Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Day (December 2016)
172 slides from Norsk Hydro Asa's investor day presentation, Dec 1, 2016
Slide 1: Capital Markets Day
Capital Markets Day London December 1, 2016
Slide 2: Table of contents
Table of contents Hydro 6 Finance 41 Market Outlook 68 Rolled Products 103 Primary Metal 118 Bauxite & Alumina 135 Energy 148 2
Slide 3: Safety information at London Stock Exchange
Safety information at London Stock Exchange • There are no scheduled fire alarm tests today, so if the fire alarms do go off please listen to the announcements and follow the instructions. • The Fire Assembly point is over by St Pauls Cathedral opposite the ‘Blacks Camping Store’. • The Event Manage
Slide 4: Cautionary note in relation to certain forward-looking statements
Cautionary note in relation to certain forward-looking statements Certain statements included in this announcement contain forward-looking information, including, without limitation, information relating to (a) forecasts, projections and estimates, (b) statements of Hydro management concerning plans
Slide 5: Agenda
Agenda 07:30 – 08:00 Light breakfast and registration 11:25 – 11:40 Q&A 08:00 – 08:05 Welcome 11:40 – 11:55 Break 08:05 – 08:55 Hydro 11:55 – 12:15 Bauxite & Alumina 08:55 – 09:35 Finance 12:15 – 12:35 Energy 09:35 – 09:50 Q&A 12:35 – 12:45 Q&A 09:50 – 10:00 Break 12:45 – 13:00 Summary and Q&A 10:00
Slide 6: Innovation and differentiation through integrated value chain
Innovation and differentiation through integrated value chain Svein Richard Brandtzæg Capital Markets Day 2016
Slide 7: Hydro continues its strong progress in 2016
Hydro continues its strong progress in 2016 7
Slide 8: Conducting business the Hydro Way
Conducting business the Hydro Way Safety and environment Corporate responsibility Safety performance Carbon-neutral from a (TRI) at industry benchmark life-cycle perspective On track 2.6* 2020 ambition of a TRI rate below 2.0 and zero fatalities 1:1 reforestation by 2017 On track On track * TRI rate
Slide 9: Main developments during 2016
Main developments during 2016 Record high alumina Karmøy technology Production started at UBC 2.3 TWh power sourcing in Record Sapa results production at Alunorte pilot construction line and Automotive line 3 Germany and Norway** through 2016 ~70%* complete CMD Bauxite & Primary Rolled CMD Energy Sa
Slide 10: Ambitious mid-term strategic goals within the Hydro aspiration
Ambitious mid-term strategic goals within the Hydro aspiration Ambitions Target Timeframe Progress¹ Status • Improve safety performance, strive for injury free environment TRI<2 2020 2.62 • Realize ongoing improvement efforts Better BNOK 2.9 2019 1.1 BNOK • Secure new competitive sourcing contracts
Slide 11: Operational leadership among peers
Operational leadership among peers Solid cost positions in aluminium value chain Lowest CO2 emissions Smelter BOC curve by company (2016) Tonnes CO2/tonne aluminium, 2016 2 000 USD/mt 20 Direct Indirect Average 500 0 0 30 000 60 000 Among the best on safety performance Alumina BOC curve by company (
Slide 12: Leading financial position and clear priorities
Leading financial position and clear priorities Maintaining financial strength and shareholder focus Strongest balance sheet, Highest underlying payout ratio and dividend yield Total Debt/Total Equity, 2011-2015 2011-2015 Dividend 2.7 1.2 0.9 0 0 yield, % 288 % 275 % 52 % 21 % 72 % 11 % 25 % 13 % 0%
Slide 13: Capital returns challenged by weak market fundamentals
Capital returns challenged by weak market fundamentals Hydro’s improvement trend ahead of the peer group in recent years TSR performance ahead of the peer group Improving RoACE trend 2008-2015 Reported RoACE pre-tax (Factset definition)**, 2011-2015 Hydro Peers 10% 29% 12% 5% -25% 0% -49%* 2011 2012
Slide 14: Lifting performance, driving shareholder value
Lifting performance, driving shareholder value Managing cyclicality Strengthening competitiveness Differentiating through financial through improvements and through the integrated strength and flexibility high-grading value chain 14
Slide 15: Opportunities and challenges in the global aluminium landscape
Opportunities and challenges in the global aluminium landscape 15
Slide 16: Opportunities and risks within the global megatrends
Opportunities and risks within the global megatrends Global trade Technological Macroeconomic Emerging Global climate and regulatory and digital development economies challenge framework revolution • Global GDP improving • Brazil and Russia • International trade • Changing behavior • Rapidly growing
Slide 17: Key drivers for China's aluminium expansion losing momentum
Key drivers for China’s aluminium expansion losing momentum Drivers for aluminium capacity Past Present Demand growth • Continued strong growth short-term, but expected to slow longer term • From softer to harder constraints, as exemplified by environmental Lack of environmental restrictions inspect
Slide 18: Stakeholders are increasingly valuing corporate responsibility
Stakeholders are increasingly valuing corporate responsibility Stricter regulations, increasing customer demands, strong focus on compliance, climate and sustainability Among regulators and NGO’s, due to the For customers and end-users, due to In international finance, due to increasing demands for
Slide 19: A decade of healthy demand growth for aluminium
A decade of healthy demand growth for aluminium CAGR 2016-2025 Semis Primary Recycling 3-4% 2-3% 4-5 %* Source: CRU, Hydro analysis * Process and post-consumed scrap 19
Slide 20: Aluminium's reach is growing in response to key long-term trends
Aluminium’s reach is growing in response to key long-term trends Substitution continues to be a key driver for aluminium Transport Packaging Building & construction Electrical Urbanization Lightweighting Urbanization Substitution China moderating Substitution Sustainability Urbanization Energy-effic
Slide 21: Material substitution in automotive driving aluminium demand
Material substitution in automotive driving aluminium demand Aluminium is essential for automotive lightweighting and emissions reduction Aluminium vehicle penetration, North America Kg per light vehicle 250 15 % 200 BiW CAGR* 2015-2022 150 • 10% reduction 100 in vehicle weight gives car makers a 5-
Slide 22: Aluminium demand continues to outpace other base metals
Aluminium demand continues to outpace other base metals China still has considerable growth potential from a per capita perspective Aluminium continues to be the fastest growing base metal Growth rates dependent on level of economic maturity Global demand base metals Semis demand growth 2016 Index 2
Slide 23: Primary supply growth moderating
