Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Day (December 2019)
77 slides from Norsk Hydro Asa's investor day presentation, Dec 5, 2019
Slide 1: Tønder Site Visit
Tønder Site Visit December 5, 2019
Slide 2: Agenda December 5
Agenda December 5 08:30 - 09:00 Welcome and introduction – Stian Hasle, Head of Investor Relations 09:00 - 10:00 Extrusion Europe and Tønder – Mette Boye Sørensen, Managing Director Hydro Extrusion Denmark 10:00 - 11:00 Precision Tubing and Tønder – Tommy Seeberg, Managing Director Hydro PT Tønder 1
Slide 3: Hydro and Extruded Solutions
Hydro and Extruded Solutions Lifting profitability, driving sustainability Stian Hasle, Head of Investor Relations December 5, 2019
Slide 4: Hydro is engaged in the entire aluminium value chain
Hydro is engaged in the entire aluminium value chain Rolled Recycling Bauxite Alumina Energy Primary Casthouse Products Extrusion Extrusion 35.000 people 150 locations ~ NOK 160 billion 40 countries 4
Slide 5: Extruded Solutions – a big part of Hydro today
Extruded Solutions – a big part of Hydro today ~1/4 of Hydro’s capital employed, 2018 ~1/4 of Hydro’s Underlying EBITDA, 2018 ~1/3 of Hydro’s total revenue, 2018 Energy Bauxite & Energy 2% Energy 4% Alumina 13 % Bauxite & 13 % Extruded Bauxite & Alumina Solutions 24% Alumina 28% 26 % Extruded Soluti
Slide 6: Extruded Solutions – #1 in the global aluminium extrusion industry
Extruded Solutions – #1 in the global aluminium extrusion industry 22,200 Revenue employees NOK 64 billion More than Present in 100 locations 40 countries 50% of production 1.4 million tonnes based on recycled delivered aluminium 6
Slide 7: The global extrusion champion – worldwide reach, local presence
The global extrusion champion – worldwide reach, local presence Clear leader in a fragmented industry where closeness to customers and markets are key success factors Unrivalled position as #1 extrusions provider globally Customers in diversified end-markets Extrusion sales volume (2018), in thousan
Slide 8: Organized in four business units
Organized in four business units 22,200 highly competent people across the world, total turnover of BNOK 64 Extrusion Europe Extrusion North America Precision Tubing Building Systems • Market leader focusing on • Uniquely positioned as the only • Technology leader in selected • Leading European play
Slide 9: Proven track-record of value creation with further potential
Proven track-record of value creation with further potential Successful value-over-volume strategy Last 12 months underlying EBITDA in MNOK 4,500 4,000 Simplify and 3,500 collaborate 3,000 Simplification drive to increase focus, reduce complexity and cost 2,500 2,000 1,500 1,000 Deliver value-added
Slide 10: Capital return dashboard for Extruded Solutions
Capital return dashboard for Extruded Solutions Returns in line with the cost of capital reflecting leading market positions and value-over-volume strategy Capital employed in ES 7% 7% 24 % 7-8% ~26 BNOK 2017 2018 URoaCE > CoC Nominal long-term in 2018 cost of capital ~7% 2017-2018 average URoaCE Ca
Slide 11: Negative extrusions demand in Europe and North America
Negative extrusions demand in Europe and North America Driven by weak macroeconomic development Extrusions – estimated market growth 2019 vs 2018 (%) Extrusions – estimated market growth 2019 vs 2018 (%) 0% Building & construcion -1% Transport & -2% automotive -3% Industrial -4% -5% Other -6% -7% To
Slide 12: Extruded Solutions taking firm measures in weak markets
Extruded Solutions taking firm measures in weak markets • Restructuring in Europe • Full closures: Pinto (Spain), Redditch (UK), Rotherham (UK), Wakefield warehouse (UK), Lodz warehouse (Poland), Dusseldorf office (Germany), Drunen fabrication unit (Netherlands) • Divestments: Chisineu Cris (Romania
Slide 13: CIRCAL is being chosen by builders and architects
CIRCAL is being chosen by builders and architects More than 40 large buildings are now being built using Hydro CIRCAL for the facade, at the request of the final users 13
Slide 14: Extrusion Europe
Extrusion Europe Mette Boye Sørensen, MD Extrusion Denmark December 5, 2019
Slide 15: One Extrusion Europe
One Extrusion Europe 9.500 People Magnor Finspång Vetlanda 40 plants Birtley Tibshelf Bromyard Tønder Lithuania Gloucester Hoogezand Uphusen Trzcianka Bedwas Sales: 2.4 BEUR Harderwijk Rackwitz Łódź Cheltenham Lichtervelde Drunen Chrzanów Ghlin Lucé Raeren Žiar Offenburg 586 Ktons of profiles Châtea
Slide 16: Hydro Extrusion Europe – Success through differentiation
Hydro Extrusion Europe – Success through differentiation • Close to the customers with regional presence • Strong Key Account management across boarders • One-Stop-Shopping enabled by large variety of presses and Value Added activities • Many possibilities for fabrication and surface treatment inhou
Slide 17: Hydro Extrusion Europe – Who we are
Hydro Extrusion Europe Who we are We are Aluminium. We offer efficient, innovative solutions to our customers, make them successful. We unite excellent quality in extrusion, highest precision in surface treatment and fabrication and outstanding customer experience.
