Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Cheuvreux European Large Cap Conference 2007
34 slides from Norsk Hydro Asa's conference presentation, Mar 30, 2007
Slide 1: Hydro
Hydro Executive Vice President and CFO, John Ottestad Cheuvreux European Large Cap Conference Paris, 30 March 2007
Slide 2: Agenda
Agenda z The heritage z 1999-2007 years of transformation z ’New’ Hydro Page: 2 •
Slide 3: We have a rich heritage
We have a rich heritage … Kristian Birkeland and Sam Eyde Rjukan Waterfalls – our first giant project Fertilizer for the international market First class project execution – from day 1 Page: 3 •
Slide 4: Norsk Hydro is established 1905
1905 Banque Paribas sent experts from Europe 2 December 1905 Norsk Hydro is established Page: 4 •
Slide 5: Modern Hydro emerges
Modern Hydro emerges z 1963 - Enters into aluminium production - Decides to participate in North Sea oil exploration with a consortium of seven French oil companies z 1969 - Hydro and its French partners in the Petronord group made a major discovery - Ekofisk: first oil discovery on the Norwegian co
Slide 6: Active portfolio management 1999-2006
Active portfolio management 1999-2006 Acquisitions and divestments Enterprise value 1999-2006 NOK billion Acquisitions Saga Petroleum 1999 31 Wells, Technal and SDFI 2001-2002 6 VAW 2002 24 Spinnaker Exploration 2005 16 Peregrino 2005 2 Total acquisitions 79 Divestments non-core activities 32 Page:
Slide 7: Yara listed on Oslo Stock Exchange March 2004
Yara listed on Oslo Stock Exchange March 25 2004 z The world’s leading fertilizer company – well positioned for profitable growth z Transfer of Agri values directly to shareholders (80 percent) 20 percent offering to effectively position Agri in the capital markets z Yara share price appreciation of
Slide 8: Strategic decision to merge oil and gas activities with Statoil
Strategic decision to merge oil and gas activities with Statoil z The Boards of Hydro and Statoil have agreed to the merger and a prospectus (F-4) has been filed with the SEC z Hydro’s shareholders to receive 0.8622 shares in the new company for each Hydro share and retain their shares in Hydro z Hy
Slide 9: Development in market capitalization, dividends and buyback 1999-2007
Development in market capitalization, dividends and buyback 1999 - 2007 NOK billion 336 164 80 61 52 40 1999* 2007** Hydro 1999 Dividends and buybacks 1999-2006 Yara International "New'' Hydro Hydro Petroleum * 4 January 1999 close, nominal value ** 23 March 2007 close. Aluminium and Oil & Energy ba
Slide 10: Competitive share price development (NYSE)
Competitive share price development (NYSE) 1 January 2002 to 31 December 2006 1 January 2007 to 23 March 2007 Hydro 314 % Alcoa 14 % Statoil 302 % Alcan 8% BG Group 231 % Hydro 6% ENI 172 % BG Group 4% ConocoPhillips 139 % Statoil 2% RepsolYPF 137 % Chevron 0% Total 105 % ExxonMobil -2 % ExxonMobil
Slide 11: Hydro going forward
Hydro going forward z Core businesses: Aluminium Metal, Aluminium Products and Power z 22 000 employees of which 7 000 in Norway z Operations in more than 30 countries z Annual turnover more than NOK 100 billion z Operating income 2006 NOK 7.8 billion z Market Capitalization NOK 80 billion* * 23 Mar
Slide 12: Strong aluminium industry position
Strong aluminium industry position Integrated Emerging Market Mining & Metal Manufacturing 3 900 Primary Rolled Extrusions Other 3 790 3 320 3 094 Production in 1 000 tonnes in 2005 2 435 1 826 1 331 1 050 1 003 854 850 870 841 614 519 498 409 240 214 201 155 100 100 100 29 Alcoa¹ Alcan Hydro United
Slide 13: Aluminium Metal
Aluminium Metal z Operational excellence z Geographic repositioning z Expected primary production 2010: 2 million tons z Strong focus on return on capital Page: 13 •
Slide 14: Aluminium price remains historically high
Aluminium price remains historically high USD per ton Primary aluminium LME USD/ton 3 000 LME (3-month avg.) LME forward Q4 2006 average 2 725 2 500 Q4 2006 end 2 803 Q3 2006 average 2 528 2 000 Q3 2006 end 2 584 1 500 Q2 2006 average 2 682 Q2 2006 end 2 630 1 000 Q1 2006 average 2 444 Q1 2006 end 2
Slide 15: Industry costs rising – Hydro's position improved
Industry costs rising – Hydro’s position improved Significant shift in industry cost curve* Cost (USD/ton) z Alumina 2 500 Hydro’s 2006 position 2006 - Two thirds of cost increase 2 250 Hydro’s 2003 position - Coming down from peak 2 000 2003 1 750 Industry average 2006: 1 640 z Energy 1 500 1 547 -
Slide 16: Alunorte alumina refinery – key asset in repositioning
Alunorte alumina refinery – key asset in repositioning z Targeting 6.5 million ton production by 2009 z Hydro stake 34 percent of world’s largest refinery z First-quartile investment costs and highly competitive conversion costs z Platform for pursuing new opportunities in Brazil and other bauxite r
Slide 17: Qatalum project – profitable mega-smelter in key region
Qatalum project – profitable mega-smelter in key region z 585 000 tons annually – expansion potential to 1.2 million tons annually z First quartile operating cost – captive gas power z 50/50 joint venture between Hydro and Qatar Petroleum z Final cost estimate and build decision summer 2007 Page: 17
Slide 18: Aluminium Products