Primary supply growth moderating Chinese and Middle East primary production growth coming down Russia North America Western Europe 1% 2% 0% 1% China 2% -3% Middle East 17% 10% 4% 4% India South America 9% 9% Primary supply growth -3% 0% CAGR 2000-2016 CAGR 2016-2020 Source: CRU 23
Slide 24: Global market balance progressing better than expected in 2016
Global market balance progressing better than expected in 2016 External analysts expecting deficits 2018-2020 CRU estimates of global primary metal balances at different points in time* Mill mt 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 2014 2015 2016 2017 2018 2019 2020 Dec 2014 Oct 2015 Oct 2016 Source: C
Slide 25: Further strengthening Hydro's solid position
Further strengthening Hydro’s solid position 25
Slide 26: Full value chain approach for higher value creation
Full value chain approach for higher value creation Dedicated business models in each area combined within an overall company framework Benefits of Hydro’s integrated model Bauxite Primary aluminium mining production Operations and technology Customers and markets Alumina production Energy • Operati
Slide 27: Investing across the value chain
Investing across the value chain Focus on technology, recycling and automotive growth Major ongoing projects, capex and completion date Status Effects Karmøy technology pilot • Piloting world’s most energy and climate-efficient technology Net BNOK 2.7 ~70% complete • Adding 75 000 mt capacity Gross
Slide 28: Hydro with strong market positions globally
Hydro with strong market positions globally #1 position #1 Strong ~24% position presence in foil and litho market globally precision the Nordic share in tubing power extruded globally market products #3 position extrusion ingot ~27% market Top Strong share in positions market extruded in value prese
Slide 29: Targeting value-add, specialized and advanced product niches
Targeting value-add, specialized and advanced product niches Examples of Hydro’s high competence, high margin strategy Metal products Rolled products Extruded products Crash-resistant alloy Body-in-White Crash management system for automotive customers One-piece side car panel for safer trucks Autom
Slide 30: Combining high-value outputs with lower value inputs
Combining high-value outputs with lower value inputs Repositioning Hydro’s recycling activities, preparing for the circular economy Recycling benefits for Hydro • Reduced metal costs, increased margins and returns • Improved capacity utilization ~50% of EI remelter sales • Reduced energy consumption
Slide 31: The most ambitious climate strategy in global aluminium
The most ambitious climate strategy in global aluminium Carbon-neutral by 2020 from a life-cycle perspective Hydro’s climate strategy Value-creating implementation examples Karmøy technology pilot Climate and energy- Primary Metal, Norway efficiency in production Automotive line 3 Use-phase benefits
Slide 32: Leading the way in technology, innovation and digitalization
Leading the way in technology, innovation and digitalization Electro-discharge texturing at new AL3 Improved surface quality Alunorte Enhanced formability press filter Karmøy Concentration of solids technology pilot Reduced storage area Environmental benefits Artificial intelligence Sensor technolog
Slide 33: Industry's most ambitious improvement efforts on track
Industry’s most ambitious improvement efforts on track NOK 2.9 billion targeted in 2016-2019, NOK 1.1 billion in 2016 Better Better Better Bauxite & Rolled Primary Better Alumina Products Metal BNOK BNOK 1.0 BNOK 0.9 BNOK 1.0 2.91) Target 2016 Target 2016 Target 2016 NOK 500 million NOK 200 million
Slide 34: Maximizing value-creation from Hydro's strong competence base
Maximizing value-creation from Hydro’s strong competence base Business systems, innovation, capabilities and people engagement Bauxite & Alumina Primary Metal Rolled Products Energy Increasing stability and lifting Setting the industry benchmark Strengthening the performance Operational excellence a
Slide 35: Sapa JV – global market leader, strong improvement trend
Sapa JV – global market leader, strong improvement trend From restructuring to profitable growth UEBIT up ~60 % Operational Higher share Q415-Q316 vs improvements of value-add Q414-Q315 and restructuring products 35
Slide 36: Hydro's strategic direction
Hydro’s strategic direction 36
Slide 37: Driving long-term shareholder value
Driving long-term shareholder value Priorities for cash over the cycle Share buybacks/ Sustaining Reliable and special M&A Solid balance dividends capex and predictable sheet and liquidity selective growth dividend Organic growth 37
Slide 38: Hydro's roadmap towards improved profitability
Hydro’s roadmap towards improved profitability Solid contribution from improvement efforts, continued currency support and improving price level Underlying RoaCE after tax (%) 12 9 6 3 0 Hydro excluding Delivered Remaining RoaCE improvement programs improvement efforts improvement efforts scenario L
Slide 39: Lifting performance, driving shareholder value
Lifting performance, driving shareholder value Managing cyclicality Strengthening competitiveness Differentiating through financial through improvements and through the integrated strength and flexibility high-grading value chain • Maintain financial strength • Strengthen leading positions in • Add
Slide 40: Hydro
HYDRO
Slide 41: Finance
Finance Maximizing long-term value creation potential Eivind Kallevik Capital Markets Day 2016
Slide 42: Financial performance over time
Financial performance over time Earnings and RoACE supported by continuous improvements Uncompromised balance sheet strength 10 9.7 10% 10 30% 5.1 5.4 6.0 5.7 6.2 1.7 1.7 0.7 2.7 0 0% 1.3 (0.1) 0 0% 2011 2012 2013 2014 2015 LTM Q3-16 2011 2012 2013 2014 2015 LTM Q3-16 Underlying EBIT - BNOK (LHS)* U
Slide 43: Prudent financial framework
Prudent financial framework 43
Slide 44: Prudent financial framework
Prudent financial framework Managing industry cyclicality, driving long-term shareholder value Reliable Financial Disciplined Lifting cash flow shareholder Effective risk strength capital potential remuneration management and flexibility allocation policy Improving efficiency, Investment grade credi
Slide 45: Supporting earnings with industry-leading improvement ambitions
LIFTING CASH FLOW POTENTIAL Supporting earnings with industry-leading improvement ambitions Underlying EBIT development Better improvement ambition by NOK billion categoty, 2.9 BNOK 2016-2019 Better ambition 2016-2019 Improvements 2011-2015 Improvements 2009-2011 1.8 7.1 6.0 5.6 5.3 Volume/capacity
Slide 46: Structurally improved cost position upstream
