Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Day (January 2002)
26 slides from Norsk Hydro Asa's investor day presentation, Jan 8, 2002
Slide 1: Capital Markets Day: Performance and Financial Strength
Capital Markets Day Performance and Financial Strength Executive Executive Vice Vice President President and and CFO CFO Leiv Leiv L. L. Nergaard Nergaard Norsk Norsk Hydro Hydro ASA ASA Oslo, Oslo, January January 8, 8, 2002 2002
Slide 2: Creating shareholder value
2 Creating shareholder value Return on Capital and Performance asset productivity Share- holder- Portfolio Capital discipline value management Financial capacity Major portfolio restructuring 33047_3 - 01.2002 - * 2 - Hydro Media
Slide 3: VAW Transaction
3 VAW Transaction ● Total consideration is 2,645 mill Euro (21.2 Bn NOK* including net interest bearing debt of 757 mill Euro (NOK 6.1 bn) ● In addition Norsk Hydro takes over 450 mill. Euro (3.6 bn NOK) unfunded pension obligations ● Acquisition financed through cash and debt ● Subject to approval
Slide 4: VAW Financial impact on Norsk Hydro
4 VAW Financial impact on Norsk Hydro ● Pro forma first 9 months 2001 EBITDA: + 7% EPS: + 1.30 NOK/share ● Estimated* debt/equity: 0.7 ● Hydro maintains emphasis on keeping A/A2 rating * Estimated after transaction 33047_3 - 01.2002 - * 4 - Hydro Media
Slide 5: Norsk Hydro and VAW combined
5 Norsk Hydro and VAW combined Pro Forma Total assets 30 Sept. 2001 Total assets Norsk Hydro + VAW Norsk Hydro 14% 23% 39% 44% 14% 16% 17% 33% Oil and Energy Aluminium Agri Other 33047_3 - 01.2002 - * 5 - Hydro Media
Slide 6: Norsk Hydro and VAW combined
6 Norsk Hydro and VAW combined Pro Forma EBITDA first 9 months 2001 Norsk Hydro Norsk Hydro + VAW 6% 4% 12% 11% 9% 18% 67% 73% Oil and Energy Aluminium Agri Other 33047_3 - 01.2002 - * 6 - Hydro Media
Slide 7: Speedy return to strong financial position
7 Speedy return to strong financial position Long-term debt/equity* illustrating llustrating expected effect of VAW acquisition 0.69 0.7 0.7 0.6 0.55 0.49 0.50 0.5 0.5 0.37 0.39** 0.4 0.29** 0.3 0.2 0.1 0 1997 1998 1999 2000 30.09.01 After Target acq. 2003 * Long-term debt divided by shareholders' e
Slide 8: Planned capital allocation 2002
8 Planned capital allocation 2002 Capital expenditures by business area Oil & Energy Oil and Energy* 8.5 bn. NOK Aluminium 8.0 bn. NOK Agri 2.0 bn. NOK Others 0.5 bn. NOK Other Total 19.0 bn. NOK *Excl. exploration budget of 2.4 bn. NOK Agri Aluminium* * 2002 VAW investments included. (VAW acquisiti
Slide 9: Active divestment program
9 Active divestment program ● New divestment target of NOK 10 billion by end 2003 ■ Larger non-core candidates for divestment include: – Petrochemicals – KFK shareholding – VAW Flexible Packaging ● Continued divestments within core areas ■ Recent examples: – Pelican, non-core NCS licenses, Oleochemi
Slide 10: CROGI — our key measure of return
10 CROGI — our key measure of return ● CROGI - Cash Return on Gross Investments: EBITDA less tax Gross invested capital ● CROGI at "normalised" prices — good indicator for: ■ Average over the cycle performance ■ Effects of internal improvement efforts ● CROGI at actual prices — good profitability in
Slide 11: CROGI — development
11 CROGI — development CROGI % 14 12 ● Normalized prices: 3.3 ■ NOK/USD: 8.00 10 10.3 ■ Brent Blend (USD/bbl) 18 1 ■ CAN27 (USD/t) 113 8 9 8.5 8.4 ■ LME 3M (USD/t) 1,500 7.7 8 6 ● Average over the cycle 4 target 10% 2 0 1996 1997 1998 1999 2000 2001 2002(e) Actual prices Normalized prices 33047_3 -
Slide 12: CROGI performance
12 CROGI performance Actual prices Oil and Energy Aluminium Agri 16 14 12 10 8 6 4 2 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000 0 33047_3 - 01.2002 - * 12 - Hydro Media
Slide 13: Medium term CROGI outlook (normalised)
13 Medium term CROGI outlook (normalised) ● Agri — well positioned to show levels above 10% in coming years ● Aluminium — programs initiated to bring normalised CROGI to 10% by 2004 ● Oil and Energy — currently around 9%. Build-up of international production takes time ● Asset productivity improveme
