Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Presentation (April 2012)
110 slides from Norsk Hydro Asa's investor presentation, April 2012
Slide 1: Investor presentation April/May 2012
Investor presentation 2012 April/May 2012
Slide 2: Table of contents and cautionary note
Table of contents Cautionary note 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 strategies for Hydro, such as pl
Slide 3: Company overview
1 Company overview (3)
Slide 4: Hydro: resource rich and fully integrated
Hydro: resource rich and fully integrated Hydro underlying EBIT quarterly, NOK million 9 930 6 009 (2 555) 3 551 6 133 557 • Based in Norway with 3,200 operations in 40 countries 2,800 • 23 000 employees 2,400 2,000 • Operating revenues 1,600 • 2008: NOK 89 billion 1,200 • 2009: NOK 67 billion • 201
Slide 5: Hydro's value proposition
Hydro’s value proposition • Capturing full potential of attractive long bauxite and alumina position • Continuing unparalleled USD 300 per mt improvement program • Strengthening portfolio robustness with world-class Qatalum smelter • Securing solid financials through high-value hydropower assets • A
Slide 6: 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 7: Aluminium is the metal of the future
Aluminium is the metal of the future • Lightweight • Formability • 1/3 density of steel • Extrusion, rolling, casting • Low melting point vs. steel • Recyclability • 5% of original energy consumption • Excellent conductivity • 75% of all aluminium produced still in use • Thermal – electrical • Corro
Slide 8: Hydro - a first tier aluminium company
Hydro - a first tier aluminium company Production in 2011 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 A lcoa Rio Tint o Alcan UC Rusal Norsk Hydro BHP Billiton Dubal Aluminium Bahrain Cent ury V edant a Source: CRU, Hydr
Slide 9: Raw material is key to our aluminium future
Raw material is key to our aluminium future Aluminium equivalent consolidated capacity, million tonnes • Long position in End-2010 End-2011 Post-CAP bauxite and alumina 4.3 creates flexibility • Strategically attractive 3.3 3.4 assets • New business 2.4 2.4 2.3 opportunities 1.9 1.4 • Resource const
Slide 10: Strategy for further value creation
Strategy for further value creation Bauxite & Alumina Primary Metal Energy Mid- and downstream • Excellence in • Reposition • Increase value of • Adjust capacity and operations • Keep solid cash flow in energy business cost base to market • Commercialize current assets • Develop current base • Conti
Slide 11: Ideally positioned for future growth
Ideally positioned for future growth Hydro power Alouette Norway Metal Paragominas Qatalum 2 Bauxite Metal Acro CAP Suzhou Alumina Extrusion (11)
Slide 12: Safe operations is a top priority
Safe 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 3.4 2.9 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD2012 (12)
Slide 13: Market outlook
2 Market outlook (13)
Slide 14: Aluminium is part of the solution
Aluminium is part of the solution Global trends Demand for semis Share of semis consumption Million mt 2011 – 62 million mt 120 Consumer 5-7% annual growth Electrical durables 100 12% 6% Packaging 49 9% Machinery 80 & equipment 10% 36 Foil stock 8% 60 Other 6% Capabilities 23 Transport 25% 40 53 45
Slide 15: Aluminium price increase, stable alumina prices
Aluminium price increase, stable alumina prices Aluminium price USD per tonne Platts index USD per tonne / % of LME 3 400 500 18.0 3 000 450 17.0 2 600 400 16.0 2 200 350 15.0 1 800 300 14.0 1 400 250 13.0 1 000 200 12.0 2001 2003 2005 2007 2009 2011 2013 2015 Aug-10 Dec-10 Apr-11 Aug-11 Nov-11 Apr-
Slide 16: Seasonality lifts demand for fabricated products from weak Q4
