Norsk Hydro ASA · OSL:NHY
Norsk Hydro ASA — Investor Presentation (March 2005)
62 slides from Norsk Hydro ASA's investor presentation, Mar 3, 2005
Slide 1: 100 years of viability
1905 1929 1943 1963 1967 1969 1986-1988 2002-2004 100 years of viability 2005-03-03
Slide 2: A viable society. A need. An idea. 36,000 professionals.
z A viable society. A need. An idea. 36,000 professionals. Energy. Cooperation. Aluminium. Determination. Pushing boundaries. Respect. Nature. Courage. 100 years. Thinking ahead. 53609_E • Hydro Media • 04.2005 • 2
Slide 3: Hydro's mission
Hydro’s mission Hydro creates a more viable society by developing natural resources and products in innovative and efficient ways 53609_E • Hydro Media • 04.2005 • 3
Slide 4: From hydroelectric development to viability
From hydroelectric development to viability 1905 2005 1905 1929 1943 1963 1967 1969 1986-1988 2002-2004 Hydro is To the Bombs Modern Hydro The fruits Oil is Gaining An born coast and develops of co- discov- confid- aluminium sabotage operation ered ence heavy- weight 53609_E • Hydro Media • 04.2005
Slide 5: Hydro is born
1905 – 1918 Hydro is born z 1903: Sam Eyde acquires Rjukan Falls z 1905: Hydro is formed z 1907: Production of hydroelectric power and fertilizers starts up at Notodden z 1907: Construction of the world’s biggest hydro-power plant commences at Rjukan z 1915-16: Rjukan development completed 53609_E •
Slide 6: Sam Eyde – Hydro's first CEO
1905 –1917 Sam Eyde – Hydro’s first CEO z Active engineer and entrepreneur z Creates a number of new companies early in the 1900s z Unyielding faith in the opportunities represented by waterfalls z Establishes the platform for the first industrial production of saltpetre fertilizer together with the
Slide 7: First industrial production of mineral fertilizer
1907 First industrial production of mineral fertilizer Important breakthrough for world food supply 53609_E • Hydro Media • 04.2005 • 7
Slide 8: Sigurd Kloumann – Hydro's first project leader
Sigurd Kloumann – Hydro’s first project leader z At the age of 26, builds Hydro’s first power station and plant at Notodden z Then goes on to direct construction of world’s biggest power station at Rjukan z Establishes aluminium industrv and the small community of Høyanger z Delivers on time and on
Slide 9: To the coast
1920 – 1940 To the coast z 1920s bring setbacks and hardship z Fertilizer production has to be cut z Major new project on the coast – at Herøya z Workforce reductions at Notodden and Rjukan z Boardroom battle – Sam Eyde wins support for Haber-Bosch technology z Unpopular collaboration between Hydro
Slide 10: Bombs and sabotage hit Hydro and its employees
1943 Bombs and sabotage hit Hydro and its employees z The plants at Herøya are bombed by American planes z Many Hydro employees and civilians lose their lives z Allied bombing campaign to terminate heavy-water production at Vemork z Bold sabotage strike paralyses plant 53609_E • Hydro Media • 04.200
Slide 11: Modern Hydro emerges
1963 Modern Hydro emerges z Hydro modernizes fertilizer production by means of gas- based ammonia production z Enters into aluminium production z Decides to participate in North Sea oil exploration med seven French oil companies 53609_E • Hydro Media • 04.2005 • 11
Slide 12: Employees and management learn that 1 + 1 = 3
1967 Employees and management learn that 1 + 1 = 3 z Progressive cooperation trials introduced at Herøya z Cooperation on rationalization, efficiency improvement and cost awareness z Workers gain greater responsibility z Greater opportunities for more varied tasks z Cooperation trials receive intern
Slide 13: Hydro discovers oil – as partner on the Ekofisk-field in the North Sea
1969 Hydro discovers oil – as partner on the Ekofisk-field in the North Sea z Following several years exploration, Hydro and its French partners in the Petronord group make a major discovery in the North Sea in 1969 z Oil exploration conducted in conjunction with Phillips, the American company that
Slide 14: Internationalization gets under way – in Qatar
1970 Internationalization gets under way – in Qatar Construction of a fertilizer plant in the Persian Gulf provides international project experience 53609_E • Hydro Media • 04.2005 • 14
Slide 15: Petrochemical plants at Rafnes built
1974-76 Petrochemical plants at Rafnes built 53609_E • Hydro Media • 04.2005 • 15
