Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Q1 2004 Earnings Presentation
52 slides from Norsk Hydro Asa's earnings presentation, May 10, 2004
Slide 1: First quarter 2004
Norsk Hydro ASA 10 May, 2004 First quarter 2004
Slide 2: Highlights first quarter
Norsk Hydro ASA – First quarter 2004 2 Highlights first quarter High oil and gas prices, improved aluminium markets Oil and gas production up 11% from Q1 2003 Strong improvements in Aluminium results Successful demerger and listing of Yara Strong financial position 49323_E • Hydro Media • 05.2004 •
Slide 3: Income from continuing operations
3 Norsk Hydro ASA – First quarter 2004 Income from continuing operations* Per quarter NOK million Gains from divestments 3 500 3 100 3 135 2 991 3 000 2 500 2 342 1 851 2 005 2 000 1 809 1 500 1 417 1 000 500 241 0 2002 2003* 2004 Accumulated 7 100 8 656 3 135 * Including the effect of change in acc
Slide 4: Net income
Norsk Hydro ASA – First quarter 2004 4 Net income* Per quarter NOK million Gains from divestments 4 500 4 218 4 000 3 765 3 500 3 235 3 280 2 840 3 000 2 482 2 324 2 397 2 500 2 180 2 132 2 000 1 500 1 333 1 144 1 000 513 500 0 2001 2002 2003* 2004 Accumulated 7 892 8 765 10 968 4 218 * Including th
Slide 5: Earnings before interest, tax, depreciation and amortization (EBITDA)
Norsk Hydro ASA – First quarter 2004 5 Earnings before interest, tax, depreciation and amortization (EBITDA) Per quarter NOK million 16 000 14 000 13 546 12 000 11 045 9 783 9 820 9 935 9 452 10 000 8 964 8 407 8 196 7 955 8 000 7 199 6 775 6 208 6 000 4 000 2 000 0 2001 2002 2003 2004 Accumulated 3
Slide 6: Consolidated income statements
Norsk Hydro ASA – First quarter 2004 6 Consolidated income statements 1st quarter 1st quarter NOK million 2004 2003 Operating revenues 39 598 35 763 Operating income 9 276 5 982 Equity in net income of non-consolidated investees 131 187 Financial income (expense), net (624) (651) Other income, net 1
Slide 7: Variance analysis Hydro group
Norsk Hydro ASA – First quarter 2004 7 Variance analysis Hydro group NOK million 1st quarter 2004 13 546 2003 9 935 Variance EBITDA 3 611 - Prices and currency, Exploration & Production (E&P) 165 - Margin incl. currency effects ¹) 805 - Volume 2 380 - Fixed costs (425) - Depreciation (355) - Product
Slide 8: Operating income
Norsk Hydro ASA – First quarter 2004 8 Operating income Individual operating segment 1st quarter 1st quarter NOK million 2004 2003 Exploration and Production 7 082 5 482 Energy and Oil Marketing 733 715 Eliminations 3 (22) Hydro Oil & Energy 7 818 6 175 Metals 989 572 Rolled Products 148 - Extrusion
Slide 9: Financial solidity
Norsk Hydro ASA – First quarter 2004 9 Financial solidity 0.7 0.60 0.6 0.5 0.4 0.38 0.34 0.3 0.18 0.2 0.1 0 2001 2002 2003 2004 Interest-bearing debt + Net pension liability (tax adjusted) + Operating lease commitments (discounted) - Cash and cash equivalents – Other liquid assets divided by Shareho
Slide 10: Earnings per share from continuing operations
Norsk Hydro ASA – First quarter 2004 10 Earnings per share from continuing operations* NOK 14 Gains from divestments 12.0 12.3 12 11.7 10 9.1 7.8 8 7.0 6.1 6 5.5 4 2 0.9 0 2002 2003* 2004 Accumulated 27.5 32.5 12.3 * Before effect of change in accounting principles 49323_E • Hydro Media • 05.2004 •