Seasonality lifts demand for fabricated products from weak Q4 Hydro’s fabricated products sales Total fabricated Q1 2012 vs Q4 2011 products sales Foil Litho Can Packaging Auto General Extrusion Building Extrusion Precision Q1 12 vs beverage & building & heat engineering Eurasia Systems Americas Tub
Slide 17: Weaker demand year-on-year for fabricated products
Weaker demand year-on-year for fabricated products Hydro’s fabricated products sales Total fabricated Q1 2012 vs Q1 2011 products sales Foil Litho Can Packaging Auto General Extrusion Building Extrusion Precision Q1 12 vs beverage & building & heat engineering Eurasia Systems Americas Tubing Q1 11 e
Slide 18: Seasonally higher Q1 primary demand
Seasonally higher Q1 primary demand World outside China (quarterly annualized) 1 000 mt 30 000 • Seasonal increase in demand, 25 000 while production declined from curtailments 20 000 15 000 • Improved supply-demand balance expected in 2012 10 000 • ~1 million mtpy announced curtailments 5 000 0 Jan
Slide 19: Physical tightness and increasing premiums despite high inventories
Physical tightness and increasing premiums despite high inventories World reported primary aluminium inventories Regional ingot premiums 1 000 mt Days USD per mt 8,000 80 225 7,000 70 200 175 6,000 60 150 5,000 50 125 4,000 40 100 3,000 30 75 2,000 20 50 1,000 10 25 0 0 0 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1
Slide 20: A multi-speed world economy
A multi-speed world economy ~5% 44,9 Primary aluminium demand (million mt) ~0% ~9% ~5% 8,4 19,3 5,6 ~3% 25,6 North America Europe incl. Mexico ~4% 11,6 China 2011 Other Growth 2012 World ex. World China Source: CRU, Hydro analysis (20)
Slide 21: China increased net imports
China increased net imports In terms of aluminium equivalents across the total value chain Annualized aluminium equivalents*, million mt 15 2006 2007 2008 2009 2010 2011 2012 • Bauxite and alumina ** • Stable bauxite imports at high levels to China • Increased alumina Import 10 imports in early 2012
Slide 22: Alumina cost curve lifted by cost pressure
Alumina cost curve lifted by cost pressure Business operating cost alumina Production USD per mt 2006: 550 73 million mt 2006 2011 500 2011: 97 million mt 450 400 350 300 250 200 150 100 50 Accumulated world capacity, % 0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: CRU, 2011: LME USD 2 438 p
Slide 23: Aluminium cost curve lifted by cost pressure
Aluminium cost curve lifted by cost pressure Business operating cost aluminium Production USD per mt 2006: 4 000 34 million mt 2006 2011 2011: 3 500 47 million mt 3 000 2 500 2 000 1 500 1 000 Accumulated world capacity, % 500 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: CRU, LME USD 2 438 pe
Slide 24: 66% of available bauxite in 3 countries
66% of available bauxite in 3 countries Billion mt Guinea 14.9 China 2.1 Mali 0.9 1.2 0.0 Jamaica Venezuela 4.0 India Vietnam 1.1 1.8 1.6 2.3 0.5 0.4 0.0 0.3 Indonesia Cameroon 1.0 0.1 1.2 0.0 Brazil 8.2 Australia 9.5 2.0 5.9 Big-league (Top- 3) Total bauxite, billion tonnes: reserves, mine site res
Slide 25: Alumina market is consolidating
Alumina market is consolidating Net long alumina position, million tonnes Alcoa 4.3 Alcoa 8.8 Vale 3.0 Hydro 2.1 Glencore 2.4 BHP Billiton 1.7 BHP Billiton 1.9 Rio Tinto Alcan 1.6 Kaiser 1.0 UC Rusal -0.8 Alcan 0.8 Vedanta -1.1 Sual 0.7 Century -1.1 Rio Tinto 0.5 Alba -1.7 Pechiney 0.4 China -1.9 VA
Slide 26: Alumina index price
Alumina index price Platts index in USD USD per mt Percent 500 18.0 Alumina price % of LME 450 17.0 400 16.0 350 15.0 300 14.0 250 13.0 200 12.0 Aug-10 Sep-10 Nov-10 Dec-10 Feb-11 Mar-11 May-11 Jun-11 Jul-11 Sep-11 Oct-11 Nov-11 Jan-12 Mar-12 Apr-12 Source: Platts (26)
Slide 27: 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 2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012 Power – E
Slide 28: Energy: high reservoir levels, volatile prices
