Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Day (December 2021)
89 slides from Norsk Hydro Asa's investor day presentation, Dec 13, 2021
Slide 1: Lifting profitability, driving sustainability – Hydro 2025
Lifting profitability, driving sustainability Hydro 2025 Oslo, December 13, 2021
Slide 2: Forward-looking statements
Certain statements included in this announcement contain forward-looking information, including, without limitation, information relating to (a) forecasts, projections and estimates, (b) statements of Hydro management concerning plans, objectives and strategies, such as planned expansions, investmen
Slide 3: Agenda
09.00 – 09.05 Welcome 09.05 – 10.30 Hydro 10.30 – 10.45 Break 10.45 – 11.30 Financial priorities 11.30 – 12.30 Q&A 3 3
Slide 4: Capital Markets Day 2021 – Hilde Merete Aasheim, President & CEO
Capital Markets Day 2021 Hilde Merete Aasheim President & CEO 4
Slide 5: Lifting profitability, driving sustainability
Lifting profitability, Driving sustainability Adjusted RoaCE Deliver on three value-creation levers • Improvement program, commercial ambition, strategic ✓ 13% Adjusted EBITDA growth areas Finalize strategic review Hydro Rolling ✓ LTM Q3 2021 22 BNOK Achieve 10% RoaCE target over the cycle ✓ 2021 Sh
Slide 6: Long-term global agenda focusing on climate crisis
Long-term global agenda focusing on climate crisis 6
Slide 7: Rising demand across all segments
Rising demand across all segments Sustainable and smart Renovated, energy Cleaner energy and Longer lasting products mobility efficient buildings cutting-edge clean that can be repaired, technological innovation recycled and re-used Semis demand1) Semis demand – Semis demand – Semis demand – Recycle
Slide 8: Hydro aluminium in landmark buildings
Grand Opera House. Shanghai, China Times Square. New York City, USA Bibliotheca Alexandrina. Alexandria, Egypt 8 8 Norwegian National Opera and Ballet. Oslo, Norway National September 11 Memorial Museum Pavilion. New York City, USA “Under” – Europe’s First Underwater Restaurant. Lindesnes, Norway
Slide 9: Ambitious abatement targets driving demand in all sectors
Ambitious abatement targets driving demand in all sectors but especially Automotive OEMs Share of greener1) aluminium demand per segment OEMs are pushing for ever more ambitious lifecycle decarbonization targets % greener of total aluminium demand Timeline to achieve target Decarbonization target 20
Slide 10: Energy policy impacting Chinese supply and driving deficit
Energy policy impacting Chinese supply and driving deficit in coming years Global production estimates China annual supply Global balance estimates1) Million tonnes, primary aluminium Million tonnes, primary aluminium Million tonnes, primary aluminium 4 1 73 43 0.9 0.8 0.5 42 0.4 0.0 5 41 2021 2022
Slide 11: Leading innovation and competence throughout entire aluminium and energy value chain
Leading innovation and World leader in global Leading low-carbon competence throughout C aluminium industry, position enabling value entire aluminum and energy working closely creation from value chain with customers decarbonization trend 11
Slide 12: Net zero products, net zero company, net zero society
Net zero products, net zero Protect biodiversity and reduce Improve the lives and livelihoods company, net zero society our environmental footprint wherever we operate 1212
Slide 13: Renewables – energy storage – green hydrogen
Reducing GHG emissions in society at large by delivering climate friendly solutions • Increased renewables production • Energy storage and solutions • Green hydrogen replacing fossil fuel • Low carbon and recycled aluminium Deliver zero carbon aluminium Remove emissions from own Reduce and avoid emi
Slide 14: Technologies ready for pilot phase
Technologies ready for pilot phase Carbon capture and storage HalZero chloride process decarbonizing existing smelters technology for decarbonizing greenfield developments Tonnes CO2e / tonne aluminium, scope 1 and 2 emissions, liquid metal Tonnes CO2e / tonne aluminium, scope 1 and 2 emissions, liq
