Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Q3 2002 Earnings Presentation
57 slides from Norsk Hydro Asa's earnings presentation, Oct 21, 2002
Slide 1: Third quarter 2002
Third quarter 2002 Norsk Hydro ASA 21 October 2002
Slide 2: Highlights third quarter, 2002
Norsk Hydro - Third quarter 2002 2 Highlights third quarter, 2002 High oil and gas production – increased 2002 production target High exploration charge, NOK 1.3 billion Challenging aluminium markets – weak earnings Solid Agri performance in low price environment Strong NOK reduces earnings High tax
Slide 3: Net income
Norsk Hydro - Third quarter 2002 3 Net income Per quarter NOK million Gains from divestments 6 000 4 859 5 000 3 896 4 000 3 235 3 000 2 775 2 840 2 451 2 180 2 132 2 000 1 260 1 333 1 144 1 000 709 813 634 513 0 1999 2000 2001 2002 Accumulated 3 416 13 981 7 892 5 485 39214E -10.2002- *3 - Hydro Me
Slide 4: Earnings before interest, tax, depreciation and amortization (EBITDA)
Norsk Hydro - Third quarter 2002 4 Earnings before interest, tax, depreciation and amortization (EBITDA) Per quarter NOK million 14 000 12 877 12 387 12 000 11 359 10 996 10 349 9 970 10 000 9 131 9 125 8 588 8 000 7 314 7 297 7 490 5 790 6 000 5 029 3 811 4 000 2 000 0 1999 2000 2001 2002 Accumulat
Slide 5: Consolidated income statements
Norsk Hydro - Third quarter 2002 5 Consolidated income statements 3nd quarter 3nd quarter NOK million 2002 2001 Operating revenues 40 560 36 086 Operating income 3 945 4 741 Equity in net income of non-consolidated investees (356) 17 Interest income and other financial income 210 655 Other income, n
Slide 6: Net financial income (expense)
Norsk Hydro - Third quarter 2002 6 Net financial income (expense) 3rd quarter 3rd quarter NOK million 2002 2001 Interest income 305 730 Dividends and net gain/(loss) on securities (95) (75) Interest income and other financial income 210 655 Interest expense (761) (902) Capitalized interest 162 153 N
Slide 7: Variance analysis Hydro group
Norsk Hydro - Third quarter 2002 7 Variance analysis Hydro group NOK million Year to date 3rd quarter 2002 25 203 7 490 2001 30 460 9 131 Variance EBITDA (5 257) (1 641) - Prices and currency, E&P * (4 730) (1 045) - Margin incl. currency effects (3 670) (850) - Volume 3 525 1 090 - Fixed costs 1 60
Slide 8: EBITDA
Norsk Hydro - Third quarter 2002 8 EBITDA Individual operating segment 3rd quarter 3rd quarter NOK million 2002 2001 Exploration and Production 5 022 6 533 Energy and Oil Marketing 429 224 Hydro Oil and Energy 5 451 6 757 Metals 474 287 Rolled Products 101 46 Extrusion and Automotive 274 210 Other a
Slide 9: Earnings per share
Norsk Hydro - Third quarter 2002 9 Earnings per share NOK Gains from divestments 20 18.6 18 16 14.9 14 12.4 12 10.6 11.0 10 9.4 8.4 8.3 8 5.5 5.2 6 4.4 4 3.1 3.1 2.4 2.0 2 0 1999 2000 2001 2002 13.8 53.4 30.5 21.3 39214E -10.2002- *9 - Hydro Media
Slide 10: Cash flow per share
Norsk Hydro - Third quarter 2002 10 Cash flow per share NOK 40 34.6 35 30 28.3 26.2 25 23.1 23.7 21.0 19.8 20 18.8 18.5 18.0 15.6 14.3 14.5 15 13.5 11.1 10 5 0 1999 2000 2001 2002 58.3 107.0 75.8 60.3 39214E -10.2002- *10 - Hydro Media
Slide 11: Net interest-bearing debt/shareholders' equity
Norsk Hydro - Third quarter 2002 11 Net interest-bearing debt/shareholders’ equity* Ratio 0.71 0.7 0.6 0.5 0.41 0.43 0.4 0.28 0.3 0.2 0.1 0 1999 2000 2001 30.09.02 * Net interest-bearing debt divided by shareholders' equity plus minority interest 39214E -10.2002- *11 - Hydro Media
Slide 12: Oil and Energy – highlights third quarter