LIFTING CASH FLOW POTENTIAL Structurally improved cost position upstream Productivity gains supported by currency tailwinds All-in implied primary cost and margin, USD/mt 1) Implied alumina cost and margin, USD/mt 3) Realized Realized all-in price 2) 2 368 2 353 alumina price 2 271 286 284 275 2 179
Slide 47: Improving margins downstream
LIFTING CASH FLOW POTENTIAL Improving margins downstream Rolled Products Underlying EBIT per mt Sapa (100%) Underlying EBIT per mt NOK NOK 1,248 1,260 1,456 1,204 973 1,032 785 783 738 656 466 2013 2014 2015 LTM Q3 2016* (63) UEBIT/t ex. Neuss EBIT/t incl. Neuss 2013 2014 2015 LTM Q3 2016 • Gradual
Slide 48: Optimizing working capital remains key priority
LIFTING CASH FLOW POTENTIAL Optimizing working capital remains key priority Release in 2016 following the above-average inventory build-up last year NOK billion* Days 20 80 • Net operating capital generally follows LME 76 76 76 74 72 72 70 70 68 68 70 71 70 69 • NOC release throughout 2016 driven by
Slide 49: Continuous portfolio review
LIFTING CASH FLOW POTENTIAL Continuous portfolio review Recent non-core and legacy asset divestments contribute to cash flow Asset/business Completed Cash effect Accounting effect Description Casthouse Hannover, Germany Q1 2014 ~MEUR 7 ~MEUR 4 Legacy asset Stranded asset following closure Koorang Bu
Slide 50: Maintain investment-grade credit rating
FINANCIAL STRENGTH AND FLEXIBILITY Maintain investment-grade credit rating Funds from operations determine the balance sheet structure • Maintain investment-grade rating Adjusted net debt / Equity − Currently: BBB (S&P), Baa2 (Moody’s), both with stable outlook 60 % <55 % 50 % • Financial ratio ambi
Slide 51: Maintain a solid balance sheet
FINANCIAL STRENGTH AND FLEXIBILITY Maintain a solid balance sheet Reduced adjusted net debt Adjusted net debt • Reduction in Qatalum and Sapa net debt due to NOK billion positive net cash flow and stronger NOK 8.0 6.1 1.3 End Q3-15 0.3 3.3 (5.5) (8.0) (7.1) (17.3) 5.9 6.8 -18 -18%% End Q3-16 End Q3-
Slide 52: Long-term sustaining capex around NOK 4 billion
DISCIPLINED CAPITAL ALLOCATION Long-term sustaining capex around NOK 4 billion Higher than average sustaining capex driven by sustaining investments in Brazil NOK billion 6.0 5.5 5.3 5.0 5.0 4.9 4.7 4.5 4.2 4.0 3.5 3.5 3.3 3.0 2.8 2.7 2.5 2.0 1.5 1.0 0.5 0 2011 2012 2013 2014 2015 2016E 2017E 2018E
Slide 53: Growth capex focused on high-grading, recycling and technology
DISCIPLINED CAPITAL ALLOCATION Growth capex focused on high-grading, recycling and technology Majority of sustaining capex allocated upstream NOK billion • Sustaining projects for 2016-2019: 7.8 − Red mud disposal area 7 6.8 − Bauxite tailing dam 6.3 − Opening of new bauxite mining area 6 5.8 − Prim
Slide 54: Aiming for reliable and competitive returns to shareholders
RELIABLE SHAREHOLDER REMUNERATION POLICY Aiming for reliable and competitive returns to shareholders Aiming for competitive shareholder returns Payout ratio compared to alternative investments in peers NOK/Share ~110% Average 22 % payout ratio Dividend policy since 2014 2011-2015 • Ordinary dividend
Slide 55: Limited financial hedging, flexible business model
EFFECTIVE RISK MANAGEMENT Limited financial hedging, flexible business model Historical correlations between commodities and currencies indicate a natural earnings hedge • Hedging strategy Cross-correlations between currencies and commodities − Fluctuating with the market: revenues primarily exposed
Slide 56: Sensitivities and scenarios
Sensitivities and scenarios 56
Slide 57: Significant exposure to commodity and currency fluctuations
Significant exposure to commodity and currency fluctuations Aluminium price sensitivity +10%* UEPS Currency sensitivities +10%* NOK million +0.98 NOK/share Sustainable effect: 2,900 NOK million USD BRL EUR 2,200 UEBIT 2 780 (1 120) (250) UEBITDA 2 830 (840) (160) UEPS 0.91 (0.31) (0.06) UEBIT Underl
Slide 58: Bauxite & Alumina sensitivities
Bauxite & Alumina sensitivities Annual sensitivities on underlying EBIT if +10% in price Revenue impact NOK million • ~14.5% of 3-month LME price per tonne alumina 850 − ~One month lag • Realized alumina price lags PAX by one month Cost impact 240 Bauxite • ~2.45 tonnes bauxite per tonne alumina • P
Slide 59: Primary Metal sensitivities
Primary Metal sensitivities Annual sensitivities on underlying EBIT if +10% in price Revenue impact NOK million • Realized price lags LME spot by ~1-2 months • Realized premium lags market premium by ~1-2 months 2,480 Cost impact Alumina • ~1.9 tonnes per tonne aluminium 210 • ~14.5% of 3-month LME
Slide 60: Commodities and currencies need to be seen in tandem
Commodities and currencies need to be seen in tandem Spot prices and currency rates indicate earnings upside Underlying EBIT sensitivity to changes in LME Key variables “run-rate”* vs Q3-16 realized and USD/NOK Annual effect Change in LME price Q3-16 Impact on Impact on UEPS realized Run-rate* % cha
Slide 61: Improvement efforts lift EBITDA potential
Improvement efforts lift EBITDA potential Scenarios are not forecasts, but represent earnings potential based on sensitivities Indicative EBITDA-range in 3 scenarios NOK billion 25 20 15 Incl. 1.9 BNOK* in remaining 10 improvement ambitions 2017 - 2019 5 Incl. 5.6 BNOK in realized improvement progra
Slide 62: Improvement efforts and capital discipline contribute to FCF growth
Improvement efforts and capital discipline contribute to FCF growth… Scenarios are not forecasts, but represent earnings potential based on sensitivities Indicative Free cash flow (FCF) range in 3 scenarios NOK billion 15 10 Incl. 1.9 BNOK* in remaining improvement 5 ambitions 2017 - 2019 Incl. 5.6
Slide 63: ...and lift potential for competitive returns
…and lift potential for competitive returns Scenarios are not forecasts, but represent earnings potential based on sensitivities Indicative RoaCE range in 3 scenarios 15% 12% 9% 6% Incl. 1.8 BNOK* in remaining improvement 3% ambitions 2017 - 2019 0% Incl. 5.6 BNOK in realized improvement programs 20
Slide 64: Financial targets and aspiration
Financial targets and aspiration 64
Slide 65: Driving long-term shareholder value
Driving long-term shareholder value Balancing capital allocation and financial strength Capital expenditures Solid balance Sustaining capex to ensure operational excellence Long-term shareholder value sheet and Investments to keep market share, reduce costs, Share strengthen margins • Reinvest in li
Slide 66: Hydro's aspiration underpinned by firm financial targets
Hydro’s aspiration underpinned by firm financial targets Medium and long-term Ambition Timeframe CMD 2016 status Better improvement ambition 2.9 BNOK 2016-2019 1.1 BNOK 2016E Sustaining capex ~ 4 BNOK Over the cycle 5.3 BNOK 2016E Average capex incl. growth 6.0 BNOK 1) 2017-2019 7.8 BNOK 2016E Divid