Energy: high reservoir levels, volatile prices Market price Southwestern Norway (NO2) Water reservoir levels Southwestern Norway (NO2) NOK/MWh Percent 700 100 2011 2012 2011 2012 90 600 80 500 70 400 60 50 300 40 200 30 20 100 10 0 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 1 4 7 10 13 16
Slide 29: First quarter results 2012
3 Third quarter results 2011 (29)
Slide 30: Solid production, weak underlying demand, Europe weighs on outlook
• Solid production performance • Weak underlying demand, helped by seasonality • Europe weighs on global outlook (30)
Slide 31: Q1 highlights
Q1 highlights • Underlying EBIT NOK 557 million • Lower alumina and aluminium prices • Metal volumes up on seasonality, lower alumina sales • Strong Energy result, record production levels (31)
Slide 32: Raw material cost challenge
Raw material cost challenge LME price lags important raw material prices LME 3 month, indexed (Q1 2010=100) Pet coke price, indexed (Q1 2010=100) Caustic price, indexed (Q1 2010=100) +127% +84% +87% +67% +15% +1% Q1 2010 Q1 2011 Q1 2012 Q1 2010 Q1 2011 Q1 2012 Q1 2010 Q1 2011 Q1 2012 Source: EcoWin
Slide 33: Stable production but weak result in Bauxite & Alumina
Stable production but weak result in Bauxite & Alumina • Stable production in Alunorte and Paragominas • Lower alumina sales volumes and realized prices • Continued raw material cost pressure • CAP project postponed • Uncertain short- and medium term supply/demand balance and uncertain development i
Slide 34: Primary Metal improvement program on track
Primary Metal improvement program on track USD 235 per mt by end-2012 Estimated primary aluminium cash cost and margin USD/mt 1) 475 475 475 425 250 2 175 375 375 25 2 000 1 900 • Additional USD 35 per mt expected realized 1 675 1 750 in 2012, remaining USD 65 in 2013 • Progressing according to plan
Slide 35: Holsbru hydropower project concluded
Holsbru hydropower project concluded • Annual normal power production increased by 84 GWh to 9.5 TWh • Production from Holsbru started on April 1 • NOK ~250 million investment cost (35)
Slide 36: Adapting to a challenging market environment
Adapting to a challenging market environment • Stabilizing and improving production Bauxite & • Focus on improving cost position Alumina • Actively promoting index pricing • Targeting USD 235 per mt in 2012 within Primary USD 300 per mt cost improvement program Metal • Focus on optimizing production
Slide 37: Underlying EBIT
Underlying EBIT 1 906 1 646 1 448 1 110 1 133 965 688 588 557 NOK million Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Bauxite & Alumina 1) 162 288 71 113 155 272 302 159 (144) Primary Metal 1) (169) 382 318 86 583 765 653 484 30 Metal Markets 65 31 163 62 143 244 93 (39)
Slide 38: High-level quarterly result development
High-level quarterly result development NOK billion 0.1 (0.9) 0.2 0.1 1.1 0.6 Underlying EBIT Q4 Energy volume and Aluminium and alumina Variable cost PM Alumina and aluminium Underlying EBIT Q1 2011 price volume price 2012 (38)
Slide 39: Key financials
Key financials NOK million Q1 2012 Q4 2011 Q1 2011 Year 2011 Revenue 21 748 21 749 21 138 91 444 Underlying EBIT 557 1 133 1 448 6 133 Items excluded from underlying EBIT 108 (1 494) 4 408 3 694 Reported EBIT 665 (362) 5 855 9 827 Financial income (expense) 433 (26) (93) (1 288) Income (loss) before
Slide 40: Tax and financial expense
Tax and financial expense Tax Finance NOK million Q1 2012 Year 2011 NOK million Q1 2012 Year 2011 Income before tax 1 098 8 539 Interest income 76 263 Equity accounted investments 115 260 Dividends received and net loss on securities 50 (53) Tax free gain sale shares and revaluation Financial income
Slide 41: Items excluded from underlying EBIT
Items excluded from underlying EBIT NOK million Q1 2012 Q4 2011 Q1 2011 Year 2011 Underlying EBIT 557 1 133 1 448 6 133 Unrealized effects power contracts 265 (31) 40 195 Unrealized LME and other derivative effects 42 (348) (136) (399) Metal effect, Rolled Products (60) (134) 176 (7) Rationalization