Norsk Hydro - Third quarter 2002 12 Oil and Energy – highlights third quarter Production 452 000 boed, up 33 000 from Q3 2001 Realized oil price USD 27.1 per barrel, in NOK down 7.5% for oil and 23% for gas compared to Q3 2001 Exploration Expensed acquisition costs and high drilling costs Discoverie
Slide 13: Oil and Energy
Norsk Hydro - Third quarter 2002 13 Oil and Energy EBITDA NOK million Eliminations Energy and Oil Marketing Exploration and Production 8 500 7 976 7 986 7 894 7 697 7 425 7 500 6 982 6 757 6 500 5 847 6 155 5 528 5 451 5 314 5 500 4 500 4 075 3 500 2 500 1 962 2 228 1 500 500 - 500 1999 2000 2001 20
Slide 14: Operating costs per barrel oil equivalents
Norsk Hydro - Third quarter 2002 14 Operating costs per barrel oil equivalents NOK/boe 106.1 110 91.5 90.1 Exploration/ 90 85.0 other costs Depreciation 70 excess value Saga Depreciation/ 50 abandonment 30 Field-/prod. costs 10 Net tariffs/other inc. -10 1999 2000 2001 Year to date 2002 Year to date
Slide 15: Petroleum production
Norsk Hydro - Third quarter 2002 15 Petroleum production Per quarter 1 000 boe/day Oil Oil Norway Oil International Gas Norway 500 482 443 451 447 452 442 429 427 419 411 104 400 382 385 88 104 371 110 93 115 110 98 86 92 67 57 74 53 43 15 11 18 43 287 300 272 16 71 58 200 314 331 337 325 313 333 32
Slide 16: Exploration
Norsk Hydro - Third quarter 2002 16 Exploration Expensed, Activity Capitalized NOK million capitalized Expensed current period current period previous years Q1 Misc. Norway Gulf Of Mexico (Kate) 623 316 406 714 Hebron Q2 Angola (Block 34 and Block25) 634 86 387 936 Trinidad and Tobago Q3 Angola (Blo
Slide 17: Exploration — significant wells
Norsk Hydro - Third quarter 2002 17 Exploration — significant wells Location Well expected Norsk Hydro share finalised Norway - Solsikke 50% 4Q 2002 Canada - Flemish pass 30% 2003 GoM - 2 wells 25% 2002/2003 Iran - Anaran 100% 2003 39214E - 10.2002 – *17 - Hydro Media
Slide 18: Oil and Energy – prospects
Norsk Hydro - Third quarter 2002 18 Oil and Energy – prospects Q4 production target 500 000 boed 2002 target lifted from 455 000 to 470 000 boed Q4 exploration Solsikke (NCS), Voss (GoM) and Zinia (Angola block 17) Tune start up in Q4, a gas field tie-in to Oseberg 39214E - 10.2002 – *18 - Hydro Med
Slide 19: Aluminium – highlights third quarter
Norsk Hydro - Third quarter 2002 19 Aluminium – highlights third quarter Weak markets Realized price USD 1 379 per tonne, vs USD 1 472 in Q3 2001 Strengthened downstream market share in Europe Permanent capacity reduction in Extrusion North America Cost reductions and integration on track Rationaliz
Slide 20: Aluminium
Norsk Hydro - Third quarter 2002 20 Aluminium EBITDA NOK million Other and Eliminations Extrusion and Automotive 2 100 Rolled Products 1 900 1 803 1 430 Metals 1 659 1 700 1 566 1 500 1 292 1 300 1 065 1 073 1 100 889 849 899 827 900 773 526 700 473 500 300 (302) 100 - 100 - 300 - 500 1999 2000 2001
Slide 21: Metals - highlights
Norsk Hydro - Third quarter 2002 21 Metals - highlights Realized prices in NOK decreased approximately 20% vs Q3 2001 Product premiums still at low level Depreciated BRL vs USD causes unrealized currency loss in Brazil of NOK 380 million, YTD NOK 620 million Brownfield expansions in Sunndal, Alunort
Slide 22: Rolled Products - highlights
Norsk Hydro - Third quarter 2002 22 Rolled Products - highlights Weak market – increased market share Operational performance of major mills on plan, performance gap in Holmestrand Inventory loss of approximately NOK 100 million from declining metal prices 39214E - 10.2002 – *22 - Hydro Media
Slide 23: Extrusion and Automotive - highlights
