Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Day (December 2003)
18 slides from Norsk Hydro Asa's investor day presentation, Dec 11, 2003
Slide 1: Financial status and policies
John O. Ottestad Executive Vice President and CFO Financial status and policies Capital Markets Day December 11, 2003
Slide 2: Presentation outline
Presentation outline ! Agri listing ! Update on financial policies ! Rating ! Debt / Equity ! Shareholder policy ! Capital expenditures and operational improvements ! 2004 capital expenditures ! High quality investment projects ! Divestment status ! Cost saving initiatives ! Operating capital reduct
Slide 3: Agri listing
Agri listing ! Transaction ! March 25, 2004 ! Demerger and 20% offering ! Share split ! One Agri share for each Hydro share ! Agri capital structure October 1, 2003 ! Net interest-bearing debt NOK 8.5 billion ! Equity at book value NOK 8 billion 47346 12 2003 3 Hydro Media
Slide 4: Financial position
Financial position ! Proceeds from Agri listing ! Funding of ongoing investment projects ! Debt reduction ! Dividend and share buy-back ! Maintain “A”/”A2” rating ! Risk mitigation ! Financial preparedness to pursue strategic options 47346 12 2003 4 Hydro Media
Slide 5: Financial solidity
Financial solidity 0.8 0.67 0.7 0.54 0.60 0.6 0.5 0.44 0.39 0.4 0.34 0.3 0.2 0.1 0 1998 1999 2000 2001 2002 30.09.2003 Net interest-bearing debt Net interest-bearing debt incl. pension liabilities and operating lease commitments Interest-bearing debt + Net pension liability (tax adjusted) + Operatin
Slide 6: Pension liabilities – 2003 development
Pension liabilities – 2003 development ! Pension cost in 2003 in line with the estimate ! Long-term interest rates have declined ! Sensitivity guidance: – 0.5% reduction in long-term interest rate results in an approximately 10% increase in pension obligations – All pension assumptions to be revised
Slide 7: Dividend policy maintained
Dividend policy maintained NOK 12 10.50 10.00 10 9.50 8.00 8 7.50 7.50 7.00 6.00 6 4.25 4 3.50 2 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 ! 30% of Net Income as average over some years ! Supplemented by share buy-backs ! Increase in line with results 47346 12 2003 7 Hydro Media
Slide 8: Capital expenditures
Capital expenditures* NOK billion 25 22 20 20 20 Exploration 15 Other Agri Aluminium 10 Oil & Energy 5 0 2003 Plan 2003 Estimate 2004 Plan * Excluding implementation effect in 2003 of new accounting standard on asset retirement obligations (SFAS 143), totalling NOK 1.9 billion, Agri is not included
Slide 9: High quality investment projects
High quality investment projects ! Ormen Lange, Norway ! Strengthens Hydro’s equity gas position ! Block 17, Angola ! Increases Hydro’s oil production internationally ! Sunndal, Norway ! Expansion of Europe’s largest aluminium smelter completed ! Alouette, Canada ! Among the world’s 10% lowest cost
Slide 10: Strong divestment record
Strong divestment record ! Deals signed in 2003 NOK billion* 20 – Scanraff – Gjøa 16 – Carmeda 16 – VAW IMCO – Other 12 9.3 ! Total divestments for the period 1999 – 2003: NOK 25.3 billion 8 4 0 1999-2001 2002-2003 * All numbers are based on enterprise value 47346 12 2003 10 Hydro Media
Slide 11: RoaCE – new return metric
RoaCE – new return metric ! Most commonly used metric for oil companies ! Facilitates peer benchmarking ! Still focus on cash margins and asset productivity ! 10% IRR after tax for investment projects 47346 12 2003 11 Hydro Media
Slide 12: Strong cost saving record
Strong cost saving record Initiatives to increase efficiency continue in all parts of the organization Annual cost Reduced saving Compared to year manning (NOK million) Saga Petroleum acquisition 800 1,0002) 1999 Oil & Energy improvements 8001) 9002) 2002 Agri Turnaround 3,750 2,900 1998 Aluminium i
Slide 13: Reductions in net operating capital
Reductions in net operating capital ! Substantial reductions in operating Days 92 capital days achieved through 100 80 ! Efficient invoicing processes and 80 67 optimal credit limits 63 ! Optimizing inventory levels 60 40 ! Cash released 20 0 1999 2000 2001 2002 47346 12 2003 13 Hydro Media
Slide 14: Financial priorities
Financial priorities ! Earnings improvement ! Meet profitability targets ! Growth in Earnings per Share (EPS) ! Efficiency and capital discipline ! Successful Agri listing ! Financial preparedness 47346 12 2003 14 Hydro Media
Slide 15: Financial status and policies - Additional information
Financial status and policies - Additional information
Slide 16: Indicative price and currency sensitivities 2004
Indicative price and currency sensitivities 2004 NOK million Price sensitivity 1) Pre tax After tax Oil price (bbl) 1,450 390 USD 1 increase Aluminium price (tonne) 875 615 USD 100 increase USD sensitivity 1) 2) Pre tax After tax USD Oil & Energy 2,900 785 1 NOK increase USD Aluminium 2,100 1,475 1
Slide 17: Financial solidity - calculation
Financial solidity - calculation 31 31 31 31 31 30 Amounts in NOK Million December December December December December September 1998 1999 2000 2001 2002 2003 5) [A] Cash and cash equivalents 1,936 7,435 21,766 27,148 5,965 16,461 [B] Other liquid assets 2,493 2,535 2,490 2,421 2,647 1,743 [C] Bank
Slide 18: Forward-Looking Statements/ Use of Non-GAAP Financial Measures
Forward-Looking Statements/ Use of Non-GAAP Financial Measures 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