Slide 18: Remelting
Remelting Supporting a circular economy and flexibility for customers of Extruded Solutions 8 W2W Recycling Plants • 380K tonnes capacity • 6”–16” extrusion ingot diameters • 6000 series alloys + some 7000 & 3000 • Scrap sourcing coordinated with Primary • Take back systems with Extrusion customers
Slide 19: Extrusion
Extrusion Excellence in aluminium profiles 60 Extrusion presses • 660K tons capacity • 6”–16” diameters • Primarily 6000 series alloys • Big profiles, small profiles • Tight tolerances, unique mechanical properties and high precision Capacity from Pinto and Chisineu Cris not included 19
Slide 20: Profiles are the core of our business
Profiles are the core of our business Experience from hundreds of thousands of designs From 6” Mini Extrusions To 16” Large & Wide Extrusions in La Selva & Offenburg in Lichtervelde & Harderwijk 20
Slide 21: Fabrication
Fabrication Value over Volume Extensive value-added services • Punching • Milling • Drilling • Assembly • Cutting • CNC Machining • Friction Stir Welding • Welding • Bending • Joining • Deburring • Kitting 8
Slide 22: Surface Excellence
Surface Excellence We are strong supplier in surface treatment • Largest installed anodizing capacity in Europe • 14 anodizing lines in Europe • 8 Painting lines in Europe • One of the biggest powder coating consumer 22
Slide 23: Products for every day's life…
Products for every day’s life… At home In your car At the office When traveling • Windows and doors • Interior • Facades • Train and subway sides • Furniture • Exterior • Windows • Flooring • Electronics • Chassis • Walls • Handrails • Greenhouses • E-mobility • Electronics • Luggage compartments •
Slide 24: Extrusion Europe serves a broad range of markets
Extrusion Europe serves a broad range of markets Building & Transportation Engineering Automotive Trading Other construction 40 % 16 % 15 % 15% 5% 9% Based on 2018 volumes 24
Slide 25: Extrusion Denmark
Extrusion Denmark December 5, 2019
Slide 26: Hydro Extrusion Denmark employees
Hydro FF Hydro | ‘ 446 FTE et 256FTE 2
Slide 27: Now meet Hydro Extrusion Denmark
Now meet Hydro Extrusion Denmark 28.000 tones delivered Established in 1975 256 people 2 locations 25.000 tones produced 27
Slide 28: Our history
Our history Hydro Formel OEM Focus on Hydro Extrusion Hydro Ext. begins Ext. begins crash alloy E-mobility (Plug-in projects & established P-16 Precision Tubing Structural qualification hybrid) program “Towards (7 inch) Business Applications started established Solution” 1975 1983 1995 1997 2014 201
Slide 29: Extrusion presses in Denmark
Extrusion presses in Denmark • P16 (1,600 tonnes, 7 inch) • P22 (2,400 tonnes, 8 inch) 29
Slide 30: The extrusion process
The extrusion process It is all about temperature Billet preheating Extrusion Cooling Ageing Customer requirement • Surface • Stretching • Dimensions • Cutting • Mechanical properties • Billet temperature • Die • Exit temperature • Ageing cycle • Billet taper • Container • Cooling rate • Dummy block
Slide 31: The extrusion process
The extrusion process » Hydro 31
Slide 32: Main geographical markets (volume)
Main geographical markets (volume) 45% 41% (incl. automotive) 11% 3% 32
Slide 33: Extrusion Denmark markets
Extrusion Denmark markets Building & Transportation Engineering Automotive Other construction 34 % 11 % 13 % 36% 6% Based on 2018 volumes 33
Slide 34: Main customers
Main customers » The first ever flat roof window with curved ‘glass Pa nt UNIVERSAL ROBOTS 34
Slide 35: Sustainability as leaver for further growth
Sustainability as leaver for further growth 35
Slide 36: Sustainability as leaver for further growth cont.
