Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — 2016 Global Metals, Mining & Steel Conference
25 slides from Norsk Hydro Asa's conference presentation, May 11, 2016
Slide 1: Norsk Hydro
Norsk Hydro Svein Richard Brandtzæg 2016 Global Metals, Mining & Steel Conference
Slide 2: Cautionary note in relation to certain forward-looking statements
Cautionary note in relation to certain forward-looking statements 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
Slide 3: Well positioned in challenging markets
Norsk Hydro Well positioned in challenging markets 3
Slide 4: Leading performance compared to aluminium peers
Leading performance compared to aluminium peers First-quartile aluminium producer, 2016 Smelter BOC curve by company Strongest balance sheet, USD/t Total Debt/Total Equity, 2011-2015 2 000 1 500 288 % 275 % 1 000 72 % 25 % 13 % 500 0 10 000 20 000 30 000 40 000 50 000 60 000 First quartile alumina p
Slide 5: A resource-rich, global aluminium company
A resource-rich, global aluminium company Robust positions along the entire value chain A complete aluminium company Norway’s • Primary aluminium production in Norway, Germany, Primary Qatar, Slovakia, Brazil, Canada, Australia aluminium Long 2nd largest • 10 TWh captive hydropower production hydrop
Slide 6: Building competitiveness through HSE, CSR and compliance
Building competitiveness through HSE, CSR and compliance Safety performance Carbon-neutral from a (TRI) at industry benchmark life-cycle perspective High focus on compliant On track 3.6/2.0* Own employees/ Contractors behavior and practices • HSE, CSR and compliance always first on the Hydro • Clear
Slide 7: Uncertain markets
Uncertain markets Solid demand growth 7
Slide 8: Strong long-term growth drivers across all segments
Strong long-term growth drivers across all segments Recycling taking a bigger share Strong demand drivers in key aluminium segments Semis demand CAGR 2015 – 2025 Growth in automotive vehicle production Primary Transport Aluminium content in cars increasing 5–6% 3–4% Growth in other transport modes,
Slide 9: Environmental regulations accelerate substitution across segments
Environmental regulations accelerate substitution across segments Copper substituion in HVAC&R, Steel substitution in automotive cabling and transmission lines Key enabler for energy-efficient buildings 13% 6x 40% HVAC&R* BiW 2016-2023 market growth of energy CAGR potential from worldwide consumed ~
Slide 10: Aluminium market expected to be largely balanced in 2016
Aluminium market expected to be largely balanced in 2016 Higher risk of capacity restarts in China Supply development 2016 Market balance 2016 Mill tonnes Milll tonnes Estimated cash negative in 20161) 15 % 20 % 1.5 – 2.0 mill tonnes World ex-China China Oversupply ~2.4 (0.5) – 0.5 ~1.2 mill tonnes
Slide 11: SHFE prices increase on tighter market, stable all-in LME prices
SHFE prices increase on tighter market, stable all-in LME prices USD/mt USD/mt USD/mt NOK/mt 2 100 2 100 3 000 18 000 1 900 1 900 2 600 16 000 1 700 1 700 2 200 14 000 1 500 1 500 1 800 12 000 1 300 1 300 1 400 10 000 Feb-14 Jul-14 Dec-14 May-15 Oct-15 Apr-16 Mar-16 jan 12 jun 13 nov 14 apr 16 LME 3
Slide 12: Shrinking arbitrage amid rising SHFE prices
Shrinking arbitrage amid rising SHFE prices Preliminary exports figures indicate increased exports in March Semis exports Comp. adv. (monthly, kmt) (USD/mt) 500 1 000 450 800 400 Improved comp. adv. China 350 600 300 400 250 200 200 150 0 100 ( 200) 50 0 ( 400) jan.07 nov.08 sep.10 jul.12 mai.14 mar
Slide 13: Alumina prices rebound on tightening market balance
Alumina prices rebound on tightening market balance Bauxite market may be affected by refinery curtailments Platts alumina index (PAX) China bauxite imports, volume and price by country USD/mt Percent USD/tonne CIF 450 20% 100 19% 90 400 80 18% 350 70 17% 60 300 16% 50 40 15% 250 30 14% 20 200 10 13