Slide 67: Maximizing long-term value creation potential
Maximizing long-term value creation potential • Continuous cost and margin improvements • Working capital management • Financial strength and flexibility • Disciplined capital allocation • Reliable shareholder remuneration policy • Effective risk management (67)
Slide 68: Market Outlook
Market Outlook Kathrine Fog Capital Markets Day 2016
Slide 69: Macro and downstream
Macro and downstream HYDRO
Slide 70: Global macro development improving, uncertainty persists
Global macro development improving, uncertainty persists Primary demand at or above GDP in key regions Real GDP, annual growth Primary demand annual growth, key regions (%) (%) Forecast 12% 10% 8% 10% 6% 8% 4% 6% 2% 0% 4% -2% 2% -4% -6% 0% 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 China
Slide 71: Global aluminium demand prospects remain encouraging
Global aluminium demand prospects remain encouraging Broad-based demand growth across segments, better growth outlook than other base metals Diversified consumption base Continued strong underlying drivers Global semis demand Cars per 1,000 persons of working age World population Consumption per per
Slide 72: Strong substitution trend for aluminium in automotive
Strong substitution trend for aluminium in automotive High demand within body-in-white driving rolled products demand Main module Aluminium potential Global semis demand for transport sector by product form (Mill t) Body 30 Rolled products Chassis 7% 25 Interior Extrusions 20 castings 4% 15 Chassis
Slide 73: Rolled products demand driven by transport segment
Rolled products demand driven by transport segment Transport share increasing in total rolled products demand General rolled products demand, Expected market development selected regions • Continued substitution trend in transport segment YoY-growth contributing to overall demand growth 10% • Packag
Slide 74: Continued growth in extrusion demand
Continued growth in extrusion demand Gradual improvement expected in Europe Extrusion demand, Expected market development selected regions • US housing market still sustaining positive momentum YoY-growth • Weakness in US truck and trailer segment 10% • Construction activity in Europe continues to i
Slide 75: Extrusion market supported by continued momentum in B&C market
Extrusion market supported by continued momentum in B&C market Trend towards Green buildings also shaping up Housing market indicators Index, Jan 2006=100 120 100 80 60 40 20 0 Jan-06 Jun-06 Sep-07 Jul-08 May-09 Mar-10 Oct-09 Aug-10 Jan-11 Jun-11 Sep-12 Jul-13 May-14 Mar-15 Oct-14 Aug-15 Jan-16 Jun-
Slide 76: China's consumption pattern changing, with transport emerging
China’s consumption pattern changing, with transport emerging as a key engine of growth Chinese semis demand per key segments Mill tonnes 2015 2025 49 5% 5% 5% 4% 10% 12% 28% 36 35% 14% 15% 20% 16% 16% 16% 9 Construction Transport Transport Construction Electrical Packaging Machinery & equipment Oth
Slide 77: Growth in Chinese semis exports largely stable
Growth in Chinese semis exports largely stable Periods of higher arbitrage leading to increased exports Chinese semis exports Net semis exports as share of total semis production Monthly exports Periods of elevated arbitrage Thousand tonnes Thousand tonnnes Share of semis in favour of China* product
Slide 78: Trade regulations and duties impacting trade flows
Trade regulations and duties impacting trade flows Chinese semis exports by destination 3% 7% (2015) Europe 10% US • 7.5 % import duties on semis 47% • 3 – 6 % import • Turkey 11% duties on semis introducing EU duties 13% Asia 10% Africa North America Europe Asia Middle East • In general low Latin A
Slide 79: Primary metal market
Primary metal market HYDRO
Slide 80: Recap CMD 2015: Global surplus expected to moderate in 2016
Recap CMD 2015: Global surplus expected to moderate in 2016 Surplus moderating from ~1 million tonnes to 0-1 million tonnes Global (’000 mt) Global growth expectations 2016 Demand: 4-5 % Supply: 2-4 % 60 000 Supply Demand 55 000 Demand influences 2016 50 000 Supply Chinese construction sector influe
Slide 81: Market balance progressing better than expected
Market balance progressing better than expected Surplus moderating from ~1 million tonnes to a small deficit Global (’000 mt) Global growth 2016 Happened to a limited extent Happened to a large extent Demand: ~5 % Supply: ~3 % 60 000 Supply Demand 55 000 Demand influences 2016 50 000 Supply Chinese
Slide 82: Global primary market expected to be largely balanced also in 2017
Global primary market expected to be largely balanced also in 2017 Supply growth in world ex. China driven by India, pace of Chinese restarts uncertain Global (’000 mt) Global growth expectations 2017 Demand: 3-5 % Supply: 4-6 % 65 000 Supply Demand 60 000 55 000 Demand Supply influences 2017 influe
Slide 83: Divergence in market balances continuing in 2017
Divergence in market balances continuing in 2017 Global demand growth largely stable, production increasing in China driven by new projects and restarts World ex. China 2-4 % Primary market balances 2016 (‘000t) 2000 China (mill t.) 2-3 % 1000 ROW Global 28 Production 0 2016 levels Demand 27 -1000 W
Slide 84: Market deficits increasing in key consumer regions
Market deficits increasing in key consumer regions Rising deficits in North America and Europe amid smelter curtailments and continued demand growth Primary metal balances, selected regions outside China Europe (ex. Russia Russia) 4000 0 3000 -1000 2000 North America -2000 1000 0 -3000 0 -1000 2000
Slide 85: Chinese primary stocks largely stable in 2016
Chinese primary stocks largely stable in 2016, while total stocks outside China are decreasing Chinese exports not fully filling up deficits outside China China World ex. China (‘000t) (‘000t) 12000 160 12000 160 140 140 10000 10000 120 120 8000 8000 100 100 6000 80 6000 80 60 60 4000 4000 40 40 200
Slide 86: Energy source for primary production varies between regions
Energy source for primary production varies between regions Chinese and Indian smelters largely dependent on coal North America Europe China Middle East India South America Coal Hydro Power source used in Gas Nuclear aluminium smelters in 2016 Other renewables Source: CRU, Hydro analysis 86
Slide 87: Chinese smelters buying coal from market and impacted by rising coal prices
Chinese smelters buying coal from market and on-grid smelters impacted by rising coal prices Coal prices rising… …but with varying impact on smelter cost RMB/t USD/t 700 100 650 On-grid power Directly impacted, 90 rates impacted by must buy coal from 600 80 higher coal prices the market 550 30 – 35%