Slide 42: Bauxite & Alumina
Bauxite & Alumina Q1 Q4 Q1 Key figures 2012 2011 2011 Alumina production, kmt 1 464 1 490 1 336 Total alumina sales, kmt 1 776 1 956 1 762 Realized alumina price, USD/mt 293 306 329 Apparent alumina cash cost, USD/mt 269 261 266 Bauxite production, kmt 2 290 2 317 1 720 Underlying EBITDA, NOK millio
Slide 43: Primary Metal
Primary Metal Q1 Q4 Q1 Key figures 2012 2011 2011 Primary aluminium production, kmt 514 539 490 Total sales, kmt 627 594 636 Realized LME price, USD/mt 2 155 2 439 2 366 Realized LME price, NOK/mt 12 404 13 834 13 664 Underlying EBITDA, NOK million 577 1 097 1 137 Underlying EBIT, NOK million 30 484
Slide 44: Qatalum additional reporting
Qatalum additional reporting • Results affected by LME spot price with Key figures – Qatalum (50%) Q1 2012 ~2 month lag, including inventory effects Revenue, NOK million 1 018 • Underlying net income down NOK 56 million in Q1 2012 from Q4 2011 Underlying EBITDA, NOK million 226 • Mainly due to lower
Slide 45: Metal Markets
Metal Markets Q1 Q4 Q1 Key figures 2012 2011 2011 Remelt production, kmt 152 131 150 Total metal products sales, kmt 858 804 772 Underlying EBITDA, NOK million 113 (13) 168 Underlying EBIT excl currency and 116 80 95 inventory valuation effects, NOK million Underlying EBIT, NOK million 87 (39) 143 Q
Slide 46: Rolled Products
Rolled Products Q1 Q4 Q1 Key figures 2012 2011 2011 External sales volumes, kmt 227 215 245 Underlying EBITDA, NOK million 263 211 342 Underlying EBIT, NOK million 151 86 232 Underlying EBIT NOK million 673 151 Q1 operating results • Sales volumes 6% up in seasonally stronger quarter 232 232 • End o
Slide 47: Extruded Products
Extruded Products Q1 Q4 Q1 Key figures 2012 2011 2011 External sales volumes, kmt 133 121 136 Underlying EBITDA, NOK million 125 31 237 Underlying EBIT, NOK million 14 (90) 105 Underlying EBIT NOK million 151 14 Q1 operating results • Volumes up 10% in seasonally stronger quarter • Continued challen
Slide 48: Energy
Energy Q1 Q4 Q1 Key figures 2012 2011 2011 Power production, GWh 3 190 2 706 2 308 Net spot sales, GWh 1 879 1 430 955 Southwest Norway spot price (NO2), 272 259 520 NOK/MWh Underlying EBITDA, NOK million 584 484 600 Underlying EBIT, NOK million 556 441 573 Underlying EBIT Q1 operating results NOK m
Slide 49: Net cash/(debt) development Q1 2012
Net cash/(debt) development Q1 2012 NOK billion Net cash flow from operations NOK 0.6 billion 1.9 (0.7) (0.6) (0.9) 1.7 0.1 1.5 Net cash Q4 2011 Underlying EBITDA Operating capital Other adjustments Investments/ C urrency Net cash Q1 2012 divestments translation & other (49)
Slide 50: Robust financial position
Robust financial position Net cash/(debt), NOK billion Dec 31, Dec 31, Mar 31, NOK billion 2010 2011 2012 11.0 Cash and cash equivalents 10.9 8.4 8.8 Short-term investments 1.3 1.8 1.6 Short-term debt (0.9) (4.3) (5.1) Long-term debt (0.3) (4.2) (3.7) Net cash/(debt) 11.0 1.7 1.5 Net int.-bearing de
Slide 51: Priorities 2012
Priorities 2012 • Continued performance improvements • Responding with appropriate measures • Capital discipline (51)
Slide 52: Business overview
4 Business overview (52)
Slide 53: Bauxite & Alumina
Bauxite & Alumina (53)
Slide 54: High-quality asset portfolio
High-quality asset portfolio MRN Paragominas Alunorte alumina CAP alumina bauxite mine bauxite mine refinery refinery project • 5% ownership • 60% ownership, 100% by • 91% ownership • 81% ownership • Volume off-take agreement 2015 • World’s largest alumina • CAP refinery (Phase I) is for Vale’s 40%
Slide 55: Paragominas
Paragominas One of the world’s largest bauxite mines • 2011 production: 8.2 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: Paragominas – production process