Slide 16: Growing self-confidence
1986 Growing self-confidence z Launches extensive environmental and safety turnaround operation z Acquisition of Årdal and Sunndal Verk (ÅSV) creates major aluminium company z Hydro listed on New York stock exchange 53609_E • Hydro Media • 04.2005 • 16
Slide 17: Remarkable turnaround operation: environment and safety first priority
1987 Remarkable turnaround operation: environment and safety first priority z Environmentalists launch fierce major attack on industry z Major environmental clean-up operation gets under way at Herøya z Sharp focus on in-house safety z Environmental and safety issues top priority in all parts of the
Slide 18: Oil production comes on stream on Oseberg
1988 Oil production comes on stream on Oseberg z Hydro’s first North Sea operator assignment z Innovative, yet controversial development concepts z On stream earlier than planned z Total cost = NOK 27 billion – five billion under budget z Technical and financial success for Hydro 53609_E • Hydro Med
Slide 19: Internationalization and growth in oil and gas
1990 – 1994 Internationalization and growth in oil and gas z New magnesium production comes on stream in Canada z North Sea concentration and further development of Oseberg and Troll Oil z Hydro extends international oil and gas engagement to Canada and Angola z The Hydro Texaco joint venture become
Slide 20: Wide-ranging technology breakthroughs
1995 Wide-ranging technology breakthroughs z Work on new oil technology bears fruit z Horizontal precision drilling makes “impossible” projects profitable z Best of both worlds on Troll: a major gasfield that also contains oil z In 2000 Troll becomes number one oil producer on the Norwegian continen
Slide 21: Saga acquisition boosts oil company ranking
1999 Saga acquisition boosts oil company ranking z Hydro acquires Saga Petroleum and boosts its position as an oil company z Transaction’s total value: NOK 20.2 billion z Hydro’s operating revenues exceed NOK 100 billion for the first time z New strategy and restructuring 53609_E • Hydro Media • 04.
Slide 22: Extensive restructuring throughout the company
2000 – 2005 Extensive restructuring throughout the company z Dawn of a new century marked by extensive restructuring z Oil operations increase efficiency following Saga acquisition z Aluminium operations subject to major cost cuts z Agri Turnaround puts fertilizer operations back on sound financial
Slide 23: Hydro: an aluminium heavyweight
2002 Hydro: an aluminium heavyweight Acquires VAW and establishes itself as one of three global aluminium companies 53609_E • Hydro Media • 04.2005 • 23
Slide 24: Fertilizer operations divested to become Yara
2004 Fertilizer operations divested to become Yara Independent after 99 years as a Hydro-owned business 53609_E • Hydro Media • 04.2005 • 24
Slide 25: Onward with Energy and Aluminium
2005 Oneward with Energy and Aluminium z Hydro commemorates its centennial by delivering record financial results and achieving solid market positions 53609_E • Hydro Media • 04.2005 • 25
Slide 26: Facts and figures for a record year
Facts and figures for a record year 53609_E • Hydro Media • 04.2005 • 26 53609_N
Slide 27: Facts and figures for 2004
Facts and figures for 2004 z Even stronger Hydro posts record results z Good operations and efficient project execution z Very good market conditions z Big profitability improvements 53609_E • Hydro Media • 04.2005 • 27
Slide 28: A large international organization
A large international organization Hydro in total: 34, 648 employees * Others O&E Norway 12 130 15 % 10 % Germany 5 630 USA 3 780 France 2 043 UK 1 459 Italy 1 267 Sweden 1 223 Denmark 971 Aluminium Austria 829 75 % Spain 681 Others 4 635 * Per 1 January 2005 53609_E • Hydro Media • 04.2005 • 28
Slide 29: Our European and global network
Our European and global network Sales (downstream) Production and sales 53609_E • Hydro Media • 04.2005 • 29
Slide 30: Employee safety taken seriously
Employee safety taken seriously 25 20 15 10 5 0 1997 1998 1999 2000 2001 2002 2003 2004 LTIs Injuries restricting work capacity Medical treatment Injuries reported per million hours worked, Hydro employees 53609_E • Hydro Media • 04.2005 • 30
Slide 31: Hydro has 40,000 shareholders throughout the world
