Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Day (November 2024)
109 slides from Norsk Hydro Asa's investor day presentation, Nov 27, 2024
Slide 1: Capital Markets Day 2024
Capital Markets Day 2024 London, United Kingdom November 27, 2024
Slide 2: Cautionary note
Cautionary note 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, objectives and strategies, such as planned expan
Slide 3: Accelerating the green aluminium transition
Capital Markets Day 2024 Accelerating the green aluminium transition Eivind Kallevik President & Chief Executive Officer
Slide 4: #1 priority: Health and safety
#1 priority: Health and safety TRI1) per million hours worked HRI2) per million hours worked 12 months rolling average 12 months rolling average 5 3 4 2 2.72 average 3 since Q3’19 1.21 average since Q3’19 2 2.13 per end-Q3’243) 1 1 0.69 per end-Q3’243) 0 0 Q3’19 Q3’20 Q3’21 Q3’22 Q3’23 Q3’24 Q3’19 Q
Slide 5: 2024 | Delivering on our key strategic priorities
2024 | Delivering on our Improvement program 2024 Commercial initiatives 2024 RoaCE over the cycle key strategic priorities NOK 9.9 billion vs 2024 target NOK 3.0 billion vs 2025 target 11.8 percent Last 5-year avg. NOK 9.5 billion NOK 3.9 billion per Q3 2024 Delivering on improvement program and co
Slide 6: The global race for greener positions continues
The global race for greener positions continues Persistent climate Industrial Security of supply and commitments competitiveness strategic resilience 6
Slide 7: Aluminium - A critical raw material for the green transition
Aluminium - A critical raw material for the green transition Energy transition related Challenging end-markets impacting CBAM challenges and solutions demand key driver of growth short-term, but long-term remains to secure level playing field Global aluminium demand outlook - BNEF European extrusion
Slide 8: It's time to accelerate
It’s time to accelerate The world needs more low-carbon aluminium 2030 material decarbonization targets There is limited aluminium below Hydro’s low-carbon product suite growing in number across industries 4 tonne CO2e per tonne Al available as the preferred solution Annual By 2030 primary productio
Slide 9: Our value chain is a unique opportunity
Our value chain is a unique opportunity Traceability in own value chain ensures certified, traceable and low-carbon aluminium Certified, Responsible Reduced Protect Social Common Circular transparent mining emissions biodiversity impact standards solutions value chain Controlling the upstream gives
Slide 10: Strong global presence
Strong global presence The complete aluminium and renewable energy company Key features Americas Europe Aluminium Metal Energy 5 countries 26 countries • Market leader in low-carbon aluminium Bauxite & Alumina with clear roadmap to net-zero Extrusions • High-quality bauxite and alumina #1 position 9
Slide 11: Greener earnings uplift potential of NOK 2 billion by 2030 progressing
Greener earnings uplift potential of Greener product capability from total aluminium portfolio1) NOK 2 billion1) by 2030 progressing Million tonnes capacity potential Executing in 2024 Building capabilities for future contributions Recycled aluminium (high potential) Hydro CIRCAL Sales volumes, tonn
Slide 12: Hydro 2030: Pioneering the green aluminium transition
Hydro 2030: Pioneering the green aluminium transition, powered by renewable energy Key priorities towards 2030 Step up growth investments in Recycling and Step up ambitions within Extrusions to take lead in the market opportunities renewable power generation emerging from the green transition Execut
Slide 13: Executing on Recycling growth ambitions
Executing on Recycling growth ambitions Bridges to be verified PCS capacity Recycling EBITDA potential • Improving hot metal cost by USD 20-30 per tonne1) Tonnes (‘000) NOK billion • Delivering Alumetal synergies of EUR 10-15 PCS consumption 2030 PCS Current portfolio 2030 EBITDA million2) Installed
Slide 14: Positioning for growth in Extrusions
VELUX Group Positioning for growth in Extrusions Hydro Extrusions EBITDA ambitions • Stepping up improvement efforts through NOK billion automation, operational improvements, 10-12 procurement, recycling and commercial CRU extrusion Market growth vs demand forecast 2025: 30% NA, YoY: 5% NA, 3% EU 20
Slide 15: Executing on renewable power generation ambitions
