Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Day (December 2011)
46 slides from Norsk Hydro Asa's investor day presentation, Dec 1, 2011
Slide 1: Capital Markets Day: Performance frontrunner
Capital Markets Day: Performance frontrunner Svein Richard Brandtzæg, President and CEO December 1, 2011 (1)
Slide 2: Hydro's value proposition
Hydro’s value proposition ● Capturing full potential of attractive long ● Securing solid financials through bauxite and alumina position high-value hydropower assets ● Continuing unparalleled ● Adding value through high-end products USD 300 improvement program based on technology leadership and ● St
Slide 3: Improving markets in 2011
Improving markets in 2011 World outside China – supply/demand World reported primary aluminium inventories Regional ingot premium 1 000 mt 1 000 mt Days USD per mt 30 000 8 000 80 225 28 000 26 000 7 000 70 200 24 000 175 22 000 6 000 60 20 000 150 5 000 50 18 000 125 16 000 4 000 40 14 000 100 12 0
Slide 4: Results recover from financial crisis
Results recover from financial crisis Hydro underlying EBITDA quarterly, NOK million 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2008 2009 2010 2011 Including Vale assets (4)
Slide 5: Safe operations is a top priority
Safe operations is a top priority TRI rate 10.3 7.0 6.0 5.4 4.0 4.1 3.9 4.0 3.7 2.9 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011YTD (5)
Slide 6: Renewed CSR focus with entry into mining
Renewed CSR focus with entry into mining ● Hydro’s ambition remains to strive for CSR strategy pillars excellence in CSR related matters Integrity & Anti- 1 Corruption ● Hydro reports on CSR according to Global Reporting Initiative (GRI) Community & 2 stakeholder ● Hydro is a member of International
Slide 7: Fully integrated throughout the value chain
Fully integrated throughout the value chain Recycling Rolling Bauxite Alumina Energy Primary Casting Products Extrusion Recycling (7)
Slide 8: Macro economic situation – global uncertainty
Macro economic situation – global uncertainty Europe United States China Sovereign debt concern Demand issue Reduced growth (8)
Slide 9: Proactive corrective measures
Proactive corrective measures Robust ● Sovereign debt crisis financial ● Capacity adjustment position measures ● Confidence indicators ● Flexibility in remelt system pointing downwards ● Active margin management ● Financial market unrest ● Strengthened focus on improvement programs ● Softening growt
Slide 10: Capturing potential in Bauxite & Alumina
Capturing potential in Bauxite & Alumina (10)
Slide 11: Vale transaction creates a stronger Hydro
Vale transaction creates a stronger Hydro ● Strategically attractive assets ● Long position in bauxite and alumina ● New business opportunities ● Resource-constrained world (11)
Slide 12: Long alumina position gives strategic flexibility
Long alumina position gives strategic flexibility Million mt ● Industry consolidation 0.3 1.5 ● Long position creates flexibility ● Growing smelter portfolio ● Capturing commercial opportunities 3.3 ● CAP and Paragominas projects will 2.3 2.4 further strengthen alumina position Bauxite Alumina Alumi
Slide 13: World-class bauxite and alumina assets
World-class bauxite and alumina assets ● Integrated through pipeline ● Technological frontrunner ● Competitive cost position ● Top quality alumina ● Successful integration ● Solid production improvement (13)
Slide 14: Repositioning Primary Metal
Repositioning Primary Metal (14)
Slide 15: Leading global portfolio of metal products
Leading global portfolio of metal products 1.3 1.0 0.2 0.1 Europe North America 0.1 0.3 0.3 Asia 0.5 Qatar Liquid production Brazil Remelt/recycling 0.3 Sale of non-equity volume Australia Annual consolidated capacity, million mt (15)
Slide 16: Preferred partner in casthouse products
Preferred partner in casthouse products ● Capitalizing on value-added casthouse products portfolio Extrusion ingot ● Enhancing value of market system 1.6 million mt through margin management ● Growing market positions in US and Asia with Qatalum volumes Foundry alloys 0.6 million mt ● Utilizing prod
Slide 17: Qatalum is designed for value creation
Qatalum is designed for value creation 2x1.2 km of electrolysis cells World’s largest value added casthouse (17)
Slide 18: Qatalum streamlining in 2012
Qatalum streamlining in 2012 ● All cells in production ● Focus on production optimization ● 1350 MW power plant at full capacity ● Target annual production of 600 000 mt (18)
Slide 19: Aluminium industry facing cost pressure
Aluminium industry facing cost pressure ● Increasing cost of input factors ● Fixed cost pressure from inflation ● Strong raw-material driven currencies (19)
Slide 20: USD 300 cost improvement program on track
USD 300 cost improvement program on track 300 Operational improvements 200 Fixed cost reductions and lean operations Above plant level initiatives 100 Casthouse product margin 0 Realized 2010 Expected 2011 USD 300 per mt real term target for fully owned smelters excluding Neuss with 2009 as baseline
Slide 21: Solid power coverage
Solid power coverage ● Long-term solid power coverage, majority based on hydropower ● Long-term power contract signed for Tomago ● MoU signed for power to Alouette expansion ● CO2 emission framework essential (21)
Slide 22: High-value power assets
High-value power assets (22)
Slide 23: Aiming to lift power production to 10 TWh
Aiming to lift power production to 10 TWh Power production capacity (TWh) per region and reversion year ● Power producing assets and ongoing projects ● Maintain cost control in operations and projects Telemark ● Holsbru and Vasstøl capacity into production during 3.0 0.5 2012 2044- No reversion 2049