Slide 15: Post Consumer Scrap: scaling up volumes in line with market demand
Post Consumer Scrap (PCS): scaling up volumes in line with market demand PCS Decarbonization Tonnes CO2e / tonne aluminium ~6.9 ~0.3-0.5 • Going deeper in the scrap pile to lift profitability - Laser-based sorting (LIBS) Scope 1 Scope 2 Scope 3 - Screw extruder 4.8 • Recycling friendly alloys • Rene
Slide 16: Capitalize on market demand through circularity while decarbonizing primary value chain
Capitalize on market demand through circularity while decarbonizing primary value chain XX tCO2/t first commercially 2.3 available volumes XX tCO2/t pilot volumes Advanced sorting technology 1.0 Circal Decarbonization of remaining <0.5 Pilot for Hydrogen in recyclers emissions 0.0 2025 2030 2040 205
Slide 17: On track to achieve 30% carbon emissions reduction by 2030
On track to achieve 30% carbon emissions reduction by 2030 and net zero by 2050 or earlier GHG emissions – ownership equity Million tonnes CO2 (% of 2018 baseline emissions) Fuel switch, Electrifying coal electrical boilers, boilers, grid mix Roadmap to 2050 other initiatives improvements, 11.3 smel
Slide 18: Hydro's unique position to capture commercial value from decarbonization
Hydro’s unique position to capture commercial value from decarbonization Fastest way to near-zero carbon PCS technology ready for Leading position in high growth Strong track record of partnering products at scale industrialization market segments Credibility to seek public funding Profitable growth
Slide 19: Biodiversity and waste ambitions
Today 2030 2040 2050 1:1 rehabilitation available mined areas within 2 years No net loss biodiversity in new projects Tailings dry backfill Eliminate the need for new Utilize 10% of bauxite permanent residue generated bauxite residue storage Landfill <35% spent Eliminate landfilling of pot linings g
Slide 20: Equip people with essential skills for future economy
Equip people with essential skills for future Contribute to economic and social Ensure transparency and responsible economy development in communities where we business practices in our supply chains operate V V V Empower 500,000 people with education Business-specific targets Transparency and trace
Slide 21: Hydro 2025 – Capital Markets Day 2021
») Hydro Hydro 2025 Capital Markets Day 2021
Slide 22: Seizing opportunities where our capabilities match the megatrends
Seizing opportunities where our capabilities match the megatrends 1 2 22
Slide 23: Improvement program, commercial ambition and recycling investments key strategic levers
Improvement program, commercial ambition and recycling investments key strategic levers • Safety and operational excellence • New products, including greener brands • Double post-consumer scrap use by 2025 • 1st quartile cost positions upstream • Market share in attractive segments • Develop recycli
Slide 24: Target NOK 8.5 billion in improvements by 2025
Target NOK 8.5 billion in improvements by 2025 2025 accumulated improvement potential by year 2025 accumulated improvement NOK billion NOK billion +1.1 8.5 NOK 5.7 billion realized as 0.4 0.1 1.2 0.5 of Q3-2021 0.6 2.4 1.3 1.6 NOK 8.5 3.8 2.0 3.0 billion 7.4 2.7 3.0 1.9 1.0 2019A 2020A Q3-2021 Q4-20
Slide 25: Bauxite & Alumina and Aluminium Metal cost curve positions
Bauxite & Alumina Aluminium Metal Alumina Business Operating Cost curve (2021) Smelter Business Operating Cost curve1) (2021) 900 5000 800 700 4000 600 500 3000 400 2000 300 200 Hydro B&A 1000 Hydro AM 100 0 0 Status quo Global CO2 price 50 USD/t CO2e Status quo Global CO2 price 50 USD/t CO2e Global
Slide 26: Total sales of greener products to double by 2025
Total sales of greener products to double by 2025 Commercial ambition 20251) Sales volumes2) NOK billion Tonnes (000s) ~2.5x +1.0 ~1203) 1003) 2.5 Indicative potential 40 50 V from greener 20 product offerings 1.5 2020 2021e 2022e 2025e Medium-term capacity est. Sales volumes2) Tonnes (000s) ~2x ~1,