Executing on renewable power generation ambitions Hydro Energy Hydro Rein Secure access to renewable power through hydropower, solar and wind Pursue profitable projects through JV owned by Hydro and MAM1) • Upgrading and expanding hydropower assets • 1.7 GW of renewable projects in operations by 202
Slide 16: Progressing on the roadmap towards net-zero
Progressing on the roadmap towards net-zero GHG emissions – ownership equity1) Million tonnes CO2e (% of 2018 baseline emissions2)) 10 Achieved reductions Reduction targets since 2018 10% by 2025 30% by 2030 100% by 2050 Status • Fuel switch from heavy fuel oil to natural gas at Alunorte (~434,000 t
Slide 17: Contributing to the global Nature Positive goal
Contributing to the global Nature Positive goal Ambition for no net loss (NNL) Partnering to contribute Value chain of biodiversity to nature positive outcomes emissions Paragominas bauxite mine: Teaming up with Mercedes-Benz: Direct emissions • Developing KPIs for NNL target, review, and • Mercede
Slide 18: Improving lives and livelihoods, supporting a Just Transition
Improving lives and livelihoods wherever we operate, supporting a Just Transition Respect and promote human rights Fundament Strengthening of the human rights’ due diligence processes for own operations, value chain and affected communities Areas of impact Support positive Invest in Responsible loca
Slide 19: Partnerships are advancing to the next stage
Partnerships are advancing to the next stage Some of the world's most ambitious companies rely on Hydro to future-proof their businesses Hydro + VELUX Hydro + Mercedes-Benz Hydro + Porsche Hydro + Brompton Hydro + Volvo Group The VELUX Group partnership Mercedes-Benz expands the The industry’s first
Slide 20: Business areas at the forefront
Business areas at the forefront Bauxite &Alumina Energy Aluminium Metal Extrusions • Execute on 2030 decarbonization targets • Pursue profitable captive hydropower • Step up growth and be an industry leader • Step up growth investments aiming to and position as sustainability leader growth options w
Slide 21: Launching new improvement program
Launching new improvement program Drive profitability towards 2030 Strong track record of delivering improvements NEW: 2030 improvement program NOK billion NOK billion, 2024 baseline 6.5 17,4 Commercial Some key changes excellence program Today’s program Procurement improvement program More focused
Slide 22: Extrusions: Strengthening improvements and accelerating growth
Capital Markets Day 2024 Extrusions: Strengthening improvements and accelerating growth Paul Warton Executive Vice President, Hydro Extrusions
Slide 23: Extrusions demand significantly down over last years
Extrusions demand significantly down over last years, long-term growth prospects remain attractive Lower demand compared to base case for NOK 8 billion target Extrusion demand estimates (CRU) Extrusion demand CAGR 2024 - 30 (‘000 tonnes) 4,000 4.3% 5.5% EU April 2021 Forecast Total EU October 2024 e
Slide 24: Solid EBITDA per tonne generation despite weak markets
Solid EBITDA per tonne generation despite weak markets Segment position and margin management as key drivers Hydro Extrusions realizing solid EBITDA per tonne in weak markets Extrusion demand CAGR 2024 - 30 Hydro Extrusions EBITDA per tonne, NOK 5 945 4.3% 5.5% 5 612 Total • Similar absolute extrusi
Slide 25: Leveraging opportunities from greener transition and substitution towards aluminium
Hydro Extrusions leveraging opportunities from greener transition and substitution towards aluminium Greener transition 2018 2020 2021 2023 2024 in buildings First project All main >500 projects First projects Project for production Building Systems with Hydro products in Hydro done in Hydro in Hydr
Slide 26: Growing automotive exposure through long-term contracts
Growing automotive exposure through long-term contracts Slower transition to EV growth short-term, long-term potential remains attractive BEV sales facing headwinds short-term, Leveraging global footprint, Record levels of OEM sole supply contracts long-term trend supportive serving OEMs across cont
Slide 27: Customers collaborating with Hydro Extrusions to make greener products
Customers from all industries collaborating with Hydro Extrusions to make greener products Serving global customers Partnerships Not only automotive • Global customer, served on two continents, Extrusions Europe Partnership supporting VELUX decarbonization also in the program creating value by U.S.
