Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Day (December 2004)
32 slides from Norsk Hydro Asa's investor day presentation, Dec 15, 2004
Slide 1: Capital Markets Day 2004: Progress in Aluminium
Capital Markets Day 2004 Progress in Aluminium Jon-Harald Nilsen, Executive Vice President 2004-12-15
Slide 2: Progress in Aluminium
Progress in Aluminium z Improved financial and operational performance z Strong strategic progress upstream and improved cost positions z Building competitive strengths downstream 52358_3 12 2004 • 2 • Hydro Media
Slide 3: We have delivered on our commitments
We have delivered on our commitments Return on Capital target achieved one year ahead of plan Improvement programs delivered CROGI 1998 – 2003: Actual prices Percent 12 All projects as planned Workforce reduction Cost reductions 2 000 3CROGI 000 (normalised*) Magnesium Aluminium Magnesium Aluminium
Slide 4: Operating income improving
Operating income improving NOK million Metals Rolled Products Extrusion and Automotive Other and Eliminations 1 629 1 269 858 833 711 653 709 564 530 495 412 230 345 (146) (997) 2001 2002 2003 2004 Jan-Sep Accumulated 185 1 698 2 456 3 756 52358_3 12 2004 • 4 • Hydro Media
Slide 5: Improving financial performance: Metals
Improving financial performance Metals NOK million 5000 4000 3000 2000 1000 0 2002 2003 2004 Jan- Sep Non-consolidated investees and depreciation Operating income EBITDA Jan-Sep 2003 52358_3 12 2004 • 5 • Hydro Media
Slide 6: Improving financial performance: Rolled Products
Improving financial performance Rolled Products NOK million 1200 1000 800 600 400 200 0 2002 2003 2004 -200 Jan- -400 Sep Non-consolidated investees and depreciation Operating income/loss EBITDA Jan-Sep 2003 52358_3 12 2004 • 6 • Hydro Media
Slide 7: Improving financial performance: Extrusion
Improving financial performance Extrusion NOK million 1000 800 600 400 200 0 2002 2003 2004 Jan- Sep Non-consolidated investees and depreciation Operating income EBITDA Jan-Sep 2003 52358_3 12 2004 • 7 • Hydro Media
Slide 8: Improving financial performance: Automotive
Improving financial performance Automotive NOK million 600 400 200 0 2002 2003 2004 Jan- -200 Sep Non-consolidated investees and depreciation Operating income/loss EBITDA Jan-Sep 2003 52358_3 12 2004 • 8 • Hydro Media
Slide 9: Improving financial performance: North America
Improving financial performance North America NOK million 200 100 0 2002 2003 2004 -100 Jan- Sep -200 -300 Non-consolidated investees and depreciation Operating income/ loss EBITDA Jan-Sep 2003 52358_3 12 2004 • 9 • Hydro Media
Slide 10: Improving financial performance: Hydro Aluminium
Improving financial performance Hydro Aluminium NOK million 7500 6000 4500 3000 1500 0 2002 2003 2004 Jan- Sep Non-consolidated investees and depreciation Operating income EBITDA Jan-Sep 2003 52358_3 12 2004 • 10 • Hydro Media
Slide 11: Strengthening strategic positions
Strengthening strategic positions Improve alumina relative cost position Improve aluminium relative cost position Strengthen leadership position in Europe: Metal Selective growth outside Europe: Metal Products, Products, Extrusion, Rolled Products and Automotive Extrusion, Rolled Products and Automo
Slide 12: A unique and differentiated portfolio
A unique and differentiated portfolio Estimates 2004 and 2009** 1 000 tonnes Equity Medium/long term contracts Alumina * 715 885 2000E Equity Electrolysis metal 1600 2000E Equity 3rd party Remelt Metal products 1600 350 1720 4300-5000E Rolled Extrusion & Automotive Downstream 940 686 1800-2000E * Al
Slide 13: A unique portfolio: Higher capital turnover
A unique portfolio: Higher capital turnover Revenues / gross investments EBITDA / Revenues Factor Percent 1.4 25 Pechiney 1.2 Hydro 20 Aluminium 1.0 Alcoa Alcan 15 0.8 Hydro Aluminium 0.6 Alcoa 10 Alcan 0.4 5 Pechiney 0.2 0.0 0 1998 1999 2000 2001 2002 2003 2004* 1998 1999 2000 2001 2002 2003 2004*
Slide 14: Western World demand expected to grow in the coming years
Western World* demand expected to grow in the coming years 1 000 tonnes 40 000 % growth per segment 35 000 3000 4.1 Other 30 000 2800 3000 4.1 2700 2800 Durables 2400 25 000 2500 5600 2400 5300 2.8 Electrical and 4800 5000 20 000 engineering 6500 2.7 6300 B&C 5600 5900 15 000 5700 2.3 Packaging 5400
Slide 15: Energy drives primary restructuring
Energy drives primary restructuring Net exports, 1 000 tonnes 4 000 3 000 2 000 1 000 Asia* Europe USA 0 China Canada South Australia and CIS ROW** -1 000 America New Zeeland -2 000 -3 000 -4 000 2000 2005E 2012E -5 000 * Excluding China ** Rest of the world, including the Middle East Source: CRU, H
Slide 16: Increasing industry exposure to market power prices
Increasing industry exposure to market power prices Aluminum production – power sourcing 1 000 tonnes* 22 584 20 000 To be renewed 15 000 Russia 10 000 Contract Unknown contract expiry 5 000 Captive 0 2003 2007 2011 2015 2019 2023 * Excluding China Source:CRU, Hydro Aluminium 52358_3 12 2004 • 16 •
Slide 17: Attractive power contract portfolio for Hydro
Attractive power contract portfolio for Hydro Germany a challenge Self generation and long term contracts Norway Australia Canada Slovakia Germany Timeline 2005 2010 2015 2020 52358_3 12 2004 • 17 • Hydro Media