Sustainability as leaver for further growth cont. 36
Slide 37: Sustainability toolbox
Sustainability toolbox » Hydro rs] es 2. CO? CIRCAL REDUXA’ FOOTPRINT oe “Nrian B Aluminium Stewardship Initiative 37
Slide 38: Hydro Circal 75R and Hydro Reduxa 4.0
Sustainability as leaver for further growth cont. Hydro Circal 75R Hydro Reduxa 4.0 38
Slide 39: More on Hydro Circal 75R
More on Hydro Circal 75R » Hydro Hydro CIRCAL 39
Slide 40: More on Hydro Reduxa 4,0
More on Hydro Reduxa 4,0 » Hydro 8000 kg CO2 equivalent 40
Slide 41: E-mobility as leaver for growth
E-mobility as leaver for growth Emobility 2018 2025 Emobility 418 kt total market 867KT total market Emobility 19 kg/car 35kg kg/car Source: Ducker and European Aluminium Extrusion content as net value 41
Slide 42: E-mobility as leaver for growth
E-mobility as leaver for growth 4x VW Kühlplatte 42
Slide 43: Substitution as a leaver for growth
Substitution as a leaver for growth Function: Force reduction solenoid valve block. 43
Slide 44: From Bull to Bear
From Bull to Bear • CASH Improvement (Net Operating Capital) • Organizational restructuring • Cost cutting 44
Slide 45: Values and People
Values and People Care. Courage. Collaboration. These are the values we build on. 45
Slide 46: Hydro Precision Tubing Tønder
Hydro Precision Tubing Tønder Tommy Seeberg, MD Precision Tubing Tønder December 5, 2019
Slide 47: Meeting customer needs – Globally and locally
Meeting customer needs – Globally and locally With presence 19 cast- With more than in more than houses 39 anodizing lines 14 welding lines production units countries 24 paint 188 lines presses employees 47
Slide 48: Precision Tubing business unit
Precision Tubing business unit TØNDER: 7 With With more than 12 træk- High speed maskiner cutters 28 alm cut 3 presses lines markets share production units 400 4 employees plants employees 48
Slide 49: Manufacturing on Coil
Manufacturing on Coil 49
Slide 50: Billet homogenizing
Billet homogenzing Hydro Ingot casting Melt treatment = N Induction Preheating Zinc arc spray i only on MPE Re-coiler Quench Extrusion 50
Slide 51: Chipless cut to length
Hydro Chipless cut to length e Ink Jet print for traceability es PA12 plastic Co-extrusion < —~ Secretsoup Degrease bath a of Sink draw Straighten process 51
Slide 52: De-coiler
De-coiler Hydro Re-coiler Clamping & Straightener yd COS Se Cut to length 52
Slide 53: Hydro
Hydro
Slide 54: Precision Tubing overview
Precision Tubing overview North America South America • Multi-port extrusions (MPE) • Multi-port extrusions (MPE) • Extruded tubes • Precision drawn tubes (PDT) • Precision shapes • Extruded tubes • Internally enhanced tubes • PE coated tubes (HyPlus) • Zinc Coated Round Tube • Line sets (air-condit
Slide 55: Precision Tubing overview cont.
