Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — SEB Nordic Seminar 2018
20 slides from Norsk Hydro Asa's conference presentation, Jan 10, 2018
Slide 1: Norsk Hydro – SEB Nordic Seminar 2018
Norsk Hydro SEB Nordic Seminar 2018 Investor Relations
Slide 2: Agenda
Agenda 1) Hydro – a global, fully integrated company 2) Market update 3) Q&A 2
Slide 3: Fully integrated value chain
Fully integrated value chain World class assets, high-end products and leading market positions Focus on cost efficiency and process technology Focus on margin management and product innovation Centralized business model Decentralized business model Bauxite & Alumina Energy Primary Metal Metal Marke
Slide 4: Fully integrated across the aluminium value chain and markets
Fully integrated across the aluminium value chain and markets Broad products and solutions offering from bauxite to end-user products Bauxite Transport & Building & Packaging Electronics & Machinery & Consumer automotive construction electrical equipment durables Alumina Energy Primary Metal Rolled
Slide 5: Sapa acquisition completed October
Sapa acquisition completed October 2 Financed through cash and in the Swedish and Norwegian bond markets Hydro after transaction: • Hydro with full ownership in the global leader in Capital employed by end Q3-17 extruded aluminium solutions BNOK ~96 • Hydro now fully integrated across value chain an
Slide 6: Maintaining a solid balance sheet and investment-grade credit rating
Maintaining a solid balance sheet and investment-grade credit rating Funds from operations determine the balance sheet structure Adjusted net debt / Equity Hydro Hydro incl Sapa* Cash flow generation strengthened by Sapa-acquisition** 60% Operating cash flow, in NOK billion Hydro Hydro incl Sapa* 50
Slide 7: Industry-leading improvement drive
Industry-leading improvement drive Improvement target lifted to NOK 3.0 billion 2016-2019, NOK 1.7 billion realized by end-2017 Bauxite & Alumina Rolled Products Primary Metal Better BNOK 1.3 in 2019 BNOK 0.7 in 2019 BNOK 1.0 in 2019 • High production at Alunorte and • Operational and ramp-up • Impr
Slide 8: Among the best positioned in the industry upstream
Among the best positioned in the industry upstream Alumina BOC curve by company (2017) Smelter BOC curve by company (2017) USD/mt USD/mt 400 2,400 2,000 300 1,600 200 1,200 800 100 400 0 0 0 30,000 60,000 90,000 120,000 mt 0 15,000 30,000 45,000 60,000 mt Source: Republished under license from CRU I
Slide 9: Increasing cost pressure in the aluminium industry
Increasing cost pressure in the aluminium industry Increasing market prices for all input factors Index: Jan 2016 = 100 Primary aluminium Index: Jan 2016 = 100 Bauxite and Alumina 250 300 250 200 200 150 150 100 100 50 50 0 0 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Jan-16 Apr-16 Jul-16 Oct-1
Slide 10: Karmøy Technology Pilot: world's most climate and energy-efficient aluminium production
Karmøy Technology Pilot: world’s most climate and energy-efficient aluminium production • Annual capacity of 75 000 tons, to be ramped up during 2018 • On time and budget • Net Hydro capex 2015-Q3 2017 BNOK 2.5 − Total capex BNOK 3.7 − Enova support BNOK 1.2 • Net Hydro capex 2015-2018 BNOK 2.7 − To
Slide 11: Aluminium market
Aluminium market HYDRO
Slide 12: Supply-side reform and environmental shutdowns moderating Chinese primary supply growth
Supply-side reform and environmental shutdowns moderating Chinese primary supply growth 1 800 Annual production effect (‘000t) 1 000 Supply side reform Environmental shutdowns Weiqiao 1 300 East Hope 800 ~500 Shandong 300 Xinfa 500 Henan Xinjiang Jiarun 200 Inner Mongolia Jinlian Shanxi 2+26 affecte
Slide 13: Increasing average all-in aluminium prices in Q4
Increasing average all-in aluminium prices in Q4 Arbitrage between LME and SHFE opened towards the end of Q4 LME and SHFE aluminium prices All-in aluminium prices USD/mt USD/mt NOK/mt 2 400 3 000 18 000 2 200 2 600 16 000 2 000 1 800 2 200 14 000 1 600 1 800 12 000 1 400 1 200 1 400 10 000 Jan-15 Ap
Slide 14: Chinese market oversupplied in 2017 on the back of restarts and expansions
Chinese market oversupplied in 2017 on the back of restarts and expansions in 2016 and 2017, growth coming down in Q3 and Q4 Chinese production and demand growth YoY-growth (%) SHFE-price (RMB/t) 25% 17,000 16,000 20% 15,000 15% 14,000 13,000 10% 12,000 5% 11,000 10,000 0% 9,000 -5% 8,000 Jan-15 Mar
Slide 15: Primary aluminium market to be largely balanced in 2018
Primary aluminium market to be largely balanced in 2018 Market balances largely similar compared to 2017 World ex. China 2018 3-4 % Primary market balance 2018 (mill t.) (‘000t) 3-4 % 2 000 ~30.1 – 30.4 Production ~28.0 – 28.3 Demand 1 000 0 -1 000 China 2018 4-6 % (mill t.) -2 000 4-6 % ~37.5 – 38.
Slide 16: Inventory days approaching historically tight levels in world outside China in 2018
Inventory days approaching historically tight levels in world outside China in 2018 Chinese inventory days expected to increase, but not substantially China World ex. China (‘000t) (‘000t) 12000 180 12000 180 160 160 10000 10000 140 140 8000 120 8000 120 100 100 6000 6000 80 80 4000 60 4000 60 40 40
Slide 17: Alumina prices significantly up in October, decreased in Nov and Dec
Alumina prices significantly up in October, decreased in Nov and Dec Increasing Atlantic bauxite exports to China, primarily from Guinea Platts alumina index (PAX) Monthly Chinese bauxite imports USD/mt Percent Million mt 8 550 22% 7 500 450 6 20% 400 5 18% 350 4 300 16% 3 250 2 14% 200 PAX % of LME
Slide 18: Growth in global semis demand creates opportunities for both primary and recycled material
Growth in global semis demand creates opportunities for both primary and recycled material Solid growth for semis, primary and recycling CAGR 2017 – 2027 Semis Primary Recycling* ~3 % 2-3 % 3-4 % Source: CRU, Hydro Analysis * Post-consumer and fabrication scrap ** Unallocated creep estimated at same
Slide 19: Q&A
O&A HYDRO
Slide 20: Infinite Aluminium
INFINITE ALUMINIUM HYDRO