Slide 27: Hydro Bauxite & Alumina
») Hydro Hydro Bauxite & Alumina Capital Markets Day 2021
Slide 28: Focusing on operational robustness and sustainability
Focusing on operational robustness and sustainability Alunorte at nameplate capacity Eliminate landfilling of waste in 2021 in the long term Robust maintenance plans Annualized volumes Alunorte (alumina) Million tonnes Nameplate Alunorte (6.3 mtpy) 6.3 6.3 5.2 5.7 6.1 5.8 5.6 6.2 4.3 3.3 3.7 Q1 Q3 Q
Slide 29: Hydro Extrusions
») Hydro Hydro Extrusions Capital Markets Day 2021
Slide 30: Unrivalled position as #1 extrusions provider globally
Unrivalled position as #1 extrusions Four distinct Business Units, all with strong segment presence provider globally Total volume 2020: 1.1 million tonnes1) Extrusion sales volume (2020), tonnes (000s) 1500 Building 7% Systems Distribution 13% Precision 10% Tubing 1000 Automotive 16% Extrusion Tran
Slide 31: ~200,000 tonnes announced in new capacity across portfolio in 2021
~200,000 tonnes announced in new capacity across portfolio in 2021 +160,000 tonnes recycled aluminium capacity • Products with low carbon footprint • Recyclability and keeping materials “in the loop” Navarra, Spain Sjunnen, Sweden The Dalles, USA Székesfehérvár, HUN +12,000 tonnes directed toward th
Slide 32: Extrusions project examples
IAAPS – University of Bath, UK l TECHNAL Photo:John Kees 32 Neue Balan - Munich, Germany l WICONA LUSEP - Loughborough, UK l TECHNAL
Slide 33: Hydro Extrusions EBITDA margins and peers
Hydro Extrusions Hydro Extrusions and peers EBITDA-margin per unit in Hydro Extrusion (%) Annual reported EBITDA margins (%) Hydro Extrusions Peers1) Oct 2021 YTD Oct 2018 YTD 10.8 10.4 10.3 >5% 9.7 8.9 8.0 0-5% 6.4 6.6 <0% Total HE portfolio (~100 sites), 1.3 million tonnes 2018 2019 2020 YTD 2021
Slide 34: Extrusions EBITDA
Extrusions EBITDA NOK billions 2.1 Underlying market growth 8.0 • Capitalize on underlying growth in extrusion demand in 2.4 key regions and segments -1.5 Dedicated cost reduction programs • Procurement 0.9 • SG&A cost 4.1 • Restructuring • Operational improvements through our way of working, Extrus
Slide 35: Hydro Recycling
») Hydro Recycling Capital Markets Day 2021
Slide 36: Increasing customer awareness and regulatory push driving circular economy
Increasing customer awareness and regulatory push driving circular economy Market: Post-consumer scrap to take larger Customers: Increased awareness and desire Regulatory: Green deal, Grønn Plattform; share of future metal demand to use recycled aluminium reduce waste & CO2 footprint, promoting circ
Slide 37: Flexibility in scrap sourcing and large recycling asset base
Unique flexibility in scrap sourcing, Large recycling asset base covering North Customer closeness to lead adaptation of developing advanced sorting technology America1 and Europe innovative greener products number of sites Europe 5 Aluminium Metal HyForge™ 9 Extrusions North America Aluminium Metal
Slide 38: Announced projects and project pipeline
Capacity Announced projects increase Greenfield recycler Cassopolis, Michigan +120 kt Høyanger Recycling, Norway +36 kt1) Expansion project Rackwitz, Germany +25 kt Expansion project Deeside, UK +7 kt LIBS sorting pilot N/A Greenfield recycler Székesfehérvár, HUN +90 kt Expansion project Sjunnen, Sw
Slide 39: AM Recycling EBITDA margin and first metal from projects
AM Recycling EBITDA margin Estimated first metal from announced projects USD/mt 200 2022 2023 2024 2025 150 100 Sjunnen Rackwitz Høyanger (+20 kt) (+25 kt) (+36 kt) 50 Székesfehérvár Navarra The Dalles (+90 kt) 0 (+23 kt) (+27 kt) Cassopolis (+120 kt) Deeside (+7 kt) EBITDA Margin Ave 2008-2013 Gree
Slide 40: Strong recycling project pipeline under execution
Recycling EBITDA1) Strong recycling project pipeline under execution NOK millions 540 – 940 2,070 – 2,470 PCS capacity Investments EBITDA uplift ‘000 ton BNOK MNOK Projects underway 160 Investment decision 1,370 160 possible in 2021-’22 2025 ambition 200 - 350 3.0 - 4.5 700 – 1,100 1,370 Early phase