Slide 28: Future-proofing customers
Future-proofing customers Greener sourcing and production Hydro Extrusions sustainability targets 2030 Sourcing Production Product -27% -24% CO2 emissions on CO2 direct/indirect extrusion billets1) emissions1) Help customers realize their sustainability Reduce own emissions ambitions and positions 1
Slide 29: Extrusions acting as market leader to reach 2030 sustainability targets
Extrusions is acting as market leader to reach 2030 sustainability targets across all Business Units Second wind turbine installed in Ghlin, Belgium and exploring opportunities for Holistic sustainability fuel switch to decarbonize approach in Trzianka, the recycling facility. Poland. Heat pumps and
Slide 30: Delivering on growth projects, re-shaping investment agenda
Delivering on growth projects, re-shaping investment agenda towards press replacements and automation Hydro Extrusions CAPEX agenda – short- and long-term Complete Ramping up Under execution Project pipeline Hueck M&A The Dalles cast (U.S.) Hungary automotive press Press replacements (Albi & Gainesv
Slide 31: Press consolidations giving new capabilities and cost savings
Press consolidations giving new capabilities and cost savings, automation project providing strong returns Press consolidation example: Cressona (U.S.) Automated Fabrication cells Two old presses One new press Manning 2x7 FTEs per shift 4 FTEs per shift Maintenance cost p.a. USD 3-4 million USD ~2 m
Slide 32: Extrusions stepping up ambitions on operational and commercial improvements
Extrusions stepping up ambitions on operational and commercial improvements Ambitious improvement targets 2030 supported by dedicated value streams Category Description Improvement ambition towards 2030 (2024 baseline, real terms) • Increase market share in key, dedicated segments Commercial through
Slide 33: NOK 8 billion target in 2025 challenged by weak short-term demand
NOK 8 billion target in 2025 challenged by weak short- term demand – Strengthened improvement agenda Underlying extrusion demand in key regions and segments not sufficient to deliver NOK 8 billion Hydro Extrusions EBITDA ambitions NOK billion • Lower recycling and extrusion volumes • Lower recycling
Slide 34: Roadmap to 2030 target underpinned by stronger improvement agenda
Roadmap to 2030 target underpinned by stronger improvement agenda and structural demand recovery Cyclical improvement in extrusions demand and improvement program supporting long-term targets Hydro Extrusions EBITDA ambitions Hydro Extrusions 2030 NOK billion (real 2023) 1.5 – 2.5 10.0-12.0 10.0 –12
Slide 35: Aluminium Metal: Accelerating through innovation, collaboration and growth
Capital Markets Day 2024 Aluminium Metal: Accelerating through innovation, collaboration and growth Hanne Simensen Executive Vice President, Hydro Aluminium Metal
Slide 36: Long-term outlook remains strong
Long-term outlook remains strong Solid growth in demand for low-carbon recycled and primary aluminium expected towards 2030 and beyond Global aluminium consumption Greener demand growth outpacing rest of the market In million tonnes CAGR 2024-30 ~3% 140 CAGR CAGR Total EU / North 2011-24 2024-30 Ame
Slide 37: Low-carbon aluminium expected to be in limited supply
Low-carbon aluminium expected to be in limited supply – Hydro well positioned Total supply of aluminium with mine to metal emissions below 4 kg CO2e / kg Al is ~8 million tonnes Cradle-to-gate emissions curve 2023 (tonnes CO2e per tonne Al) 24 Other Scope 3 emissions 22 Alumina emissions Scope 1 + 2
Slide 38: Hydro has a unique value proposition in aluminium
Hydro has a unique value proposition in aluminium One-stop-shop for high-quality, low-carbon aluminium: Going to market with a combined offering of primary and recycled aluminium, and transparency in the value chain High-quality aluminium products Transparency in full World class R&D supporting and
Slide 39: Two complementary business models
Two complementary business models allow flexibility to pursue opportunities in fluctuating markets Primary value chain Characteristic Primary Production Recycling Bauxite mining Alumina refining Primary smelting Operations • Larger units • Smaller units • Stable raw • Complex, regional material valu
Slide 40: Primary production: Accelerating competitiveness
Capital Markets Day 2024 Primary production: Accelerating competitiveness to maintain leading position Hanne Simensen Executive Vice President, Hydro Aluminium Metal
Slide 41: Leveraging our competitive advantage to further strengthen our position