Slide 88: Global cost curve pressured by higher coal and alumina prices
Global cost curve pressured by higher coal and alumina prices USD/t 2 400 Key development from 2014 to 2016… Lower energy prices Lower alumina prices 2 000 Lower premiums Stronger USD 1 600 1 200 Cost pressure going into 2017 800 Higher coal prices Higher alumina prices 400 2014 2016 (‘000t) 0 0 10
Slide 89: Regional standard ingot premiums falling back to historical levels
Regional standard ingot premiums falling back to historical levels, all-in price level supported by currency effect USD/mt NOK/mt USD/mt 3 000 18 000 900 800 700 2 600 16 000 600 500 2 200 14 000 400 300 1 800 12 000 200 100 1 400 10 000 0 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-11 Nov-11 Sep-
Slide 90: Recycling is becoming more important as post consumed scrap gains momentum
Recycling is becoming more important as the generation of post consumed scrap material gains momentum Estimatede recovery from post-consumed scrap collected Primary demand versus recycled material, global Million tonnes Million tonnes 140 35 Forecast Forecast 30 120 25 100 20 80 15 60 10 40 5 20 0 0
Slide 91: Bauxite and alumina market
Bauxite and alumina market 91
Slide 92: Chinese primary production dependent on imported resources
Chinese primary production dependent on imported resources Around 36% based on imported raw material (average 2013-2016) % of Primary Production 100 7% Imported 90 80 29 % Imported 70 60 50 100 % 93 % Domestic 40 64 % Domestic 30 20 10 0 Primary production Alumina Bauxite Source: CRU, China customs,
Slide 93: Bauxite production in China to level off, triggering more imports
Bauxite production in China to level off, triggering more imports Chinese bauxite imports influencing price development Chinese bauxite production and imports • Depleting resources and deteriorating Mtpy quality, not sufficient to sustain operations in key provinces, triggering: 200 - increasing ref
Slide 94: Chinese bauxite imports – a dynamic landscape
Chinese bauxite imports – a dynamic landscape Malaysia ban continues, Guinea emerges as major supplier, increased exposure to freight, prices decreasing and converging China bauxite imports, volume and price by country Bauxite price CIF China USD/tonne CIF USD/tonne 90 65 Malaysia entrance 80 60 70
Slide 95: Chinese bauxite imports increasingly exposed to freight
Chinese bauxite imports increasingly exposed to freight Freight represents ~10 to 50% of the CIF price, freight rates at current low levels Chinese bauxite imports origin 2013 2016 Guinea Indonesia Mill. tonnes Mill. tonnes 40 40 20 20 Altantic Pacific 0 0 2013 2014 2015 2016 2013 2014 2015 2016 Bal
Slide 96: Higher cost Chinese refineries impacted by imported bauxite prices
Higher cost Chinese refineries impacted by imported bauxite prices 20 Mtpy of high cost alumina capacity in Shandong, still growing USD/t 350 Other Caustic Energy Bauxite 300 • Shandong refineries exposed to bauxite import prices Hebei 250 − but necessary capacity, as domestic Shanxi Shandong bauxit
Slide 97: Alumina curtailments reduce oversupply outside China
Alumina curtailments reduce oversupply outside China Capacity curtailments in the Atlantic basin, offset by growth in Pacific World ex-China alumina supply/demand balance Mill. tonnes 60 40 Point Comfort 20 Corpus Christi Ras Al Khair 0 2015 2016e Paranam Atlantic Pacific Demand Kendawangan China al
Slide 98: Alumina prices rising amid smelter restarts and cost inflation
Alumina prices rising amid smelter restarts and cost inflation Recent alumina price drivers Platts alumina index (PAX) Percent USD/t 450 20% Market balances • Smelter restarts and new projects ramping up in China 19% 400 • Tight markets ex. China amid curtailments 18% 350 17% Cost inflation • Rising
Slide 99: Long-term outlook and summary
Long-term outlook and summary 99
Slide 100: Strong growth drivers across segments providing solid demand outlook
Strong growth drivers across segments providing solid demand outlook Short-term macroeconomic volatility, long-term fundamentals still in place Strong demand drivers in key aluminium segments Semis demand CAGR 2016 – 2025 Growth in automotive vehicle production Transport Aluminium content in cars in
Slide 101: Growth in global semis demand creates opportunities for primary and recycled material
Growth in global semis demand creates opportunities for both primary and recycled material World outside China semis demand growth exceeding Chinese growth rates into next decade CAGR 2016 – 2025 Estimated semis demand growth, 2025 vs 2016 + 14-15 millon tonnes + 11-12 millon tonnes Semis Primary Re
Slide 102: Market outlook summary
• Macro drivers and substitution effects supporting underlying aluminium demand growth • Limited primary supply growth outside China and India • Global primary market largely balanced this year and next • Cost curve pressured upwards by rising alumina and coal prices, with regional differences • Rec
Slide 103: Rolled Products
Rolled Products Kjetil Ebbesberg Capital Market Day 2016
Slide 104: Hydro Rolled Products
Hydro Rolled Products Holmestrand Rolling mill Karmøy Sales Office Smelter R&D centre Hamburg Neuss Norf Grevenbroich Bonn Strong European 1 million tonnes of flat Unique integrated Casthouse network and Industry-leading rolled products per year aluminium cluster: integrated recycling R&D facility p
Slide 105: Rolled Products: High-grading portfolio and improving cost position
Rolled Products: High-grading portfolio and improving cost position Multi-year contract signed Opening of UBC Trial production Cooperation agreement with Jaguar Landrover processing line started at new automotive line 3 with Austin Al on scrap sorting solution for automotive CMD CMD 2015 2016 Alunor
Slide 106: Cultural enhancement program to lift cooperation and engagement
Cultural enhancement program to lift cooperation and engagement “Renew” Rolled Products to enable Better, Bigger, Greener targets • Courage Cooperation • Better • Respect • Trust • Bigger • Cooperation • Openness • Greener • Determination • Involvement • Foresight Hydro Renew Hydro Way culture aspir
Slide 107: Rolled Products strategic priorities
Rolled Products strategic priorities Building on solid foundation, pursuing attractive opportunities • Improve safety performance and • Enhance market positions through • Leading provider of sustainable drive for operational excellence product high-grading solutions to customers • Differentiate thro
Slide 108: Improvements in Rolled Products
Improvements in Rolled Products Q3 2016 – Q4 2015 vs Q3 2015 – Q4 2014 -23%1 +5% +28% Underlying EBIT Safety Total shipments Rolling operations2 TRI rate 4.7 910.000 tons 1.167 MNOK +8 +30% Best 10% %-points3 Employee Engagement Auto BiW shipments 83% favorable 1) YTD 2016 vs YTD 2015 2) Rolling ope
