Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Q4 2012 Earnings Presentation
48 slides from Norsk Hydro Asa's earnings presentation, February 2013
Slide 1: Improved result on lower input cost
Improved result on lower input cost Presentation (1)
Slide 2: Svein Richard Brandtzæg, President and CEO
Svein Richard Brandtzæg President and CEO (2)
Slide 3: Q4 highlights
Q4 highlights • Underlying EBIT NOK 138 million • Lower raw material costs • Lower realized aluminium prices, higher alumina prices • Higher power prices and production in Energy • Ambitious improvement programs on track • Proposed 2012 dividend NOK 0.75 per share (3)
Slide 4: Aluminium
Solid global demand growth for aluminium, with regional differences Europe United States China • Continued weak markets • Modest growth expected for • Signs of soft landing Macro 2013 • High unemployment rates, • Political leadership transition especially in Southern Europe • Focus on budget deficit
Slide 5: Rolled Products 2012 sales in line with 2011
Rolled Products 2012 sales in line with 2011 Rolled Products sales by segment Rolled Products total sales 2012 vs 2011 Foil & Can Litho & Auto General engineering 2012 vs Q4 2012 Q4 2012 & Other 2011 vs Q3 2012 vs Q4 2011 5% 3% -1% -3% -2% -7% (5)
Slide 6: Balanced primary aluminium market
Balanced primary aluminium market World outside China (quarterly annualized) • Seasonally lower demand in Q4 1 000 mt 30 000 • Aluminium production increasing 25 000 due to restart of disrupted capacity 20 000 • 2-4 % aluminium demand growth expected in world outside China 15 000 in 2013 10 000 • Ba
Slide 7: Continued upward trend in ingot premiums
Continued upward trend in ingot premiums World reported primary aluminium inventories Regional ingot premiums 1 000 mt Days USD per mt 8 000 80 300 275 7 000 70 250 6 000 60 225 200 5 000 50 175 150 4 000 40 125 3 000 30 100 75 2 000 20 50 1 000 10 25 0 0 0 Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Ja
Slide 8: Volatile aluminium prices at low levels
Volatile aluminium prices at low levels USD per tonne 3 400 • Increased aluminium price towards end of quarter 3 000 • Aluminium price still at low levels 2 600 − Reflecting weak macro-economic outlook 2 200 Primary aluminium LME USD/mt NOK/mt 1 800 Q4 2012 average 2 017 11 458 Q4 2012 end 2 072 11
Slide 9: Alumina index price trending upwards
Alumina index price trending upwards Platts index* USD per mt Percent 450 20 • Average Platts alumina index Alumina price % of LME increased from USD 315 per mt in Q3 to USD 327 per mt in Q4 2012 400 18 • Alumina price continued to increase, partly due to supply concerns 350 16 • Alumina price as a
Slide 10: Increased bauxite imports into China
Increased bauxite imports into China Annualized aluminium equivalents*, million mt • Bauxite and alumina 2011 2012 − Increased imports of bauxite after removal of temporary 15 export restrictions from Indonesia to China Import − Significantly increased alumina 10 imports in 2012 • Primary aluminium
Slide 11: Stable raw material prices, LME still lagging
Stable raw material prices, LME still lagging Indexed (Q1 2010=100) 3-month LME Caustic price Coal price Fuel oil price* Pet coke price +127% +125% +119% +105% +87% +84% +87% +67% +67% +56% +54% +50% +35% +36% +30% +15% +17% +10% +1% -1% +3% +4% -8% -12% -8% Q1 Q1 Q1 Q2 Q3 Q4 Q1 Q1 Q1 Q2 Q3 Q4 Q1 Q1
Slide 12: Energy: Increased prices, normal reservoir levels
Energy: Increased prices, normal reservoir levels Market price Southwestern Norway (NO2) Water reservoir levels Southwestern Norway (NO2) NOK/MWh Percent 700 100 2011 2012 2013 2011 2012 2013 90 600 80 500 70 400 60 50 300 40 200 30 20 100 10 0 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 1
