Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Q2 2003 Earnings Presentation
56 slides from Norsk Hydro Asa's earnings presentation, Jul 21, 2003
Slide 1: Second quarter 2003
Second quarter 2003 Norsk Hydro ASA 21 July, 2003
Slide 2: Highlights second quarter, 2003
Norsk Hydro – Second quarter 2003 2 Highlights second quarter, 2003 Continued operational progress in all three areas Strong cashflow Flexible Packaging divestment completed Debt/equity ratio further improved Decision to list Agri Authorization for buyback of shares 43575E - 07.2003 - *2 - Hydro Med
Slide 3: Public listing of Agri
Norsk Hydro – Second quarter 2003 3 Public listing of Agri Well received by key stakeholders Project organization established Advisers to be selected Agri Capital Markets Day planned in November Public listing during first half 2004 43575E - 07.2003 - *3 - Hydro Media
Slide 4: Net income
Norsk Hydro – Second quarter 2003 4 Net income* Per quarter NOK million 6 000 Gains from divestments 4 859 5 000 3 896 4 000 3 235 3 280 3 000 2 775 2 840 2 451 2 482 2 180 2 324 2 132 2 000 1 333 1 144 1 000 513 0 2000 2001 2002 2003 Accumulated 13 981 7 892 8 765 4 806 * Including the effect of ch
Slide 5: Earnings per share
Norsk Hydro – Second quarter 2003 5 Earnings per share* NOK 20 18.6 Gains from divestments 18 16 14.9 14 12.7 12.4 12 10.6 11.0 10 9.4 8.5 9.0 8.4 8.3 8 6 5.2 4.4 4 2.0 2 0 2000 2001 2002 2003 Accumulated 53.4 30.5 34.0 17.5 * Before effect of change in accounting principles 43575E - 07.2003 - *5 -
Slide 6: Consolidated income statements
Norsk Hydro – Second quarter 2003 6 Consolidated income statements 2nd quarter 2nd quarter NOK million 2003 2002 Operating revenues 40 578 44 454 Operating income 4 619 5 077 Equity in net income of non-consolidated investees 392 (203) Interest income and other financial income 379 288 Other income
Slide 7: Adjusted income second quarter 2003
Norsk Hydro – Second quarter 2003 7 Adjusted income second quarter 2003 2nd quarter Adjust- Adjusted NOK million 2003 ments Income Operating revenues 40 578 - 40 578 Operating income 4 619 119 4 738 Equity in net income of non-consolidated investees 392 (170) 222 Interest income and other financial
Slide 8: Net financial income (expense)
Norsk Hydro – Second quarter 2003 8 Net financial income (expense) 2nd quarter 2nd quarter NOK million 2003 2002 Interest income 211 442 Dividends and net gain (loss) on securities 168 (154) Interest income and other financial income 379 288 Interest expense (708) (844) Capitalized interest 184 158
Slide 9: Operating income
Norsk Hydro – Second quarter 2003 9 Operating income Individual operating segment 2nd quarter 2nd quarter NOK million 2003 2002 Exploration and Production 3 107 3 069 Energy and Oil Marketing 547 617 Eliminations (2) - Hydro Oil and Energy 3 652 3 686 Metals 542 568 Rolled Products 53 (76) Extrusion
Slide 10: Variance analysis Hydro group
Norsk Hydro – Second quarter 2003 10 Variance analysis Hydro group NOK million 1st half 2nd quarter 2003 20 441 9 277 2002 17 713 9 125 Variance EBITDA 2 728 152 - Prices and currency, E&P * 695 (505) - Margin incl. currency effects (1 110) (235) - Volume 1 550 (205) - Fixed costs 300 25 - Depreciat
Slide 11: Earnings before interest, tax, depreciation and amortization (EBITDA)
Norsk Hydro – Second quarter 2003 11 Earnings before interest, tax, depreciation and amortization (EBITDA) Per quarter NOK million 14 000 12 877 12 387 12 000 11 359 11 164 10 996 10 349 10 455 9 970 10 000 9 131 9 125 9 277 8 588 8 000 7 297 7 490 6 000 4 000 2 000 0 2000 2001 2002 2003 Accumulated
Slide 12: EBITDA