Slide 109: Strong positions in market segments
Strong positions in market segments Portfolio high-grading and strong focus on quality and service as key elements for success Automotive Foil Beverage can Lithography Special products Ambition Gain No.2 position Strengthen global No. 1 Grow No.3 position Strengthen global Strengthen No.1 in Europea
Slide 110: Expanding in higher-margin segments with increased ambition level
Expanding in higher-margin segments with increased ambition level Pursuing attractive automotive growth opportunity Sales by segment 2010 2015 2020 12% 14% 24% Auto Bev Can Litho Foil Special Products 110
Slide 111: It's all about serving our customers
It’s all about serving our customers Differentiation as key element of our strategy Parameters for differentiation Customers view on us • Ball* Vendor Rating 2015 TCS: • Quality Best in Class can body stock • Service • Alufoil Trophy 2016: • Supply Chain Award for battery foil solution • Innovation
Slide 112: Quality and service improvement for our customers
Quality and service improvement for our customers Global market leadership in lithographic sheets driven by quality and service Quality – Service – Plate cracking Leadtime reduced in one of the largest from 11 to 6 weeks German printing shops to support the need reduced by 90% by of our overseas int
Slide 113: Innovation as strong driver for increased competitiveness
Innovation as strong driver for increased competitiveness Innovative solutions for automotive customers Copper free Scrap sorting – header material Solution for Automotive for heat-exchanger – developed by Austin AI Creating a unique selling (USA) and Hydro: sorting proposition by significantly 5.xx
Slide 114: Production of used beverage can recycling started
Production of used beverage can recycling started Lowering the metal cost and contributing to Hydro’s carbon neutrality target • Opening ceremony May 3rd 2016 • Ramp-up ongoing • Delay due to equipment performance issues • Operations in stable mode, further improvement program ongoing • Output of >
Slide 115: Automotive line 3 moves Hydro towards No. 2 position in European Body-In-White
Automotive line 3 moves Hydro towards No. 2 position in European Body-In-White Realizing an attractive growth opportunity • EUR 130 million investment, on time and budget • Trial production started in October 2016 • Ramp-up to total nominal capacity of 200,000 mt/year in 2017 • Includes dedicated sk
Slide 116: NOK 900 million improvement ambition on track for 2019
NOK 900 million improvement ambition on track for 2019 Delayed UBC line ramp-up in 2016, however not affecting final target Better NOK 900 million to be delivered by end-2019 Rolled MNOK Products 900 MNOK Improvement driven by 1000 900 • Automotive growth Recycling 800 • Recycling 700 • Operational
Slide 117: Rolled Products mid-term goals
Rolled Products mid-term goals Creating shareholder value with technology, product innovation and customer relations Ambitions Target Timeframe Progress1 Status • Improve safety performance, strive for injury free environment TRI <2 2020 4.72 • Realize ongoing improvement efforts Better Rolled Produ
Slide 118: Primary Metal
Primary Metal Hilde Merete Aasheim Roland Scharf-Bergmann Capital Markets Day 2016
Slide 119: Primary Metal and Metal Markets production portfolio
Primary Metal and Metal Markets production portfolio Norway UK Canada Germany Luxembourg France Slovakia US Spain Qatar Primary Brazil JV 100% Remelt/ Recycling 2.1 million tonnes 1.0 million tonnes Australia 2.1 million mt is consolidated capacity. Slovalco and Albras are fully consolidated, Tomago
Slide 120: Primary Metal: Extending the technology lead and driving improvements
Primary Metal: Extending the technology lead and driving improvements Karmøy Technology Pilot Digitization initiatives gaining The JV 180 USD/t improvement ~70% completed at year-end 2016 momentum programs finalized as planned* CMD CMD 2015 2016 Product development for New supply agreement with ~1 T
Slide 121: Primary Metal strategic priorities
Primary Metal strategic priorities World-leading aluminium producer • Strive for an injury-free environment • Realize 200,000 mt creep • Growing recycling business will improve environmental footprint • Deliver on improvement programs • Extend technology lead with Karmøy Technology Pilot • Reduce en
Slide 122: Strengthening relative position
Strengthening relative position Improvements keep Hydro competitively positioned on the CRU cost curve Implied all-in primary cost development¹ 2016 CRU² global business operating cost curve by smelter USD/mt USD/mt ‘USD 300+ program’ 2 000 2 200 ‘JV 2 000 program’ 1 800 1 500 Hydro PM CRU average 1
Slide 123: Long history of improvements continues
Long history of improvements continues Delivering on creep program and NOK 1 billion improvement ambition Better Primary Metal Production for Fully Owned and Joint Venture smelters 2014-2025 NOK 1 billion to be delivered by end-2019 BNOK 1.0 In thousand mt In million NOK 200 Joint ventures 1200 Full
Slide 124: Karmøy Technology Pilot advancing toward 2017 start-up
Karmøy Technology Pilot advancing toward 2017 start-up Construction Potroom erection, incl. steel structure • Project budget NOK 4.3 billion, net project costs of NOK 2.7 billion and NOK 1.6 billion in Enova support • Estimate ~70% physical completion at year-end 2016 • The project is on budget and
Slide 125: Karmøy Technology Pilot: a step on the way to a digital future
Karmøy Technology Pilot: a step on the way to a digital future Smelter 4.0 Autonomous Connected operator Connected Automated Automated cells & maintenance plants cranes transport 125
Slide 126: Strong position in value-added casthouse products
Strong position in value-added casthouse products 82% of global sales volume is value added Foundry alloys, 19% Leading 2.9 million mt sales of global position casthouse products in 2016* Strong capabilities in Extrusion ingot, 52% all Automotive segments Leading global position Unique primary Sheet
Slide 127: Value added products strategy creates substantial value
Value added products strategy creates substantial value and supports competitive cash cost position for smelters Share of 2016 value added production* in % of total CRU Casthouse value creation curve 2016 (net realisation)*** primary casthouse production** By company, USD per mt 400 Peers 300 Hydro
Slide 128: Market differentiation to further grow value added products position
