic direction aims to realize full potential of Importance of aluminium within key green aluminium’s strong qualities and versatility transition technologies1 PV Electric vehicles Wind power Aluminium Steel Copper Composites
Slide 51: Transport & construction key semis demand segments
Transport & construction key semis demand segments Source: CRU, Hydro Analysis Global semis demand 2023: ~98 million tonnes Per segment Per product form Per region 6% 23% 2% 1% 2% 11% 13% 26% 10% 1% 6% 1% 14% 50% 15% 35% 21% 30% 8% 18% Extrusions 8% per segment Transport Construction 15% China Packa
Slide 52: Highest growth for low-carbon and recycled material
Highest growth for low-carbon and recycled material Low-carbon and recycled aluminium to make up majority of EU and North America market by 2030 Estimated demand based on currently stated ambitions Examples of front runners with ambitious 2030 targets Greener demand growth is Specific aluminium Euro
Slide 53: Largely balanced markets towards 2030
Largely balanced markets towards 2030 Healthy demand outlook driven by transport and electrical Global semis demand 2023-2030 119 Largely balanced market with recycling playing important role1) In million tonnes In million tonnes 3 122 7 Transport 3 6 0 1 3 Construction 2 6 +22 2 Packaging 2 Foil st
Slide 54: Aluminium is a key enabler for the entire green transition
Aluminium is a key enabler for the entire green transition 2030 energy transition will require 15-22 million tonnes aluminium, increasing to 25-42 million tonnes by 2050 Additional aluminium demand from green transition enablers1) E-mobility transition Circular building & Heating & cooling Million t
Slide 55: EV transition driving strong growth in aluminium demand
EV transition driving strong growth in aluminium demand Key choices on component design and material selection are being matured now Aluminium content per car growing While EV share of sales is growing exponentially Aluminium in car, kg EV sales penetration, % 350 EVs Average aluminium 100 300 conte
Slide 56: EVs are not built the same way as internal combustion engines cars
EVs are not built the same way as internal combustion engines cars Radical change in design leading to changing dynamics for aluminium usage Aluminium demand from extrusions driven by switch to EVs Use of aluminium large and mega castings accelerating Tonnes (‘000) Kg per vehicles (Europe)1) Tonnes
Slide 57: From cutting tailpipe emissions to cutting embedded emissions
From cutting Carbon Footprint ICE vs EV tailpipe emissions ICE to cutting embedded emissions Materials EV production Manufacturing Use phase 83% +40% 0 10 20 30 40 50 60 Of the embedded emissions Emissions from materials, Tonne CO2e from aluminium, steel and including batteries, increase polymer 40%
Slide 58: Transition to EVs enables substitution opportunities
Transition to EVs enables substitution opportunities EVs contain considerably more copper than combustion engines Potential additional global Application A demand in 2030 Replacing complex copper cabling with approx. 3kg of aluminium solution 100kt Price, Weight, Emissions 60-80kg 4x Application B P
Slide 59: Aluminium is an attractive substitute for copper
Aluminium is an attractive substitute for copper Especially in segments with high growth from green transition Copper demand expected to exceed supply from 2027 onwards Key substitution facts Forecast Million tonnes 2 0 Copper: ~ $8,400/t Aluminium: ~ $2,200/t -2 -4 -6 Price ratio of >3.5x -8 leads
Slide 60: Solar market provides strong growth potential for aluminium
Solar market provides strong growth potential for aluminium Regional growth potential within aluminium mounting systems GW installed CAGR 2022-30 800 for global solar segment 700 600 14% 500 Chinese domestic alu demand from 400 solar in 2023 300 ~2.8 million 200 tonnes 100 Potential aluminium demand
Slide 61: Green transition drives substantial expansion of electricity grids
Green transition drives substantial expansion of electricity grids Average annual demand for aluminium by 2040 in stated policies scenario Million tonnes 20 20 17 15 14 10 5 Reaching 1.5 degree scenario requires adding or refurbishing 80 million kms 0 2020 2030 Aluminium (transmission) 2040 Copper (
Slide 62: Full value chain perspective: primary production with embedded emissions below 4.0
Full value chain perspective: 7 million mt of primary production with embedded emissions below 4.0 kgCO2/kg aluminium Cradle-to-gate emissions curve 2023 Tonnes CO2e per tonne Aluminium 24 Other Scope 3 emissions1) 22 Bauxite & Alumina emissions (NHY wholly owned) 20 Bauxite & Alumina emissions (Rus
Slide 63: Scrap loophole undermines CBAM and climate goals
Scrap loophole undermines CBAM- extending carbon pricing to imported CBAM and climate goals products to level out ETS effects April 2023 CBAM adopted • The Carbon Border Adjustment Mechanism (CBAM) extends ETS carbon October 1, 2023 pricing to import products from 2026, protecting EU industry from c
Slide 64: EU agenda supporting Hydro's strategy
EU agenda supporting Hydro’s strategy Regulatory framework supporting strategic direction Critical Raw Material Act • Aluminium expected to be defined as a Strategic Raw Material upon final adoption • Important recognition of aluminium’s role for EU strategic autonomy and the green transition Sustai
Slide 65: Sustainable Operations
») Hydro Sustainable Operations
Slide 66: Safe and responsible operations is a top priority
Safe and responsible operations Continuing efforts within ESG performance2) is a top priority • Transparent and consistent reporting approach for more than three decades Leadership in health and safety, social responsibility, • Sustainability is fully integrated in Hydro’s strategy and compliance as
Slide 67: Many vying to take sustainable aluminium leading positions
Many vying to take sustainable aluminium leading positions Only Hydro with integrated advantage Customer Share of Global Primary and recycling Decarbonization co-innovation “One roof” mine to renewables presence capabilites technology roadmap on end-products component traceability Peer 1 Peer 2 Clos
Slide 68: Positioning Hydro to pioneer the green aluminium transition
