Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Q1 2014 Earnings Presentation
49 slides from Norsk Hydro Asa's earnings presentation, 2014
Slide 1: Higher sales volumes and power production lift results
Higher sales volumes and power production lift results First quarter presentation
Slide 2: Cautionary note
Cautionary note 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 strategies for Hydro, such as planned expansions,
Slide 3: Svein Richard Brandtzæg, President and CEO
Svein Richard Brandtzæg President and CEO (3)
Slide 4: Q1 highlights
Q1 highlights • Underlying EBIT rises to NOK 772 million • Seasonally higher sales volumes • Increased power production • World ex-China primary aluminium demand continues to exceed production • Investment in new automotive line and in new recycling capacity (4)
Slide 5: Demand expected to exceed production in 2014
Demand expected to exceed production in 2014 World outside China World outside China (quarterly annualized) 1 000 mt 30 000 • Seasonally stronger demand 25 000 • 2014 aluminium demand expected to grow 2-4 % in world outside China 20 000 • New curtailments and delays partly 15 000 offsetting ramp-ups
Slide 6: Standard ingot premiums rise to record highs
Standard ingot premiums rise to record highs Regional standard ingot premiums USD per mt 500 • US and European standard ingot 450 premiums rose sharply in Q1 2014 400 • US premiums ~405 USD/mt, EU 350 premiums (duty-paid) ~375 USD/mt at 300 end-April 250 200 • Proposed changes to LME warehousing 150
Slide 7: Aluminium prices decrease through the quarter
Aluminium prices decrease through the quarter USD per mt 3 400 • Aluminium price declining to range of USD 1 700 - 1 800 per mt in Q1 3 000 • Minor decrease in average USD/mt price, 2 600 partly offset by weaker NOK 2 200 Primary aluminium LME USD/mt NOK/mt 1 800 Q1 2014 average 1 752 10 671 Q1 2014
Slide 8: All-in aluminium price rising
All-in aluminium price rising USD per mt 2400 2200 2000 1800 1600 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 LME cash LME cash + US Midwest LME cash + Europe duty paid LME cash + Japan Source: Metal Bulletin, MW/MJP: Platts, Reuter
Slide 9: Slight reduction in reported inventories world ex-China
Slight reduction in reported inventories world ex-China World outside China reported primary aluminium inventories 1 000 mt Days 8 000 120 7 000 100 6 000 80 5 000 4 000 60 3 000 40 2 000 20 1 000 0 0 Q1 00 Q1 01 Q1 02 Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 IAI Other
Slide 10: Higher average alumina prices, falling through Q1
Higher average alumina prices, falling through Q1 Platts alumina index (PAX) USD per mt Percent 450 20 • Average PAX increased both in USD/mt and percentage of LME 400 18 − Average price 328 USD/mt, up 5 USD/mt from Q4 − Alumina as % of LME rose to close to 20 % 350 16 mid-quarter, highest since PAX
Slide 11: Indonesia bauxite export ban taking effect
Indonesia bauxite export ban taking effect • Complete ban on bauxite exports from Chinese bauxite import by origin (monthly) mid-January 2014 Million mt 9 • Closures by bauxite miners in Indonesia 8 7 • Uncertainty around possibility of getting 6 export license for those with plans to 5 build alumin
Slide 12: China bauxite imports decreasing through Q1
China bauxite imports decreasing through Q1 Indonesia export ban taking effect Annualized aluminium equivalents*, million mt YTD 2011 2012 2013 2014** 25 • Bauxite and alumina − Significant drop in bauxite China import 20 imports during Q1 as Indonesia export ban starts 15 − Q1 alumina imports at hi
Slide 13: Strong improvement focus in Brazil