Norsk Hydro – Second quarter 2003 12 EBITDA Individual operating segment NOK million 2nd quarter 2003 2nd quarter 2002 Exploration and Production 5 228 5 311 Energy and Oil Marketing 1 048 844 Eliminations (2) - Hydro Oil and Energy 6 274 6 155 Metals 1 124 715 Rolled Products 215 82 Extrusion and A
Slide 13: Operating income – EBIT – EBITDA
Norsk Hydro – Second quarter 2003 13 Operating income – EBIT – EBITDA Second quarter 2003 Operating Non-cons Interest Selected Other Depr. and NOK million EBIT EBITDA income investees income fin. items income amort. Exploration and Production 3 107 4 (23) - - 3 088 2 140 5 228 Energy and Oil Marketi
Slide 14: Net interest-bearing debt/shareholders' equity
Norsk Hydro – Second quarter 2003 14 Net interest-bearing debt/ shareholders’ equity* Ratio 0.7 0.6 0.5 0.44 0.41 0.4 0.32 0.3 0.28 0.2 0.1 0 2000 2001 2002 30.06.2003 * Net interest-bearing debt divided by shareholders' equity plus minority interest 43575E - 07.2003 - *14 - Hydro Media
Slide 15: Oil and Energy – highlights second quarter
Norsk Hydro – Second quarter 2003 15 Oil and Energy – highlights second quarter Good earnings Oil and gas production according to plan Oil production affected by planned maintenance (23 000 bbl/day) Seasonally lower gas sales Discovery in Gulf of Mexico (Lorien) Power production down, prices up vs l
Slide 16: Oil and Energy
Norsk Hydro – Second quarter 2003 16 Oil and Energy EBITDA Eliminations Energy and Oil Marketing NOK million Exploration and Production 9 000 8 668 7 976 7 986 7 894 7 887 8 000 7 697 7 425 6 982 7 000 6 757 6 155 6 274 5 847 6 000 5 528 5 451 5 000 4 000 3 000 2 000 1 000 0 2000 2001 2002 2003 Accu
Slide 17: Operating costs per barrel
Norsk Hydro – Second quarter 2003 17 Operating costs per barrel NOK/boe 99.7 100 91.5 90.1 88.5 80 60 40 20 0 2000 2001 2002 1st half 2003 Exploration 11.2 9.1 20.3 8.6 Net transportation * 7.3 8.5 9 6.9 Other cost/income 1.7 2.3 2 4.2 Deprec.& aband. 49 46.4 46.4 46.3 Field/Prod. cost 22.3 23.8 22
Slide 18: Petroleum production
Norsk Hydro – Second quarter 2003 18 Petroleum production Per quarter 1 000 boe/day 600 Oil Gas 540 552 482 143 156 484 500 451 448 452 442 443 427 419 104 112 411 104 110 385 115 110 88 400 86 371 93 91 74 397 396 57 378 364 372 300 337 325 333 334 328 336 338 313 311 200 100 0 2000 2001 2002 2003
Slide 19: Exploration activities second quarter
Norsk Hydro – Second quarter 2003 19 Exploration activities second quarter Hydro Location Status share USA – Lorien (GoM) 10% Discovery Iran – Anaran 75%* Ongoing Canada – Tuckamore 33% Dry Norway – PL 195 40%** Non-commercial Norway – PL 189 10% Ongoing * Formal governmental approval of Farm-out of
Slide 20: Oil and Energy – prospects
Norsk Hydro – Second quarter 2003 20 Oil and Energy – prospects Production target 2003 maintained at 510 000 boe/day Planned maintenance in Q3 close to Q2 level Projects Start-up Grane and Fram Vest in October – below budget Ormen Lange PDO expected in Q4 Sale of Gjøa (PL 153) to Gaz de France Gover
Slide 21: Aluminium – highlights second quarter
Norsk Hydro – Second quarter 2003 21 Aluminium – highlights second quarter Solid progress of improvement programs Reduced cost base by NOK 1.6 billion Estimated costs related to improvement programs reduced by NOK 170 million Market conditions still weak Realized NOK aluminium price 10% lower vs Q2
Slide 22: Aluminium
Norsk Hydro – Second quarter 2003 22 Aluminium EBITDA NOK million Other and Eliminations Extrusion and Automotive Rolled Products 2 000 1 803 1 430 Metals 1 750 1 659 1 566 1 572 1 619 1 500 1 316 1 292 1 250 1 000 889 899 526 827 750 473 500 250 (302) 0 - 250 - 500 2000 2001 2002 2003 Accumulated 5