Slide 24: Hydro is a global energy player
Hydro is a global energy player Energy consumption in alumina refineries, smelters and rolling mills Europe Power 14.8 TWh Natural gas 2.4 TWh North America Power 1.6 TWh Middle East Power 4.6 TWh South America Power 4.2 TWh Coal 5.6 TWh Australia/Asia Fuel oil 7.4 TWh Power 3.8 TWh Natural gas 0.1
Slide 25: Hydro's energy agenda
Hydro’s energy agenda ● Developing Norwegian assets and maximizing value creation ● Securing competitive energy globally ● Considering equity position where relevant ● Optimizing 3-4 TWh long position in Norway (25)
Slide 26: High-end portfolio of products
High-end portfolio of products (26)
Slide 27: Aluminium is part of the solution
Aluminium is part of the solution Capabilities 5-7% annual growth in demand Global trends Capabilities Source: CRU (27)
Slide 28: No. 1 flat rolled products producer in Europe
No. 1 flat rolled products producer in Europe External sales in tonnages ● World leader in high-end products Litho Foil 13% foil and litho 17% ● External sales of 945 000 mt in 2010 ● Strategy of high-grading product portfolio Packaging ● Margin management and cash generation General 22% engineering
Slide 29: Customers are marketing our product
Customers are marketing our product (29)
Slide 30: Aluminium in cars on a long and steady climb
Aluminium in cars on a long and steady climb Aluminium content in light vehicles, average global car (kg) ● Continuous drive to reduce energy consumption in automotive sector 180 168 ● Tailored alloys tuned for super strength 160 ● Body-in-white market expected to grow 140 127 by 13% per year over t
Slide 31: European extrusion leader with global presence
European extrusion leader with global presence ● Leading position in Europe External sales in tonnages Other Transport 9% ● Strong position in US and Brazil 11% ● Global leader in precision tubing ● External sales of 529 000 mt in 2010 Domestic & office equipments 18% ● Strategy of solidifying leadi
Slide 32: New products, solutions and applications
New products, solutions and applications Making heat-exchanger technology leap …into broad range of non-automotive from automotive… products and applications Aluminium has almost replaced copper in The leading position of copper in buildings has automotive precision tubing over last 30 years remaine
Slide 33: Copper substitution represents major potential
Copper substitution represents major potential Total wire harness in modern vehicle • Substitution to aluminium: 12.5 kg/car • Weight reduction: about 50% vs. copper • Worldwide potential: about 875 000 mt annually (33)
Slide 34: Energy saving aluminium
Energy saving aluminium Parabolic mirrors Solar panel profiles Window profiles Heat pumps (34)
Slide 35: Extrusion growth in emerging markets
Extrusion growth in emerging markets ● New extrusion capacity in Itú ● New extrusion and precision tubing ● Investment: NOK ~300 million capacity in Suzhou ● Production from 2013 ● Investment: NOK ~300 million ● Production ramp-up in 2012/2013 615 198 100 100 2000 2010 2000 2010 Demand for semis, in
Slide 36: New products from Hydro's alloying expertise
New products from Hydro’s alloying expertise High Speed Alloys Mg-Si prec. Microstructure Mg5Si6 Long Life Alloys Dispersoids Bending behaviour Eutectic morphology Fe-rich particles (36)
Slide 37: Hydro innovation drives product demand
Hydro innovation drives product demand Foil packaging Automotive Beverage cans Solar parks Building & construction Consumer electronics Lithographic plates (37)
Slide 38: Shaping the future
Shaping the future (38)
Slide 39: Truly a global company
Truly a global company ● Bauxite & Alumina Capital employed, as per September 31, 2011 ● Alumina priced globally Downstream ● Brazilian production portfolio 16% ● Primary Metal ● Aluminium is a global commodity (LME) Raw materials ● Regional premiums 41% ● Global production portfolio ● Downstream ●
Slide 40: Ideally positioned for future growth
Ideally positioned for future growth Holsbru Alouette Vasstøl Metal Hydro power Paragominas Qatalum 2 Bauxite Metal Acro CAP Suzhou Alumina Extrusion (40)
Slide 41: Significant capacity growth
Significant capacity growth Annual consolidated capacity in metal equivalents, million mt 3.3 2.3 2.4 1.7 1.6 1.4 1.5 1.1 1.2 0.5 2007 2011 2007 2011 2007 2011 2007 2011 2007 2011 Bauxite Alumina Primary aluminium Remelt Downstream (41)
Slide 42: Solid financial situation
Solid financial situation ● Strong balance sheet creates financial Net cash/(debt), NOK billion robustness in volatile markets 2.4 ● Cash generation provides capital flexibility ● Liquidity remains a top priority ● Ability to execute investments and acquisitions also in periods of -0.1 uncertainty -
Slide 43: Competitive shareholder returns prioritized
Competitive shareholder returns prioritized Relative share price development in USD Capital Markets Day Jan 13, 2011 – Nov 25, 2011 1.3 ● Aiming for competitive shareholder 1.2 returns compared to industry peers 1.1 1.0 ● Hydro dividend policy 0.9 0.8 ● Ordinary dividend: 30% of net income over 0.7
Slide 44: Strategy for further value creation
Strategy for further value creation Bauxite & Alumina Primary Metal Energy Mid- and downstream • Excellence in operations • Reposition • Increase value of energy • Continue proven high- • Expand capacity • Keep solid cash flow in business end product strategy • Commercialize current assets • Develop
Slide 45: Future value creation
Future value creation ● Improve relative position ● Focus on operational excellence ● Develop commercial opportunities ● Manage portfolio actively (45)
Slide 46: www.hydro.com
www.hydro.com