Slide 41: Hydro Energy
») Hydro Hydro Energy Capital Markets Day 2021
Slide 42: Containing global warming requires massive electrification and decarbonization
Containing global warming only possible through massive electrification and decarbonization of industries COP 26 COP 26concluded with concluded nation with Confirms the need Urgent need for industrial for for Will require Will requiremassive massiveamounts of Confirms the need state pledges towards
Slide 43: Industrials represent ~40% of global emissions
Industrials represent ~40% of ~50% of fuel used for energy by Eliminating industry carbon global emissions industrials can be electrified footprint requires a combination using existing technology of solutions and technologies Scope 1 and 2 Breakdown of global industrial energy consumption Renewable
Slide 44: Electricity and energy price development; net-zero relies on decarbonized energy
Electricity and energy price commodities price development Net-zero in 2050 relies on decarbonizing energy generation since 2019 % share €/ton and €/MWh 200 100 88 80 150 61 60 100 40 29 50 20 0 0 Jan-19 Dec-19 Nov-20 Oct-21 2020 2030 2050 CO2 Gas Coal Power Germany Power Nordic In IEA’s pathway to
Slide 45: Renewable capacity, hydrogen and battery demand forecasts
Brazil renewable capacity forecast Global hydrogen demand European battery demand GW TWh TWh 21,800 1.9 Utility scale solar PV 90 Power generation Onshore wind Transportation Stationary storage 63 37 Building heating and power Vehicles 43 19 33 Industry energy and hear 10 18 7 53 New feedstock uses
Slide 46: The renewable energy leader enabling decarbonization
With renewables, energy efficiency and electrification we can tackle Green hydrogen to address 30% 70% of global emissions from ‘hard to abate’ sectors World-class energy competence center Batteries The renewable energy leader enabling the decarbonization and energy transition for industries 46
Slide 47: Business area with supporting competence for speed and de-risking
Business area with supporting competence as foundation for speed and de-risking Energy Operations & Batteries Projects Energy Markets Strong industrial partners Operational scale, commercial Project development and competence Deliver on project pipeline in renewable energies and technologies impleme
Slide 48: Hydro REIN: the one-stop-shop energy partner for industrials
Hydro REIN: the one-stop-shop energy partner » for industrials Help the industry succeedin | the energy transition Utilize Hydro’s position and extensive experience in power systems Hydro Source power from captive portfolio of renewable assets 48
Slide 49: Hydro's portfolio
Storage systems 1. Early entry Brazil Energy efficiency 2. Developer / operator position Nordics Onsite generation 3. Long-term ownership strategy Market 10 TWh repowering need in Hydro by 2025 and 100+ sites identified in 4. Value enhancing services to potential large potential for serving clients
Slide 50: Stor-Skälsjön, Brazil, Sørlige Nordsjø II, North York
Stor-Skälsjön, Sweden Brazil Sørlige Nordsjø II North York, Canada 260MW ready-to-be-built wind power Maturing several large-scale attractive Joint application with Equinor and First battery project to be installed in plant in Sweden (SE2) to be opportunities in Brazil, both within RWE for the upcom
Slide 51: A green hydrogen producer and industrial integrator
A green hydrogen producer and industrial integrator Owned by Hydro, a global Hydrogen’s future is fossil- Hydro potential offtake Fully integrated – owner, Delivering across industries energy & aluminium player free: we do green-only gives platform for growth developer and operator supported by part
Slide 52: A large potential for decarbonization and economic development
We need an ambition loop between industry and governments Industrial fuel switch Renewable energy Incentives bridging Hydrogen demand capabilities development the cost gap A large potential for decarbonization and economic development Images (1) Hydro Karmøy plant (2) casting at a Hydro site (3) Hyd