Slide 23: Aluminium – Business comments
Norsk Hydro – Second quarter 2003 23 Aluminium – Business comments Metals – fair result in weak market Strong NOK negatively impacts Norwegian smelters Phase 2 of Sunndal primary expansion in production Rolled Products – improved results, still weak Increased shipments, pressure on margins Extrusion
Slide 24: Aluminium – improvement program on track
Norsk Hydro – Second quarter 2003 24 Aluminium – improvement program on track Workforce reduction Cost reductions 2 000 3 000 Magnesium Aluminium 2 500 Magnesium Aluminium 1 500 2 000 1 000 1 500 1 000 500 500 0 0 Q2- Q3- Q4- Q1- Q2- Target Q2- Q3- Q4- Q1- Q2- Target Target 2002 2002 2002 2003 2003
Slide 25: Aluminium – prospects
Norsk Hydro – Second quarter 2003 25 Aluminium – prospects Market outlook Limited signs of market recovery Continued high metals inventories, stable prices Downstream margins still under pressure Improvement programs have top priority 43575E - 07.2003 - *25 - Hydro Media
Slide 26: Agri – highlights second quarter
Norsk Hydro – Second quarter 2003 26 Agri – highlights second quarter Solid financial result Improved fertilizer prices Negative impacts from currency and energy costs European market positions improved Reduced imports in 2002-2003 fertilizer season Capacity reductions by local producers Good profit
Slide 27: Agri
Norsk Hydro – Second quarter 2003 27 Agri EBITDA NOK million 1 800 1 570 1 600 1 383 1 400 1 198 1 202 1 200 1 078 1 099 1 073 1 008 951 1 000 819 800 705 725 719 645 600 400 200 0 2000 2001 2002 2003 Accumulated 3 553 4 402 3 945 2 275 43575E - 07.2003 - *27 - Hydro Media
Slide 28: Agri – prospects
Norsk Hydro – Second quarter 2003 28 Agri – prospects Global nitrogen market – solid consumption growth European fertilizer market – slow decline New fertilizer season in Europe starting with low inventories and satisfactory prices High energy costs 43575E - 07.2003 - *28 - Hydro Media
Slide 29: Norsk Hydro – priorities ahead
Norsk Hydro – Second quarter 2003 29 Norsk Hydro – priorities ahead Focus on bottom line Continued improvements First class project execution Capital discipline Successful positioning of Agri as listed company Complete NOK 10 billion divestment program 43575E - 07.2003 - *29 - Hydro Media
Slide 30: Additional information
Additional information
Slide 31: Adjusted income second quarter 2003
Norsk Hydro – Second quarter 2003 31 Adjusted income second quarter 2003 NOK million 2nd quarter 2003 Adjustments Adj. Income Exploration and Production 3 107 - 3 107 Energy and Oil Marketing 547 - 547 Eliminations (2) - (2) Hydro Oil and Energy 3 652 - 3 652 Metals 542 (25) 517 Rolled Products 53 (
Slide 32: Major infrequent items impacting second quarter 2003 earnings
Norsk Hydro – Second quarter 2003 32 Major infrequent items impacting second quarter 2003 earnings NOK Item Segment Reporting line million Provision for loss regarding loan to Goldendale (USD 20 million) Aluminium Operating income (140) Reversal of environmental accruals Aluminium Operating income 6
Slide 33: Depreciation
Norsk Hydro – Second quarter 2003 33 Depreciation Individual operating segment 2nd quarter 2nd quarter NOK million 2003 2002 Exploration and Production 2 136 2 210 Energy and Oil Marketing 148 195 Hydro Oil and Energy 2 284 2 405 Metals 351 323 Rolled Products 147 116 Extrusion and Automotive 297 26
Slide 34: Equity in net income of non-consolidated investees