Positioning Hydro to pioneer the green aluminium transition Growing recycling capabilities 100% Earnings uplift potential 2030 of NOK 2 billion1) <2.3t/t 80% Greener product capability from total aluminium portfolio1) 60% Million tonnes capacity potential 40% Tonnes CO2e High-potential 5 per tonne A
Slide 69: Execute on ambitious decarbonization and technology road map
Execute on ambitious decarbonization and technology road map, step up to contribute to nature positive and a just transition Climate Nature Social Forcefully deliver on net-zero roadmap, Contribute to a nature positive future through Improve lives and livelihoods wherever we decarbonizing our value
Slide 70: Net-zero Hydro: The roadmap
Net-zero Hydro: The roadmap On track to achieve 30% carbon emissions reduction by 2030 and net-zero by 2050 or earlier GHG emissions – ownership equity1) Million tonnes CO2e (% of 2018 baseline emissions2)) 2018 2025 2030 2050 Fuel switch, Renewable power, green or earlier Electrifying coal boilers,
Slide 71: Decarbonization ambition: Three paths to net-zero
Decarbonization ambition: Three paths to net-zero Clear technology roadmap to deliver industrial volumes of zero-carbon aluminium by 2030 HalZero process Carbon capture and storage Recycling New process technology for decarbonizing Technologies for decarbonizing existing Technologies for more PCS-us
Slide 72: Widening our scope to reach zero CO2 emissions
Widening our scope to reach zero CO2 emissions Structured approach to reduce emissions throughout primary value chain CO2e emissions kgCO2/kgAl Renewable power Pursuing optionality is crucial for our path to across value chain. net-zero Initiatives on track ~1.4 ~0.2-0.3 ~0.3 ~1.6 Bio material Incre
Slide 73: Electrolysis decarbonization on track - HalZero
Electrolysis decarbonization on track - HalZero Ground-breaking technology to change the game CO2e emissions kgCO2/kgAl ~1.4 ~0.2-0.3 ~0.3 ~1.6 Bio material • Approval to start construction ~0.3-0.5 of new test facility in ~0.0 ~4.0 Porsgrunn - expected to be REDUXA 4.0 Bauxite & Logistics Anode Sme
Slide 74: Electrolysis decarbonization on track – carbon capture
Electrolysis decarbonization on track – carbon capture Technology shift for existing aluminium smelters CO2e emissions kgCO2/kgAl ~1.4 ~0.2-0.3 ~0.3 ~1.6 Bio material • Testing of Verdox technology ongoing at Sunndal ~0.3-0.5 ~4.0 ~0.0 • Installing capture ready cells REDUXA 4.0 Bauxite & Logistics
Slide 75: Pursuing optionality to decarbonize casthouses
Pursuing optionality to Starting industrialization of bio-methane from decarbonize casthouses 2024, stepping up activities in electrification Bio-methane Hydrogen tests and Direct electrification Important milestones for all initiatives: Bio-methane, • Introducing bio- pilots: pilots: hydrogen and d
Slide 76: Anode decarbonization
Anode decarbonization Utilizing bio-materials in anode production triggers Bio-methane and bio-materials in the process potentials for below zero emissions • Fuel switch to bio-methane in anode baking furnace – Havila contract • Substitution to bio-based packing materials CO2e emissions kgCO2/kgAl B
Slide 77: Logistics decarbonization
Logistics decarbonization Choosing the right solutions leads to reduced What we have done emissions. Ambition: 30% reduction by 2030 • >95% of AM volumes now have the major transport leg by sea • 85% emission reduction on container transport from China to Europe CO2e emissions kgCO2/kgAl • Moving vo
Slide 78: Recycling decarbonization
Recycling 2030 ambitions: Recycling decarbonization 850-1,200 Full value chain with multiple product outlets • Large recycling asset base in Europe and North America 770 560 • Broad range of products – extrusion ingot, sheet ingot, foundry alloys, HyForge, Master alloys • Ability to utilize and upcy
Slide 79: Contribute to a nature positive future
Contribute to a nature positive future through initiatives on biodiversity, waste handling and land-use Partnerships for Nature Positive No Net Loss Ambition for Paragominas Supply chain emissions Outcomes • No Net Loss of biodiversity for our • Develop opportunities for positive • Establish invento
Slide 80: Improving lives and livelihoods by supporting a just transition
Improving lives and livelihoods wherever we operate by supporting a just transition Just transition framework Respect and promote Support positive local Responsible supply Invest in education human rights development chain
Slide 81: Investing in the community is our license to operate
Investing in the community is our license to operate Social Infrastructure Community Projects Stakeholder Engagement • Construction of 9 Terpaz community • Investment in community-based projects • Transparency, dialogue and volunteer centers (3 already built) targets security, benefitted 80 thousand
Slide 82: Sustainable financing initiatives increase access to capital
Sustainable financing initiatives increase access to capital and provide cost of capital advantage Linked to Hydro sustainability ambitions Green and Sustainability Linked Financing Framework 10% • Framework published to facilitate issuance of green and sustainability linked bonds carbon 520-670 emi
Slide 83: Greener investments drive value creation
Greener investments drive value creation Hydro’s largest prioritized investment areas combine sustainability and profitability Recycling (PCS) B&A (El-Boilers) Electrolysis abatement Other Greener investments / Total Investments Several large recycling Substantial Technology roadmaps in • Energy sav
Slide 84: Financial Framework
») Hydro Financial Framework
Slide 85: Key performance metrics Q4 2023
Key performance metrics Q4 2023 Adjusted EBITDA Free cash flow1) Adjusted RoaCE2) NOK million NOK billion 12-month rolling % 7 184 5.8 22.2% 3 899 3 737 8.5% 7.1% 4Q22 3Q23 4Q23 -1.4 -1.5 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 Upstream costs3,4) Extrusion volumes Improvement program status USD per tonne Thou
Slide 86: Our financial framework guides the short and long-term
Our financial framework guides the short and long-term Solid framework for lifting returns and cash flow and managing uncertainty NOK NOK 8.5 Strengthening improvement Total shareholder distribution since 2019 30.7 billion and commercial ambition 2024 - 2030 amounting to NOK 30.7 billion billion Imp