Slide 53: Hydrogen clusters and partnerships
Hydrogen clusters linked to industrial partners’ on-site hydrogen production. 1 Partnerships to enable project scale and drive down costs. 2 2 Developing independent projects globally 3 53
Slide 54: Hydro Årdal and Hydro Vetlanda
Hydro Årdal Årdal (50 MW) Hydro Vetlanda Holmestrand, Speira 54
Slide 55: Strong project pipeline in selected parts of the battery value chain
Strong project pipeline in selected parts of the battery value chain • Recycling and second life • Cell and pack solutions • Anode material and technology • Selected next generation technologies Raw materials Active Recycling material • Leading sustainability competence • Active industrial developer
Slide 56: Targeting 3x value uplift on invested equity
Targeting 3x value uplift on invested equity Invested equity value - Batteries NOK billions 3x • Achieved value uplift 4.6x of invested equity based on 10 valuation in transactions to date 8 • Value uplift from revaluation of Northvolt and Corvus Energy 6 • Exploring further opportunities in selecte
Slide 57: Pål Kildemo, EVP and CFO
Pål Kildemo EVP and CFO 57
Slide 58: Financial strength and flexibility
Financial strength and flexibility Adjusted Total Adjusted RoaCE1) EBITDA2) shareholder return3) 13% 22 BNOK 67% LTM Q3 2021 LTM Q3 2021 LTM Nov 30th, 2021 CAGR +47% 13% 22.4 67% 59% 10.4 13.1 1% 4% 2019 2020 LTM Q3 2021 2019 2) 2020 LTM Q3 2021 Hydro Peer avg4) 1) RoaCE figures as reported, where r
Slide 59: Financial strength and flexibility: cash flow and net debt
Financial strength and flexibility Hydro is well positioned to keep delivering going forward Free cash flow 1,2) Adjusted net debt (cash) Adjusted net debt / AEBITDA4) 9.5 BNOK 10.5 BNOK 0.6x LTM Q3 2021 Q3 2021 LTM Q3 2021 +265% -72% Target <2 9.5 25.4 23.3 2.3 7.7 2.0 11.8 10.5 2.6 7.8 1.2 0.6 201
Slide 60: Lifting cash flows towards 2025
Improvement New strategic program and growth commercial initiatives ambition Lifting cash flows towards 2025 Strengthen working Capex capital optimization management 60
Slide 61: Sustainability position
Sustainability position 65% Europe Index inclusion DJSI inclusion since 1999 Continuing efforts to further improve reporting and increase transparency • Transparent and consistent reporting approach for more 71/100 AA rating #1 rank in sector (1/43) Industry leader than three decades Among top 10% p
Slide 62: Sustainability position: EU Taxonomy aligned share
Sustainability position Aligned share estimated to be 22 – 27% of revenue and 30 – 35% of CAPEX Not eligible revenue Eligible revenue Description Eligible CAPEX Not eligible CAPEX ≈ 22 – 27% Majority of Secondary Norwegian European aluminum hydropower ≈ 30 – Primary production production1) 35% Extru
Slide 63: An additional ten percentage points may align with the EU Taxonomy
Sustainability position An additional ten percentage points may align with the EU Taxonomy The EU Taxonomy aims to incentivise Taxonomy sensitivity Accumulated 2022-25e • Switching to low carbon electricity NOK billion • Reducing production emissions 44 41 EU Taxonomy Not eligible Eligible 2022-25 C
Slide 64: Access to favorable financing and positive impact on cost of capital
Sustainability position Access to favorable financing and positive impact on the cost of capital Current positions Potential new A comprehensive sustainable transactions financing framework • Sustainability linked Revolving Credit Facility • Green/sustainable loans ✓ Access to capital (2019-2026) •
Slide 65: Strategic modes reflect global megatrends and high-return opportunities
Clear principles for capital allocation Strategic modes reflect global megatrends and high-return opportunities Safe, compliant and efficient operations – The Hydro Way Businesses Bauxite & Alumina Aluminium Metal Recycling Energy Extrusions Strategic mode Sustain and improve Sustain and improve Sel
Slide 66: ~50% of capex 2022-25 is return seeking and growth capex