Norsk Hydro – Second quarter 2003 34 Equity in net income of non-consolidated investees Individual operating segment 2nd quarter 2nd quarter NOK million 2003 2002 Exploration and Production 4 12 Energy and Oil Marketing 18 23 Hydro Oil and Energy 22 35 Metals 204 (211) Rolled Products (5) (18) Extru
Slide 35: Consolidated balance sheet
Norsk Hydro – Second quarter 2003 35 Consolidated balance sheet NOK million 30.06.2003 30.06.2002 31.12.2002 Cash and cash equivalents 12 042 7 148 5 965 Other liquid assets 1 715 2 281 2 647 Receivables 41 590 40 822 40 553 Inventories 16 680 17 481 17 232 Non-current assets 144 648 140 940 140 814
Slide 36: Net interest bearing debt
Norsk Hydro – Second quarter 2003 36 Net interest bearing debt* NOK billion 40 34.2 35 29.7 30 27.3 25 21.1 20 15 10 5 0 2000 2001 2002 30.06.2003 * Interest bearing debt less cash and cash equivalents 43575E - 07.2003 - *36 - Hydro Media
Slide 37: Statement of Cash Flow
Norsk Hydro – Second quarter 2003 37 Statement of Cash Flow NOK million 1st half 2003 1st half 2002 Operating activities: Net income 4 806 4 972 Depreciation, depletion and amortization 7 146 6 637 Other adjustments 424 (1 845) Net cash provided by operating activities 12 376 9 764 Investing activit
Slide 38: Variance analysis Oil and Energy
Norsk Hydro – Second quarter 2003 38 Variance analysis Oil and Energy NOK million 1st half 2nd quarter 2003 14 942 6 274 2002 12 002 6 155 Variance EBITDA 2 940 119 - Prices and currency 2 785 115 - Oil 80 280 - Gas (2 260) (920) - Currency 90 20 - Put options ___________________ ___________________
Slide 39: Variance analysis Exploration and Production
Norsk Hydro – Second quarter 2003 39 Variance analysis Exploration and Production NOK million 1st half 2nd quarter 2003 12 998 5 228 2002 10 240 5 311 Variance EBITDA 2 758 (83) - Prices and currency 2 785 115 - Oil 80 280 - Gas (2 260) (920) - Currency 90 20 - Put options ___________________ ______
Slide 40: Variance analysis Energy and Oil Marketing
Norsk Hydro – Second quarter 2003 40 Variance analysis Energy and Oil Marketing NOK million 1st half 2nd quarter 2003 1 968 1 048 2002 1 762 844 Variance EBITDA 206 204 - Margin 355 110 - Volume (635) (330) - Fixed costs 130 100 - Depreciation 90 45 - Other 5 5 Variance operating income (54) (70) -
Slide 41: Price development – crude oil
Norsk Hydro – Second quarter 2003 41 Price development – crude oil Average Brent Blend dated per quarter USD/bbl NOK/bbl 35 280 USD/bbl NOK/bbl 30 240 25 200 20 160 15 120 10 80 5 40 0 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2nd quarter 2003: 182 NOK/bbl 26.03 USD/bbl 43575E - 07.2003 -
Slide 42: New fields on stream 2003 – 2006
Norsk Hydro – Second quarter 2003 42 New fields on stream 2003 – 2006 Hydro share boe/day Development Jasmim 4 000 International activity PDO Submittal PDO Approval/ Dalia 20 000 Sanctioning Rosa 12 000 Start Production Kharyaga 2+3 18 000 (phase 1-3) Murzuq 7 000 (A+D field) Great Mabruk 6 000 (pha
Slide 43: Production per field
Norsk Hydro – Second quarter 2003 43 Production per field Boe/day Q2 2002 Q2 2003 Hydro share % Hydro production Oseberg 195 000 158 000 34.00 53 964 Snorre 242 000 227 000 17.65 40 089 Oseberg South 75 000 87 000 34.00 29 649 Åsgard 213 000 279 000 9.60 26 840 Ekofisk 250 000 356 000 6.65 23 674 Gu
Slide 44: Exploration activity and costs
Norsk Hydro – Second quarter 2003 44 Exploration activity and costs NOK million 1 400 1 200 1 000 800 600 Expensed share 400 200 0 - 200 - 400 1/00 2/00 3/00 4/00 1/01 2/01 3/01 4/01 1/02 2/02 3/02 4/02 1/03 2/03 3/03 4/03 Capitalized share Activity Expensed old wells Cost reduction repayment Angola
Slide 45: Variance analysis Aluminium
