Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — The Dahlman Rose & Co First Annual Global Metals, Mining & Materials Conference 2010
24 slides from Norsk Hydro Asa's conference presentation, Nov 17, 2010
Slide 1: Hydro - a resource rich and fully integrated aluminium company
Hydro - a resource rich and fully integrated aluminium company Jørgen C. Arentz Rostrup, Executive Vice President and CFO The Dahlman Rose & Co First Annual Global Metals, Mining & Materials Conference November 17, 2010 (1)
Slide 2: Cautionary note in relation to certain forward-looking statements
Cautionary note in relation to certain forward-looking statements Certain statements contained in this announcement constitute “forward-looking information” within the meaning of Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as a
Slide 3: Hydro's value proposition
Hydro’s value proposition • Resource rich and fully integrated aluminium and energy company with global reach and attractive positions across the value chain • Upstream cost position to be improved by the world-class Qatalum smelter • Strong operational performance and cost focus • Financial discipl
Slide 4: Strong positions across aluminium value chain
Strong positions across aluminium value chain Raw materials processing Primary aluminium production, Aluminium in products and energy marketing and recycling Bauxite Primary Metal Rolled Extruded & Alumina Energy Metal Markets Products Products • Bauxite capacity • Long-term power • 2.4 million tonn
Slide 5: Attractively positioned, global reach
Attractively positioned, global reach Norway • 900 000 tonnes hydro-powered aluminium production Continental Europe • Technology centre, R&D for next-generation smelter • Leading mid and downstream position • Hydropower developments (Holsbru) • New recycling centre (Karmøy) North America Asia • Alou
Slide 6: Sales volumes moving towards pre-crisis levels
Sales volumes moving towards pre-crisis levels Normal seasonal pattern in Q3 Total downstream sales* Total upstream sales Jan-Sep 10 vs Jan- Jan-Sep 10 vs Jan-Sep Q3 10 vs Q2 10 Q3 10 vs Q3 09 Sep 09 Q3 10 vs Q2 10 Q3 10 vs Q3 09 09 21% 16% 15% 12% -3% -5% * Excluding Automotive Structures (6)
Slide 7: Inventories stabilized at high level
Inventories stabilized at high level 1 000 tonnes 7 000 • Reported inventories outside IAI stocks LME NYMEX/TOC OM/Japan China: ~6 million tonnes 6 000 • Large portion of inventories held 5 000 by financial investors • Time horizon depending on interest 4 000 rates, warehousing costs and LME contang
Slide 8: Increased ingot premiums
Increased ingot premiums USD per tonne 200 US Mid West Japan Europe* 150 100 50 0 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 * Duty-paid Source: Metal Bulletin, MW/MJP: Platts (8)
Slide 9: China balanced in primary aluminium
China balanced in primary aluminium 1 000 tonnes • Balanced supply and demand 600 550 during Q3 500 450 400 • New announced production Net import 350 300 250 cuts due to energy reduction 200 and environmental targets to 150 100 be reached by end-2010 50 0 (50) (100) • Delays in new capacity Net expo
Slide 10: 2010 market outlook
2010 market outlook • World outside China World outside China (annualized), 1 000 tonnes 30 000 C onsumption Production • Primary aluminium consumption 28 000 expected close to 24 million tonnes, 26 000 around 17% growth from 2009 24 000 22 000 • Consumption first nine months 20 000 stronger than an
Slide 11: Underlying EBIT
Underlying EBIT 2 032 1 619 1 490 1 110 965 868 688 -493 -618 -651 -793 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 NOK million 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 Primary Metal 938 795 906 93 (185) (895) (760) (717) (49) 657 399 Metal Markets 363 139 (41) 242 (245) 196 (15) (20) 65 31 163 R
Slide 12: Primary Metal repositioning continues