Aluminium Products z Extrusion - Solid platform gives strong returns z Rolled Products - strong cash generator in challenging markets z Restructuring to be completed in 2007 - Divestment of Automotive Castings and Automotive Structures - Closure of Magnesium smelters Page: 18 •
Slide 19: Power
Power z Norway’s second largest power producer - Annual production ~ 9 TWh (7-11 TWh), 100% hydropower - 2.7 TWh with no reversion - 3.6 TWh subject to reversion in 2044-2057* - 2.7 TWh subject to reversion in 2022 - Installed capacity 1 860 MW z Acquired power under long-term contracts until 2020 ~
Slide 20: Technological and operational leadership
Technological and operational leadership z Smelting z Rolled products – Litho and foil - Leading smelting technology - Number one in lithographic plates and thin gauge foils - Alunorf – world’s largest hot rolling mill z Extrusion & Precision tubing - Grevenbroich – world’s largest cold rolling mill
Slide 21: Strong results for new Hydro businesses in 2006
Strong results for “new” Hydro businesses in 2006 Operating Adjusted Operating NOK billion Depreciation Investments revenues EBITDA income Aluminium Metal 68.4 9.1 (1.7) 6.4 2.0 Aluminium Products 49.8 1.7 (1.7) (0.1) 1.3 Power 6.3 1.3 (0.1) 1.2 0.04 Polymers 6.9 1.5 (0.4) 1.0 0.5 Page: 21 •
Slide 22: Return on capital focus
Return on capital focus Aluminium Metal Aluminium Products 18,7% 7,7% 7,9% 3,7% 3,3% 1,7% -3,2% -1,3% 2003 2004 2005 2006 2003 2004 2005 2006 Page: 22 •
Slide 23: Dividend policy
Dividend policy 30% payout ratio over time 1 Year 5 year Target 44 % z High commodity prices have supported current dividend 35 % 36 % payout and share buy backs 33 % 31 % z Hydro will continue existing 26 % dividend policy with an average payout ratio of 30 percent of net earnings 18 % z Share buy-
Slide 24: Share price development new Hydro
Share price development “new” Hydro Relative development NYSE 18 December 2006 – 23 March 2007 1,6 New Hydro Statoil Alcoa Alcan 38 % 0% 12 % 9% 1,5 1,4 1,3 1,2 1,1 1,0 0,9 12-18-2006 1-18-2007 2-18-2007 3-18-2007 Source: Yahoo Finance, NYSE, USD Page: 24 •
Slide 25: Management with a proven track record
Management with a proven track record Eivind Reiten President and Chief Executive Officer from 2001 Cecilie Ditlev-Simonsen Executive Vice President, Chief Communication Officer from 2006 John Ottestad Executive Vice President, Chief Financial Officer from 2002 Tom Røtjer Executive Vice President, P
Slide 26: Additional Financial Information
Additional Financial Information Page: 26 •
Slide 27: Segment information
Segment information Operating income NOK million 2006 2005 2004 Aluminium Metal 6 362 2 694 785 Aluminium Products (83) (370) 1 072 Power 1 185 1 123 741 Other activities 1 229 (88) 274 Corporate and eliminations (885) 1 064 (854) Total 7 808 4 423 2 018 Adjusted EBITDA 1) NOK million 2006 2005 2004
Slide 28: Aluminium Metal financials
Aluminium Metal financials NOK million 2006 2005 2004 Operating revenues 68 405 54 579 51 957 Depreciation 1 728 1 687 3 798 Operating income 6 362 2 694 785 Non-consolidated investees 837 272 281 Adjusted EBITDA 9 134 4 821 5 297 Investments 1) 1 979 1 792 4 244 Primary aluminium production (tons)
Slide 29: Aluminium Products financials
Aluminium Products financials 1) NOK million 2006 2005 2004 Operating revenues 49 844 42 477 43 533 Depreciation 1 666 2 913 1 848 Operating income (83) (370) 1 072 Non-consolidated investees (179) 47 68 Adjusted EBITDA 1 715 2 670 3 058 Investments 2) 1 250 1 970 1 951 Rolled Products sales volumes
Slide 30: Power financials
Power financials NOK million 2006 2005 2004 Operating revenues 6 292 6 614 4 108 Depreciation 120 142 121 Operating income 1 185 1 123 741 Non-consolidated investees 22 10 2 Adjusted EBITDA 1 337 1 283 875 Investments 42 98 241 Power production, TWh 8.3 10.8 8.1 Acquired under long-term contracts fo
Slide 31: Combined income statements – Hydro after demerger
Combined income statements – Hydro after demerger NOK million 2006 2005 Operating revenues 102 632 92 100 Depreciation, depletion and amortization 3 674 3 975 Impairment losses 289 1 259 Other operating costs 90 863 82 444 Operating income 7 808 4 423 Non-consolidated investees 761 491 Financial inc
Slide 32: Combined balance sheets – Hydro after demerger
Combined balance sheets – Hydro after demerger NOK million 31 December 2006 31 December 2005 Cash and cash equivalents 6 609 10 266 Short-term investments 15 020 3 859 Receivable Hydro Petroleum 200 779 Receivables and other current assets 20 181 19 073 Inventories 14 220 12 952 Current assets held
Slide 33: Investor Relations in Hydro
Investor Relations in Hydro t: +47 22 53 84 83 Ada Christiane Rieker Vice President m: +47 951 82 718 e: ada.christiane.rieker@hydro.com t: +47 22 53 24 55 Gudmund Isfeldt Investor Relations Officer m: +47 480 01 180 e: gudmund.isfeldt@hydro.com t: +47 22 53 92 80 Stefan Solberg Investor Relations O
Slide 34: Cautionary note in relation to certain forward-looking statements
Cautionary note in relation to certain forward-looking statements Certain statements contained in this announcement constitute “forward-looking information” within the meaning of Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as a
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