Strong improvement focus in Brazil Implied alumina cost and margin, USD/mt 1) • Annualized alumina production stable from Q4 475 23 425 15 • Higher hydrate production at Alunorte, 11 263 increased production at Paragominas 260 258 • “From B to A” improvement program progressing according to plan − T
Slide 14: Primary Metal operational improvements continue
Primary Metal operational improvements continue Implied primary cost and margin, USD/mt 1) • Primary cost continues downward trend 475 − Improvement efforts with bottom-line effect 300 400 425 − Favorable exchange rate development 350 1 775 − Increasing premiums 1 500 1 400 • USD 180 JV program on t
Slide 15: Higher shipments in Rolled Products
Higher shipments in Rolled Products Rolled Products sales by segment Q1 2014 vs. Q4 2013 Q1 2014 vs. Q1 2013 Packaging & Litho, Auto & Heat General engineering Total Rolled Packaging & Litho, Auto & Heat General engineering Total Rolled Building exchanger Products Building exchanger Products 14% 15%
Slide 16: Expanding capacity for automotive growth market
Expanding capacity for automotive growth market • Regulations forcing light-weighting of vehicles to reduce CO2 emissions − Substitution gaining momentum • New body-in-white production line at Grevenbroich − Brings total capacity to 200kmt − Completion by end 2016 − EUR 130 million (16)
Slide 17: Expanding recycling capacity
Expanding recycling capacity • New recycling line for used beverage cans (UBC) at Neuss in Germany − Reduces cost of metal production − Increases capacity to more than 100kmt − Completion by end-2015 − EUR 45 million • In line with strategy to increase recycling capacity and become carbon neutral by
Slide 18: Seasonally stronger demand for extruded products
Seasonally stronger demand for extruded products • Seasonal demand increases from Q4 − Increases in North America and Europe − Signs of weakening in South America • Increased demand compared to same quarter previous year in US and Europe • Global demand for precision tubing supported by strong autom
Slide 19: Improved reservoir levels, lower prices
Improved reservoir levels, lower prices Market price Southwestern Norway (NO2) Water reservoir levels Southwestern Norway (NO2)* NOK/MWh Percent 700 100 2013 2014 90 600 80 500 70 400 60 50 300 40 200 30 2013 20 100 2014 10 10 year average 0 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 1 4 7
Slide 20: Eivind Kallevik, Executive Vice President and CFO
Eivind Kallevik Executive Vice President and CFO (20)
Slide 21: High-level quarterly result development
High-level quarterly result development NOK billion 1.1 0.4 (0.1) (0.1) 0.8 0.1 0.5 Underlying EBIT Q1 Underlying EBIT Q4 Energy volume and Sales volumes and Price and margin Other Underlying EBIT Q1 2013 2013 price SAPA 2014 Figures for 2013 throughout the presentation have been adjusted reflecting
Slide 22: Key financials
Key financials NOK million Q1 2014 Q4 2013 Q1 2013 2013 Revenue 18 282 16 570 16 109 64 877 Underlying EBIT 772 471 1 076 2 725 Items excluded from underlying EBIT 50 (485) (372) (1 063) Reported EBIT 822 (14) 704 1 663 Financial income (expense) 92 (772) (177) (2 576) Income (loss) before tax 914 (
Slide 23: Items excluded from underlying EBIT
Items excluded from underlying EBIT NOK million Q1 2014 Q4 2013 Q1 2013 2013 Underlying EBIT 772 471 1 076 2 725 Unrealized effects on power and raw material contracts 175 14 (269) (107) Unrealized derivative effects on LME related contracts (5) (78) (30) (202) Metal effect, Rolled Products - (87) 5
Slide 24: Bauxite & Alumina
Bauxite & Alumina Q1 Q4 Q1 Key figures 2014 2013 2013 Alumina production, kmt 1 428 1 452 1 361 Total alumina sales, kmt 1 906 1 959 1 874 Realized alumina price, USD/mt 269 263 296 Implied alumina cost, USD/mt* 258 259 261 Bauxite production, kmt 2 242 2 080 2 210 Underlying EBITDA, NOK million 122