Norsk Hydro - Third quarter 2002 23 Extrusion and Automotive - highlights European extrusion – improved performance in challenging market Increased market share Operational improvements US extrusion – permanent closure of plant and offices NOK 90 million charged Automotive – low demand for key car m
Slide 24: Aluminium improvement program on track
Norsk Hydro - Third quarter 2002 24 Aluminium improvement program on track Workforce reduction Cost reductions 2000 2500 1750 Magnesium Aluminium Magnesium Aluminium 1500 2000 1250 1500 1000 750 1000 500 500 250 0 0 YTD Q2 YTD Q3 Target 2002 Target 2003 YTD Q2 YTD Q3 Target Target Target 2002 2003 2
Slide 25: Aluminium – prospects
Norsk Hydro - Third quarter 2002 25 Aluminium – prospects Challenging markets Strengthened self-help initiatives Improve cost position through brownfield expansions (Sunndal, Alunorte, Alouette) 39214E - 10.2002 – *25 - Hydro Media
Slide 26: Agri – highlights third quarter
Norsk Hydro - Third quarter 2002 26 Agri – highlights third quarter Satisfactory start of new fertilizer season in Europe Strong volume growth outside Europe Continued productivity improvements Strong returns for gas and chemicals activities Still low prices on key fertilizers 39214E - 10.2002 – *26
Slide 27: Agri
Norsk Hydro - Third quarter 2002 27 Agri EBITDA NOK million 2 000 1 570 1 500 1 383 1 198 1 078 1 099 951 1 008 1 000 819 705 725 719 604 503 500 0 - 40 - 500 - 427 -1 000 1999 2000 2001 2002 Accumulated 640 3 553 4 402 3 300 39214E - 10.2002 – *27 - Hydro Media
Slide 28: Agri – prospects
Norsk Hydro - Third quarter 2002 28 Agri – prospects Increasing ammonia price, urea price still low Flat fertilizer consumption in Europe compared with last season Positive NPK volume outlook in Asia Recovery in grain prices 39214E - 10.2002 - *28 - Hydro Media
Slide 29: Norsk Hydro – prospects
Norsk Hydro - Third quarter 2002 29 Norsk Hydro – prospects Realize value creation potential after VAW acquisition Increasing oil and gas production Growth in non-European fertilizer sales Financial strength a priority NOK 10 billion divestment program in progress 39214E -10.2002- *29 - Hydro Media
Slide 30: Additional information
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Slide 31: Operating income
Norsk Hydro - Third quarter 2002 31 Operating income Individual operating segment 3rd quarter 3rd quarter NOK million 2002 2001 Exploration and Production 2 844 4 499 Energy and Oil Marketing 326 122 Eliminations - 1 Hydro Oil and Energy 3 170 4 622 Metals 441 (163) Rolled Products (18) 18 Extrusion
Slide 32: Equity in net income of non-consolidated investees
Norsk Hydro - Third quarter 2002 32 Equity in net income of non-consolidated investees 3rd quarter 3rd quarter NOK million 2002 2001 Exploration and Production 6 19 Energy and Oil Marketing 48 11 Eliminations - (2) Hydro Oil and Energy 54 28 Metals (329) (70) Rolled Products (18) - Extrusion and Aut
Slide 33: Infrequent items – EBITDA
Norsk Hydro - Third quarter 2002 33 Infrequent items – EBITDA Individual operating segment 3rd quarter 2nd quarter 1st quarter NOK million 2002 2002 2002 Exploration and Production - - 77 Hydro Oil and Energy - - 77 Metals (20) (93) (169) Rolled Products (20) (162) (48) Extrusion and Automotive (105
Slide 34: Statement of Cash Flow
Norsk Hydro - Third quarter 2002 34 Statement of Cash Flow Year to date Year to date NOK million 2002 2001 Operating activities: Net income 5 485 6 748 Depreciation, depletion and amortization 10 206 9 171 Other adjustments 4 093 6 961 Net cash provided by operating activities 19 784 22 880 Investin
Slide 35: Consolidated balance sheet