Slide 14: Norsk Hydro including VAW — indicative sensitivity by unit changes
14 Norsk Hydro including VAW — indicative sensitivity by unit changes EBITDA Net income CROGI Mill NOK Mill NOK % points Oil price + 1 USD/boe 990 215 0.07 LME + 100 USD/t 820 575 0.20 CAN + 10 USD/t 600 420 0.15 Currency + 0.1 NOK/USD 430 105* 0.07 Underlying assumptions : Oil 18 USD/bbl, LME 1,500
Slide 15: Hydro — new reporting format from 2002
15 Hydro — new reporting format from 2002 NEW OLD ● Exploration and Production ● Exploration and Production ● Energy & Oil Marketing ● Oil Marketing ● Energy Hydro Oil and Energy Hydro Oil and Energy ● Metals 1) ● Aluminium Metal Products ● Rolled products ● Extrusion ● Extrusion & Automotive 2) ● O
Slide 16: Main financial targets
16 Main financial targets ● Cash Return on Gross Investment (CROGI*), nominal after tax 10% ● Return on new investments, real rate after tax 10% ● Dividend: Share of net income, average over the cycle 30% ● Solidity: Long term interest-bearing debt/equity 0.5 * Based on "normalised" price set to ref
Slide 17: Additional sensitivity information
17 Capital Markets Day Additional sensitivity information 33047_3 - 01.2002 - * 17 - Hydro Media
Slide 18: Norsk Hydro including VAW — indicative sensitivity by % changes
18 Norsk Hydro including VAW — indicative sensitivity by % changes EBITDA Net income CROGI Mill NOK Mill NOK % points Oil price + 5% USD/boe 890 195 0.07 LME + 5% USD/t 615 430 0.15 CAN + 5% USD/t 340 235 0.08 Currency + 5% NOK/USD 1,720 415* 0.29 Underlying assumptions : Oil 18 USD/bbl, LME 1,500 U
Slide 19: Financial results Norsk Hydro
19 Financial results Norsk Hydro 1999 2000 Acc Q3 ‘01 EBITDA (Mill NOK) 21,944 46,609 30,460 Cash flow per share 58.3 107.0 62.0 Earnings per share 13.90 53.40 26.10 Comments on effects of new offshore tax regime 33047_3 - 01.2002 - * 19 - Hydro Media
Slide 20: Oil & Energy — indicative sensitivities
20 Oil & Energy — indicative sensitivities EBITDA CROGI Mill NOK % points Oil price + 1 USD/boe 1,100 0.22 Currency + 0.1 NOK/USD 215 0.04 Underlying assumptions: Oil 18 USD/bbl, NOK/USD 8.00 Full tax paying position offshore 33047_3 - 01.2002 - * 20 - Hydro Media
Slide 21: Aluminium — indicative sensitivities
21 Aluminium — indicative sensitivities EBITDA CROGI Mill NOK % points LME + 100 USD/t 400 0.64 Currency + 0.1 NOK/USD 105 0.17 Underlying assumptions: LME 1,500 USD/t , NOK/USD 8.00 Simplified tax rate: 30% 33047_3 - 01.2002 - * 21 - Hydro Media
Slide 22: Agri — indicative sensitivities
22 Agri — indicative sensitivities EBITDA CROGI Mill NOK % points CAN + 10 USD/t 600 0.89 Oil price + 1 USD/boe -110 -0.16 Currency + 0.1 NOK/USD 60 0.09 Underlying assumptions: Oil 18 USD/bbl, CAN 113 USD/t , NOK/USD 8.00 Simplified tax rate: 30% 33047_3 - 01.2002 - * 22 - Hydro Media
Slide 23: Aluminium — indicative sensitivities by unit changes incl. VAW
23 Aluminium — indicative sensitivities by unit changes incl. VAW EBITDA CROGI Mill NOK % points LME + 100 USD/t 820 0.76 Currency + 0.1 NOK/USD 155 0.14 Underlying assumptions: LME 1,500 USD/t , NOK/USD 8.00 Simplified tax rate: 30% 33047_3 - 01.2002 - * 23 - Hydro Media
Slide 24: Norsk Hydro (excl. VAW) indicative sensitivity by unit changes
24 Norsk Hydro — (excl. VAW) indicative sensitivity by unit changes Indicative EBITDA Net income CROGI Mill NOK Mill NOK % points Oil price + 1 USD/boe 990 215 0.08 LME + 100 USD/t 400 280 0.11 CAN + 10 USD/t 600 420 0.17 Currency + 0.1 NOK/USD 375 65* 0.07 Underlying assumptions : Oil 18 USD/bbl, L
Slide 25: Norsk Hydro (excl. VAW) indicative sensitivity by % changes
25 Norsk Hydro - (excl. VAW) indicative sensitivity by % changes EBITDA Net income CROGI Mill NOK Mill NOK % points Oil price + 5% USD/bbl 890 195 0.08 LME + 5% USD/t 300 210 0.08 CAN + 5% USD/t 340 235 0.09 Currency + 5% NOK/USD 1,500 265* 0.27 Underlying assumptions : Oil 18 USD/bbl, LME 1,500 USD
Slide 26: Safe harbour statement
26 Safe harbour statement In order to utilize the "Safe Harbor" 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 with respect to the financial conditi