Slide 25: Primary Metal
Primary Metal Q1 Q4 Q1 Key figures 2014 2013 2013 Primary aluminium production, kmt 484 492 478 Total sales, kmt 593 515 541 Realized LME price, USD/mt 1 749 1 802 2 043 Realized LME price, NOK/mt 10 702 10 916 11 533 Implied primary cost USD/mt 1 400 1 375 1 625 Underlying EBITDA, NOK million 753 9
Slide 26: Qatalum result improved when adjusting for insurance settlement
Qatalum result improved when adjusting for insurance settlement Key figures – Qatalum (50%) Q1 2014 Q4 2013 Q1 2013 • Stable production Revenue, NOK million 1 087 1 072 1 125 • Underlying net income down NOK 128 million from Q4 2013 Underlying EBITDA, NOK million 342 504 349 − Insurance settlement i
Slide 27: Metal Markets
Metal Markets Q1 Q4 Q1 Key figures 2014 2013 2013 Remelt production, kmt 139 123 135 Metal products sales, kmt* 720 648 697 Underlying EBITDA, NOK million 157 214 163 Underlying EBIT excl currency and inventory 161 144 110 valuation effects, NOK million Underlying EBIT, NOK million 141 190 146 Under
Slide 28: Rolled Products
Rolled Products Q1 Q4 Q1 Key figures 2014 2013 2013 External sales volumes, kmt 243 226 236 Underlying EBITDA, NOK million 351 284 311 Underlying EBIT, NOK million 181 100 152 Underlying EBIT NOK million 615 181 Q1 results • Seasonally higher shipments 181 • Lower costs due to efficiency gains and s
Slide 29: Energy
Energy Q1 Q4 Q1 Key figures 2014 2013 2013 Power production, GWh 2 964 2 411 2 904 Net spot sales, GWh 1 581 1 089 1 518 Southwest Norway spot price (NO2), 249 287 311 NOK/MWh Underlying EBITDA, NOK million 474 420 557 Underlying EBIT, NOK million 435 383 517 Underlying EBIT Q1 results NOK million •
Slide 30: Sapa joint venture
Sapa joint venture Key figures – Sapa (50%) Q1 2014 Q4 2013 • Seasonally stronger quarter − Higher sales volumes in all areas Revenue, NOK million 5 673 5 066 compared to Q4 2013 Underlying EBITDA, NOK million 220 (22) • Underlying net income up NOK 175 million from Q4 2013 Underlying EBIT, NOK mill
Slide 31: Other and Eliminations
Other and Eliminations Q1 Q4 Q1 Other and Eliminations 2014 2013 2013 Sapa JV 35 (140) - Other (127) (134) (125) Eliminations 84 (31) 87 Other and Eliminations (8) (306) (38) (31)
Slide 32: Net cash/(debt) development Q1 2014
Net cash/(debt) development Q1 2014 NOK billion Net cash flow from operations NOK (0.7) billion 1.9 (1.0) (1.5) 0.7 (0.6) (0.6) (0.1) Net cash Q4 2013 Underlying EBITDA Operating Capital Other adjustments Investments Dividends Net debt Q1 2014 (32)
Slide 33: Outlook
• Lift and stabilize bauxite and alumina production • Deliver on improvement programs • Demand expected to exceed production in primary aluminium market (33)
Slide 34: Additional information
Additional information (34)
Slide 35: Items excluded from underlying results - 2014
Items excluded from underlying results - 2014 NOK million (+=loss/()=gain) Q1 2014 Unrealized derivative effects on LME related contracts Bauxite & alumina (4) Total impact Bauxite & alumina (4) Unrealized derivative effects on LME related contracts Primary metal (12) Unrealized effects on physical
Slide 36: Items excluded from underlying results - 2013
Items excluded from underlying results - 2013 NOK million (+=loss/()=gain) Q1 2013 Q2 2013 Q3 2013 Q4 2013 2013 Unrealized derivative effects on LME related contracts Bauxite & Alumina 13 (3) - 3 12 Legal settlements Bauxite & Alumina - - - 109 109 Total impact Bauxite & Alumina 13 (3) - 112 121 Unr
Slide 37: Operating segment information