Slide 18: Qatar – the future pattern
Qatar – the future pattern z Heads of agreement signed z Annual capacity - 570 000 tonnes - Expansion potential up to 1 200 000 tonnes z Investments - Smelter and casthouse: USD 2 – 2.5 billion Excellent location - Power plant: USD 0.7-0.8 billion z Hydro ownership - 49 % in smelter and power statio
Slide 19: Ambitious primary production growth
Ambitious primary production growth Million tonnes 2.0 1.5 1.0 2001 2005E 2009E Production growth, % 1999-2004 2005-2009* Hydro 36% 27% Total world 24% 20% Source: Hydro Aluminium, Brook Hunt long -term outlook 2004. * incl. Qatar for Hydro 52358_3 12 2004 • 19 • Hydro Media
Slide 20: Improving relative cost position 2003-2009
Improving relative cost position 2003-2009 Cash cost USD/tonne To be closed z Høyanger SØ, 22 kt 2 000 z Årdal SØ, 50 kt z Karmøy SØ,122 kt Hydro ’09 Hydro ’03 1 500 Total average USD 1 097/tonne 1 000 New capacity z Alouette, 60 kt 500 z Sunndal, 250 kt z Qatar, 280 kt 0 0 20 40 60 80 100 Cumulativ
Slide 21: Increasing equity alumina at lower cost
Increasing equity alumina at lower cost Cash cost USD/tonne 220 200 180 160 World weighted 140 average 2003: USD 134/tonne 2000: Hydro average USD 165/tonne 120 100 2006*: Hydro average 80 USD 120/tonne 60 0 5 10 15 20 25 30 35 40 45 Cumulative production, million tonnes per year * After sale of alu
Slide 22: Medium term price outlook favourable
Medium term price outlook favourable USD/tonne 2 500 z Strong market fundamentals z Increased production costs 2 000 z Energy z Alumina z Carbon raw materials 1 500 z Freight 1 000 z Weakening USD 500 1980 1984 1988 1992 1996 2000 2004 Nominal prices 52358_3 12 2004 • 22 • Hydro Media
Slide 23: Downstream activities
Downstream activities Rolled Total revenue*: NOK 35 bn Products z Europe 80% z North America 12% Extrusion z Others 8% Automotive 45% 37% 18% * Jan-Sep 2004, split on sectors based on revenue 52358_3 12 2004 • 23 • Hydro Media
Slide 24: Rolled Products: Building a stronger business
Rolled Products: Building a stronger business z Growth in high margin segments - New litho line in 2005 - Foil mills upgraded - Increased heat exchanger volume z Delivered on improvement programs - Cost reduction and demanning - Turnaround of underperforming units - Modernization of Slim plant (Ital
Slide 25: Rolled Products: Increasing focus on higher margin segments
Rolled Products: Increasing focus on higher margin segments Annualized shipments* Operating income Jan-Sep 2004: 950 000 tonnes NOK 593 million Foil Foil 16% 22% Litho 30% Litho 15% Strip 69% Strip 48% *Jan-Sep 2004: 710 000 tonnes 52358_3 12 2004 • 25 • Hydro Media
Slide 26: Extrusion: Global growth from leading position in Europe
Extrusion: Global growth from leading position in Europe z Consolidating leadership in Europe z Closing performance gap in USA z Expanding in emerging and low cost markets z Growing value added business z Realizing system benefits 52358_3 12 2004 • 26 • Hydro Media
Slide 27: Extrusion: Strong financial performance
Extrusion: Strong financial performance EBITDA / Sales Capital Turnover * Percent Percent SAPA Hydro Extrusion SAPA Hydro Extrusion 14 250 12 200 10 150 8 6 100 4 50 2 0 0 1998 1999 2000 2001 2002 2003 2004 1998 1999 2000 2001 2002 2003 2004 Jan- Jan- Sep Sep * Sales / Gross investment 52358_3 12 20
Slide 28: Automotive: Leading market positions in focus areas
Automotive: Leading market positions in focus areas Market positions 2003 % of total market incl. steel/cast iron solutions 80 Europe 65 NAFTA 60 40 35 17 20 14 4 5 6 1 0 Precision Bumper Cylinder Engine tubing beams heads blocks 52358_3 12 2004 • 28 • Hydro Media
Slide 29: Automotive: Building on strengths and fixing underperformance
Automotive: Building on strengths and fixing underperformance z Precision Tubing - Strong financial performance - New plants in China and Mexico 2005 z Structures - Improving financial performance from low level - Focusing product portfolio - Restructuring ongoing z Castings - Improved financial per
Slide 30: Continued strong focus on bottom line growth
Continued strong focus on bottom line growth z Continue to strengthen European leadership and build global presence in selected segments and geographical areas z Capitalize on a unique and differentiated portfolio profile and value chain integration in an environment of structural change z Improve r
Slide 31: Forward-looking statements/use of non-GAAP financial measures
Forward-looking statements/ use of non-GAAP financial measures In order to utilize the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, Hydro is providing the following cautionary statement: This presentation contains certain forward-looking statements
Slide 32: Hydro is a Fortune 500 energy and aluminium supplier
Hydro is a Fortune 500 energy and aluminium supplier founded in 1905, with 36,000 employees in nearly 40 countries. We are a leading offshore producer of oil and gas, the world's third-largest integrated aluminium supplier and a pioneer in renewable energy and energy-efficient solutions. As we look