Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Merger or Acquisition (December 2006)
20 slides from Norsk Hydro Asa's merger presentation, Dec 18, 2006
Slide 1: Strategy for Hydro going forward
Strategy for Hydro going forward 18 December 2006
Slide 2: Transaction background
Transaction background z The Boards of Hydro and Statoil have agreed to recommend a merger of Hydros’s oil & gas activities with Statoil to form a new oil and gas company z For Hydro’s shareholders this means: - They will hold 32.7 percent of the new company and receive 0.8622 shares in the new comp
Slide 3: Key milestones
Key milestones z 18 December 2006 Transaction announced z 20 February 2007 2006 preliminary results z 8 May 2007 Annual General Meeting z Second quarter 2007 Extraordinary General Meetings z Third quarter 2007 Expected closing
Slide 4: Strategy for long-term growth
Strategy for long-term growth z Building on a leading, global position in metal production z Pursuing new, attractive opportunities in alumina and metal z Leveraging unique platforms in Extrusion, Precision Tubing and Building Systems and strong position in Rolled Products
Slide 5: Strong industry position
Strong industry position Integrated Emerging Market Mining & Metal Manufacturing 3 900 3 790 3 320 Production in 1 000 tonnes in 2005 2,435 2,350 1 826 1 331 1 050 953 854 870 841 850 614 498 409 240 201 155 110 100 100 100 Alcoa¹ Alcan Hydro United 29 Chalco Hindalco BHP Rio CVRD Novelis Aleris2 Sa
Slide 6: Competitive return on capital
Competitive return on capital RoaCE 18% 16% Peer range * Hydro 14% 12% 10% 8% 6% 4% 2% 0% 2004 2005 2006 * Alcoa and Alcan Source: Bloomberg return on capital methodology. Hydro figures are approximations to Bloomberg methodology.
Slide 7: Aluminium Metal
Aluminium Metal z Strong focus on return on capital z Restructuring on track z Operational excellence and production creep z Long-term profitable growth
Slide 8: Upstream aluminium positioned for growth
Upstream aluminium positioned for growth Bauxite Alumina Primary Casthouse products z 65 percent equity alumina position at low cash cost z 1.7 million tonnes per year primary production in 2007, target 2 million tonnes per year 2010 z Global leader in casthouse technology and products z Financials
Slide 9: Alunorte alumina refinery – key asset in repositioning
Alunorte alumina refinery – key asset in repositioning z Targeting 6.5 million tonnes 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 in other bau
Slide 10: Qatalum – profitable mega-smelter in key region
Qatalum – profitable mega-smelter in key region z 585 000 tonnes per year – expansion potential to 1.2 million tonnes per year z First quartile operating cost – captive power z 50/50 joint venture between Hydro and Qatar Petroleum z Final cost estimate and build decision summer 2007
Slide 11: Competence and technology provide basis for growth
Competence and technology provide basis for growth z Distinct project management skills z Proprietary technology opens doors for new business opportunities z Next-generation smelter cell technology being developed z Value-added primary products attractive to partners
Slide 12: Power – a solid fundament
Power – a solid fundament z 10 TWh in Norway of hydroelectric power z Solar energy ventures z Financials first nine months 2006 - Operating revenues NOK 4.2 billion - Adjusted EBITDA: NOK 1.2 billion
Slide 13: Aluminium Products
Aluminium Products z Strong momentum in restructuring z Global organization well positioned for growth in 26 countries z State of the art material technology z Strong record in delivering innovative aluminium solutions z Financials first nine months 2006 - Operating revenues NOK 39.9 billion - Adjus
Slide 14: High-graded portfolio of downstream assets
High-graded portfolio of downstream assets Rolled Products Extrusion Precision Tubing Building Systems z Leading Rolled Products assets in Europe - Global leader in high value added products (litho, aseptic foil, heat exchanger) z Proven business model in Extrusion - Close to customer, supplying inn
Slide 15: Hydro Polymers – Listing or divestment being considered
Hydro Polymers – Listing or divestment being considered Operating revenues in NOK million z Solid turnaround delivered 5 356 5 512 5 036 4 208 z Adjusted EBITDA first nine months 2006 NOK 794 million z Competitive position, strengthened through chlorine and ethylene 2004 2005 2005 2006 Jan-Sep inves
Slide 16: Strong financial position
Strong financial position z Net interest-bearing debt is estimated at NOK 4 billion at year-end 2006 z Maintain dividend policy - 30 percent average pay-out ratio over the cycle - 2006 dividend to be funded by Hydro’s oil and gas business z Increase leverage to finance attractive growth opportunitie
Slide 17: Preliminary carve-out statements
Preliminary carve-out statements First nine months ended NOK billion 30 September 2006 Operating revenues 81.8 Depreciation, depletion and amortization 3.1 Other operating cost 70.4 Operating income 8.3 Non-consolidated investees 0.7 Financial income (expense), net (0.1) Income before tax and minori
Slide 18: Hydro – growth and value creation
Hydro – growth and value creation z Strong return on capital z Operational excellence z Delivering new growth opportunities globally z Solid financial position
Slide 19: 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
Slide 20: Use of non-GAAP financial measures
Use of non-GAAP financial measures With respect to each non-GAAP financial measure Hydro uses in connection with its financial reporting and other public communications, Hydro provides a presentation of what Hydro believes to be the most directly comparable GAAP financial measure and a reconciliatio