Slide 87: Capital allocated according to strategic modes
Capital allocated according to strategic modes Strategic modes reflect global megatrends and high-return opportunities Safe, compliant and efficient operations The Hydro Way Businesses Bauxite & Alumina Aluminium Metal Recycling Energy Extrusions Strategic mode Sustain and improve Sustain and improv
Slide 88: Strong profitability in strategic growth areas
Strong profitability in strategic growth areas Indicative profitability in current return-seeking and Recycling growth portfolio • Increase proportion of post consumer scrap (PCS), lowering metal cost • Improved economies of scale in brownfield expansions • Sorting technology and equipment standardi
Slide 89: Press replacements giving new capabilities and cost savings
Press replacements giving new Press consolidation capabilities and cost savings Indicative profitability in current return-seeking and growth portfolio CoC: ~7% IRR 15-30% Two old presses One new press Manning 2 x 8 FTEs per shift 4-5 FTEs per shift Maintenance cost p.a. EUR 1,500K EUR 350-450K IRR
Slide 90: Shareholder and financial policy
Shareholder and financial policy Historical shareholder distribution • Aiming for competitive shareholder returns and Dividend 3.2% 3.8% 3.1% 9.9% 7.7% 3.7% dividend yield compared to alternative investments in yield1) peers • Dividend policy • Average ordinary payout ratio: 50% of adjusted net inco
Slide 91: Hedging policy
Hedging policy • Overall risk policy • Remain exposed to the inherent cash flow volatility related to Hydro’s business • Fluctuating with the market - volatility mitigated by strong balance sheet • Diversified business • Vertical integrated value chain reducing risk and volatility • Strengthening re
Slide 92: 2025 hedge position increased during the quarter
2025 hedge position increased by 20 kt during the quarter Aluminium hedges of 320-460 kt/yr 2024-25 in place Strategic hedging status NOK Billions • 2024: 440 kt hedged at a price of ~2500 USD/t • 2025: 320 kt hedged at a price of ~2500 USD/t • Pricing mainly in NOK, with USD hedges converted to NOK
Slide 93: Significant exposure to commodity and currency fluctuations
Significant exposure to commodity and currency fluctuations Aluminium price sensitivity +10% Currency sensitivities +10% NOK million Sustainable effect: 3 220 NOK million USD BRL EUR 2 250 AEBITDA 4,250 (1,020) (100) One-off reevaluation effect: AEBITDA Adjusted Net Income Financial items (590) 1,39
Slide 94: Targeting stable Net Operating Capital in 2024
Targeting stable Net Operating Capital in 2024 Structural changes and market effects driving Net Net Operating Capital1) Operating Capital increase historically NOK billion NOK 17 billion NOC increase since Q4-20 (until Q3-23) 2024 guiding • Weakening reporting currency (NOK) (all BAs) NOC other NOK
Slide 95: Capex outlook and pipeline replacement
Underlying 2024 capex in line with last year’s guidance Potential for Added flexibility depending market development accelerated Potential NOK ~1 billion cash effective organic growth capex from 2023, pending payables by depending on Historical capex YE 2024 market Sustaining capex development 55% s
Slide 96: Capital allocation increases earnings resilience
Capital allocation increases earnings resilience Extrusion and recycling margins, greener premiums growing as share of total earnings EBITDA NOK billion 5% Greener premiums 15% Recycling Extrusions Energy 24% 13% Upstream Other 17% 9% 7% 15% 18% 12% 50% 58% 66% -3% -4% -2% 2013-2022 Q3-23 LTM Improv
Slide 97: Hydro profitability growth roadmap
Hydro profitability growth roadmap Main drivers – improvement efforts, growth and market development ARoaCE potential 2030 AEBITDA potential 2030 Cash flow potential after Main further upside drivers Profitability target of >10% NOK billion sustaining CAPEX1) 2030 • Sustainability differentiation an
Slide 98: Capital return dashboard 2023
Capital return dashboard 2023 Capital employed1) 11 % Bauxite & Alumina Capital returns Balance sheet Free cash flow 27 % 22 % Aluminium Metal adj. RoaCE adj. ND/EBITDA 2023 Metal Markets Extrusions 4) 23 % ~115 BNOK Energy 7.1% 2) 0.73) (0.2) BNOK 13 % 8% 36 % 11% last 5 years vs adj. ND/EBITDA < 2
Slide 99: Capital return dashboard for Bauxite & Alumina
Capital return dashboard for Bauxite & Alumina Returns below the cost of capital reflecting challenging markets, embargo and operational issues during the early years Capital employed in B&A 12 % 22 % 6% 6% 1.8 BNOK 10-11% 3% 2% ~26 BNOK (31 Dec ‘23) -2 % 2018 2019 2020 2021 2022 2023 Adjusted EBITD
Slide 100: Capital return dashboard for Energy
Capital return dashboard for Energy Returns above the cost of capital reflecting the depreciated asset base Capital employed in Energy 30 % 25 % 11 % 19 % 3.1 BNOK 13 % 12 % ~13 BNOK 9% 6-7% (31 Dec ‘23) 2018 2019 2020 2021 2022 2023 Adjusted EBITDA FY 2023 Return requirement 2018-2023 ~18% average
Slide 101: Capital return dashboard for Aluminium Metal & Metal Markets
Capital return dashboard for Aluminium Metal & Metal Markets Investments in recycling capacity to support growth Capital employed in AM (MM) 35 % 28 % 14 % 10%-11% 10.5 (1.5) BNOK 5% 3% (7-8%) ~43 (9) -3 % BNOK 2018 2019 2020 2021 2022 2023 (31 Dec ‘23) Adjusted EBITDA FY 2023 8% 36 % ~14% (~22%) Re
Slide 102: Capital return dashboard for Extrusions
Capital return dashboard for Extrusions Returns in line with the cost of capital reflecting leading market positions in high value segments and portfolio optimization Capital employed in Extrusions 11 % 10 % 9% 7% 6% 6% 23 % ~27 BNOK 6.5 BNOK 7-8% 2018 2019 2020 2021 2022 2023 (31 Dec ‘23) Adjusted
Slide 103: Appendix: Business Areas
») Hydro Appendix: Business Areas
Slide 104: The aluminium value chain
The aluminium value chain World class assets, high-end products and leading market positions Raw materials processing and energy Primary aluminium production, marketing and recycling Aluminium in products Bauxite and Alumina Energy Aluminium Metal Metal Markets Extrusions • High quality Gibsite baux
Slide 105: Bauxite & Alumina