Slide 11: Earnings per share
Norsk Hydro ASA – First quarter 2004 11 Earnings per share* NOK Gains from divestments 18 16.5 16 14.7 14 12.4 12.7 12 11.0 9.0 9.3 10 8.4 8.5 8.3 8 6 5.2 4.4 4 2.0 2 0 2001 2002 2003 2004 Accumulated 30.5 34.0 41.5 16.5 * Before effect of change in accounting principles 49323_E • Hydro Media • 05.2
Slide 12: Oil & Energy – highlights
Norsk Hydro ASA – First quarter 2004 12 Oil & Energy – highlights Production record – 615 000 boe/day Important contributions from new fields (Grane, Fram Vest) Strong gas demand in Europe Good operational performance, low unit costs High prices Oil price USD 31.6 per barrel – down 3% in NOK Gas pri
Slide 13: Oil & Energy
Norsk Hydro ASA – First quarter 2004 13 Oil & Energy EBITDA NOK million Eliminations Energy and Oil Marketing 10 503 10 000 Exploration and Production 9 139 8 668 7 894 7 887 7 745 8 000 7 425 6 757 6 155 6 274 5 847 6 000 5 528 5 451 4 000 2 000 0 2001 2002 2003 2004 Accumulated 27 604 25 340 31 82
Slide 14: Petroleum production
Norsk Hydro ASA – First quarter 2004 14 Petroleum production Per quarter 1 000 boe/day Oil Gas 700 615 596 600 552 173 540 166 482 143 156 484 489 500 451 448 452 427 419 104 112 116 385 115 110 88 442 400 93 91 430 74 397 396 378 364 372 373 300 334 328 336 338 311 200 100 0 2001 2002 2003 2004 Ave
Slide 15: Production costs per barrel
Norsk Hydro ASA – First quarter 2004 15 Production costs per barrel NOK/boe 25.3 25.6 24.1 24.1 22.9 23.2 22.9 23.9 21.1 20.1 19.8 17.4 17.1 2001 2002 2003 2004 Annual average: 24.1 22.6 20.7 17.1 49323_E • Hydro Media • 05.2004 • 15
Slide 16: Oil & Energy – prospects
Norsk Hydro ASA – First quarter 2004 16 Oil & Energy – prospects 2004 production target 560 000 boe/day Seasonally lower gas sales in Q2 and Q3 Planned maintenance mainly in Q3 Q2 exploration activity Angola and Libya Business development Develop NCS potentials Pursue international opportunities 493
Slide 17: Aluminium – highlights
Norsk Hydro ASA – First quarter 2004 17 Aluminium – highlights Improved markets Higher volumes upstream and downstream Continued progress on internal improvements Gains on LME positions 49323_E • Hydro Media • 05.2004 • 17
Slide 18: Aluminium
Norsk Hydro ASA – First quarter 2004 18 Aluminium EBITDA NOK million Other and Eliminations Extrusion and Automotive 2 708 2 750 Rolled Products 2 500 Metals 2 250 2 000 1 430 1 809 1 750 1 572 1 619 1 498 1 500 1 292 1 316 1 250 889 827 1 000 526 899 750 500 (302) 250 0 - 250 - 500 2001 2002 2003 2
Slide 19: Aluminium – business comments
Norsk Hydro ASA – First quarter 2004 19 Aluminium – business comments Metals Increased volumes, strong trading results Higher aluminium price partly offset by higher variable costs Rolled Products Increased volumes and improved product mix Lower margins in EUR – higher in NOK Extrusion & Automotive
Slide 20: Aluminium – prospects
Norsk Hydro ASA – First quarter 2004 20 Aluminium – prospects Positive outlook for global aluminium market Soft market for rolled products in Europe, stronger EUR weakens competitive position for European producers Extrusion & Automotive – positive market outlook Improvement program for Norwegian sm
