Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Corporate Update (August 2004)
22 slides from Norsk Hydro Asa's corporate update, August 2004
Slide 1: Rolled Products segment
Hydro Aluminium Svein Richard Brandtzæg President, Rolled Products Rolled Products segment
Slide 2: Content
Content Segment overview How do we perform? The way forward 51145_5 08 2004 • 2 • H ydro M edia
Slide 3: Main messages
Main messages z Significantly improving operational performance z Shifting product mix gradually into higher margin segments z Firm margin management 51145_5 08 2004 • 3 • H ydro M edia
Slide 4: Rolled Products 2003
Rolled Products 2003 Main products Foil and strip for packaging, offset printing, transportation, and building applications Production 893 000 tonnes Employees* 4 250 Plant Sales Office * As per 31.12.2003 51145_5 08 2004 • 4 • H ydro M edia
Slide 5: Main products and applications
Main products and applications 51145_5 08 2004 • 5 • H ydro M edia
Slide 6: Product portfolio and main markets – 2003
Product portfolio and main markets – 2003 Shipments : 893 000 tonnes Markets (% of revenue) South Other Foil America 10% 16 % 4% North America Litho 5% 14 % Heat General strip Exchange 62 % Europe 8% 81% Revenues : NOK 17 825 million Foil 21 % Litho General strip 14 % 56 % Heat Exchange 9% 51145_5 0
Slide 7: Delivering according to plan
Delivering according to plan What we said in 2003 What have we done since then Improvement programs Reduce operating cost z Realised VAW integration synergies 11% above target. Actual 2003: € 16 million z Lets Roll program ongoing. Savings of € 13.3 million realized Increased output of high margin p
Slide 8: Key financial figures
Key financial figures EBIT and EBITDA 2002 – 2004 2003 NOK million 18 400 Revenues (millions) 1 000 CROGI % 6.4% Gross Investment * 12 600 800 600 367 704 400 200 424 Depreciation & 536 Amortisation 131 0 EBIT 2002 2003 1H 2004 - 200 -278 - 400 EBITDA 1H 2003 * Gross Investment by 31.12.2003 51145_5
Slide 9: Underlying EBITDA 2003
Underlying EBITDA 2003 NOK million 1 200 Recurring 1 000 Non-recurring 800 600 400 200 0 Reported Infrequent* Adjusted for non- Gain/loss on Adjusted also for recurring items inventories** recurring items *) Infrequent items mainly include items related to Let’s Roll programme **) Inventory loss fro
Slide 10: Underlying EBITDA 2004 (first half)
Underlying EBITDA 2004 (first half) NOK million 1 000 900 Non-recurring Recurring 800 700 600 500 2003 first 400 half 300 200 100 0 Reported YTD 2Q04 Infrequent* Adjusted for non- Gain/loss on Adjusted also for recurring items inventories** recurring items *) Infrequent items mainly include items re
Slide 11: Closing the performance gap
Closing the performance gap Underlying * EBITDA € million 150 z Improved cost position and optimised production system 100 (Let‘s Roll) z Continued growth in high- margin segments and further improved margin management 50 z Expanded product offerings – commercial and technical service (Coils&More) 0
Slide 12: Industry restructuring accelerates in Europe
Industry restructuring accelerates in Europe European* capacity ownership if Alcan spin-off and Alcoa purchases go ahead Alcan Others 14% 24% "SpinCo" Rusal 18% 1% Corus 7% Alcoa Hydro 20% 16% * Includes Eastern Europe & CIS Source: CRU 51145_5 08 2004 • 12 • H ydro Media
Slide 13: China has become the main driver for global market growth
China has become the main driver for global market growth z Chinese market for aluminium rolled products is expected to grow in average by 12% over the next 4 years (worldwide growth forecast at 4 - 5%) z Chinese consumption accounts for 11% of the total worldwide rolled products consumption z Marke
Slide 14: Well positioned in the higher value segments
Well positioned in the higher value segments Hydro market shares in % 30 Lithography 40 10 Foil 20 Heat exchanger 28 Can end 20 Worldwide Western Europe 51145_5 08 2004 • 14 • H ydro Media
Slide 15: Continue to build on competitive strengths
Continue to build on competitive strengths z Technology – World leader in lithographic sheet and foil quality – Further development in heat exchanger – Technology & market presence in key can stock market provides a base load for potential investments in developing markets z Assets – Alunorf is one
Slide 16: Keep focus on key value drivers
Keep focus on key value drivers z Focus on safety – TRI* rate significantly improved from 21 in 2002 to 15,5 in 2003 – TRI 8 first half 2004 z Fully exploit potential of existing asset base – Continued increase in capacity utilization: 90%** in 2003 – Performance system established including benchma
Slide 17: Priorities going forward
Priorities going forward z Deliver above cost of capital z Successful implementation of improvement programs z Continuing product mix optimisation and firm margin management z Strengthening positions in selected market segments z Prepare for future growth in new markets 51145_5 08 2004 • 17 • H ydro
Slide 18: Forward-looking statements/ use of non-GAAP financial measures
18 Forward-looking statements/ use of non-GAAP financial measures In order to utilize the “safe harbor” 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 statemen
Slide 19: Appendix
Hydro Aluminium HYDRO Appendix
Slide 20: Gains & losses on inventory: revaluation effect of inventory
“Gains & losses on inventory” => Revaluation effect of inventory z HARP’s volume of metal purchased physically is in average equal to tonnage of finished products delivered z Purchased metal arrives when finished product is shipped to customer Î Inventory level remains unchanged, on average z Applyi
Slide 21: Estimation of revaluation effect by simplified calculation
Estimation of revaluation effect by simplified calculation z Applying the Fifo principle for inventory valuation leads to constant re-evaluation of HARP’s inventories z HARP’s inventory (FiFo) has the following pricing structure z 45% is priced LME m-2 z 45% is priced LME m-3 z 10% is priced LME m-4
Slide 22: Revaluation effect: Actual vs. Formula calculation
Revaluation effect: Actual vs. Formula calculation TEUR 10000 8000 6000 4000 2000 0 2003- 2003- 2003- 2003- 2003- 2003- 2003- 2003- 2003- 2003- 2003- 2003- 2004- 2004- 2004- 2004- 2004- 2004- 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 -2000 -4000 actual Metal effect calc. Met al effect @