Bauxite & Alumina
Slide 106: B&A is an important enabler for low-carbon aluminium
B&A is an important enabler for low-carbon aluminium Controlling the top of the We can produce among the lowest carbon Enabling greener premiums for our primary aluminium and value chain aluminum in the world extrusion products Bauxite 4-6 times Hydro has the highest quality, lowest carbon and most
Slide 107: Industry frontrunner with robust operations
Industry frontrunner with robust operations B&A have developed a more robust operation, but current market environment is challenging Improved operations Competitive cost position • Nameplate production at Alunorte/Paragominas for the last 3 CRU (2023), USD per tonne Alumina1) years 600 500 • Greatl
Slide 108: Large and concentrated bauxite reserves
Large and concentrated bauxite reserves Guinea stands out as a long-term source Bauxite reserves billion mt Guinea China 0,7 7,4 Vietnam 5,8 Jamaica 2.0 India Big-league (Top 4) 0,7 Indonesia Mid-league (each > 1 Bt) 1,0 Less significant bauxite resources Total bauxite resources Brazil 2.7 Australia
Slide 109: Bauxite and alumina cluster in Para, Brazil
Bauxite and alumina cluster in Para, Brazil Paragominas bauxite mine Alunorte alumina refinery Bauxite production, mt Alumina production, mt (100% ownership, nameplate capacity 9.9mt) • Long-life resource (62% ownership, nameplate capacity 6.3mt) • World’s largest alumina refinery outside China • Ba
Slide 110: Hydro and Glencore partnering up to further develop Alunorte
Recent transaction: Hydro and Glencore to become partners to further develop Alunorte Alunorte Hydro and Glencore partnering up to further develop Alunorte Hydro balances its alumina • Location: Barcarena, state of Pará, portfolio after agreement with Brazil Glencore1) • Proceeds used for strategic
Slide 111: Bauxite operational mining costs in Paragominas
Bauxite operational mining costs in Paragominas Indicative Paragominas bauxite mining costs • Labor cost 13% • Influenced by Brazilian wage level 23% • Energy cost • Refers to Power and fuel cost 24% • Maintenance and consumables 19% • Mainly influenced by Brazilian inflation 20% • Large fixed cost
Slide 112: Favorable integrated alumina cost position
Favorable integrated alumina cost position Indicative implied alumina cost composition • Implied alumina cost 2023 - USD 340 per mt1) • Alunorte, Paragominas and external alumina sourcing for resale • Bauxite 8% • Internal bauxite from Paragominas at cost, sourced bauxite from MRN 21% • External bau
Slide 113: Strong commercial organization maximizing the value of B&A assets
Strong commercial organization maximizing the value of B&A assets External alumina sourcing Long positions in alumina • 4.0-4.5 2) million mt of external alumina sourced annually • Pricing should reflect alumina market fundamentals • Long term off-take agreement with Rio Tinto • Selling 3-4 million
Slide 114: Focus on driving profitability in a sustainable way
Focus on driving profitability in a sustainable way CAPEX: 5.7 BNOK Improvement program Tailings dry backfill Fuel switch El-boilers Hydro Energy 1,000HA - 700 000 tons - 400 000 Improvements Commercial 60% IRR land usage 26% IRR CO2 >50% IRR tons CO2 NOK 3.2 Billion NOK 620 million • Tailings dry
Slide 115: Alunorte to reduce carbon 70% by 2030
Alunorte to reduce carbon 70% by 2030 CO2e emissions kgCO2/kgAl 4.0 -71% 1.4 0.4 1.0 1.4 0.3 0.7 0.3 0.4 • Already 1st Quartile emissions in 2023 0.3 2023 Gas & 2025 elBoilers 2027 elBoilers 2030 • Fuel Switch and three el-boilers will 0.3 elBoilers 4&5 6-10 move Alunorte to one of the lowest smelte
Slide 116: Contributing to nature positive
Contributing to nature positive Reforestation Residue management • Best practice reforestation program • Hydro is current best practice in in Paragominas, exceeding 1-to-1 Residue management averaging 0.7T replanting on a strict a three-year cycle: of Residue per T of alumina • Year 1 = Deforestatio
Slide 117: Investing in the community is our license to operate
Investing in the community is our license to operate Social Infrastructure Community Projects Stakeholder Engagement • Construction of 9 Terpaz community • Investment in community-based projects • Transparency, dialogue and volunteer centers (3 already built) targets security, benefitted 80 thousand
Slide 118: Bauxite & Alumina sensitivities
Bauxite & Alumina sensitivities Annual sensitivities on adjusted EBITDA if +10% in price Revenue impact NOK million • Realized alumina price lags PAX by one month 1 900 Cost impact Bauxite • ~2.45 tonnes bauxite per tonne alumina • Pricing partly LME-linked Caustic soda (10) (70) (60) • ~0.1 tonnes
Slide 119: Bauxite & Alumina profitability growth roadmap
Bauxite & Alumina profitability growth roadmap Main drivers – fuel switch, commercial differentiation and market development ARoaCE potential 2030 AEBITDA potential 2030 Cash flow potential after Main further upside drivers Profitability target of >10% NOK billion sustaining CAPEX1) 2030 • Positive
Slide 120: Capital return dashboard for Bauxite & Alumina
Capital return dashboard for Bauxite & Alumina Returns below the cost of capital reflecting challenging markets, embargo and operational issues during the early years Capital employed in B&A 12 % 22 % 6% 6% 1.8 BNOK 10-11% 3% 2% ~26 BNOK (31 Dec ‘23) -2 % 2018 2019 2020 2021 2022 2023 Adjusted EBITD
Slide 121: Energy
Energy
Slide 122: Pioneering the green aluminium transition, powered by renewable energy
Pioneering the green aluminium transition, powered by renewable energy Hydro’s energy consumption1) 18.3 Hydropower Europe Onshore Wind2) 1.5 Electricity 18.3 TWh Solar PV2) North America Natural gas 1.5 TWh Electricity 2.3 TWh 2.3 1.9 12,0 Energy Solutions3) Natural gas 1.9 TWh Green hydrogen3) Mid
Slide 123: Energy is a key differentiator in the aluminium industry
Energy is a key differentiator in the aluminium industry Center of energy excellence in Hydro Bauxite Alumina Primary Extrusion ~25% ~35% ~35% Energy cost 1) ~8% ~50% Energy business area’s • Power sourcing • Power sourcing • Power sourcing and • Power sourcing contribution to Hydro production • Fue
Slide 124: Market pricing principle applied to internal contracts