Slide 21: Norsk Hydro – priorities ahead
Norsk Hydro ASA – First quarter 2004 21 Norsk Hydro – priorities ahead Meet ambitious oil and gas production target Improve competitiveness of European smelters Continue first-class project execution Ensure profitable growth 49323_E • Hydro Media • 05.2004 • 21
Slide 22: Additional information
Additional information
Slide 23: EBITDA
Norsk Hydro ASA – First quarter 2004 23 EBITDA Individual operating segment NOK million 1st quarter 2004 1st quarter 2003 Exploration and Production 9 593 7 770 Energy and Oil Marketing 907 920 Eliminations 3 (22) Hydro Oil & Energy 10 503 8 668 Metals 1 529 1 047 Rolled Products 335 168 Extrusion a
Slide 24: Net financial income (expense)
Norsk Hydro ASA – First quarter 2004 24 Net financial income (expense) NOK million 1st quarter 2004 1st quarter 2003 Interest income 184 372 Dividends and net gain (loss) on securities 118 9 Interest income and other financial income 302 381 Interest expense (565) (713) Capitalized interest 132 178
Slide 25: Depreciation
Norsk Hydro ASA – First quarter 2004 25 Depreciation Individual operating segment NOK million 1st quarter 2004 1st quarter 2003 Exploration and Production 2 472 2 241 Energy and Oil Marketing 148 143 Hydro Oil & Energy 2 620 2 384 Metals 446 351 Rolled Products 172 148 Extrusion and Automotive 325 2
Slide 26: Equity in net income of non-consolidated investees
Norsk Hydro ASA – First quarter 2004 26 Equity in net income of non-consolidated investees Individual operating segment NOK million 1st quarter 2004 1st quarter 2003 Exploration and Production 1 5 Energy and Oil Marketing 16 53 Hydro Oil & Energy 17 58 Metals 32 105 Rolled Products - 7 Extrusion and
Slide 27: Statement of Cash Flow
Norsk Hydro ASA – First quarter 2004 27 Statement of Cash Flow NOK million 31.03.04 31.03.03 31.12.03 Operating activities: Net income 4 218 2 482 10 968 Depreciation, depletion and amortization 3 696 3 358 13 947 Other adjustments 625 586 (2 142) Net cash provided by operating activities 8 539 6 42
Slide 28: Operating income – EBIT – EBITDA
Norsk Hydro ASA – First quarter 2004 28 Operating income – EBIT – EBITDA First quarter 2004 Depr. Operating Non-cons Interest Selected Other NOK million EBIT and EBITDA income investees income fin. items income Amort. Exploration and Production 7 082 1 34 4 7 121 2 472 9 593 Energy and Oil Marketing
Slide 29: Adjusted operating income first quarter 2004
Norsk Hydro ASA – First quarter 2004 29 Adjusted operating income first quarter 2004 Adj. operating NOK million 1st quarter 2004 Adjustments income Exploration and Production 7 082 (285) 6 797 Energy and Oil Marketing 733 733 Eliminations 3 3 Hydro Oil & Energy 7 818 (285) 7 533 Metals 989 989 Rolle
Slide 30: Infrequent and other special items first quarter 2004
Norsk Hydro ASA – First quarter 2004 30 Infrequent and other special items impacting operating income first quarter 2004 NOK Item Segment million Exploration and Gain regarding sale of Gjøa (285) Production Aluminium, Other and Unrealized gain on LME postitions (350) Eliminations Corporate and Elimi