Leveraging our competitive advantage to further strengthen our position Strategic priorities to protect and develop the unique position of Hydro’s Primary portfolio Safeguard strong cash flow Improvement • Long-term renewable power and raw material diversification – Albras power secured, active in t
Slide 42: Strengthen competitiveness through technology, debottlenecking, digitalization and robotization
Strengthen competitiveness through cutting edge technology, debottlenecking, digitalization and robotization Category Description Improvement Program NOK billion • Maximizing asset utilization at competitive capex levels Creep • Track record of ~100kt since 2014 – up to ~80kt further Commercial Orga
Slide 43: Roadmap to net-zero – Milestones in 2024
Roadmap to net-zero – Milestones in 2024 Pursuing sustainability strategy to differentiate Hydro on climate, nature and social aspects to capitalize on low-carbon market growth Post consumer scrap (PCS) Fuel switch Decarbonized processes in primary production • Alunorte fuel switch to reduce carbon
Slide 44: Recycling: Accelerating through improved margins and execution on growth
Capital Markets Day 2024 Recycling: Accelerating through improved margins and execution on growth Hanne Simensen Executive Vice President, Hydro Aluminium Metal
Slide 45: Hydro meeting customer needs with unique capabilities within recycling
Hydro meeting customer Proven track record in realizing value from scrap needs with unique capabilities Increasing post-consumer scrap (PCS) share in production Extrusion ingot recycling + recycled foundry alloy, (‘000) tonnes and percentage share1) within recycling 850-1200 450 310 320 370 280 ~30
Slide 46: Current cyclical downturn, strong long-term fundamentals
Current cyclical downturn, Global megatrends support recycling strong long-term fundamentals Increasing focus on circular economy and decarbonization from key stakeholders Average EBITDA margin improving over time, high volatility post-covid tracking building & construction demand Society Customers
Slide 47: Scrap exports expected to decrease from ~2030
Scrap exports expected to decrease from ~2030 as China is becoming more scrap self-sufficient Critical to keep low-grade scrap in Europe/U.S. through regulation, sorting and domestic applications Scrap generation increasing at higher rates in China vs Europe/ U.S. in line EU1) is net exporter to Chi
Slide 48: Keeping more low-grade scrap in Europe/U.S. through sorting and upcycling
Hydro aiming to keep more low-grade scrap in Europe/ U.S. through sorting and upcycling Mixed scrap exported to Asia either due to push (limited local use) or pull (higher value) drivers Low Export to Asia High Old building scrap Non-ferrous Auto EC wire chops Clean profiles Painted profiles Shredde
Slide 49: Roadmap to 2030 ambitions
Roadmap to 2030 ambitions Strengthening margin robustness and growing through the cycle Improving recycling margins 1 in weak markets Realizing full value potential from 2 completed investments Driving profitable growth, 3 positioning for the future
Slide 50: Accelerating hot-metal cost improvements
1 Improving margins Accelerating hot-metal cost improvements as key competitive advantage in Aluminium Metal Recycling Controlling the controllables – exercising discipline and pushing the boundaries in weak markets The Azuqueca case Raw material mix 100 % 100 % 100% 100% Improving relative cost pos
Slide 51: Executing on strategic growth projects in recycling
2 Driving growth Executing on strategic growth projects in recycling Progressing on key strategic priorities, positioning for the future Customer centric Scrap-sorting Portfolio RFA2) integration approach and sourcing diversification and synergies Partnership with HySort operations Cassopolis advanc
Slide 52: Alumetal becoming an integral part of the Aluminium Metal network
3 Realizing value Alumetal becoming an integral part of the Aluminium Metal metal network On track to realize EUR 10-15 million1) in annual EBITDA uplift by 2027 RFA2) – Critical contributor to realizing Enabling synergies in the AM portfolio Progress made on multiple initiatives the recycling strat
Slide 53: Approved projects delivering on the 2030 PCS target
Approved projects delivering Approved creep / growth projects on the 2030 PCS target Torija greenfield Kety upgrade, Alumetal HyForge Henderson Atessa Recycling post-consumer scrap (PCS) capacity roadmap Million tonnes PCS Luce upgrade Wrexham HySort NowaSol HySort 2030 PCS target Current portfolio
Slide 54: Approved projects to deliver on the 2030 EBITDA target