Slide 13: 2012 production up in Paragominas, stable in Alunorte
2012 production up in Paragominas, stable in Alunorte • Paragominas stabilizing above 9 million tonnes − 9.2 million tonnes produced in 2012 − 13% increase in 2012 vs 2011 • Alunorte production stable vs 2011 − 5.8 million tonnes produced in 2012 − «From B to A» improvement program includes identifi
Slide 14: USD 300 program to reach target by end-2013
USD 300 program to reach target by end-2013 Estimated primary aluminium cash • USD 300 per mt improvement program cost and margin is targeted to be reached by end-2013 USD/mt 1) 475 425 − Achieved USD 235 per mt by end-2012 475 300 − Weak markets put pressure on casthouse margins 2 000 1 775 1 375 1
Slide 15: Summing up 2012, Priorities for 2013
Summing up 2012 • Challenging markets, in particular in Europe • Increasing global demand for aluminium products • Continue our efforts to create a global leader in aluminium Priorities for 2013 • USD 300 program in Primary Metal • Performance in Bauxite & Alumina through «From B to A» • Competitive
Slide 16: Jørgen C. Arentz Rostrup, EVP and CFO
Jørgen C. Arentz Rostrup Executive Vice President and CFO (16)
Slide 17: Underlying EBIT
Underlying EBIT 1 810 1 606 1 343 1 223 543 496 138 -19 NOK million Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Bauxite & Alumina 155 272 302 159 (144) (188) (386) (73) Primary Metal 583 765 653 484 30 240 (10) 53 Metal Markets 143 244 93 (39) 87 44 7 69 Rolled Products 232 232 1
Slide 18: High-level quarterly result development
High-level quarterly result development NOK billion 0.2 0.2 0.3 0.2 0.1 0.0 Underlying EBIT Q3 Variable cost Energy volume and Alumina and aluminium Other Underlying EBIT Q4 2012 price volume/price 2012 (18)
Slide 19: Key financials
Key financials NOK million Q4 2012 Q3 2012 Q4 2011 2012 2011 Revenue 15 585 14 722 17 157 64 181 71 500 Underlying EBIT 138 (19) 1 223 1 158 5 982 Items excluded from underlying EBIT 532 (249) (1 176) (725) 4 086 Reported EBIT 669 (267) 46 432 10 068 Financial income (expense) (82) 251 (13) (348) (1
Slide 20: Tax and financial expense
Tax and financial expense Tax Finance NOK million 2012 2011 NOK million Q4 2012 Q3 2012 Income before tax 85 8 819 Interest income 86 60 Tax free loss (gain) of shares, revaluation gain (47) (5 348) Dividends received and net gain (loss) on 51 47 securities Equity accounted investments 453 276 Finan
Slide 21: Items excluded from underlying EBIT
Items excluded from underlying EBIT NOK million Q4 2012 Q3 2012 Q4 2011 2012 2011 Underlying EBIT 138 (19) 1 223 1 158 5 982 Unrealized effects on power and raw material contracts 168 182 (37) 937 153 Unrealized derivative effects on LME related contracts 346 (266) (343) 109 (328) Metal effect, Roll
Slide 22: Bauxite & Alumina
Bauxite & Alumina Q4 Q3 Q4 Key figures 2012 2012 2011 Alumina production, kmt 1 397 1 441 1 490 Total alumina sales, kmt 1 880 1 683 1 956 Realized alumina price, USD/mt 285 270 306 Apparent alumina cash cost, USD/mt 239 261 261 Bauxite production, kmt 2 378 2 439 2 317 Underlying EBITDA, NOK millio
Slide 23: Primary Metal
Primary Metal Q4 Q3 Q4 Key figures 2012 2012 2011 Primary aluminium production, kmt 485 484 539 Total sales, kmt 505 557 593 Realized LME price, USD/mt 1 940 2 022 2 439 Realized LME price, NOK/mt 11 069 11 856 13 834 Underlying EBITDA, NOK million 522 476 1 097 Underlying EBIT, NOK million 53 (10)
Slide 24: Improved result for Qatalum
Improved result for Qatalum Q4 Q3 • High and stable production volumes Key figures – Qatalum (50%) 2012 2012 2012 Revenue, NOK million 1 034 1 075 4 292 • Underlying net income up NOK 90 million from Q3 2012 Underlying EBITDA, NOK million 250 179 998 Underlying EBIT, NOK million 4 (79) (22) • Higher
Slide 25: Metal Markets