Market pricing principle applied to internal contracts Based on external price references Sourcing side Revenue side TWh TWh Spot price 0-2 3) • Long-term contract 1 9.4 (7-11) 1) • Market pricing • Fixed annual Regulated pricing price adjustments • Market pricing 16-182) • Duration varies • Differe
Slide 125: Energy EBITDA development
Energy EBITDA development • Production and market prices strongly linked to hydrological Adjusted EBITDA and NO2 spot price NOK million conditions NOK/MWh 4 926 5 000 2 500 • Seasonal market variations in demand and supply. Gains or losses 3 791 4 000 3 146 2 000 may occur from delink between area p
Slide 126: Norwegian power market surplus in question
Norwegian power market surplus in question Public opposition to onshore wind parks limiting the effect of attractive renewable resources Market uncertainty prevails Norwegian Power Balance TWh 300 Power market balance weakening (short-medium term) 250 200 Demand from electrification and new industri
Slide 127: Norwegian power projects remain attractive
Norwegian power projects remain attractive Attractive resource base and cost level, and onshore wind is enabler for renewables at low shaping cost Range of LCOE and Nordic System price to 20301) Illustrative Capture rates Southern Norway and Germany 2023 EUR per MWh Percentage 140% 90 80 120% Southe
Slide 128: Wind and hydropower interplay is key for future system
Wind and hydropower interplay is key for future system Hourly Total Hourly per source NO2 Week 6 2023 NO2 Week 6 2023 Hydro power Wind power Hydro (LHS) Wind (RHS) 12000 12000 1600 1400 Hydro power production MWh/h Wind power production MWh/h 10000 10000 Wind power and 1200 8000 8000 flexible hydrop
Slide 129: Pursuing growth opportunities at different stages
Pursuing growth opportunities at different stages Realizing value potential 2020: Hydro 2025 Strategy 1905 1991 2016 - 2019 2017 2021 2023 Wind power PPAs First battery investment Green hydrogen Hydro Rein JV Energy markets operations Hydro Rein Batteries unit established Hydro Havrand Hydro Rein an
Slide 130: Energy: Strong production platform, market performance and growth opportunities
Energy: Strong production platform, market performance and growth opportunities Resource spend Norwegian hydropower players 2022 NOK per MWh 60 Strong platform for value creation 50 • EBITDA “platform” from operations 40 • 8 TWh on long term contracts (predictable prices) + 2 TWh (average) net long
Slide 131: Energy assets and unique competence drive value creation across Hydro
Energy assets and unique competence drive value creation across Hydro Strong platform for production, sourcing and advisory Decarbonizing Hydro and external industries Operations and projects: HSE excellence, Decarbonizing Hydro operating 40 power plants across Norway • Power sourcing, managing and
Slide 132: Position and capabilities across entire value chain
Position and capabilities across entire value chain Major renewable energy producer, market player and offtaker In Operation Offtake Aluminium Metal Hydropower in Norway (equity): 9.4 TWh Norwegian smelters: 17 TWh Hydropower in Norway (operator): 13 TWh Wind power in Norway (operator): 0.7 TWh Offt
Slide 133: Status for Hydro's wind projects in Western Norway
Status for Hydro’s wind projects in Western Norway Pursuing opportunities to develop and source power to industry Snøheia: Årdal: Other locations: Snøheia: ongoing. Project development Exploring new power development in a Actively exploring opportunities for new Proceeding whenFproject is mature. wi
Slide 134: Value creation across the energy space going forward
Value creation across the energy space going forward High performance and profitability ambitions: 1 Energy Classic ROACE > 15% Hydro Rein JV platform annual eIRR 10 – 20 % Batteries 3x invested capital, 20% TSR average annually Grow value of our Norwegian portfolio through upgrading of 2 existing h
Slide 135: Capital return dashboard for Energy
Capital return dashboard for Energy Returns above the cost of capital reflecting the depreciated asset base Capital employed in Energy 30 % 25 % 11 % 19 % 3.1 BNOK 13 % 12 % ~13 BNOK 9% 6-7% (31 Dec ‘23) 2018 2019 2020 2021 2022 2023 Adjusted EBITDA FY 2023 Return requirement 2018-2023 ~18% average
Slide 136: Energy profitability growth roadmap
Energy profitability growth roadmap Main drivers – Net spot sales volume and market development Classic - AEBITDA potential 2030 Classic - Cash flow potential REIN JV – pro-rata AEBITDA Main further upside drivers NOK billion after sustaining CAPEX1) 2030 potential (Hydro’s share)2) 2030 • Additiona
Slide 137: Hydro Rein's journey: Fast-tracking portfolio development
Hydro Rein’s journey: Fast-tracking portfolio development CUSTOMERS PORTFOLIO PEOPLE CAPITALIZATION 5.3 TWh p.a.1) 2.6 GW 1) 412) ~90 3) JV with Macquarie signed under long-term gross capacity total # of renewable projects Asset Management Hydro Rein FTEs EUR & USD PPAs in construction & secured in
Slide 138: Portfolio overview: Renewable energy projects in the Nordics and Brazil
Portfolio overview: Renewable energy projects in the Nordics and Brazil Gross capacity Production Project Country Price area Technology # Projects Ownership (%) Partner(s) FID COD (MW) (GWh) Stor-Skälsjön SE2 1 25% 260 807 2021 2024 Ventos de São Zacarias Northeast 1 49.9% 456 1,957 2022 2024 UNDER
Slide 139: Current portfolio adds 2.4 TWh to REIN's captive power
Current portfolio adds 2.4 TWh to REIN’s captive power1) 1.7 GW gross, approximately USD 1.8 billion gross Renewable energy Projects under construction Gross GW Stor-Skälsjön Ventos de São Zacarias Mendubim Boa Sorte Under 1,0 0,7 1.7 construction Secured 0,9 • 25% ownership share • 49.9% ownership
Slide 140: Hydro Rein on track to becoming preferred supplier of renewable energy solutions
Hydro Rein on track to becoming preferred supplier of renewable energy solutions to industrials 2026 Targets communicated at Hydro’s Capital Markets Day 2022 2030 vision of continued profitable growth 3 GW >500 MW 400-450 MNOK1) Sustainable & attractive risk-adjusted returns Gross portfolio in added
Slide 141: Multiple value levers to create attractive returns