Paragominas – production process Reclaimer Silo SAG mill Pumping station Classification to pipeline Tailings dam/recovered Classification water Ball mill Recrusher Vibrating screen (56)
Slide 57: Bauxite mining costs in Paragominas
Bauxite mining costs in Paragominas • Energy cost – power and fuel Paragominas bauxite mining costs 2011 • Labor cost • Influenced by Brazilian wage level 15% 19% • Productivity improvements 16% • Maintenance and consumables 21% • Influenced by Brazilian inflation 9% • Large fixed cost base 20% • Im
Slide 58: Alunorte
Alunorte World’s largest alumina refinery • 2011 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 (58)
Slide 59: Alunorte - production process
Alunorte - production process Bauxite dewatering Steam Alumina Al2O3 Powerhouse Bauxite Caustic soda Evaporation Test tank Calcination Digestion Hydrate Classification (Al(OH)3) Precipitation Decanters Mud residue (59)
Slide 60: Favorable integrated alumina cash cost position
Favorable integrated alumina cash cost position • Integrated alumina cash cost position 2011 Integrated alumina cash cost position 2011 • USD 266 per mt • Alunorte, Paragominas and sourced alumina 5% • Bauxite • Cash cost to be improved as Paragominas 11% increase production and pipeline is fully ut
Slide 61: Excellent Alunorte alumina quality
Excellent Alunorte alumina quality • High-quality bauxite as basis • Low content of fines • Low content of non-organic materials • Gallium, phosphor and titanium • High degree of consistency • Low variability on high-quality alumina • Customers have preference for Alunorte alumina compared with othe
Slide 62: External alumina sourcing
External alumina sourcing • 2 million mt of external alumina sourcing in 2011 • Long term off-take agreement with Rio Tinto • Increasing with 400 000 mt annually when Yarwun expansion is in operation • Short- and medium term contracts • To balance and optimize position geographically • Various prici
Slide 63: 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 • Spot market activity is important • New norm for the industry • Index pricing and shorter-term contracts (3-4 years) • Getting wider acceptance in the marke
Slide 64: Business model – volume flows
Business model – volume flows 1 000 tonnes, pro forma 2011 External sourcing 2 000 alumina External 1) 2 000 3 700 alumina sales Paragominas 8 200 Commercial Prod (100%) 8 200 operations Alunorte Internal 2) Hydro availability Prod (100%) 5 300 Hydro alumina sales 100% 5 800 3 600 availability Alumi
Slide 65: Primary Metal
Primary Metal (65)
Slide 66: World-wide production network
World-wide production network Primary aluminium annual production capacity Norway, 880 000 tonnes • Sunndal (100%) : 375 000 tonnes • Årdal (100%): 190 000 tonnes Canada, 115 000 tonnes • Karmøy (100%): 170 000 tonnes • Alouette (20%): 115 000 tonnes 42% • Høyanger (100%): 60 000 tonnes • Expansion
Slide 67: Primary Metal improvement program on track
Primary Metal improvement program on track USD 235 per mt to be realized within 2012 300 Operational improvements • Improved current efficiency • Reduced power consumption 65 • Reduced anode consumption Fixed cost reductions 35 and lean operations 200 Further operational improvements Technology cost
Slide 68: Robust power coverage
Robust power coverage Power coverage (%), based on consolidated production in 2011 100% • 80% of current production has power coverage until 2020 or beyond 75% • ~2/3 based on hydro-power 50% • Renewal of power contracts • Tomago – contract signed • Alouette – MoU signed for expansion 25% and prolon
Slide 69: Qatalum – 1st quartile cost position
Qatalum –1st quartile cost position Further creep potential beyond 2012 • On track to exceed nameplate 600 capacity first year of full production • 1st quartile cost position 400 established • Cash cost around USD 1400-1500 per mt at 2010 market conditions 200 • Operational excellence and cost optim