Metal Markets Q4 Q3 Q4 Key figures 2012 2012 2011 Remelt production, kmt 119 136 131 Metal products sales, kmt 661 717 717 Underlying EBITDA, NOK million 91 32 (13) Underlying EBIT excl currency and inventory 40 104 80 valuation effects, NOK million Underlying EBIT, NOK million 69 7 (39) Underlying
Slide 26: Rolled Products
Rolled Products Q4 Q3 Q4 Key figures 2012 2012 2011 External sales volumes, kmt 226 228 215 Underlying EBITDA, NOK million 190 325 211 Underlying EBIT, NOK million 71 214 86 Underlying EBIT NOK million 673 640 Q4 operating results • Stable sales volumes 232 232 204 • Margins reduced due to product m
Slide 27: Energy
Energy Q4 Q3 Q4 Key figures 2012 2012 2011 Power production, GWh 2 448 2 157 2 706 Net spot sales, GWh 1 099 989 1 430 Southwest Norway spot price (NO2), 268 131 259 NOK/MWh Underlying EBITDA, NOK million 363 250 484 Underlying EBIT, NOK million 322 220 441 Underlying EBIT Q4 operating results NOK m
Slide 28: Discontinued operations – Extruded Products
Discontinued operations – Extruded Products • Underlying loss from discontinued operations NOK 59 million • Pro-forma underlying EBIT negative NOK 75 million1) • Reduced sales volumes somewhat offset by improvement efforts • Continued weak European extrusion markets *1) Pro-forma underlying EBIT inc
Slide 29: Net cash/(debt) development Q4 2012
Net cash/(debt) development Q4 2012 NOK billion Net cash flow from operations NOK 2.8 billion 0.6 1.0 1.0 0.1 1.2 1.7 0.0 Net debt Q3 2012 Underlying EBITDA Operating capital Other adjustments Investments Dividends and other Net cash Q4 2012 (29)
Slide 30: Decreased net pension liability
Decreased net pension liability December December • Projected benefit obligation down NOK billion 31, 2012 31, 2011 NOK 5 billion on changed assumption Projected benefit obligation (15.5) (20.5) − Extruded Products as discontinued operations − Increased discount rate in Norway, reduced Fair value of
Slide 31: Adjusted net debt down to NOK 8.3 billion
Adjusted net debt down to NOK 8.3 billion Dec 31, Dec 31, • Reduced net adjusted debt due to NOK billion 2012 2011 − Completion guarantee in Qatalum Cash and cash equivalents 7.0 8.4 Short-term investments 4.3 1.8 − Reduced net pension liability Short-term debt (6.0) (4.3) − Extruded Products classi
Slide 32: Proposed 2012 dividend NOK 0.75 per share
Proposed 2012 dividend NOK 0.75 per share • Strong commitment to return cash to shareholders • Solid operational performance • Solid financial position • Uncertain market outlook • Average five year payout ratio* is ~172% − Dividend policy is 30% payout over the cycle • Represents payout of ~NOK 1.5
Slide 33: Cautionary note
Cautionary note Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management’s plans, objectives and strategies for Hydro, such as planned expansions,
Slide 34: Additional information
Additional information (34)
Slide 35: Items excluded from underlying results - 2012
Items excluded from underlying results - 2012 NOK million (+=loss/()=gain) Q1 2012 Q2 2012 Q3 2012 Q4 2012 2012 Unrealized derivative effects on LME related contracts Bauxite & alumina (8) 11 1 (11) (8) Total impact Bauxite & alumina (8) 11 1 (11) (8) Unrealized derivative effects on LME related con
Slide 36: Items excluded from underlying results - 2011
Items excluded from underlying results - 2011 NOK million (+=loss/()=gain) Q1 2011 Q2 2011 Q3 2011 Q4 2011 2011 Unrealized derivative effects on currency contracts (Alunorte) Bauxite & alumina (1) - - - (1) Derivative effects on LME related contracts (Vale Aluminium) Bauxite & alumina 16 (67) (24) 3
Slide 37: Operating segment information