Slide 14: Strengthening relative industry position with ambitious targets
Norsk Hydro Strengthening relative industry position with ambitious targets 14
Slide 15: Proven track-record of productivity gains continues
Proven track-record of productivity gains continues Hydro’s improvement drive until 2015 Hydro’s new improvement ambition Tailor-made ambitions across Total improvements 2011-2015: Total improvements of the value chain BNOK 4.5¹ BNOK 2.9 from 2016-20192 Better ‘Energy Primary Better Metal Aspiration
Slide 16: Structurally improved cost position
Structurally improved cost position Productivity gains supported by currency All-in implied primary cost and margin, USD/mt 1) Implied alumina cost and margin, USD/mt 1) 300 475 23 2,500 2300 2175 350 300 52 2,000 1 875 250 2 050 200 1,500 1 650 150 1,000 1 700 264 100 205 1 250 500 50 0 0 Q2’12-Q1’
Slide 17: Significant operational and commercial improvements in Bauxite & Alumina
Significant operational and commercial improvements in Bauxite & Alumina Annualized bauxite production, million mt Sales exposure to index and short term pricing* Paragominas 11,7 10,9 10,8 100 % 100% 10,2 9,0 9,1 9,5 9,1 9,0 8,3 8,7 90 % 425 90% 9,9 7,1 6,0 80 % 80% 70 % 70% 1Q13 2Q13 3Q13 4Q13 1Q1
Slide 18: Extending the technology and innovation lead
Extending the technology and innovation lead Key to maintain and further improve Hydro’s competitive position Step-change Instability Stability Bauxite & Alumina Primary Metal Rolled Products Technology approach • Debottlenecking to go beyond • Testing aluminium production • Automotive line 3 to lif
Slide 19: Taking productivity beyond lean operations with the Karmøy technology pilot
Taking productivity beyond lean operations with the Karmøy technology pilot With spin-off effects for the entire portfolio • Technology pilot with production of 75 000 mt − 48 cells HAL4e technology – 12.3 kWh/kg − 12 cells HAL4e Ultra - 11.5 – 11.8 kWh/kg • Spin-off technology elements for existing
Slide 20: Optimizing product portfolio by expanding in higher-margin segments
Optimizing product portfolio by expanding in higher-margin segments Pursuing attractive automotive growth opportunity Increasing share of automotive in Hydro in car models Rolled Products’ portfolio 20 % 14 % 12 % Audi Q7 Peugeot BMW 7 series 308 Porsche Macan Audi A6 New Mercedes C Class T 2010 201
Slide 21: Strong improvement trend in Sapa JV
Strong improvement trend in Sapa JV 1 BNOK in restructuring gains and synergies delivered one year ahead of plan Sapa restructuring agenda* Sapa results (100 % basis), MNOK Sapa 100% basis MNOK 1,407.0 1 586 1 035 888 567 Underlying EBIT Underlying Net income Q2’14-Q1’15 Q2’15-Q1’16 • Strong demand
Slide 22: Managing industry cyclicality through a prudent financial framework
Managing industry cyclicality through a prudent financial framework Reliable Financial Disciplined Lifting cash flow shareholder Effective risk strength capital potential remuneration management and flexibility allocation policy Cost improvements: Investment grade • Long-term sustaining Revised divi
Slide 23: Hydro aspiration supported with ambitious mid-term strategic goals
Hydro aspiration supported with ambitious mid-term strategic goals Ambitions Target Timeframe • Improve safety performance, strive for injury free environment TRI<2 2020 • Deliver on Better improvement ambition BNOK 2.9 2019 • Secure new competitive sourcing contracts in Norway post 2020 4-6 TWh 202
Slide 24: Hydro 2016
Hydro 2016 Well-positioned to create value in challenging markets • Strengthening relative industry position through improvement ambitions and R&D lead • Securing resources for future decades • Re-positioning portfolio towards high-margin markets and advanced customers • Financial strength through r
Slide 25: Infinite Aluminium
INFINITE ALUMINIUM
Norsk Hydro — 2016 Global Metals, Mining & Steel Conference on 6ix