Slide 70: Solid production in Qatalum
Solid production in Qatalum • Qatalum production stable above nameplate capacity • 600 000 mt on annual basis • Focus on optimizing operations • Fire in seawater cooling tower on March 17 • No injuries • Gas turbines unaffected, steam turbines put out of operations • No metal production effects • Ad
Slide 71: Develop technology to fulfill ambitions
Develop technology to fulfill ambitions Next- generation smelter HAL 300 HAL4e R&D portfolio • Operating for several years • Benchmark technology – • HAL4e optimization – to in Sunndal process parameters and be ready for next project • Ramping up in Qatar environment • HAL Ultra – future vision • Qa
Slide 72: Metal Markets
Metal Markets (72)
Slide 73: Preferred partner in casthouse products
Preferred partner in casthouse products • Capitalizing on value-added casthouse products portfolio • Enhancing value of market Extrusion ingot 1.6 million mt system through margin management • Growing market positions in US and Asia with Qatalum volumes Foundry alloys 0.6 million mt • Utilizing prod
Slide 74: Significant system flexibility from remelting
Significant system flexibility from remelting Metal product capacities Europe 2011* 2000 • Geographical flexibility • 26 casthouses at 20 locations across 1750 4 continents 1500 • Product flexibility 1250 • 6 plants with multiple product casthouses 1000 • Sourcing system flexibility 750 500 250 • Co
Slide 75: Metal Markets earnings drivers
Metal Markets earnings drivers • Remelters Underlying EBIT excluding currency effects and ingot stock valuation effect, NOK million • Revenue impact – volume and product premiums above LME 300 • Cost impact 250 • Scrap and standard ingot premiums above LME 200 • Raw material mix • Freight cost – pro
Slide 76: Rolled Products
Rolled Products (76)
Slide 77: 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 Litho Foil 13% foil and litho 17% • Strategy of high-grading product portfolio • Margin management and cash generation • Focus production system on core assets • Alunorf (JV 50%) - world’s la
Slide 78: 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 (78)
Slide 79: 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 • Medium-term contracts 1,000 • Range from spot contracts to multi-year contracts 800 • High share of fixed costs - volume
Slide 80: Extruded Products
Extruded Products (80)
Slide 81: European extrusion leader with global presence
European extrusion leader with global presence • Leading position in Europe External sales in tonnages • 17% market share Transport Other 9% • Strong position in US and Brazil 11% • Global leader in precision tubing • Strategy of solidifying leading positions Domestic & office • Reinforce European e
Slide 82: Copper substitution represents major potential
Copper substitution represents major potential • Substitution to aluminium in Making heat-exchanger technology cars: 12.5 kg/car leap from automotive… …into broad range of non-automotive • Weight reduction: products and applications about 50% vs. copper • Worldwide potential: about 875 000 mt annual
Slide 83: Hydro innovation drives product demand
Hydro innovation drives product demand Foil packaging Automotive Beverage cans Solar parks Building & construction Consumer electronics Lithographic plates (83)
Slide 84: Extruded Products earnings drivers
Extruded Products earnings drivers • Contract structure Underlying EBIT per tonne*, NOK • Mainly short-term contracts 2,000 • Large number of small orders to 1,750 small/medium-sized customers • Produce to order - limited share 1,500 of commodity type products 1,250 • Strong cost focus 1,000 • Margi
Slide 85: Energy
Energy (85)