Precision Tubing overview cont. China Vietnam • Multi-port extrusions (MPE) • General Extrusion • Helical Grooved Tubes • Anodizing • Straight Grooved Tubes • Powder Coating • Extruded tubes • CNC Fabricating • Zinc Coated Round Tube • Profiles • 6,000 tons • Anodizing • 250 employees • 30,000 tons
Slide 56: Precision Tubing Europe
Precision Tubing Europe Precision Tubing Tønder a.s HQ Mother company founded in 1990 • Precision drawn tubes Total 400 employees (260 local) • Extruded MPE tubes • Extruded coolers • HYCOTTM coated tubes • HyLife™ products • 3 presses & drawing facilities • 30,000 tons MPE cutting facilities PDT cu
Slide 57: Precision Tubing: Global Leading Position
Precision Tubing: Global Leading Position 57
Slide 58: Main Segments We Serve
Main Segments We Serve Automotive HVAC&R Solar thermal Other industries 58
Slide 59: Automotive
Automotive Precision drawn tubes (PDT) Welded tubes Welded tubes with Multi-port extrusions (MPE) HYCOT™/® coated tubes inner fins For heaters, radiators, For structural components, For condensers, evaporators, oil For fuel lines, air-conditioning condensers, evaporators, coolant radiators, heaters,
Slide 60: HVAC&R
HVAC&R Welded tubes Used as headers, condensers, evaporators (cladded tubes) Multi-port extrusions (MPE) Used for condensers, evaporators, and can be supplied with HYBRAZ™/® coating for direct CAB brazing Internally enhanced tubes (straight and helical) Used for condensers, evaporators Precision dra
Slide 61: Solar thermal
Solar thermal Inner grooved tubes Used for harp and meander absorbers Multi-port extrusions (MPE) Used for MPE solar absorbers Precision drawn tubes (PDT) Used for connecting lines, heat transfer tubes. Can be punched to be used as manifolds 61
Slide 62: Other industries
Other industries Heavy Vehicles/Off-road PDP spacer bars Used for plate and bar heat exchangers Industrial Products Welded tubes Used for safety, health care, leisure/outdoor, child care and gardening equipment 62
Slide 63: Automotive customers
Automotive »») ® @ uteo a ew DAIMLER errD) MAHLE TI Automotive DYNAM Cumen by perermance INGLOGIES ——= — : (KALE — Veritas EE (ery) SHE Beier KEIHIN: Q@ntinental contitecn {J TOYOTA TSUSHO siamese E> martor coor SNA JDEUS BIEEISHAUSER GMBH D | NN. ‘Ss oO So 6 a FOPOR r) ae snc eect mai i 1 camrenesr
Slide 64: HVAC customers
HVAC Clow cctt co VULKAN © THERMOKEY ame SS LOKFING Carmacell ISOO} FRiTeaM GEA @ thermofin” ian. einen - EBRILLE ‘weuavatee vesttherm sereva Gg PQ TERMOKAR © SIERRA M-TEC leid| Ss ENERGIE.INNOVATIV. COKONVEKTA LUNATA MAHLE (0 JAEGGI Kelvion D riven by performance Karyer , ; sie b x @ atlantic ECHRO
Slide 65: Struts, Tank strap, Tailor Extruded Blanks, E-mobility
Struts Tank strap for Tailor Extruded E-mobility Gasoline tanks Blanks (TEB)
Slide 66: Struts
Struts
Slide 67: Struts Project overview
Struts Project overview Hydro 67
Slide 68: Hydro
Hydro
Slide 69: As =x
As =x
Slide 70: Tank strap for gasoline tanks
Tank strap for gasolinetanks
Slide 71: TEB
Tailored Extruded Blank directly from coil Design your blank according to actual need TEB
Slide 72: Tailored Extruded Blanks
Tailored Extruded Blanks Chassis parts Structual parts for doors 72
Slide 73: Door Beam
Door Beam Concept Phase Current customer design Hydro design Vægt: 0,342 Kg Vægt: 0,267 Kg ( -22% ) Material: 2mm Plade (5000 alloy) Material: 2,2 – 1,2mm - TEB Profil (6000 alloy) 73
Slide 74: E-mobility
E-mobility
Slide 75: Battery Cable - Flat
Battery Cable - Flat Project 75
Slide 76: Solid aluminium Cable for important big customer in collaboration with PT-NA
Solid aluminium Cable for important big customer in collaboration with PT-NA 76
Slide 77: Hydro – We are aluminium