Primary Metal repositioning continues Estimated primary aluminium production • Unsatisfactory cost position cash costs • Estimated first nine months 2010 cash cost In USD/tonne* USD 1 750/NOK 10 600 2 175 • Norwegian smelter system challenging 1 675 1 750 in current high-cost environment • Program f
Slide 13: Lifted improvement ambition in Primary Metal
Lifted improvement ambition in Primary Metal Operational improvements • Current USD 100/mt improvement • Improved current efficiency program extended to USD 300/mt • Reduced power consumption Current • Reduced anode consumption program USD • Scope of ambition is Hydro’s wholly- owned smelters: ~900
Slide 14: Qatalum – a world class smelter
Qatalum – a world class smelter • 50/50 joint venture with Qatar Petroleum • Capacity of 585 000 tonnes per year • Very competitive cash cost position when in full production • Investment (100%) ~USD 5.7 billion • Power outage August 9 • Affecting 444 out of 704 cells • Ramp-up resumed September 15
Slide 15: Financial position
Financial position Net cash / (debt) in NOK billion 8.9 Dec 31, Mar 31, Jun 30, Sep 30, NOK billion 2009 2010 2010 2010 Cash and cash equivalents 2.5 2.5 2.2 8.7 Short-term investments 1.5 1.6 1.3 1.3 Short-term debt (1.9) (1.0) (1.5) (1.0) Long-term debt (0.1) (2.6) (2.1) (0.1) Net cash/(debt) 2.0
Slide 16: World-class assets in resource-rich Brazil
World-class assets in resource-rich Brazil CAP alumina Alunorte refinery project alumina refinery Increasing stake from Increasing stake from 20% to 81% 34% to 91% • Bauxite licenses • Sales contract portfolio • Competence MRN bauxite mine Paragominas bauxite mine Albras aluminium smelter Current st
Slide 17: Upstream earnings become more robust
Upstream earnings become more robust Average 2007-2008 EBITDA Assumed assets Hydro and assumed Hydro from Vale assets combined USD 2.0 billion USD 0.8 billion USD 2.8 billion 8% 11% 4% 20% 15% 39% 21% 61% 64% 57% Bauxite & Alumina Primary Aluminium Downstream Energy and other Hydro Underlying EBITDA
Slide 18: Alumina prices on upwards trend
Alumina prices on upwards trend Hydro estimates of average contract prices USD per tonne alumina % of LME per tonne alumina • 3 to 10 years contract prices 313 13.4-14.0% have moved upwards 13.0-13.8% 12.2-12.7% • Bauxite and alumina prices strongly affected by Chinese growth 211 184 • China bauxite
Slide 19: Long alumina and bauxite position
Long alumina and bauxite position Upstream position transformed Hydro end-2010 Pro forma end-2010 Pro forma 2016 (60% Paragominas) (100% Paragominas) 4.2 Aluminium equivalent equity 3.7 capacity in million tonnes 3.3 2.2 2.2 1.9 1.8 1.4 0.5 Bauxite Alumina Aluminium Bauxite Alumina Aluminium Bauxite
Slide 20: Takeover of Vale's aluminium business on track
Takeover of Vale’s aluminium business on track • Hydro’s integration planning well underway • Senior management in new Bauxite & Alumina business area appointed • Vale granted hydropower concession according to Norwegian industrial concession law to take over 22% of Hydro • Transaction remains subje
Slide 21: Attractively positioned, global reach
Attractively positioned, global reach Norway • 900 000 tonnes hydro-powered aluminium production Continental Europe • Technology centre, R&D for next-generation smelter • Leading mid and downstream position • Hydropower developments (Holsbru) • New recycling centre (Karmøy) North America Asia • Alou
Slide 22: World-class upstream growth pipeline
World-class upstream growth pipeline Strong track-record in project execution Qatalum Hydropower Paragominas CAP Aluminium aluminium plant developments bauxite mine alumina refinery and power Qatar Norway Brazil Brazil plant Angola • Potential for • Development potential • Brownfield expansion • Fir
Slide 23: Priorities
Priorities • Capture market opportunities • Upstream repositioning • Vale assets integration • Qatalum ramp-up • Firm cost control • Solid operations (23)
Slide 24: www.hydro.com
www.hydro.com