Operating segment information Underlying EBIT NOK million Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Year 2011 Year 2012 Bauxite & Alumina 1) 237 272 302 159 (144) (188) (386) (73) 969 (791) Primary Metal 1) 592 765 653 484 30 240 (10) 53 2 495 314 Metal Markets 143 244 93 (39)
Slide 38: Operating segment information
Operating segment information EBIT NOK million Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Year 2011 Year 2012 1) Bauxite & Alumina 213 339 326 620 (136) (199) (387) (62) 1 498 (783) 1) Primary Metal 622 826 675 (760) (96) (1 232) (53) 107 1 363 (1 275) Metal Markets 151 335 158
Slide 39: Operating segment information
Operating segment information Total revenue NOK million Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Year 2011 Year 2012 Bauxite & Alumina 2 183 4 271 4 227 3 790 3 195 3 573 3 032 3 465 14 471 13 265 Primary Metal 8 234 9 627 9 148 7 711 7 458 7 578 6 169 5 485 34 720 26 690 Meta
Slide 40: Operating segment information
Operating segment information Internal revenue NOK million Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Year 2011 Year 2012 Bauxite & Alumina 1 168 1 688 1 587 1 433 1 241 1 356 1 111 1 098 5 876 4 806 Primary Metal 7 582 8 283 7 892 6 501 6 331 6 341 5 097 4 442 30 258 22 210 Met
Slide 41: Operating segment information
Operating segment information Depreciation, amortization and impairment NOK million Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Year 2011 Year 2012 Bauxite & Alumina 178 482 470 450 475 439 428 409 1 580 1 750 Primary Metal 467 543 548 1 577 542 1 645 482 356 3 136 3 026 Metal Ma
Slide 42: Income statements
Income statements NOK million Q4 2012 Q3 2012 Q4 2011 Year2012 Year 2011 Revenue 15 585 14 722 17 157 64 181 71 500 Share of the profit (loss) in equity accounted investments (96 (219) (166) (453) (276) Other income, net 257) 194 613 853 6 147 Total revenue and income 15 746 14 698 17 604 64 580 77
Slide 43: Balance sheets
Balance sheets NOK million Dec 31 2012 Sep 30 2012 Jun 30 2012 Mar 31 2012 Dec 31 2011 Cash and cash equivalents 7 034 8 654 7 234 8 786 8 365 Short-term investments 4 343 2 465 1 743 1 568 1 780 Accounts receivable 8 761 12 681 14 320 14 524 13 217 Inventories 9 685 12 140 12 411 13 201 14 157 Othe
Slide 44: Operational data
Operational data Pro forma Bauxite & Alumina Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Year 2011 Year 2012 Alumina production (kmt) 1 336 1 448 1 553 1 490 1 464 1 491 1 441 1 397 5 827 5 792 Sourced alumina (kmt) 436 523 581 418 324 332 399 335 1 958 1 390 Total alumina sales
Slide 45: Operational data
Operational data Pro forma Primary Metal 1) Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Year 2011 Year 2012 Realized aluminium price LME, USD/mt 2 366 2 509 2 592 2 439 2 155 2 167 2 022 1 940 2 478 2 080 Realized aluminium price LME, NOK/mt 13 664 13 803 14 225 13 834 12 404 12
Slide 46: Operational data
Operational data Metal Markets Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Year 2011 Year 2012 Remelt production (1 000 mt) 150 151 133 131 152 142 136 119 565 548 Third-party metal products sales (1 000 mt) 38 47 59 73 76 82 81 85 217 323 Metal products sales excl. ingot trading
Slide 47: Price and currency sensitivities
Price and currency sensitivities Commodity price sensitivity +10%* Currency sensitivities +10%* NOK NOK Financial Income Net million EBIT million EBIT items before tax income** Aluminium 2 660 USD 2 150 (850) 1 300 1 000 Oil (170) BRL (760) 720 (40) (25) Pet coke (200) EUR (140) (1 140) (1 280) (910
Slide 48: Investor Relations in Hydro
Investor Relations in Hydro Rikard Lindqvist Head of Investor Relations t: +47 417 51 199 e: rikard.lindqvist@hydro.com Next event First Quarter Results Pål Kildemo Investor Relations Officer April 24, 2013 t: +47 970 96 711 e: pal.kildemo@hydro.com For more information see www.hydro.com/ir Irene Al