Clear principles for capital allocation ~50% of capex 2022-25 is related to return seeking and growth capex 2022-25e CAPEX outlook Growth & Return-seeking NOK billion • Capacity investments in Extrusions with new presses in USA, Europe and China • Recycling investments including greenfield investmen
Slide 67: Inorganic growth could come in addition; capex guidance
Clear principles for capital allocation Inorganic growth in line with strategic modes could come in addition Historical capex Capex 2021E and guidance NOK Billion NOK Billion Current guiding 2021 Current guiding 2022-25 Updated guiding 2022-25 REIN & Havrand ~11 ~2 ~10 9.6 ~9-10 ~0.5 ~0.5 ~8.5 ~0.5
Slide 68: Balancing capital release and supply chain robustness
Clear principles for capital allocation Balancing capital release and supply chain robustness Focus on balancing capital release and Net operating capital book value – quarter end2) Net operating capital days, quarterly1,2) NOK Billions supply chain robustness 20 60 19 18 NOC-days significantly down
Slide 69: Robust shareholder payout – Hydro's Dividend Policy
Robust shareholder payout • Strong financials in 2021 and robust balance sheet allows higher shareholder distribution • Hydro aims to pay out 70-80% of adjusted net income for 2021 • As a combination of ordinary dividends and either extraordinary Hydro’s Dividend Policy dividends, or a combination o
Slide 70: Profitability roadmaps: business areas
Profitability roadmaps Cost improvements, commercial ambitions, and strategic growth initiatives Commercial ambition Strategic growth Improvement program BNOK 8.5 on EBITDA by 20251,2) BNOK 2.52) initiatives Base volumes Operational Fixed costs Procurement and Commercial Recycling growth excellence
Slide 71: Main drivers – improvement measures and market developments
Profitability roadmaps Main drivers – improvement measures and market developments ARoaCE potential Market scenarios 2025 Main further upside drivers Main downside risks • Sustainability differentiation and ability • Negative market and macro 27 % to produce greener aluminium developments, incl. tra
Slide 72: Main drivers – volumes and raw material optimization
Profitability roadmaps Main drivers – volumes and raw material optimization, market developments ARoaCE potential Market scenarios 2025 Main further upside drivers Main downside risks 10-11% nominal CoC 27 % • Positive market and macro • Operational disruptions developments • Negative market and mac
Slide 73: Main drivers – volumes, cost reductions, efficiency gains
Profitability roadmaps Main drivers – volumes, cost reductions, efficiency gains, and market development ARoaCE potential Market scenarios 2025 Main further upside drivers Main downside risks 10-11% nominal CoC 38 % • Positive market and macro developments • Negative market and macro • Commercial di
Slide 74: Main drivers – improvement program and commercial ambition
Profitability roadmaps Main drivers – improvement program and commercial ambition ARoaCE potential 18 % Main further upside drivers Main downside risks 7-8% nominal CoC • Selective profitable growth including • Negative market and macro larger projects developments, incl. trade restrictions 12 % • C
Slide 75: Profitability roadmaps: Energy and other upside drivers
Profitability roadmaps LTM Q3 2021 BNOK 2.5 0.6 Adjusted EBITDA Cash flow Main further upside drivers • Additional growth opportunities • Further commercial and operational improvements EBITDA • Positive market and macro developments • Holding companies fully included • Investments in part-owned pro
Slide 76: Outlook and hedging by business area
Aluminium hedges of 20-490 kt/yr 2022-24 in place per November 30 • 2022: 490 kt hedged at a price of ~2200 USD/t • 2023: 460 kt hedged at a price of ~2200 USD/t • 2024: 20 kt hedged at a price of ~2350 USD/t B&A • Pricing mainly in NOK, with USD hedges converted to NOK via USDNOK • Alunorte expecte
Slide 77: Summary: attractive asset base, strong market position, greener aluminium