Slide 86: 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 • Power producing assets and ongoing projects • Maintain cost control in operations and projects Telemark • Holsbru project concluded, production start April 1 3.0 0.5 • Vasstøl and Rjukan upgrad
Slide 87: Hydro is a global energy player
Hydro is a global energy player Energy consumption in alumina refineries, smelters and rolling mills Europe Power 14.8 TWh Natural gas 2.4 TWh North America Power 1.6 TWh Middle East Power 4.6 TWh South America Power 4.2 TWh Australia/Asia Coal 5.6 TWh Power 3.8 TWh Fuel oil 7.4 TWh Natural gas 0.1
Slide 88: 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 89: Energy earnings drivers
Energy earnings drivers Underlying EBIT* and spot price • Production and market prices strongly NOK million NOK/MWh linked to hydrological conditions 2 000 500 1 500 400 • Relatively stable annual EBIT contribution 300 1 000 • Large quarterly variations due to volatile spot 200 sales and spot prices
Slide 90: Additional information
5 Additional information (90)
Slide 91: Shareholder and financial policy
Shareholder and financial policy • Hydro aims to give its shareholders competitive Dec 31, Dec 31, Dec 31, Mar 31, returns compared to alternative investments in NOK billion 2009 2010 2011 2012 peers Cash and cash equivalents 2.5 10.9 8.4 8.8 Short-term investments 1.5 1.3 1.8 1.5 • Maintained divid
Slide 92: Hedging policy
Hedging policy Upstream • Primarily remain exposed to LME prices • Partly off-setting effects through raw material prices and negative currency correlations with LME • Majority of 2011 LME exposure in Vale transaction hedged • Operational LME hedging • Three months forward sales to manage customers’
Slide 93: Capital allocation mainly upstream
Capital allocation mainly upstream NOK billion Debt-financed investments Qatalum Investments Qatalum • Sustaining capex NOK 3.5 billion 10.2 Growth and improvement projects Sustaining capex annually including Vale assets • Growth projects in 2012 6.2 • Hydropower developments 4.5 - 5.02 • Extruded P
Slide 94: Price and currency sensitivities
Price and currency sensitivities Commodity price sensitivity +10% Currency sensitivities +10% NOK Financial Income Net NOK million EBIT EBIT million items before tax income* Aluminium 2 800 USD 2 300 (750) 1 550 1 100 Oil (270) BRL (850) 800 (50) 0 Pet coke (240) EUR (150) (1 200) (1 350) (1 000) Ca
Slide 95: Items excluded from underlying results - 2012
Items excluded from underlying results - 2012 NOK million (+=loss/()=gain) Q1 2012 Unrealized derivative effects on LME related contracts Bauxite & alumina (8) Total impact Bauxite & alumina (8) Unrealized derivative effects on LME related contracts Primary metal 113 Unrealized derivative effects on
Slide 96: Items excluded from underlying results - 2011
Items excluded from underlying results - 2011 NOK million (+=loss/()=gain) Q1 2011 Q2 2011 Q3 2011 Q4 2011 2011 Unrealized derivative effects on currency contracts (Alunorte) Bauxite & alumina (1) - - - (1) Derivative effects on LME related contracts (Vale Aluminium) Bauxite & alumina 16 (67) (24) 3
Slide 97: Operating segment information
Operating segment information Underlying EBIT Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Year Year NOK million 2010 2010 2010 2010 2011 2011 2011 2011 2012 2010 2011 Bauxite & Alumina 162 288 71 113 155 272 302 159 (144) 633 887 Primary Metal (169) 382 318 86 583 765 653 484 30 617 2 486 Metal Markets 65 31 163 62
Slide 98: Operating segment information
Operating segment information Pro forma underlying EBIT Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Year Year NOK million 2010 2010 2010 2010 2011 2011 2011 2011 2012 2010 2011 Bauxite & Alumina 205 448 348 223 237 272 302 159 (144) 1 225 969 Primary Metal (203) 481 306 230 592 765 653 484 30 816 2 495 Metal Markets
Slide 99: Operating segment information