Approved projects to deliver on the 2030 EBITDA target in normalized market Recycling adjusted EBITDA roadmap NOK billion Current portfolio • Historical margins 2013-2021 ~ USD • Installed growth • Improving hot metal • Approved growth Installed capacity 100 per tonne for existing capacity1) project
Slide 55: Aluminium Metal's leading market offering
Aluminium Metal’s leading market offering is enabled by value chain transparency and flexibility in two business models Primary value chain Bauxite mining Alumina refining Primary smelting Near zero Hydro REDUXA 3.0 Hydro CIRCAL 2.0 Recycling value chain Hydro REDUXA 4.0 Collection Processing & sort
Slide 56: Bauxite & Alumina: Accelerating through profitability and sustainability
Capital Markets Day 2024 Bauxite & Alumina: Accelerating through profitability and sustainability John Thuestad Executive Vice President, Hydro Bauxite & Alumina
Slide 57: Alumina refineries profitable in 2024, tightness to persist into 2025
Alumina refineries profitable in 2024, tightness to persist into 2025 Alumina business operating cost 2024 Alumina raw material prices World alumina balance USD per tonne USD per tonne Tonnes (‘000) PAX current: ~USD 730 per tonne 2013-2019 average 750 1,600 700 -37% 2021-2023 average 1,400 650 2024
Slide 58: Significant position enhancement since last year
Significant position enhancement since last year Several initiatives executed to boost robustness and stability, enabling full market advantage Strong financial results Energy transition Tailing safety • USD 25 per tonne lower cost on track In 2024, Hydro will complete a 3rd from fuel switching, inc
Slide 59: Improvements and commercial initiatives at the core
Improvements and commercial initiatives at the core Hydro Bauxite & Alumina successfully improved its operations through the entire value chain in 2024 Paragominas Alunorte Commercial • Bauxite trucking to refinery: 17 • Fuel switching from heavy fuel oil to • By actively executing 3rd party percent
Slide 60: Strengthening robustness
Strengthening robustness Competitive cost position Improvement initiatives 2030 improvement program – a solid starting point USD per tonne Alumina world ex China (CRU 2024) NOK billion, Bauxite silica control program targets vs 2024 1 000 baseline 90th percentile Hydro position Commercial 800 Hydro
Slide 61: Executing on greener alumina roadmap
Executing on greener alumina roadmap Alunorte will reduce emissions by 70 percent by 2030 Decarbonization roadmap for Bauxite & Alumina Lowering the position on the emission curve Tonnes CO2e per tonne Alumina from the first quartile to the first decile CO2e per tonne Alumina (scope 1 and 2)1) Aluno
Slide 62: Sustainability is more than low-carbon
Sustainability is more than low-carbon Contributing to Nature Positive and supporting a Just Transition in Brazil Social: Nature: Effectively supporting Ensuring optimal footprint communities • Hydro is a world leader in: • In 2022, Hydro delivered three TerPaz • Reforestation through its deforestat
Slide 63: Sustainability agenda enabling strategic partnerships
Hydro Bauxite & Alumina sustainability agenda enabling strategic partnerships Long-term development program in the Amazon region Turning bauxite residue from waste to marketable products • Mercedes-Benz has joined Hydro in the long-term Corridor • Hydro has one of the most advanced portfolio of pilo
Slide 64: Energy: Accelerating the green aluminium transition
Capital Markets Day 2024 Energy: Accelerating the green aluminium transition Kari Ekelund Thørud Executive Vice President, Hydro Energy
Slide 65: Global renewable investments have surged
Global renewable investments have Solar and wind power development in China 5,000 GW surged, driven by China, U.S. and EU 4,000 3,000 2,000 1,000 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 IEA: The world invests almost twice as much in Solar and wind power development in the
Slide 66: Lower Norwegian power surplus
Lower Norwegian power surplus Wind and hydropower interplay is key in the future energy system Norwegian Power Balance Hourly power production by source in price area NO2, Week 6 2024 TWh MWh/h 250 12 000 1 400 10 000 1 200 200 1 000 8 000 800 Wind power production Hydro power production 6 000 150 6
Slide 67: Volatility increases the need and value of flexibility
Volatility increases the need Norwegian hydropower adds flexibility at lower costs and value of flexibility than alternatives, with lower degree of cannibalization Pumped storage hydropower: Opportunity to shift energy production between hours and seasons Daily spot prices NO2 EUR/MWh, nominal 750 C
Slide 68: Focus on core business and key strategic priorities towards 2030
