Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Hydro — Bank of America Merrill Lynch Global Metals & Mining Conference 2009
20 slides from Norsk Hydro Asa's conference presentation, May 13, 2009
Slide 1: Hydro: A focused aluminium and energy company
Hydro A focused aluminium and energy company Svein Richard Brandtzæg, President and CEO Bank of America Merrill Lynch Global Metals & Mining Conference – May 13, 2009 (1)
Slide 2: Cautionary statement
Cautionary statement 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 expansi
Slide 3: Hydro in the aluminium value chain
Hydro in the aluminium value chain Primary aluminium production Aluminium in products, recycling Bauxite/ Primary Metal Semi alumina Energy aluminium products fabrication Remelt 65% equity in Solid long-term 1.75 mill. mt/year 2.9 mill. mt/year 1.6 mill. mt/year 502 000 ton alumina coverage of power
Slide 4: Unprecedented fall in aluminium price
Unprecedented fall in aluminium price USD per tonne 3 400 Primary aluminium LME USD/tonne NOK/tonne 3 200 3 000 Q1 2009 average 1 397 9 593 2 800 Q1 2009 end 1 405 9 555 2 600 2 400 Q4 2008 average 1 882 12 690 Q4 2008 end 1 497 10 397 2 200 2 000 Average 2008 2 620 14 446 1 800 1 600 Average 2007 2
Slide 5: Rapidly increasing inventories
Rapidly increasing inventories USD per tonne Days 3 500 110 100 3 000 90 2 500 80 70 2 000 60 50 1 500 40 1 000 30 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Aluminium inventories (days of consumption)* LME 3 month average *IAI and LME reported stocks.
Slide 6: Upstream production curtailments
Upstream production curtailments 1 000 tonnes 2 000 1 750 1 500 29% ~1 750 1 250 22% ~1 350 1 000 ~1 250 750 ~1 050 50% ~1 000 500 250 ~ 500 0 Alumina (metal equivalents) Primary aluminium Remelt End-2008 capacity Run rate Q3 2009 (6)
Slide 7: China remains balanced
China remains balanced 1 000 tonnes Primary / alloyed Semis Fabricated Scrap Total • Swift response to drop in demand 250 • Production curtailments • Strategic government purchases 200 Net import 150 100 • Shanghai price currently significantly higher than LME 50 • Encourages primary aluminium impor
Slide 8: Announced capacity curtailments
Announced capacity curtailments 12 % China ~3.5 million tonnes* 3% Alcoa C entury Rest of world ~3.4 million tonnes 7% Hydro Total ~6.9 million tonnes Rio Tinto 51 % 6% UC Rusal Other C hina 7% 14 % World production and consumption (excl. China), annualized 27 000 Production C onsumption 26 000 25 0
Slide 9: 2009 outlook
2009 outlook • Aluminium prices to remain low • Limited forward visibility • Indication of slowing LME inventory build-up • No substantial pick-up in demand • Primary aluminium consumption excluding China could decline up to 15-20% from 2008 • Chinese consumption in line with 2008 • Industry input c
Slide 10: Flexible production system
Flexible production system Primary aluminium Remelt 1 000 tonnes 1 000 tonnes 2 000 1 920 2 000 380 1 750 1 600 420 1 600 290 1 200 1 250 1 250 1 200 1 000 1 040 100 500 900 800 800 500 400 400 0 0 2008 Q1 2009* 2011 2008 Q1 2009* 2011 C urtailed primary capacity available for restart Available reme
Slide 11: Significant manning reductions
Significant manning reductions 5 000 1 450 4 500 4 500 4 000 3 500 1 700 3 000 2 500 2 000 1 500 750 1 000 600 500 0 Q3 2008 Q4 2008 Q1 2009 Q2-Q4 2009E Total Reduction in number of permanent and temporary employees and contractors (11)
Slide 12: Hydro improves cost position
Hydro improves cost position Business operating cash cost USD/tonne 3 400 Dynamic cost curve 3 000 • Falling input costs 2 600 • Production curtailments and capacity closures 2 200 1 800 1 400 Accumulated tonnage (1 000 tonnes) 1 000 0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 BOC Q1 20
Slide 13: Focus on preserving cash
Focus on preserving cash Capital expenditures, NOK billion Capital expenditures reductions* 12.3 ~11.5 • 2008-2009: 40% • 2009-2010: 15% CAP alumina project postponed, production ~4.5 start-up in 2012 subject to market conditions 2008 2009E 2010E Investments Qatalum funded by Hydro Qatalum project f
Slide 14: Financial position
Financial position Net cash / (debt) in NOK billion Secured financing: ~NOK 20 billion 10.8 • New EUR 750 million in 3-year bank facility 8.7 • New NOK 1 billion in commercial paper • USD 1.7 billion in a multi-currency revolving facility maturing in 2014 3.5 1.7 • NOK 1.3 billion short-term • Curre
Slide 15: Qatalum on target
Qatalum on target • 50/50 joint venture between Hydro and • First-stage capacity Qatar Petroleum • Smelter: 585 000 tonnes per year • Investment USD 5.6 billion (100%) • Hydro technology • 73% complete by end-Q1 • Anode plant and cast houses • 1 250 MW power plant • On target for scheduled start-up
Slide 16: Global megatrends intact?
Global megatrends intact? Millions climbing out of poverty Increasing need for energy Climate challenge 2000 1970 (16)
Slide 17: Healthy long-term demand for aluminium
Healthy long-term demand for aluminium • Properties lead to increased market share • Aluminium intensive urbanisation and infrastructure • Climate challenge – aluminium as part of the solution • Recyclability more important with high energy price • Beyond current downturn • Return to trend growth of
Slide 18: Technology-based value creation
Technology-based value creation CO2 Gas Cooler (18)
Slide 19: Priorities in 2009
Priorities in 2009 • Proactive corrective measures • Cost reductions and margin management • Working capital and counterparty risk • Production curtailments • Cash focus – maintain financial flexibility • Operational excellence • Qatalum execution (19)
Slide 20: www.hydro.com
www.hydro.com
Hydro — Bank of America Merrill Lynch Global Metals & Mining Conference 2009 on 6ix