Norsk Hydro - Third quarter 2002 35 Consolidated balance sheet NOK million 30.09.02 30.09.01 31.12.2001 Cash and cash equivalents 10 571 31 241 27 148 Other liquid assets 1 956 2 304 2 421 Receivables 39 643 35 013 34 960 Inventories 17 238 16 776 15 794 Non-current assets 139 638 115 106 117 599 To
Slide 36: Depreciation
Norsk Hydro - Third quarter 2002 36 Depreciation Individual operating segment 3rd quarter 3rd quarter NOK million 2002 2001 Exploration and Production 2 157 1 951 Energy and Oil Marketing 51 83 Eliminations - (1) Hydro Oil and Energy 2 208 2 033 Metals 316 468 Rolled Products 116 26 Extrusion and Au
Slide 37: Investments
Norsk Hydro - Third quarter 2002 37 Investments NOK billion SDFI 60 VAW Saga 53 Other activities 50 Exploration and Production 39.8 40 30 20 16.6 16.3 12.3 10 0 1999 2000 2001 Year to date 2002 39214E -10.2002- *37 - Hydro Media
Slide 38: Net interest bearing debt
Norsk Hydro - Third quarter 2002 38 Net interest bearing debt* NOK million 50 000 45 000 43 061 40 000 35 000 32 786 29 705 30 000 25 000 21 129 20 000 15 000 10 000 5 000 0 1999 2000 2001 30.09.02 * Interest bearing debt less cash and cash equivalents 39214E -10.2002- *38 - Hydro Media
Slide 39: Variance analysis Oil and Energy
Norsk Hydro - Third quarter 2002 39 Variance analysis Oil and Energy NOK million Year to date 3rd quarter 2002 17 453 5 451 2001 22 076 6 757 Variance EBITDA ( 4 623) (1 306) - Prices and currency - Oil (1 450) 550 - Gas (1 200) (335) - Currency (2 070) (1 185) - Put options (10) (75) (4 730) (1 045
Slide 40: Variance analysis Exploration and Production
Norsk Hydro - Third quarter 2002 40 Variance analysis Exploration and Production NOK million Year to date 3rd quarter 2002 16 163 5 022 2001 20 497 6 533 Variance EBITDA (4 334) (1 511) - Prices and currency - Oil (1 450) 550 - Gas (1 200) (335) - Currency (2 070) (1 185) - Put options (10) (75) (4
Slide 41: Variance analysis Energy and Oil Marketing
Norsk Hydro - Third quarter 2002 41 Variance analysis Energy and Oil Marketing NOK million Year to date 3rd quarter 2002 1 290 429 2001 1 579 224 Variance EBITDA (289) 205 - Margin (305) 75 - Volume 80 55 - Fixed costs 70 50 - Depreciation 35 30 - Other (5) (5) Variance Operating income (127) 204 -
Slide 42: Price development – crude oil
Norsk Hydro - Third quarter 2002 42 Price development – crude oil Average Brent Blend dated per quarter USD/bbl NOK/bbl 35 300 30 USD/bbl NOK/bbl 250 25 200 20 150 15 100 10 5 50 0 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 3rd quarter 2002: 203 NOK/bbl 27 USD/bbl 39214E - 10.2002 - *42 - H
Slide 43: International activity
Norsk Hydro - Third quarter 2002 43 New fields on stream 2002 - 2005 Hydro share Development PDO Submittal International activity Terra Nova 20 000 boe/day PDO Approval/ Jasmim* 5 000 Sanctioning Start Production Dalia 20 000 2006 Rosa* 12 000 2006 Kharyaga 2 +3 9 000 (phase 1-3) 2006 Murzuq 3 000 2
Slide 44: Production per field
Norsk Hydro - Third quarter 2002 44 Production per field Field (Oil incl. Daily Daily NGL/condensate) average average Hydro’s Hydro’s share boe/day boe/day production Q3 2001 Q3 2002 Percent BOE/Day Oseberg 192 000 191 000 34.00 64 803 Snorre 262 000 197 000 17.65 34 780 Oseberg South 87 000 76 000
Slide 45: Exploration activity and costs
Norsk Hydro - Third quarter 2002 45 Exploration activity and costs NOK million Expensed share 1400 1300 1200 1100 1000 900 800 700 600 500 400 300 200 100 0 -100 -200 -300 -400 1/99 2/99 3/99 4/99 1/00 2/00 3/00 4/00 1/01 2/01 3/01 4/01 1/02 2/02 3/02 Capitalized Cost reduction repayment Angola shar
Slide 46: Variance analysis Aluminium