Focus on core business and key strategic priorities towards 2030, building on strong production platform Resource spend Norwegian hydropower Shaping portfolio and Commercial ambition Energy players 2023 organization markets towards 2030 NOK per MWh Cost of labour Other opex MNOK 60 600 NOK 200 milli
Slide 69: Active sourcing agenda
Active sourcing agenda Portfolio of equity power and PPAs Norway: Power sourcing for Hydro smelters 1) Brazil: Power sourcing for B&A and Albras 2)3) TWh TWh 22 14 Potential consumption – further decarbonization 20 through technology roadmap Potential consumption 12 – further decarbonization 18 thro
Slide 70: Several routes to secure power at competitive prices
Several routes to secure power at competitive prices Upgrading and expanding Developing wind and solar Sourcing from external hydropower assets projects including JVs suppliers Røldal-Suldal Wind power projects close to smelters 10 TWh long-term contract portfolio Illvatn Hydro Rein JV Signficant pl
Slide 71: Hydro Rein contributing to renewable growth ambitions
Hydro Rein contributing to renewable growth ambitions 5.3 TWh p.a.1) 1.7 GW Europe Mendubim already sourced in operations by 2024 Ventos de São under long-term PPAs Zacarias Boa Sorte Stor-Skälsjön >16 TWh p.a. 8.4 GW additional potential gross capacity under development in portfolio Brazil ~120 GWh
Slide 72: 1.7 GW of renewables projects reaching COD in 2024
1.7 GW of renewables projects reaching COD1) in 2024 Projects delivered on time, on budget, and with high safety and sustainability standards Stor-Skälsjön Mendubim 3) Location: SE2 area Location: Northeast Inst. capacity: 260 MW Inst. capacity: 531 MWp Annual production: 807 GWh Annual production:
Slide 73: Pioneering the green aluminium transition, powered by renewable energy
Pioneering the green aluminium transition, powered by renewable energy Snøheia & Høyanger Mendubim & Alunorte Renewable electricity to supply the smelter and fuel Renewable electricity to support new switch from natural gas to green hydrogen in recycler electric boilers at the alumina refinery Matur
Slide 74: Pursuing value creation opportunities towards 2030
Pursuing value creation opportunities towards 2030 An industry leader on HSE, performance and sustainability 1 High performance and profitability ambitions: 2 Energy Classic ROACE > 15% average Hydro Rein JV platform eIRR 10 – 20 % Commercial ambition NOK 550 million Active sourcing agenda and robus
Slide 75: Accelerating through focused growth and strong performance drive
Capital Markets Day 2024 Accelerating through focused growth and strong performance drive Trond Olaf Christophersen Executive Vice President & Chief Financial Officer
Slide 76: Upstream value drivers supporting 2024 financials
Upstream value drivers supporting 2024 financials Adjusted RoaCE Adjusted EBITDA Free cash flow 1) Adjusted net debt (cash) Return-seeking and Growth over the cycle capex share of total capex 11.8 Average last 5 years % NOK 22.4 LTM Q3 2024 billion NOK -0.4 LTM Q3 2024 billion NOK 25.0 Q3 2024 billi
Slide 77: Resilient financial framework driving LT shareholder value
Resilient financial framework driving LT shareholder value Solid framework for lifting returns and cash flow, and managing uncertainty Baa2 ibili ty Rob ust NOK lf ex 39.1 (Moody’s) Strong balance sheet and investment sh Total shareholder distribution since 2020 d ofitable grow wtthh aand ar grade c
Slide 78: New improvement program
New improvement program Drive profitability towards 2030 Hydro has a strong track record of delivering improvements 2009-2015 2016-2018 2019-2024 2025-2030 2030 improvement program Key changes More focused scope – targeting the key value buckets, will no longer track the tail of smaller NOK 4.5 bill
Slide 79: Redesigned 2030 improvement programs
Redesigned 2030 improvement programs Three main programs to drive improvements - measurement methodology tailored to each program Operational Procurement Commercial improvement program improvement program excellence program • Improvement in operational metrics through • Improvements through procurem
Slide 80: New operational improvement program
New operational improvement program Hydro ambition of NOK ~2.5 billion Mitigate structural cost pressure, Improve operational Reduce hot metal cost Improve efficiency of drive efficiency for refinery & mining efficiency in recycling support functions • • • Main drivers Increased mine plant and refin
Slide 81: Procurement program to deliver NOK ~1 billion by 2030