Hydro has 40,000 shareholders throughout the world Share-listings include New York, London and Oslo Share price development Share distribution NOK 600 Hydro OSEBX indexed Private 500 Norwegian 18.7 % 400 State owned Great Britain 43.8 % 300 9.1 % 200 USA 17.8 % 100 Others 10.7 % 0 2000 2001 2002 200
Slide 32: Total returns to shareholders – a comparison
Total returns to shareholders – a comparison 2004 2000-2004 Hydro 46 % Hydro 139 % Statoil 44 % Total 100 % BG 34 % BG 70 % ExxonMobil 28 % ChevronTexaco 44 % ChevronTexaco 26 % ExxonMobil 43 % Total 26 % Alcan 30 % BP 24 % Shell 23 % Shell 20 % BP 15 % RoyalDutch 14 % RoyalDutch 12 % Alcan 6% Alcoa
Slide 33: Strong raw material prices – weak dollar
Strong raw material prices – weak dollar Aluminium price Oil price USD/tonne USD/barrel NOK index USD 2000 45 NOK index USD 40 1800 35 1600 30 25 1400 20 1200 15 1000 10 1999 2000 2001 2002 2003 2004 2005 1999 2000 2001 2002 2003 2004 2005 53609_E • Hydro Media • 04.2005 • 33
Slide 34: Strong result trend
Strong result trend Annual results in NOK million 12 434 11 477 8 375 7 100 5 894 2000 2001 2002 2003 2004 Results from continued operations prior to effect of change in accounting principles 53609_E • Hydro Media • 04.2005 • 34
Slide 35: Earnings per share
Earnings per share NOK 47.50 45.10 32.50 27.50 22.80 2000 2001 2002 2003 2004 Earnings per share from continued operations 53609_E • Hydro Media • 04.2005 • 35
Slide 36: Vastly improved returns on capital
Vastly improved returns on capital RoaCE, percent 13.0% 8.4% 7.2% 2002 2003 2004 RoaCE: Return on average capital employed 53609_E • Hydro Media • 04.2005 • 36
Slide 37: RoaCE per business area
RoaCE per business area Oil & Energy Aluminium 23,4 % Adjusted for write-down* Realized 16,2 % 11,6 % 7.0 % 4.7 % 2.7 % 3.5 % 2002 2003 2004 2002 2003 2004 * Write-down of German metal plant 53609_E • Hydro Media • 04.2005 • 37
Slide 38: Normalized RoaCE
Normalized RoaCE Percent z Assumptions: - Oil price USD 25/barrel - Aluminium price USD 7.9 1500/tonne - NOK/USD 7 6.6 6.2 - EUR/NOK 8 z Volume and margins not normalized z Restructuring costs and gains/losses on divestments have been eliminated for normalized 2002 2003 2004 figures 53609_E • Hydro
Slide 39: Debt/equity at historic low
Debt/equity at historic low 0.6 0.38 0.34 0.11 2001 2002 2003 2004 Net-interest bearing debt + net pension obligations (tax adjusted) + present value of operating lease obligations – cash and bank deposits – other means of payment divided by equity capital + minority interests 53609_E • Hydro Media
Slide 40: Oil & Energy
Oil & Energy 53609_E • Hydro Media • 04.2005 • 40 53609_N
Slide 41: Oil & Energy
Oil & Energy z High oil and gas prices continue z Gigantic North Sea project, in 2005 Ormen Lange, on track z Further enhance strong position z New operatorship in the Gulf on Norwegian continental shelf of Mexico z Considerable production growth in the z Several interesting discoveries in 2004 – ye
Slide 42: Hydro's worldwide oil and energy operations
Hydro’s worldwide oil and energy operations 53609_E • Hydro Media • 04.2005 • 42
Slide 43: Hydro's operations on the Norwegian Continental Shelf
Hydro’s operations on the Norwegian Continental Shelf FRAM TROLL B TROLL C NJORD OSEBERG TUNE Field center OSEBERG C VALE OSEBERG S OSEBERG E HEIMDAL BRAGE GRANE 980,000 bpd/30 percent of Norwegian oil production 53609_E • Hydro Media • 04.2005 • 43
Slide 44: Adding value through technical expertise
Adding value through technical expertise Technology/expertise Hydro’s position Advantages z World leader in z Greater oil production multilateral wells and recovery z World no. 5 number z Reduced drilling costs of subsea wells Troll – thin oil layer Troll Pilot z Increased oil production/ capacity f
Slide 45: Ormen Lange paves the way to an exciting future
Ormen Lange paves the way to an exciting future z Ormen Lange field, on Haltenbanken, proven 1997 z Big challenge: depths of 1,000 meters, at temperatures of –1,5oC z Hydro has operator responsibility for the development amounting to NOK 60 billion z The gas is brought ashore in Norway and piped to
Slide 46: How to make an island energy self-sufficient
Award-winning hydrogen project on Utsira: How to make an island energy self-sufficient Inexhaustible sources of clean energy 53609_E • Hydro Media • 04.2005 • 46
Slide 47: Oil & Energy – operating income