Multiple value levers to create attractive returns Value levers at project and platform level Key value levers Comments and selected examples Project equity IRR Base stand alone project equity IRR Hydro Rein with access to Optimize capital structure (including refinancing), several value creation St
Slide 142: Empowering the future of green mobility
Empowering the future of green mobility Progress in the sustainable battery materials portfolio throughout 2023 STRATEGIC TARGETS 3x Value uplift in 2030 on equity invested by 2027 GROWTH ASSETS Circular solutions 50% ownership Anode materials 30% ownership Anode materials Lithium 12% ownership • Fu
Slide 143: Hydro Havrand: World's first aluminium made with green hydrogen
Hydrogen breakthrough Hydro Havrand: World’s first aluminium made with green hydrogen 1 ‘World first’ test in Navarra, Spain 2 ‘World’s first’ pilot in Høyanger, Norway 3 Roadmap to further fuel switch • First batch of aluminium with • Full scale 3 year pilot – and • Develop roadmap to further fuel
Slide 144: Aluminium Metal
Aluminium Metal
Slide 145: Global production network
Global production network Primary production and recycling 8 stand-alone extrusion ingot recyclers • 3 in the US Norway, 1 155 000 tonnes 50% • 5 in Europe (UK, Luxembourg, • Sunndal (100%): 430,000 tonnes France, Spain and Germany) • Årdal (100%): 205,000 tonnes • St Peter & Alusort scrap sorting •
Slide 146: Low-carbon footprint due to renewable energy base and industry lowest energy consumption
Low-carbon footprint due to renewable energy base and industry lowest energy consumption Total emissions, in tonne CO2/t al Energy consumption in Hydro smelters1), kwh/kg al 18 17,5 18 16 16 15,0 14,8 14,4 13.9 14,1 14 13,1 14 12,5 12,3 11.8 12 12 10 10 8 8 6 6 4 4 2 2 0 0 Hydro Karmøy Hydro Hydro H
Slide 147: Hydro has a unique value proposition in aluminium
Hydro has a unique value proposition in aluminium Going to market with a combined offering of primary and recycled aluminium with a full product spectrum and with tailor-made alloys is unique to AM Extrusion ingot Near zero Full service offering aluminium Foundry alloy Hydro CIRCAL100R uniqueness/ p
Slide 148: Competitive primary aluminium cash cost
Competitive primary aluminium cash cost Liquid aluminium cash cost 20233) • Primary aluminium cash cost 2023 • All-in implied primary aluminium cash cost1,2) USD 2 225 per mt • LME implied primary aluminium cash cost1,3) USD 1 750 per mt 6% • Alumina • Purchases based on alumina index ~93% 11% • Pur
Slide 149: Aluminium Metal sensitivities
Aluminium Metal sensitivities Annual sensitivities on adjusted EBITDA if +10% in price Revenue impact NOK million • Realized price lags LME spot by ~1-2 months • Realized premium lags market premium by ~2-3 months 3 230 Cost impact Alumina 420 • ~1.9 tonnes per tonne aluminium • ~ 2-3 months lag (40
Slide 150: Preparing for first CO2 capture and HalZero testing at scale
Preparing for first CO2 capture and HalZero testing at scale Timeline 2022 Q1 2024 2025 2030 2035 Concept Status Proven concepts and Tested market and Realized market value prioritization first volumes industrial scale pilot volumes ✓ Successful first tests with Verdox ✓ Test facility at Sunndal com
Slide 151: Biomaterials to reach zero and below
Biomaterials to reach zero and below Timeline 2022 Q1 2024 2025 2030 2035 Concept Status Proven concepts and Tested market and Realized market value prioritization first anode industrial scale pilot volumes ✓ Substitution to bio-based packing materials ✓ Substitute fossil materials to bio-binder in
Slide 152: Bio-methane, hydrogen and direct electrification
Bio-methane, hydrogen and direct electrification Timeline 2022 Q1 2024 2025 2030 2035 Concept Status Proven concepts and Tested market and Realized market value prioritization first volume industrial scale pilot volumes ✓ Introducing bio-methane at Sunndal plant – Commercial agreement with Havila to
Slide 153: Capital return dashboard for Aluminium Metal & Metal Markets
Capital return dashboard for Aluminium Metal & Metal Markets Investments in recycling capacity to support growth Capital employed in AM (MM) 35 % 28 % 14 % 10%-11% 10.5 (1.5) BNOK 5% 3% (7-8%) ~43 (9) -3 % BNOK 2018 2019 2020 2021 2022 2023 (31 Dec ‘23) Adjusted EBITDA FY 2023 8% 36 % ~14% (~22%) Re
Slide 154: Aluminium Metal and Metal Markets profitability growth roadmap
Aluminium Metal and Metal Markets profitability growth roadmap Main drivers – improvement efforts, commercial differentiation and market development ARoaCE potential 2030 AEBITDA potential 2030 Cash flow potential after Main further upside drivers Profitability target of >10% (>8%) NOK billion susta
Slide 155: Metal Markets
rl v Metal Markets
Slide 156: Strong position in value-added casthouse products
Strong position in value-added casthouse products • Capitalizing on value-added casthouse Leading global position products portfolio Extrusion ingot Unique primary and • Extensive multi-sourcing system 1.6 million mt recycling capacity network including fully- and part-owned primary casthouses and s
Slide 157: Pricing of value-added products
Pricing of value-added products Smelter Intermediate product Casthouse Aluminium Standard ingot Value added products Extrusion ingot Foundry alloy Sheet ingot Wire rod Traded on LME • US Midwest - 1020 • Extrusion Ingot – Priced above standard ingot • Foundry Alloy – Priced above standard ingot US (
Slide 158: Metal Markets earnings drivers
Metal Markets earnings drivers • Recyclers • Revenue impact – volume, LME and product premiums Adjusted EBITDA excluding currency effects and inventory valuation effect, • Cost impact NOK million1) • Scrap and standard ingot premiums above LME 750 700 • Raw material mix 650 • Freight cost – proximit
Slide 159: 2025 recycling targets achieved with 2023 year-end installed capacity
2025 recycling targets achieved Recycling targets 20301) with 2023 year-end installed capacity Post Consumer Scrap Consumption and targeted capacity usage, tonnes (‘000) 850-1,200 Recent recycling projects with production and post-consumer scrap capacity Tonnes (‘000) 520-670 560 5 kt 5 kt 13 kt 37
Slide 160: Post-consumer scrap generation is increasing