Norsk Hydro - Third quarter 2002 46 Variance analysis Aluminium NOK million Year to date 3rd quarter 2002 3 018 827 2001 2 845 526 Variance EBITDA 173 301 - Margin (2 100) (435) - Volume 85 130 - Fixed costs 725 295 - Depreciation 510 335 - Infrequent items and restructuring costs (475) (50) - Tradi
Slide 47: Variance analysis Metals
Norsk Hydro - Third quarter 2002 47 Variance analysis Metals NOK million Year to date 3rd quarter 2002 1 739 474 2001 2 115 287 Variance EBITDA (376) 187 - Margin (1 775) (510) - Volume 200 300 - Fixed costs 570 230 - Depreciation 420 310 - Infrequent items and restructuring costs (105) 50 - Trading
Slide 48: Variance analysis Rolled Products
Norsk Hydro - Third quarter 2002 48 Variance analysis Rolled Products NOK million Year to date 3rd quarter 2002 211 101 2001 137 46 Variance EBITDA 74 55 - Margin (50) (30) - Volume (35) 5 - Fixed costs (30) (15) - Infrequent items (230) (20) - New business (VAW) 185 30 - Other (5) (5) Variance Oper
Slide 49: Variance analysis Extrusion and Automotive
Norsk Hydro - Third quarter 2002 49 Variance analysis Extrusion and Automotive NOK million Year to date 3rd quarter 2002 799 274 2001 723 210 Variance EBITDA 76 64 - Margin (255) 100 - Volume (100) (195) - Fixed costs 185 85 - Depreciation 90 25 - Infrequent items (140) (80) - New business (VAW and
Slide 50: Aluminium – Key figures by segment
Norsk Hydro - Third quarter 2002 50 Aluminium – Key figures by segment Volumes and prices Q3 2002 Q2 2002 Q3 2001 Primary production (Kmt) 348 342 199 Total metal sales (Kmt) *) 521 559 279 LME, realized (USD/t) 1 379 1 392 1 472 USD/NOK, realized **) 8.03 8.77 9.19 Rolled Products external shipment
Slide 51: Aluminium price
Norsk Hydro - Third quarter 2002 51 Aluminium price 3 months LME price, average per quarter USD per tonne 2 000 1 800 1 600 1 400 1 200 1 000 90 91 92 93 94 95 96 97 98 99 00 01 02 39214E - 10.2002 - *51 - Hydro Media
Slide 52: Inventories – primary aluminium
Norsk Hydro - Third quarter 2002 52 Inventories – primary aluminium 1 000 tonnes LME (London Metal Exchange) 5 000 IAI (Producers' inventories) 4 000 3 000 2 000 1 000 Year to date 0 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Sources: IAI and Reute
Slide 53: Variance analysis Agri
Norsk Hydro - Third quarter 2002 53 Variance analysis Agri NOK million Year to date 3rd quarter 2002 3 300 719 2001 3 303 725 Variance EBITDA (3) (6) - Margin (1 110) (345) - Volume 335 230 - Fixed costs 650 220 - Depreciation 270 160 - Infrequent items 320 (45) - Other 65 10 Variance Operating inco
Slide 54: Fertilizer prices
Norsk Hydro - Third quarter 2002 54 Fertilizer prices CAN Germany Ammonia Bulk delivered warehouse Fob Caribbean USD/tonne USD/tonne 250 250 200 200 150 150 100 100 50 50 0 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 3Q. 3Q. DAP Urea Bulk fob
Slide 55: Nitrate premium above international urea price
Norsk Hydro - Third quarter 2002 55 Nitrate premium above international urea price USD/mt N CAN Germany Urea fob Middle East Diff. 500 400 300 200 136 100 0 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 39214E - 10.2002
Slide 56: Variance analysis Petrochemicals
Norsk Hydro - Third quarter 2002 56 Variance analysis Petrochemicals NOK million Year to date 3rd quarter 2002 285 154 2001 363 117 Variance EBITDA (78) 37 - Margin (200) (30) - Volume (70) - - Fixed costs 155 60 - Depreciation 35 10 - Infrequent items 75 - - Other (10) (5) Variance Operating income
Slide 57: Safe harbour statement
Norsk Hydro - Third quarter 2002 57 Safe harbour statement In order to utilize the "Safe Harbour" provisions of the United States Private Securities Litigation Reform Act of 1995, Hydro is providing the following cautionary statement: This presentation contains certain forward-looking statements wit