Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Handelsbanken Nordic Basic Industry Seminar 2008
18 slides from Norsk Hydro Asa's conference presentation, Mar 7, 2008
Slide 1: Hydro - a resourceful aluminium company
Hydro - a resourceful aluminium company John Ove Ottestad, Executive Vice President and Chief Financial Officer March 7, 2008 (1)
Slide 2: A resourceful aluminium company
A resourceful aluminium company Aluminium ● 25 000 employees1) Metal ● Operations in more than 30 countries ● Turnover Aluminium ● 2006: NOK 99 billion Products ● 2007: NOK 94 billion ● Underlying EBIT ● 2006: NOK 10.2 billion ● 2007: NOK 9.9 billion Energy ● Market capitalization NOK 90 billion2) 1
Slide 3: Underlying EBIT per segment
Underlying EBIT per segment NOK million Aluminium Metal Aluminium Products Energy Corporate and eliminations 2 908 2 789 2 938 266 369 229 2 538 2 455 498 398 492 558 383 2 507 2 235 2 440 2 402 207 269 294 2 277 288 367 2 102 260 1 945 1 731 1 831 341 1 755 1 364 2006 2007 (3)
Slide 4: Capital employed – upstream focus
Capital employed – upstream focus Total NOK 44 billion1) 31 December 2007 Bauxite & Energy, 9% Alumina, 13% Automotive, 4% Extrusion, 9% Rolled Products, Primary 19% Aluminium, 40% Commercial, 6% 1) Including NOK 1.7 billion in negative capital employed in “Corporate and Other” not shown in graph (4
Slide 5: Improved return on capital
Improved return on capital RoaCE Hydro Aluminium Metal Aluminium Products Energy 22.5% 23.0% 19.1% 18.0% 14.6% 10.7% 4.70% -0.70% 2006 2007 2006 2007 2006 2007 2006 2007 Capital employed – December 31, 2007 (NOK billion) 44.2 27.1 14.5 4.2 (5)
Slide 6: 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 63% equity in Good long-term 1.74 mill. mt/year 3.2 mill. mt/year 1.7 mill. mt/year 728 000 ton alumina coverage of power
Slide 7: Growth and restructuring efforts
Growth and restructuring efforts Improved cost position Business operating cash cost USD/tonne 3 000 Business operating cost Weighted average Hydro (CRU) Qatalum Hydro CRU incl c losed c apac ity Hydro CRU incl Qatalum ex closed cap 2 600 Closed 250 000 tonnes capacity 2 200 in Norway and Germany (2
Slide 8: Qatalum smelter
Qatalum smelter Largest greenfield capacity built in one step ● First-stage capacity ● Smelter: 585 000 tonnes per year ● 704 cells in 2 double-lined potrooms ● Hydro technology ● Anode plant and cast houses ● 1 250 MW power plant ● Possible expansion to 1 200 000 tonnes per year ● Technology design
Slide 9: Hydro well covered with alumina
Hydro well covered with alumina New refinery positions Hydro for further growth in metal Alumina coverage Percent 140% 120% 100% LME-linked contracts 80% MoU new refinery equity 60% 40% Equity 20% 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Based on existing smelter capacity and decided smelter
Slide 10: Competitive power sourcing
Competitive power sourcing Critical for aluminium smelting Power coverage 100% ● Power represents 30% of Neuss production costs 75% Contract Contracts ● Long-term power sourcing ensures predictable costs 50% ● Globalization of Hydro’s power 25% Self Generated Self generated activities 0% ● 9 TWh cap
Slide 11: 2008 outlook
2008 outlook ● Rapidly growing global demand for primary metal ● Driven by China and despite weakening development in the US economy ● Supply disturbances bolster the aluminium price ● Uncertain global economic outlook (11)
Slide 12: Significant change in forward curve
Significant change in forward curve LME forward price, USD/tonne 3 200 2 700 2 200 1 700 1 200 2003 2005 2007 2009 2011 2013 jan-03 jan-04 jan-05 jan-06 jan-07 mar-08 (12)
Slide 13: China striving for balance
China striving for balance 1 000 tonnes ● Export tax on metal and low value- 500 added products 400 Net import 300 ● Majority of export to Asian markets 200 100 0 ● China expected to be balanced, (100) medium to long-term (200) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 06 06 06 06 07 07 07 07 (300) Net export (400) (
Slide 14: Capital allocation
Capital allocation NOK billion ● ~80% of 2008-2009 investments upstream 12-13 12-13 ● Qatalum: USD 2.8 billion ● Alunorte 3: USD 0.3 billion ● Aluminium Products ● Selective growth initiatives in Extrusion and Building Systems 5 ● Sustaining capex NOK 3 billion annually 2007 2008E 2009E Debt-finance
Slide 15: Dividend and share buyback for 2007
Dividend and share buyback for 2007 NOK million Total ~ 4 000 ~ 10 000 ● Dividend Share buyback ● Ordinary NOK 1.50 per share Extraordinary dividend ● Extraordinary NOK 3.50 per share Ordinary dividend ● Total NOK 5.00 per share 4 200 ● Share buyback authorization ● ~NOK 4 billion ● Maintain flexibi
Slide 16: Restructuring the Hydro conglomerate has created significant value
Restructuring the Hydro conglomerate has created significant value NOK billion 400 350 300 250 Dividend and buybacks Yara 200 Oil and gas Aluminium 150 Hydro 100 50 0 1999* 2007** * 4 January 1999 close, nominal value ** 28 September 2007 close. Aluminium and Oil & Energy based on transaction equati
Slide 17: Hydro's competitive strengths
Hydro’s competitive strengths ● Power position ● Close to markets and customers ● Operational performance ● Reputable partner in joint ventures ● Technological leadership ● Distinct project management skills across value chain ● Financial capacity to grow (17)
Slide 18: www.hydro.com
www.hydro.com
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