Post-consumer scrap generation is increasing But multiple hurdles exist for its utilization Post-consumer scrap recovery CAGR Price spread scrap Key trends in aluminium recycling Tonnes (‘000) 2.4% Clean vs. complex post-consumer scrap, EUR/tonne Specialty and greener Europe 2020-2040 6 000 • Growth
Slide 161: Mixed scrap types require sorting capabilities
Mixed scrap types require sorting capabilities and ability to convert to various products Securing access to the right scrap – key success factor High Low Need for sorting High EC wire chops Clean profiles Painted profiles Shredded profiles Castings Taint Tabor Twitch Post- Mix of pre- and Mix of pr
Slide 162: Megatrends support recycling agenda
Megatrends support recycling agenda Increasing focus on circular economy from both consumers and regulators Innovate for circularity Waste to value Technology Regulatory frameworks Global semis demand (Mt) 98 ∆ 29 100% PCS 17% Process 36% 13% scrap1 14% Primary 70% 51% 2022 demand Incremental demand
Slide 163: Diversifying and high-grading recycling product portfolio
Diversifying and high-grading recycling product portfolio across markets and geographies Successfully completed organic and inorganic projects in 2023 include: Introducing Hydro CIRCAL, Diversifying portfolio and increasing EI market share in the growing high-margin HyForge US capacity • 40kt of PCS
Slide 164: Hydro has a proven track record developing recycling capabilities
Hydro has a proven track record developing recycling capabilities Increasing use of PCS and Diversifying asset and product portfolio2) Expanding specialty and greener product offerings3) sorting capacity 1) Recycling product portfolio mix Increasing CIRCAL 75R capacity 100% Tonnes (‘000) +40% ~250-3
Slide 165: Stepping up activities across the recycling value chain
Stepping up activities across the recycling value chain Continuing to transform scrap into sustainable solutions for our customers Scrap sourcing Sorting Melting/casting Products & Commercial • Strengthen existing and grow new • Increase sorting capacity through • Greenfield / brownfield • Develop a
Slide 166: Hydro with competitive advantages in recycling
Recycling 2030 ambitions: Hydro with competitive 850-1,200 advantages in recycling 770 560 Full value chain with multiple product outlets 2023 2027 2030 • Large recycling asset base in Europe and North America • Broad range of products – extrusion ingot, sheet ingot, foundry alloys, HyForge, Master
Slide 167: Extrusions
Extrusions
Slide 168: Extrusions – #1 in the global aluminium extrusion industry
Extrusions – #1 in the global aluminium extrusion industry Present in ~40 countries ~ 21 000 people 1) 1.1 Million mt sales2) 1) Permanent employees as of end-2023 168 2) Total sales in 2023
Slide 169: Hydro Extrusions delivering strong EBITDA uplift
Hydro Extrusions delivering strong EBITDA uplift through targeting high-growth, advanced segments HE sales volumes split per segment HE EBITDA EBITDA per tonne vs peers Million tonnes NOK million NOK per tonne 7.020 10 000 1.4 6.480 1.1 Distribution 15% 5.696 10% 8 000 Automotive 10% 20% Transport 4
Slide 170: Extrusions earnings drivers
Extrusions earnings drivers Adjusted EBITDA per tonne1), NOK 7,500 • Contract structure 7,000 • Margin business based on conversion price 6,500 6,000 • LME element passed on to customers 5,500 • Mostly short-term contract, typically ranging from spot to 12 months, few 5,000 longer term contracts wit
Slide 171: Industry trends towards 2030 are favorable for Hydro Extrusions
Industry trends towards 2030 are favorable for Hydro Extrusions, driven by customer needs and segment growth Opportunity to leverage Hydro Extrusions’ strengths increases as target segments develop Customer needs Segment growth HE capabilities • As industries and applications mature, • More growth e
Slide 172: Hydro Extrusions will leverage opportunities from greener transition
Hydro Extrusions will leverage opportunities from greener transition to strengthen market positions Secular growth drivers in key segments HE positioning and growth ambitions Automotive CAGR • Strong global positions, long term relationships with major automotive OEMs 2022-30: • Proven capabilities,
Slide 173: Critical growth projects under execution
Critical growth projects under execution, maturing projects to enable profitable growth Further strengthening flagship plants in the portfolio, leveraging key trends Key trends Project under execution Project capacity growth since 2021 • Sustainable products with Capacity added Growth1) Hungary recy
Slide 174: Significant automotive growth business last quarters
Significant automotive growth business last quarters Record levels of OEM sole supply Partnerships Advanced offering of added value Across geographies and units contracts with large OEMs activities and fabrication services (Revenue in BEUR) 0.9 – 1.0 2.4 – 2.6 Tier1 OEM 4 2 contracts contracts 1.5 –
Slide 175: Reducing own emissions and helping customers improve their products' sustainability
Reducing own emissions and helping customers improve their products’ sustainability towards 2030 Greener sourcing Greener production Greener products Reduce water -24%1 CO2 usage by 30%2) -27%1) CO2 direct/ emissions and waste indirect generation by on extrusion emissions billets 20%2) Zero hazardou
Slide 176: Reducing own emissions and helping customers improve their products' sustainability
Reducing own emissions and helping customers improve their products’ sustainability towards 2030 Greener sourcing Greener production Greener products Greener Sweden PV-powered press Shaping the market Pilot project towards net-zero Solar-powered press in Poland First project with Hydro CIRCAL 100R H
Slide 177: Customers partnering with Hydro Extrusions to make greener products
Customers from all industries partnering with Hydro Extrusions to make greener products Partnering to cut carbon Cleanest Dirt Bike Ever project Solar panel systems made Light and flat-packed BOA emissions from its value chain to remove emissions from from low-carbon conference tables made with in h
Slide 178: Digitalization, AI and automation