Procurement program to deliver NOK~1 billion by 2030 Measures procurement efforts to fight inflation, Bauxite & Alumina procurement reduce the spend baseline and create value Potential enabled by implementation of new digital procurement solutions. Main projects addressing logistics and raw material
Slide 82: Commercial excellence program
Commercial excellence program NOK ~3 billion commercial potential across Market Increase market share in key segments through portfolio, including remaining potential from share solution offerings and high service level the greener uplift ambition Commercial Increasing commercial impact from alumina
Slide 83: 2025: Capitalizing on improvements
2025: Capitalizing on improvements Market volatility persists into 2025 AEBITDA sensitivity 2025 Market scenarios AEBITDA 2025 NOK billion NOK billion ~34 25-26 ~27 22.4 0.0-1.0 0.3-0.5 0.6 1.6 ~20 AEBITDA Fuel switch Extrusion and Ramp-up of curtailed Improvement AEBITDA 2025 AEBITDA @ AEBITDA @ la
Slide 84: Capital allocation reflecting strategic modes
Capital allocation reflecting strategic modes Strategic modes reflect global megatrends and high-return opportunities Safe, compliant and efficient operations The Hydro Way Businesses Bauxite & Alumina Aluminium Metal Recycling Energy Extrusions Strategic mode Sustain and improve Sustain and improve
Slide 85: Capital discipline and focused growth
Capital discipline and focused growth Growth & Return seeking investments 2) Sustaining capex has peaked and will start to normalize Recycling • Increase proportion of post consumer scrap (PCS), lowering metal cost • Improved economies of scale in brownfield expansions • Sorting technology and equip
Slide 86: Torija: Designed to be a high-margin recycler
Torija: Designed to be a high-margin recycler Investing EUR 180 million in next generation extrusion ingot casthouse in strategic Iberian market Normalized EBITDA margin1) Superior product mix EUR per tonne • Strategically positioned to produce high share of low- carbon advanced products • Capabilit
Slide 87: Greener investments drive value creation
Greener investments drive value creation Hydro’s largest prioritized investment areas combine sustainability and profitability Recycling (PCS) B&A (El-Boilers) Electrolysis abatement Other Greener investments / Several large recycling Substantial decarbonization Technology roadmaps in • Energy savin
Slide 88: Net Operating Capital performance to improve in 2025
Net Operating Capital performance to improve in 2025 Higher upstream prices driving Net Operating Capital build up in 2025 Net Operating Capital1) Updated 2025 guiding Strong ambitions to reduce inventory levels and NOK 2,0 billion, days YE 2024 further improve Net Operating Capital days in 2025 gui
Slide 89: Hydro profitability growth roadmap
Hydro profitability growth roadmap Main drivers: Improvement efforts, growth and market development ARoaCE potential 2030 AEBITDA potential 2030 Cash flow potential after Main upside drivers Profitability target of >10% NOK billion sustaining CAPEX1) 2030 • Sustainability differentiation and Commerc
Slide 90: Bauxite & Alumina profitability growth roadmap
Bauxite & Alumina profitability growth roadmap Main drivers: Fuel switch, commercial differentiation and market development ARoaCE potential 2030 AEBITDA potential 2030 Cash flow potential after Main upside drivers Profitability target of >10% NOK billion sustaining CAPEX1) 2030 • Positive market an
Slide 91: Aluminium Metal profitability growth roadmap
Aluminium Metal profitability growth roadmap Main drivers: Improvement efforts, commercial differentiation and market development ARoaCE potential 2030 AEBITDA potential 2030 Cash flow potential after Main further upside drivers Profitability target of >10% NOK billion sustaining CAPEX1) 2030 • Posi
Slide 92: Metal Markets profitability growth roadmap
Metal Markets profitability growth roadmap Main drivers: Recycling growth, commercial differentiation and market development ARoaCE potential 2030 AEBITDA potential 2030 Cash flow potential after Main further upside drivers Profitability target of >8% NOK billion sustaining CAPEX1) 2030 • Positive m
Slide 93: Extrusions profitability growth roadmap
Extrusions profitability growth roadmap Main drivers: Improvement program and commercial ambition ARoaCE potential 2030 AEBITDA potential 2030 Cash flow potential after Main further upside drivers Profitability target of >8% NOK billion sustaining CAPEX1) 2030 • Selective profitable growth Commercia
Slide 94: Energy profitability growth roadmap
Energy profitability growth roadmap Main drivers: Net spot sales volume and market development Energy excl. REIN JV – Energy excl. REIN JV – Cash flow potential Main further upside drivers AEBITDA potential 2030 after sustaining CAPEX1) 2030 • Additional growth opportunities NOK billion NOK billion