Operating segment information EBIT Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Year Year NOK million 2010 2010 2010 2010 2011 2011 2011 2011 2012 2010 2011 Bauxite & Alumina* 139 574 43 91 4 561 339 326 620 (136) 847 5 846 Primary Metal* (8) 645 (378) 355 525 826 675 (760) (96) 615 1 265 Metal Markets (32) 59 18 115
Slide 100: Operating segment information
Operating segment information Pro forma reported EBIT Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Year Year NOK million 2010 2010 2010 2010 2011 2011 2011 2011 2012 2010 2011 Bauxite & Alumina 205 768 47 140 213 339 326 620 (136) 1 161 1 498 Primary Metal (41) 723 (368) 499 622 826 675 (760) (96) 813 1 363 Metal Mar
Slide 101: Operating segment information
Operating segment information Total revenue Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Year Year NOK million 2010 2010 2010 2010 2011 2011 2011 2011 2012 2010 2011 Bauxite & Alumina* 1 631 2 426 1 735 2 090 2 183 4 271 4 227 3 790 3 195 7 882 14 471 Primary Metal* 6 607 7 448 6 558 6 979 8 234 9 627 9 148 7 711 7 4
Slide 102: Operating segment information
Operating segment information Internal revenue Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Year Year NOK million 2010 2010 2010 2010 2011 2011 2011 2011 2012 2010 2011 Bauxite & Alumina* 1 003 1 241 1 076 1 199 1 168 1 688 1 587 1 433 1 241 4 518 5 876 Primary Metal* 6 210 6 992 6 166 6 620 7 582 8 283 7 892 6 501 6
Slide 103: Operating segment information
Operating segment information Depreciation, amortization and impairment Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Year Year NOK million 2010 2010 2010 2010 2011 2011 2011 2011 2012 2010 2011 Bauxite & Alumina* - 1 1 1 178 482 470 450 475 2 1 580 Primary Metal* 416 430 428 462 467 543 548 1 577 542 1 737 3 136 Meta
Slide 104: Income statements
Income statements Q1 Q4 Q1 Year NOK million 2012 2011 2011 2011 Revenue 21 748 21 749 21 138 91 444 Share of the profit (loss) in equity accounted investments (115) (164) (19) (260) Other income, net 268 639 4 553 6 222 Total revenue and income 21 901 22 223 25 672 97 406 Raw material and energy exp
Slide 105: Balance sheets
Balance sheets Mar 31 Dec 31 Sep 30 Jun 30 March 31 NOK million 2012 2011 2011 2011 2011 Cash and cash equivalents 8 786 8 365 6 863 3 831 3 698 Short-term investments 1 568 1 780 1 573 1 744 1 319 Accounts receivable 14 524 13 217 15 742 16 715 19 262 Inventories 13 201 14 157 14 343 14 254 13 827
Slide 106: Operational data
Operational data Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Year Year Pro forma Bauxite & Alumina 2010 2010 2010 2010 2011 2011 2011 2011 2012 2010 2011 Alumina production (kmt) 1) 1 394 1 521 1 442 1 448 1 336 1 448 1 553 1 490 1 464 5 805 5 827 Sourced alumina (kmt) 539 557 488 556 436 523 581 418 324 2 141 1 958
Slide 107: Operational data
Operational data Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Year Year Pro forma Primary Metal 2010 2010 2010 2010 2011 2011 2011 2011 2012 2010 2011 Realized aluminium price LME, USD/mt 2 039 2 200 2 137 2 131 2 366 2 509 2 592 2 439 2 155 2 128 2 478 Realized aluminium price LME, NOK/mt 11 826 13 192 13 226 12 739
Slide 108: Operational data
Operational data Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Year Year Metal Markets 2010 2010 2010 2010 2011 2011 2011 2011 2012 2010 2011 Remelt production (1 000 mt) 1) 143 156 141 147 150 151 133 131 152 586 565 Metal products sales, own production (1 000 mt) 651 702 656 657 734 831 791 730 783 2 666 3 086 Third
Slide 109: Investor Relations in Hydro
Investor Relations in Hydro t: +47 417 51 199 Rikard Lindqvist Head of Investor Relations e: rikard.lindqvist@hydro.com t: +47 977 36 022 Stian Hasle Investor Relations Officer e: stian.hasle@hydro.com Irene Alyanakian Investor Relations Assistant t: +47 414 02 174 Kristiansen e: irene.alyanakian.kr
Slide 110: www.hydro.com
www.hydro.com