Oil & Energy – operating income NOK million Exploration and Production Oil Marketing Eliminations 8 621 7 818 7 521 7 184 6 175 5 994 5 820 5 551 5 384 5 322 4 622 3 707 3 686 3 652 3 184 3 170 2001 2002 2003 2004 Accumulated 19 177 15 947 21 143 31 144 53609_E • Hydro Media • 04.2005 • 47
Slide 48: Petroleum production per quarter
Petroleum production per quarter 1 000 boe/day 615 596 591 552 569 Oil Gas 540 514 482 484 489 166 173 451 448 452 147 176 427 143 156 419 123 385 104 112 116 115 110 88 430 442 93 91 422 415 74 397 396 391 378 364 372 373 334 328 336 338 311 2001 2002 2003 2004 Accumulated 421 480 530 572 53609_E •
Slide 49: Production costs per barrel
Production costs per barrel NOK/boe 99.7 100 90.1 83.8 82.1 50 0 2001 2002 2003 2004 Exploration 9.1 20.3 8.1 6.0 Net transport* 8.5 9.0 6.8 8.3 Other costs/revenues 2.0 1.4 1.8 0.7 Deprec. and aband. 46.4 46.4 46.4 46.4 Production cost 24.1 22.6 20.7 20.7 Million barrels oe prod 154 175 194 209 * H
Slide 50: Price trend – raw oil
Price trend – raw oil Average Brent blend per quarter USD/bbl NOK/bbl 50 300 USD/bbl NOK/bbl 45 270 40 240 35 210 30 180 25 150 20 120 15 90 10 60 5 30 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 4th quarter 2004: NOK 265 / USD 44 per barrel 53609_E • Hydro Media • 04.2005 • 50
Slide 51: Aluminium
Aluminium 53609_E • Hydro Media • 04.2005 • 51 53609_N
Slide 52: Aluminium
Aluminium z Third-largest integrated aluminium supplier in the world, present on every continent z Casthouse products from an extensive network of sources z Customers in the automotive, packaging, lithographic, building industries as well as in general engineering z Value creation through innovative
Slide 53: Aluminium 2004
Aluminium 2004 NOK EUR* million million Operating revenues 79 674 9 680 Number of employees Operating income 1 805 219 25 967 EBITDA 8 656 1 052 z Improved financial and operational performance z Strong strategic progress upstream and improved cost positions z Aluminium growth from attractive projec
Slide 54: A fully integrated global aluminium company
A fully integrated global aluminium company Bauxite/ alumina Primary metal Casthouse products Extru- Rolling sion Fabrication & Systems Automotive 53609_E • Hydro Media • 04.2005 • 54
Slide 55: Casthouse network: Security and flexibility
Casthouse network: Security and flexibility Sayansk America 400 Kurri Kurri With ownership Without ownership Remelt 53609_E • Hydro Media • 04.2005 • 55
Slide 56: Presence on every continent
Presence on every continent Employees Germany 5589 Norway 5115 USA 3769 France 1986 Italy 1261 UK 1015 Denmark 874 Austria 829 Spain 675 Hungary 658 Australia 571 Sweden 554 Portugal 535 China 459 Belgium 415 53609_E • Hydro Media • 04.2005 • 56
Slide 57: Operating income
Operating income Other and Eliminations Extrusion and Automotive 1 629 Rolled Products Metals 1 269 858 833 711 709 653 564 530 495 412 230 345 - 146 - 997 -1 951 * 2001 2002 2003 2004 Accumulated 185 1 698 2 456 1 805 * NOK 2 billion write-down of German metal plants 53609_E • Hydro Media • 04.2005
Slide 58: Financial results – Adjusted EBITDA
Financial results – Adjusted EBITDA NOK million per quarter 2 708 Metals Rolled Products 2 335 2 096 Extrusion and Automotive Other and Eliminations 1 430 1 809 1 572 1 619 1 498 1 517 1 292 1 316 889 899 827 526 - 302 2001 2002 2003 2004 Accumulated 2 543 4 334 6 498 8 656 53609_E • Hydro Media • 0
Slide 59: Strengthening strategic positions
Strengthening strategic positions z Improve alumina relative cost position z Improve aluminium relative cost position z Strengthen leadership position in Europe - Metal Products, Extrusion, Rolled Products and Automotive z Selective growth outside Europe - Metal Products, Extrusion, Rolled Products
Slide 60: Qatar – new global source
Qatar – new global source z Annual capacity - 570 000 tonnes - Expansion potential up to 1 200 000 tonnes z Investments - Metal plant and casthouse: USD 2–2.5 Excellent location billion - Power plant: USD 0.7-0.8 billion z Hydro ownership - 49% in metal plant and power plant - 51% in casthouse - Hyd
Slide 61: A strong aluminium market
A strong aluminium market Global Primary demand 2004 2013 Estimate 30,1 million tonnes 42 million tonnes Other 10% US CIS 17% Other 3% 11% US 21% Other Asia 16% Other Asia 15% Expected 40% increase in demand Europe 21% Europe China 25% 20% Japan Japan 8% China 6% Sources: CRU; Hydro aluminium estima
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