Slide 31: Adjusted operating income first quarter 2003
Norsk Hydro ASA – First quarter 2004 31 Adjusted operating income first quarter 2003 Adj. operating NOK million 1st quarter 2003 Adjustments income Exploration and Production 5 482 5 482 Energy and Oil Marketing 715 130 845 Eliminations (22) (22) Hydro Oil & Energy 6 175 130 6 305 Metals 572 572 Rol
Slide 32: Infrequent and other special items first quarter 2003
Norsk Hydro ASA – First quarter 2004 32 Infrequent and other special items impacting operating income first quarter 2003 NOK Item Segment million Energy and Reduction in market value of derivatives for power 130 Oil Marketing Corporate and Infrequent charges regarding pensions 230 Eliminations Elimi
Slide 33: Consolidated balance sheet
Norsk Hydro ASA – First quarter 2004 33 Consolidated balance sheet NOK million 31.03. 2004 31.03.2003 31.12.2003 Cash and cash equivalents 26 780 11 601 14 873 Other liquid assets 1 543 1 495 1 553 Receivables 36 223 35 997 33 444 Inventories 12 143 13 177 12 024 Current assets discontinued operatio
Slide 34: Financial solidity – calculation
Norsk Hydro ASA – First quarter 2004 34 Financial solidity – calculation 31 31 31 31 31 31 Amounts in NOK million December December December December December March 1999 2000 2001 2002 2003 2004 [A] Cash and cash equivalents 7 435 21 766 27 148 5 965 15 249 26 780 [B] Other liquid assets 2 535 2 490
Slide 35: Variance Analysis Oil & Energy
Norsk Hydro ASA – First quarter 2004 35 Variance Analysis Oil & Energy NOK million 1st quarter 2004 10 503 2003 8 668 Variance EBITDA 1 835 - Prices and currency - Oil 60 - Gas 290 - Currency (185)___________ 165 - Margin (55) - Volume 1 610 - Fixed costs (25) - Depreciation (235) - Production costs
Slide 36: Variance Analysis Exploration and Production
Norsk Hydro ASA – First quarter 2004 36 Variance Analysis Exploration and Production NOK million 1st quarter 2004 9 593 2003 7 770 Variance EBITDA 1 823 Prices and currency - Oil 60 - Gas 290 - Currency (185)____________ 165 - Volume 1 400 - Depreciation (230) - Production costs (280) - Exploration
Slide 37: Variance Analysis Energy and Oil Marketing
Norsk Hydro ASA – First quarter 2004 37 Variance Analysis Energy and Oil Marketing NOK million 1st quarter 2004 907 2003 920 Variance EBITDA (13) - Margin (80) - Volume 210 - Fixed costs (25) - Depreciation (5) - New/disposed business (95) - Other 15 Variance operating income 18 - Non-consolidated i
Slide 38: Production per field
Norsk Hydro ASA – First quarter 2004 38 Production per field Boe/day Q1 2003 Q1 2004 Hydro Share Hydro Production (oil including NGL and condensate) Percent Oseberg 194 000 185 000 34.00 62 968 Grane 0 110 000 38.00 41 925 Snorre 250 000 224 000 17.65 39 530 Oseberg South 85 000 76 000 34.00 25 822
Slide 39: Operating costs per barrel
Norsk Hydro ASA – First quarter 2004 39 Operating costs per barrel NOK/boe 99.7 100 90.1 83.8 69.3 80 60 40 20 0 2001 2002 2003 2004 Exploration 9.1 20.3 8.1 4.4 Net transportation * 8.5 9.0 6.8 7.9 Other cost/income 2.0 1.4 1.8 -4.0 Deprec. & aband. 46.4 46.4 46.4 43.9 Production cost 24.1 22.6 20.