Slide 95: Resilience and optionality through full value chain presence
Resilience and optionality through full value chain presence Integration brings resilient financial results, broader access to attractive growth and superior customer offering Hydro quarterly AEBITDA per BA (indexed per BA – Q1 2018 = 100)1) Enabling financial resilience…… 700 Resilience in financia
Slide 96: Aiming for competitive returns to shareholders
Aiming for competitive Solid dividend track record returns to shareholders Dividend, 1.75 1.25 1.25 1.25 6.85 5.65 2.5 NOK/share Dividend yield1) 2.8% 3.2% 3.8% 3.1% 9.9% 7.7% 3.7% • Aiming for competitive shareholder returns compared to Share of Adj. 45% 45% 239% 100% 118% 61% 81% alternative inves
Slide 97: Key messages
Key messages Financial strength and flexibility • Investment grade credit rating Robust shareholder payout • Aiming for competitive returns to shareholders aligned with dividend policy and capital structure targets Strong performance drive, increasing resilience • New improvement program of NOK 6.5
Slide 98: Key takeaways from today
Key takeaways from today Accelerating growth, value creation and sustainability – Supported by resilient financial framework driving long-term shareholder value Executing on Recycling, Extrusions Progressing on pathway New improvement program and renewable growth ambitions to net-zero • Recycling an
Slide 99: Appendix
Capital Markets Day 2024 Appendix
Slide 100: Guidance: Year-end adjusted net debt
Guidance: Year-end adjusted net debt Note that the information on this page is based on forward looking information from current point in time and changes might occur during the coming quarter Adjusted net debt YE - moving parts to keep in mind: • Q4 EBITDA guiding as per Q3 2024 below • SBB ongoing
Slide 101: Raw material costs development
Raw material costs development Petroleum coke and Pitch FOB USG Alumina PAX index (indexed) NO2 (indexed) (indexed) 70 3.5 2.0 3.0 60 2.5 1.5 50 2.0 40 1.0 1.5 30 1.0 20 0.5 0.5 10 0.0 0.0 0 Q1-23 Q4-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Q
Slide 102: Settlements
2026 hedging mandate completed in October 460 kt aluminium hedged at ~2,600 USD/t Aluminium hedges of 110-460 kt/yr 2024-2026 in place Strategic hedging status1) NOK Billions • 2024: 73 kt remaining at a price of ~2400 USD/t • 2025: 450 kt hedged at a price of ~2400 USD/t • 2026: 460 kt hedged at a
Slide 103: Significant exposure to commodity and currency fluctuations
Significant exposure to commodity and currency fluctuations Aluminium price sensitivity +10% Currency sensitivities +10% NOK million Sustainable effect: 3 570 NOK million USD BRL EUR 2 500 AEBITDA 5,070 (1,050) (150) One-off reevaluation effect: AEBITDA Adjusted Net Income Financial items (1,320) 1,
Slide 104: Bauxite & Alumina sensitivities
Bauxite & Alumina sensitivities Annual sensitivities on adjusted EBITDA if +10% in price Revenue impact NOK million • Realized alumina price lags PAX by one month 2 150 Cost impact Bauxite • ~2.45 tonnes bauxite per tonne alumina • Pricing partly LME linked Caustic soda (40) (40) (100) • ~0.1 tonnes
Slide 105: Aluminium Metal sensitivities
Aluminium Metal sensitivities Annual sensitivities on adjusted EBITDA if +10% in price Revenue impact NOK million • Realized price lags LME spot by ~1-2 months • Realized premium lags market premium by ~2-3 months 3 620 Cost impact 880 Alumina • ~1.9 tonnes per tonne aluminium • ~ 2-3 months lag (36
Slide 106: CAPEX sensitivity to FX
CAPEX sensitivity to FX Annual sensitivities on CAPEX if +10% in currency 1) Capex currency exposure 3) NOK million • BRL ~35% • USD ~20% 500 • EUR ~20% • NOK and other ~25% 280 280 The estimates for the different currencies exposures for capex are based on the 2025-2027 allocation guidance. The ann
Slide 107: Scenario assumptions
Scenario assumptions Scenarios are not forecasts, but illustrative earnings, cash flow and return potential based on sensitivities • Starting point – AEBITDA Q3 2024 LTM 2025 2030 • Cash flow calculated as AEBITDA less EBIT tax and Assumptions used in CRU / S&P CRU / S&P long-term sustaining CAPEX,
Slide 108: Investor Relations in Hydro
Investor Relations in Hydro Martine Rambøl Hagen Head of Investor Relations Next event t: +47 91708918 Fourth quarter results e: martine.rambol.hagen@hydro.com Elitsa Blessi and 2024 Annual Report Investor Relations Officer t: +47 91775472 February 14, 2025 e: elitsa.blessi@hydro.com Mathias Gautier
Slide 109: Hydro
Hydro