Norsk Hydro – Second quarter 2003 45 Variance analysis Aluminium NOK million 1st half 2nd quarter 2003 3 191 1 619 2002 2 191 1 292 Variance EBITDA 1 000 327 - Margin (945) (440) - Volume 370 190 - Fixed costs 20 (120) - Depreciation (140) (95) - Infrequent items and restructuring costs 430 140 - Tr
Slide 46: Variance analysis Metals
Norsk Hydro – Second quarter 2003 46 Variance analysis Metals NOK million 1st half 2nd quarter 2003 2 171 1 124 2002 1 265 715 Variance EBITDA 906 409 - Margin (765) (385) - Volume 140 110 - Fixed costs 85 (45) - Depreciation (80) (30) - Infrequent items and restructuring costs 290 65 - Trading & pr
Slide 47: Variance analysis Rolled Products
Norsk Hydro – Second quarter 2003 47 Variance analysis Rolled Products NOK million 1st half 2nd quarter 2003 383 215 2002 110 82 Variance EBITDA 273 133 - Margin (105) (55) - Volume 120 80 - Fixed costs (65) (65) - Depreciation (35) (30) - Infrequent items 205 165 - New/disposed business (10) - - Ot
Slide 48: Variance analysis Extrusion and Automotive
Norsk Hydro – Second quarter 2003 48 Variance analysis Extrusion and Automotive NOK million 1st half 2nd quarter 2003 629 300 2002 525 331 Variance EBITDA 104 (31) - Margin (35) 35 - Volume 110 - - Fixed costs - (10) - Depreciation (25) (35) - Infrequent items (65) (90) - New/disposed business (10)
Slide 49: Aluminium – Key figures by segment
Norsk Hydro – Second quarter 2003 49 Aluminium – Key figures by segment Volumes and prices Q2 2003 Q1 2003 Q2 2002 Primary production (Kmt) 360 343 344 Total metal sales (Kmt) *) 558 532 559 LME, realized (USD/t) **) 1 457 1 377 1 395 USD/NOK, realized ***) 7.33 7.21 8.51 Rolled Products external sh
Slide 50: Aluminium price
Norsk Hydro – Second quarter 2003 50 Aluminium price 3 months LME price, average per quarter USD/tonne 2 000 1 800 1 600 1 400 1 200 1 000 90 91 92 93 94 95 96 97 98 99 00 01 02 03 43575E - 07.2003 - *50 - Hydro Media
Slide 51: Inventories – primary aluminium
Norsk Hydro – Second quarter 2003 51 Inventories – primary aluminium 1 000 tonnes LME (London Metal Exchange) 5 000 IAI (Producers' inventories) 4 000 3 000 2 000 1 000 0 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Sources: IAI and LME 2003: IA
Slide 52: Variance analysis Agri
Norsk Hydro – Second quarter 2003 52 Variance analysis Agri NOK million 1st half 2nd quarter 2003 2 275 1 073 2002 2 581 1 198 Variance EBITDA (306) (125) - Margin (405) (90) - Volume 25 (85) - Fixed costs 180 70 - Depreciation 75 40 - Infrequent items - - - Other (10) 80 Variance operating income (
Slide 53: Fertilizer prices
Norsk Hydro – Second quarter 2003 53 Fertilizer prices CAN Germany Ammonia USD/tonne Bulk delivered warehouse USD/tonne Fob Caribbean 250 250 200 200 150 150 100 100 50 50 0 0 93 94 95 96 97 98 99 00 01 02 03 93 94 95 96 97 98 99 00 01 02 03 Q2 Q2 DAP Urea USD/tonne Bulk fob US Gulf USD/tonne Bulk f
Slide 54: Nitrate premium above urea price
Norsk Hydro – Second quarter 2003 54 Nitrate premium above urea price USD/mt N CAN Germany Urea fob Middle East Diff 600 500 400 300 200 100 0 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 43575E - 07.2003 - *54 - Hydro Media
Slide 55: Variance analysis Petrochemicals
Norsk Hydro – Second quarter 2003 55 Variance analysis Petrochemicals NOK million 1st half 2nd quarter 2003 225 132 2002 131 103 Variance EBITDA 94 29 - Margin 45 30 - Volume 5 (10) - Fixed costs 20 5 - Depreciation 5 - - Infrequent items - - - Other (5) (5) Variance operating income 70 23 - Non-con
Slide 56: Forward-Looking Statements/Use of Non-GAAP Financial Measures
Norsk Hydro – Second quarter 2003 56 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 contai