Slide 40: Exploration activity and costs
Norsk Hydro ASA – First quarter 2004 40 Exploration activity and costs NOK million 1 400 1 200 1 000 800 Expensed 600 share 400 200 0 - 200 - 400 Capitalized 1/01 2/01 3/01 4/01 1/02 2/02 3/02 4/02 1/03 2/03 3/03 4/03 1/04 share Activity Expensed old wells Cost reduction repayment Angola 49323_E • H
Slide 41: Price development – crude oil
Norsk Hydro ASA – First quarter 2004 41 Price development – crude oil Average Brent Blend dated per quarter USD/bbl NOK/bbl 35 280 USD/bbl NOK/bbl 30 240 25 200 20 160 15 120 10 80 5 40 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1st quarter 2004: NOK 221.3/USD 32.0 per barrel 49323_E • Hy
Slide 42: Strong production growth
Norsk Hydro ASA – First quarter 2004 42 Strong production growth 1 000 boe/day 700 ua l growth 600 ge ann % a vera 8 500 400 300 200 100 0 1998 1999 2000 2001 2002 2003 2004E 2005E 2006E 2007E Norwegian Fields Oil, international Gas 8% CAGR* * Compound Annual Growth Rate, 2001 baseline 49323_E • Hyd
Slide 43: New fields on stream 2004 – 2007
Norsk Hydro ASA – First quarter 2004 43 New fields on stream 2004 – 2007 Hydro share boe/day Dalia 22 000 International Kharyaga 2+3 15 000 (phase 1-3) Murzuq 6 000 (A + D field) Rosa 13 000 M NCS operator Ormen Lange 70 000 Oseberg M 14 000 Vestflanken M Oseberg Sør J 7 000 NCS non-operator Visund
Slide 44: Variance analysis Aluminium
Norsk Hydro ASA – First quarter 2004 44 Variance analysis Aluminium NOK million 1st quarter 2004 2 708 2003 1 572 Variance EBITDA 1 136 - Margin 325 - Volume 730 - Fixed costs (420) - Depreciation (130) - Infrequent items (5) - Trading and hedging 155 - Unrealized LME effects 345 - Other (25) Varian
Slide 45: Variance analysis Metals
Norsk Hydro ASA – First quarter 2004 45 Variance analysis Metals NOK million 1st quarter 2004 1 529 2003 1 047 Variance EBITDA 482 - Margin 40 - Volume 350 - Fixed costs (100) - Depreciation (50) - Infrequent items 5 - Trading & price hedging 155 - Other 15 Variance operating income 417 - Non-consol
Slide 46: Variance analysis Rolled Products
Norsk Hydro ASA – First quarter 2004 46 Variance analysis Rolled Products NOK million 1st quarter 2004 335 2003 168 Variance EBITDA 167 - Margin 150 - Volume 70 - Fixed costs (30) - Depreciation (25) - Infrequent items 5 - Other (20) Variance operating income 148 - Non-consolidated investees (7) - I
Slide 47: Variance analysis Extrusion and Automotive
Norsk Hydro ASA – First quarter 2004 47 Variance analysis Extrusion and Automotive NOK million 1st quarter 2004 512 2003 329 Variance EBITDA 183 - Margin 175 - Volume 310 - Fixed costs (290) - Depreciation (55) - Infrequent items (15) - Other (15) Variance operating income 109 - Non-consolidated inv
Slide 48: Aluminium – Key figures by segment
Norsk Hydro ASA – First quarter 2004 48 Aluminium – Key figures by segment Volumes and prices Q1 2004 Q4 2003 Q1 2003 Primary production (Kmt) 384 388 343 Total metal products sales (Kmt) *) 688 483 532 LME, realized (USD/t) **) 1 528 1 488 1 410 USD/NOK, realized ***) 7.13 7.10 7.25 Rolled Products
Slide 49: Aluminium price
Norsk Hydro ASA – First quarter 2004 49 Aluminium price 3 months LME price, average per quarter USD/tonne 2 000 1 800 1 600 1 400 1 200 1 000 91 92 93 94 95 96 97 98 99 00 01 02 03 04 49323_E • Hydro Media • 05.2004 • 49
Slide 50: Inventories – primary aluminium
Norsk Hydro ASA – First quarter 2004 50 Inventories – primary aluminium 1 000 tonnes 5 000 LME (London Metal Exchange) IAI (Producers' inventories) 4 000 3 000 2 000 1 000 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Sources: IAI and LME. 2004 numbers as of March 49323_E •
Slide 51: Variance analysis Petrochemicals
Norsk Hydro ASA – First quarter 2004 51 Variance analysis Petrochemicals NOK million 1st quarter 2004 211 2003 93 Variance EBITDA 118 - Margin 75 - Volume 30 - Fixed costs (30) - Depreciation (5) Variance operating income 72 - Non-consolidated investees 42 - Depreciation and amortization 4 Variance
Slide 52: Forward-Looking Statements/ Use of Non-GAAP Financial Measures
Norsk Hydro ASA – First quarter 2004 52 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 cont