Attractive asset base Strong market position Leadership in greener aluminium 1st NOK 8 billion 2.3 and 4.0 quartile cost position of EBITDA in tons CO2 per ton Extrusions by 2025 aluminium in Low greener products carbon footprint Profitable growth journey Strong balance sheet and shareholder focus S
Slide 78: Additional information
») Hydro Additional information Capital Markets Day 2021
Slide 79: Hydro targets ARoaCE above 10% over the cycle
Profitability roadmaps Hydro targets URoaCE above 10% over the cycle Capital employed1) 13 % 10 % Bauxite & Alumina 10 % Aluminium Metal 7% 25 % Metal Markets 4% Extrusions 1% 28 % ~84 BNOK Energy (30 Sept.21) 2017 2018 2019 2020 LTM Q3 ’21 ARoaCE target Nominal long-term over the cycle cost of capi
Slide 80: Bauxite & Alumina returns and capex
Profitability roadmaps Returns below the cost of capital reflecting challenging markets, embargo and operational issues during the early years Capital employed in B&A 9% 6% 6% 5% 25 % 3% 3% ~21 BNOK 2016 2017 2018 2019 2020 LTM ARoaCE > CoC Nominal long-term (30 Sept.21) Q3 ’21 cost of capital 2016-
Slide 81: Aluminium Metal returns and recycling investments
Profitability roadmaps Investments in recycling capacity to support growth Capital employed in AM (MM) 20 % 13 % 5% 5% 3% ~29 (2) BNOK 2016 2017 2018 -3 % 2019 2020 LTM ARoaCE > CoC (30 Sept.21) Q3 ’21 Nominal long-term 3% cost of capital 34 % 2016-2021LTM2) average ARoaCE Capex, BNOK 5.0 4.0 Sustai
Slide 82: Extrusions returns and capex
Profitability roadmaps Returns in line with the cost of capital reflecting leading market positions in high value segments and portfolio optimization Capital employed in Extrusions 12 % 7% 7% 6% 6% 28 % ~24 BNOK 2017 2018 2019 2020 LTM ARoaCE > CoC Nominal long-term (30 Sept.21) Q3 ’21 cost of capit
Slide 83: Energy returns and capex
Profitability roadmaps Returns above the cost of capital reflecting the depreciated asset base Capital employed in Energy 21 % 18 % 18 % 10 % 13 % 11 % 9% 6-7% ~8 BNOK ARoaCE > CoC (30 Sept.21) 2016 2017 2018 2019 2020 LTM Nominal long-term Q3 ’21 cost of capital 2016-2021LTM1) ~15% average ARoaCE C
Slide 84: Aluminium price, currency and commodity sensitivities
Aluminium price sensitivity +10% Currency sensitivities +10% NOK million Sustainable effect: 4 600 NOK million USD BRL EUR 3 220 AEBITDA 4,940 (860) (250) One-off reevaluation effect: AEBITDA Adjusted Net Income Financial items (540) 700 (4,420) Other commodity prices, sensitivity +10% NOK million •
Slide 85: Bauxite & Alumina annual sensitivities on adjusted EBITDA
Annual sensitivities on adjusted EBITDA if +10% in price Revenue impact NOK million • ~14% of 3-month LME price per tonne alumina with one month lag • Realized alumina price lags PAX by one month 2 130 Cost impact Bauxite • ~2.45 tonnes bauxite per tonne alumina • Pricing partly LME-linked (40) (100
Slide 86: Aluminium Metal annual sensitivities on adjusted EBITDA
Annual sensitivities on adjusted EBITDA if +10% in price Revenue impact NOK million • Realized price lags LME spot by ~1-2 months • Realized premium lags market premium by ~2-3 months 4 640 Cost impact Alumina 730 • ~1.9 tonnes per tonne aluminium • ~14.5% of 3-month LME price per tonne alumina, inc
Slide 87: Scenarios are illustrative, not forecasts
Scenarios are not forecasts, but illustrative earnings, cash flow and return potential based on sensitivities • Starting point – AEBITDA Q3-21 LTM Price assumptions • Improvement potential in real 2018 terms, upstream margins based on 2016-2018 average. Prices used Q3 2021 LTM 2025 in scenarios • Ca
Slide 88: Next event and investor relations contacts
Next event Line Haugetraa Fourth quarter results and t: +47 41406376 Annual report e: line.haugetraa@hydro.com February 22, 2022 Christopher Minora t: +47 90695131 For more information see e: christopher.minora@hydro.com www.hydro.com/ir Matz Coucheron-Aamot t: +47 94829696 e: matz.coucheron-aamot@h
Slide 89: Hydro – Industries that matter
Hydro Industries that matter