Operating segment information Underlying EBIT NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Year 2012 Year 2013 Bauxite & Alumina (144) (188) (386) (73) (63) (244) (370) (379) (288) (791) (1 057) Primary Metal 36 245 (4) 58 364 237 337 484 312 335 1 422 Metal Ma
Slide 38: Operating segment information
Operating segment information EBIT NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Year 2012 Year 2013 Bauxite & Alumina (136) (199) (387) (62) (76) (241) (370) (491) (284) (783) (1 178) Primary Metal (91) (1 227) (48) 112 19 122 338 377 303 (1 254) 855 Metal Mark
Slide 39: Operating segment information
Operating segment information Total revenue NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Year 2012 Year 2013 Bauxite & Alumina 3 195 3 573 3 032 3 465 3 304 3 147 3 354 3 546 3 511 13 265 13 350 Primary Metal 7 458 7 578 6 169 5 485 5 945 5 896 5 884 5 554 6 61
Slide 40: Operating segment information
Operating segment information Internal revenue NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Year 2012 Year 2013 Bauxite & Alumina 1 241 1 356 1 111 1 098 1 322 1 253 1 277 1 375 1 304 4 806 5 226 Primary Metal 6 331 6 341 5 097 4 442 5 132 4 856 4 860 4 566 5 3
Slide 41: Operating segment information
Operating segment information Depreciation, amortization and impairment NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Year 2012 Year 2013 Bauxite & Alumina 475 439 428 409 429 448 417 424 410 1 750 1 718 Primary Metal 542 1 645 482 356 470 472 461 452 437 3 026
Slide 42: Income statements
Income statements NOK million Q1 2014 Q4 2013 Q1 2013 Year 2013 Revenue 18 282 16 570 16 109 64 877 Share of the profit (loss) in equity accounted investments 40 (150) 34 (240) Other income, net 132 103 237 801 Total revenue and income 18 454 16 523 16 380 65 438 Raw material and energy expense 12 2
Slide 43: Balance sheets
Balance sheets NOK million Mar 31 2014 Dec 31 2013 Sep 30 2013 Jun 30 2013 Mar 31 2013 Cash and cash equivalents 6 476 8 412 8 397 7 399 6 411 Short-term investments 3 081 2 480 1 433 1 273 3 572 Accounts receivable 11 116 9 539 10 769 9 811 10 070 Inventories 9 599 10 070 9 758 9 669 10 266 Other c
Slide 44: Operational data
Operational data Bauxite & Alumina Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Year 2012 Year 2013 Alumina production (kmt) 1 464 1 491 1 441 1 397 1 361 1 248 1 316 1 452 1 428 5 792 5 377 Sourced alumina (kmt) 324 332 399 335 476 427 711 395 550 1 390 2 009 Total alumin
Slide 45: Operational data
Operational data Metal Markets Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Year 2012 Year 2013 Remelt production (1 000 mt) 152 142 136 119 135 132 127 123 139 548 517 Third-party metal products sales (1 000 mt) 76 82 81 85 84 78 76 78 84 323 317 Metal products sales excl
Slide 46: Sapa joint venture information
Sapa joint venture information Sapa JV (100 % basis), underlying (unaudited) NOK million, except sales volumes Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Sales volume (1000 mt) 343 311 346 360 346 314 359 Revenues 10 414 9 654 10 367 10 974 10 797 10 132 11 346 Underlying EBITDA 365 154
Slide 47: Price and currency sensitivities
Price and currency sensitivities Commodity price sensitivity +10%* Currency sensitivities +10%* NOK million EBIT NOK million EBIT Financial items Aluminium 2 530 USD 2 080 (1 200) Oil (185) BRL (840) 855 Pet coke (190) EUR (155) (180) • Annual sensitivities based on normal annual business volumes, L
Slide 48: Investor Relations in Hydro
Investor Relations in Hydro Next events Pål Kildemo Annual General Meeting Head of Investor Relations t: +47 970 96 711 May 7, 2014 e: pal.kildemo@hydro.com & Second Quarter Results July 22, 2014 For more information see www.hydro.com/ir (48)
Slide 49: Infinite Aluminium Hydro
INFINITE ALUMINIUM HYDRO