Digitalization, AI and automation Key levers to improve performance and profitability AMR = Automatic Meter Reading Automation • PT Taicang Fabrication – reducing 95 AMR = Sensors with real-time FTEs through Automation & EBS1) tracking of energy, water, gas (>20% of work-force) consumption and vibra
Slide 179: HE increasing profitability towards 2030
HE increasing profitability towards 2030 through uplift from growth projects and underlying improvements Growing market share in dedicated segments, further operational and commercial improvements HE volumes per segment HE EBITDA ambitions Indicative NOK billion (real 2023) 1.25 million Share growth
Slide 180: Hydro Extrusions 2030 strategic direction
Hydro Extrusions 2030 strategic direction XXX • Growing with the underlying markets • Growing in non-commoditized segments fitting with HE’s capabilities • Continue to compete based on capabilities and service + Market share growth ambition in high-growth, profitable segments • Investments to suppor
Slide 181: Capital return dashboard for Extrusions
Capital return dashboard for Extrusions Returns in line with the cost of capital reflecting leading market positions in high value segments and portfolio optimization Capital employed in Extrusions 11 % 10 % 9% 7% 6% 6% 23 % ~27 BNOK 6.5 BNOK 7-8% 2018 2019 2020 2021 2022 2023 (31 Dec ‘23) Adjusted
Slide 182: Extrusions profitability growth roadmap
Extrusions profitability growth roadmap Main drivers – improvement program and commercial ambition ARoaCE potential 2030 AEBITDA potential 2030 Cash flow potential after Main further upside drivers Profitability target of >8% NOK billion sustaining CAPEX1) 2030 • Selective profitable growth NOK bill
Slide 183: Additional information
») Hydro Additional information
Slide 184: Adj. EBITDA Q4 2023 vs Q4 2022
Adj. EBITDA down on lower prices, Extrusion results and Slovalco effects, partly offset by lower raw material cost Q4 2023 vs Q4 2022 7.2 0.2 0.6 1.6 1.5 0.8 0.5 0.1 1.2 1.4 3.7 -2.1 CO2 compensation Slovalco effects Other & eliminations Adj. EBITDA Realized aluminium Raw material cost Extrusion and
Slide 185: Income statements
Income statements NOK million Fourth quarter Fourth quarter Third quarter Year Year 2023 2022 2023 2022 2023 Revenue 46 754 44 075 44 702 207 929 193 619 Share of the profit (loss) in equity accounted investments 46 131 171 1 337 492 Other income, net 1 272 1 051 348 4 406 4 152 Total revenue and in
Slide 186: Balance sheet
Balance sheet NOK million December 31 September 30 June 30 March 31 December 31 September 30 June 30 March 31 2023 2023 2023 2023 2022 2022 2022 2022 Cash and cash equivalents 24 618 19 105 22 453 30 873 29 805 25 852 24 507 21 161 Short-term investments 2 641 2 101 1 158 2 696 4 173 2 511 1 882 8 5
Slide 187: Adjusting items to EBITDA, EBIT and net income
Adjusting items to EBITDA, EBIT and net income NOK million (+=loss/()=gain) Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Year 2022 Year 2023 Unrealized derivative effects on raw material contracts Hydro Bauxite & Alumina (376) (173) 157 353 177 94 (41) 182 (40) 412 Community contr
Slide 188: Operating segment information: Adjusted EBIT
Operating segment information Adjusted EBIT NOK million Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Year 2021 Year 2022 Year 2023 Hydro Bauxite & Alumina 556 383 466 1 913 718 484 10 (586) (221) 88 (610) (269) 3 318 626 (1 013) Hydro Energy 792 713
Slide 189: Operating segment information: EBIT
Operating segment information EBIT NOK million Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Year 2021 Year 2022 Year 2023 Hydro Bauxite & Alumina 583 467 407 1 830 1 094 657 (147) (1 133) (399) (30) (570) (4 223) 3 288 471 (5 222) Hydro Energy 851 7
Slide 190: Operating segment information: Total revenue
Operating segment information Total revenue NOK million Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Year 2021 Year 2022 Year 2023 Hydro Bauxite & Alumina 6 026 5 976 6 984 8 713 7 901 9 413 8 652 7 986 8 320 8 830 8 423 9 948 27 699 33 951 35 521 H
Slide 191: Operating segment information: Internal revenue
Operating segment information Internal revenue NOK million Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Year 2021 Year 2022 Year 2023 Hydro Bauxite & Alumina 2 479 2 438 2 452 3 242 2 848 3 549 3 011 2 895 3 031 3 260 3 019 3 141 10 610 12 303 12 54
Slide 192: Operating segment information: RoaCE
Operating segment information Return on average capital employed 1) (RoaCE) Reported RoaCE Adjusted RoaCE 2023 2022 2021 2020 2019 2018 2017 2023 2022 2021 2020 2019 2018 2017 Hydro Bauxite & Alumina (12.7%) 1.3% 11.9% 5.4% 1.9% 4.6% 8.5% (2.5%) 1.8% 12.0% 5.9% 2.5% 6.0% 8.5% 2) Hydro Energy 10.4% 2
Slide 193: Operating segment information: Depreciation, amortization and impairment
Operating segment information Depreciation, amortization and impairment NOK million Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Year 2021 Year 2022 Year 2023 Hydro Bauxite & Alumina 443 472 589 514 553 633 624 687 659 729 703 4 523 2 018 2 496 6 61
Slide 194: Operational data: Bauxite & Alumina
Operational data Hydro Bauxite & Alumina Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Year 2021 Year 2022 Year 2023 Alumina production (kmt) 1 540 1 586 1 579 1 600 1 519 1 536 1 579 1 559 1 550 1 542 1 522 1 571 6 305 6 193 6 185 Sourced alumina (k
Slide 195: Operational data: Aluminium Metal
Operational data Hydro Aluminium Metal 1) Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Year 2021 Year 2022 Year 2023 Realized aluminium price LME, USD/mt 1 994 2 210 2 419 2 675 2 662 3 031 2 497 2 246 2 291 2 273 2 146 2 129 2 317 2 599 2 218 Reali
Slide 196: Hydro Extrusions, information by business area
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Slide 197: Assumptions behind scenarios in profitability roadmaps
Assumptions behind scenarios in profitability roadmaps Scenarios are not forecasts, but illustrative earnings, cash flow and return potential based on sensitivities • Starting point – AEBITDA Q3-23 LTM Price and FX assumptions • Cash flow calculated as AEBITDA less EBIT tax and long-term sustaining
Slide 198: Investor Relations in Hydro
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Slide 199: Hydro
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