Market differentiation to further grow value added products position Automotive feasibility studies Crash alloy development • Quality Leadership • Lead Time and Delivery Performance Core differentiators • Commercial & Technical Services • R&D Development and Cooperation • Low Carbon Footprint Primar
Slide 129: Recycling - increasingly important part of the aluminium value chain
Recycling - increasingly important part of the aluminium value chain Identified scrap forms: clean process scrap, fabrication scrap, post-consumed scrap Global post consumed scrap collection grows strongly Primary Bauxite Alumina Production Mill tons 35 Forecast 30 Casthouse Semis Final Total alumin
Slide 130: Recycling process - from scrap to finished products
Recycling process - from scrap to finished products Process Scrap Post Consumed Scrap Furnace(s) + Finished product Homogenization Casting 130
Slide 131: Developing remelters into recycling plants
Developing remelters into recycling plants Expanding the use of post consumed and lower priced scrap Recycling 2015 (kt) Deeside, UK Clervaux, Luxembourg 2015 production: 53,000 tons 2015 production: 81,000 tons Post-consumed scrap 90 Process scrap 350 Rackwitz, Germany Standard ingot less melt loss
Slide 132: Recycling strategy in Primary Metal
Recycling strategy in Primary Metal Increase margins and capacity utilization, reduce energy consumption and emissions Build on leading remelt capabilities Increase use of post Access to processing capacity for Increase sales of Recycling Friendly consumed and post consumed and difficult scrap Alloy
Slide 133: Key drivers in Primary Metal recycling
Key drivers in Primary Metal recycling Post-consumed-scrap usage and RFA sales Targeting 100% increase in Targeting 40% increase in Positive earnings development post consumed scrap usage RFA Sales in Recycling Post Consumed Scrap Usage – ktons / % RFA sales for EI remelters – kt / % EBIT and RoaCE
Slide 134: Primary Metal mid-term goals
Primary Metal mid-term goals Creating shareholder value by strengthening relative cost position through lean operations and technology Ambitions Target Timeframe Progress1 Status • Improve safety performance, strive for injury-free environment TRI <2 2020 2.72 • Realize ongoing improvement efforts B
Slide 135: Bauxite & Alumina
Bauxite & Alumina Eivind Kallevik Simon Storesund Capital Markets Day 2016
Slide 136: Hydro is Brazil's #1 aluminium company
Hydro is Brazil’s #1 aluminium company Hydro owns 5% of Brazil’s largest bauxite No.1 in MRN mine and 86,3% of Brazil’s second largest Alunorte bauxite CAP Albras bauxite mine Paragominas Hydro owns 92.13% of Brazil’s and the world’s largest alumina refinery No.1 in alumina Hydro owns 51% of Brazil’
Slide 137: Bauxite & Alumina: Accelerating performance
Bauxite & Alumina: Accelerating performance Participation in Barcarena Paragominas awarded as Commissioning of press filters Urban Development Plan best Brazilian mine by EXAME at Alunorte CMD CMD 2015 2016 All-time low implied Vale/Hydro negotiations on Ball mill and Highest 12-month average alumin
Slide 138: Bauxite & Alumina strategic priorities
Bauxite & Alumina strategic priorities Aiming for operational and commercial leadership • Strive for an injury free environment • Secure and develop resources • Further improve organizational for future decades capabilities and HSE performance • Continue operational improvement drive, ensure world c
Slide 139: Improvement program ahead of 2016 plan, 2019 target unchanged
Improvement program ahead of 2016 plan, 2019 target unchanged Strong progress on operational and commercial efforts Better Bauxite & Alumina Improvement categories Improvements in NOK million BNOK 1.0 Alunorte 1000 Fixed • Debottlenecking Alunorte to above 900 cost nameplate capacity 800 Commercial
Slide 140: Paragominas: Supporting production above nameplate capacity
Paragominas: Supporting production above nameplate capacity Paragominas production annualized, in milion mt 11.7 11.7 10.9 10.8 YTD 2016 production up 5% from strong 2015 10.6 10.4 10.2 9.0 9.1 9.5 9.1 9.0 • Successfully implemented Bauxite & Alumina Business System 8.7 8.3 7.1 • Improved equipment
Slide 141: Alunorte: Record run-rate production above nameplate capacity
Alunorte: Record run-rate production above nameplate capacity Alunorte production annualized, in milion mt 6.3 6.5 6.4 Significantly improved production stability 6.2 6.1 6.1 6.0 5.8 5.8 5.9 5.9 5.8 5.9 • 6.3 million mt last 12 months production at nameplate capacity 5.5 5.0 5.2 • Improved equipment
Slide 142: Competitive alumina cost position
Competitive alumina cost position Alumina cash cost curve, USD/mt Implied alumina cost and margin, USD/mt 1) BOC in USD per mt 400 35 300 350 56 36 250 300 200 250 150 252 100 217 204 200 Alunorte 50 150 0 Q3 2014 Q3 2015 Q3 2016 100 Price2) 287 273 240 50 LME%3) 14.7% 16.5% 14.7% 0 Implied EBITDA c
Slide 143: China driving alumina prices up
China driving alumina prices up Key factors: Chinese smelter restarts on higher metal prices and seasonal inventory build-up Raw material costs going up – lifting the floor Increased volatility from the Chinese market Coal prices, USD per mt PAX & China (Shanxi) domestic alumina price, USD per mt 80
Slide 144: Pricing alumina and bauxite on own fundamentals
Pricing alumina and bauxite on own fundamentals Platts alumina index well established as the common pricing mechanism Hydro alumina sales exposure to index pricing 35% 50% 65% 75% 75% 85% Alumina 100% • New contracts: 100% sold on index, except Hydrate and short-term 80% contracts, normal terms 2-10
Slide 145: Strong commercial organization maximizing the value of B&A assets
Strong commercial organization maximizing the value of B&A assets Strategic sales and purchases to capture long-term value Utilizing China domestic entity • Secure LT-sales contracts • Established in May 2015 (Index & CIF terms) • Improved market intelligence and customer • Increased focus on the Hy
Slide 146: Two key focus areas for commercial in 2016
Two key focus areas for commercial in 2016 Pursuing attractive market opportunities to lift margins Hydrate alumina market (chemical grade) Utilizing China domestic entity • Hydrate - alumina before the calcination process • Gaining market intelligence and customer insight • More stable hydrate pric
Slide 147: Bauxite & Alumina mid-term goals
Bauxite & Alumina mid-term goals Creating shareholder value through efficient and commercial use of raw materials Ambitions Target Timeframe Progress1 Status • Improve safety performance, strive for injury free environment TRI <2 2020 1.42 • Realize ongoing improvement efforts Better Bauxite&Alumina
Slide 148: Energy
Energy Arvid Moss Capital Markets Day 2016
Slide 149: Energy asset overview
Energy asset overview The second largest hydropower operator in Norway • 3 production areas • 26 power stations Sogn • Annual production 10 TWh • Net spot sales 2-6 TWh • 41 generators/2260 MVA/ Telemark 2040 MW Røldal-Suldal • 190 employees • Competence center on energy for Hydro’s aluminium busine
Slide 150: Energy has a dual mission in Hydro
Energy has a dual mission in Hydro Strong, sustainable value creator and energy provider throughout the value chain To own, operate and maximize To provide competitive power sourcing value of Hydro’s energy assets and global energy competence 150
Slide 151: Energy: Securing power supply, maximizing asset value
Energy: Securing power supply, maximizing asset value Signed wind power contract with New power contracts to Neuss, Increased activities to improve Nordic Wind Power DA, Norway Germany. Fully supplied until 2025 industrial framework conditions in Brazil CMD CMD 2015 2016 Hydro Energia in Amendment t
Slide 152: Energy strategic priorities
Energy strategic priorities • Realize full potential of strong asset • Mature captive growth • Capitalize on strong climate position base and competencies opportunities over time • Further improve operational and • Raise income potential from • Capture value of the green certificate commercial perfo
Slide 153: Power Markets
Power Markets HYDRO
Slide 154: Impact of global Energiewende becomes evident
Impact of global «Energiewende» becomes evident Transitioning to a low carbon, reliable and affordable energy supply • New renewable generation continues to surprise Observed delink between global GDP and CO2 emissions Index (2000=100) • Unsubsidized solar and wind power cost projects at record-low
Slide 155: Main factors influencing the market prices for power
Main factors influencing the market prices for power A geographical break-down Norway Coal and CO2 Hydrology/Weather Transmission capacity EU and national energy policy USA Germany Coal Coal, gas and CO2 Gas Weather Renewables EU and national energy policy Global drivers US shale oil and gas China s
Slide 156: Nordic power prices decline over the last years
Nordic power prices decline over the last years Lower CO2 and coal prices as key factors. Forward curve reflects current coal, CO2, gas prices and supply side Nordic power prices halved from 2008 to 2016, EUR/MWh (real 2016) Nordic system price, EUR/Mwh (nominal) 60 60 55 55 50 50 45 45 40 40 35 35
Slide 157: Energy in Hydro - Update on selected topics
Energy in Hydro - Update on selected topics 157
Slide 158: Value creation in Energy dependent on wide array of factors
Value creation in Energy dependent on wide array of factors Volume Expiring Power and new Price contracts Commercial Drivers Sustaining and operational CAPEX competence CAPEX and OPEX & Earnings for taxes new GWh 158
Slide 159: Contractual obligations impacting Energy figures
Contractual obligations impacting Energy figures Repricing of internal contracts incurs losses 2008: Nordic system prices and EEX forward curves, in EUR/MWh (nominal) 90 • Hydro entered into a 250 MW contract for 2013-2020 as part of long- term sourcing efforts to Norwegian smelters (incl Husnes), 8
Slide 160: Maintaining industrial ownership of RSK volumes and value within the reversion regime
Maintaining industrial ownership of RSK volumes and value within the reversion regime June law amendment allows private industrial ownership and physical hydropower offtake from minority stakes Model for industrial ownership (ANS/DA) Merge into a larger publicly-owned asset with one or several owner
Slide 161: Securing long-term competitive power sourcing for smelters
Securing long-term competitive power sourcing for smelters 2.3* TWh/year from 2021 sourced in Norway and Germany since last CMD Sourcing platform for fully-owned smelters, Norway** Sourcing platform for JVs and Neuss smelter*** TWh TWh 20 20 15 15 10 10 5 5 0 0 2015 2016 2017 2018 2019 2020 2021 202
Slide 162: Providing competitive global energy sourcing and competence
Providing competitive global energy sourcing and competence Commercial competence, analytical capability and market insight B&A Primary Metal Rolled Products Assist with updating of energy sourcing strategies Analyze energy markets and provide insight Optimize electric power portfolio Lead power sou
Slide 163: Energy mid-term goals
Energy mid-term goals Creating shareholder value by maximizing value of own hydropower assets and ensuring reliable and competitive energy supply for Hydro Ambitions Target Timeframe Progress1 Status • Improve safety performance, strive for injury free environment TRI <2 2020 0 YTD2 • Robust industr
Slide 164: Sustainability and climate agenda
Sustainability and climate agenda 164
Slide 165: The climate paradox
The climate paradox Increasing share of aluminium production is coal-based CO2 emissions and main energy source in Aluminium production by power source Mill tonnes aluminium production by country Tonne CO2 / tonne aluminium 20 Coal 90 An industry challenge Forecast 18 Companies need to act 80 16 Gov
Slide 166: Our global industry's most ambitious climate strategy
Our global industry’s most ambitious climate strategy Carbon-neutral from a life-cycle perspective by 2020 Production Products Recycling 166
Slide 167: Lowering our life-cycle emissions through several measures
Lowering our life-cycle emissions through several measures Production Use phase Recycling World-class technology pilot and Meeting the needs of the automotive Strengthened position renewable energy industry • New used beverage can recycling line in Germany • Support for technology pilot • New castin
Slide 168: Hydro on track for 2020 target
Hydro on track for 2020 target Hydro’s CO2 emissions from a life-cycle perspective Million kg Co2 2.5 Most important factors 2.0 affecting 2020 target: 1.5 • Use phase benefits 1.0 • Recycling of post consumed scrap 0.5 • Own reductions in 0.0 2012 2013 2014 2015 2016 2017 2018 2019 2020 emissions -
Slide 169: Sustainability will become more and more important
Sustainability will become more and more important Competitiveness and sustainability can go hand-in-hand Producers Users Civil society 169
Slide 170: Hydro 2017
Hydro 2017 Innovation and differentiation through integrated value chain • Managing cyclicality through financial strength and flexibility • Strengthening competitiveness through improvements and high-grading • Differentiating through the integrated value chain
Slide 171: Infinite Aluminium Hydro
INFINITE ALUMINIUM HYDRO
Slide 172: Investor Relations in Hydro
Investor Relations in Hydro Stian Hasle Head of Investor Relations t: +47 97736022 e: stian.hasle@hydro.com Next event Olena Lepikhina Investor Relations Officer Fourth quarter results t: +47 96853035 February 9, 2017 e: olena.lepikhina@hydro.com For more information see www.hydro.com/ir Gunn Elise