Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Q1 2005 Earnings Presentation
59 slides from Norsk Hydro Asa's earnings presentation, Apr 26, 2005
Slide 1: First quarter 2005
First quarter 2005 John Ottestad, CFO 26.04.2005
Slide 2: Highlights first quarter
Norsk Hydro ASA – First quarter 2005 Highlights first quarter z High commodity prices z Good cost control z Record earnings 53948 04 2005 2 Hydro Media
Slide 3: High commodity prices – weak dollar
Norsk Hydro ASA – First quarter 2005 High commodity prices – weak dollar Aluminium price – LME 3m Oil price – Brent USD/tonne USD/bbl NOK indexed USD 2 000 45 NOK indexed USD 40 1 800 35 1 600 30 25 1 400 20 1 200 15 1 000 10 1999 2000 2001 2002 2003 2004 2005 1999 2000 2001 2002 2003 2004 2005 5394
Slide 4: Income from continuing operations
Norsk Hydro ASA – First quarter 2005 Income from continuing operations* By quarter NOK million 3 638 3 693 Gains from divestments 3 100 3 135 2 991 2 480 2 342 2 224 2 005 1 851 1 809 1 417 241 2002 2003 2004 2005 Accumulated 7 100 8 656 11 477 3 693 * Including the effect of change in accounting pr
Slide 5: Consolidated income statements
Norsk Hydro ASA – First quarter 2005 Consolidated income statements 1st quarter 1st quarter NOK million 2005 2004 Operating revenues 42 152 39 082 Operating income 11 754 9 276 Non-consolidated investees 213 131 Financial income (expense), net (910) (624) Other income, net - 110 Income from continui
Slide 6: Record-high cash earnings
Norsk Hydro ASA – First quarter 2005 Record-high cash earnings Adjusted EBITDA 15 852 NOK million 13 546 13 211 12 266 12 094 11 045 9 820 9 935 9 451 7 955 8 197 7 199 6 775 2002 2003 2004 2005 Accumulated 31 749 38 628 51 117 15 852 53948 04 2005 6 Hydro Media
Slide 7: Operating income
Norsk Hydro ASA – First quarter 2005 Operating income Individual operating segment NOK million 1st quarter 2005 1st quarter 2004 Exploration and Production 9 057 7 082 Energy and Oil Marketing 1 046 733 Eliminations (261) 3 Oil & Energy 9 842 7 818 Metals 1 239 968 Rolled Products 230 148 Extrusion
Slide 8: Oil & Energy – operating income
Norsk Hydro ASA – First quarter 2005 Oil & Energy – operating income Operating income, NOK million 1st quarter 2005 1st quarter 2004 Exploration and Production 9 057 7 082 Energy and Oil Marketing 1 046 733 Eliminations (261) 3 Oil & Energy 9 842 7 818 Operational data 1st quarter 2005 1st quarter 2
Slide 9: Aluminium – operating income
Norsk Hydro ASA – First quarter 2005 Aluminium – operating income Operating income, NOK million 1st quarter 2005 1st quarter 2004 Metals 1 239 968 Rolled Products 230 148 Extrusion and Automotive (36) 182 Other and eliminations (92) 331 Aluminium 1 341 1 629 Operational data 1st quarter 2005 1st qua
Slide 10: Debt/equity ratio
Norsk Hydro ASA – First quarter 2005 Debt/equity ratio 0.6 0.38 0.11 0.07 2002 2003 2004 2005 Interest-bearing debt + net pension liability (tax adjusted) + operating lease commitments (discounted) – cash and cash equivalents – other liquid assets divided by shareholders’ equity + minority interest
Slide 11: Oil & Energy – highlights
Norsk Hydro ASA – First quarter 2005 Oil & Energy – highlights z Record result z Plan for Development and Operation: Three approved and three submitted z Five exploration wells completed – two discoveries z Troll Oil cumulative production: 1 billion barrels 53948 04 2005 11 Hydro Media
Slide 12: Oil & Energy – operating income
Norsk Hydro ASA – First quarter 2005 Oil & Energy – operating income NOK million 9 842 Exploration and Production Energy and Oil Marketing Eliminations 8 621 7 818 7 521 7 184 6 175 5 994 5 384 5 322 3 707 3 686 3 652 3 170 2002 2003 2004 2005 Accumulated 15 947 21 143 31 144 9 842 53948 04 2005 12
Slide 13: Petroleum production per quarter
Norsk Hydro ASA – First quarter 2005 Petroleum production per quarter 1 000 boe/day 615 596 591 584 569 Oil Gas 540 552 173 514 482 484 489 166 176 452 147 178 448 143 156 123 104 112 116 88 430 442 110 422 415 406 397 396 391 378 364 372 373 338 2002 2003 2004 2005 Average 480 530 572 584 53948 04
Slide 14: Production costs per barrel
Norsk Hydro ASA – First quarter 2005 Production costs per barrel NOK/boe 25.6 24.0 23.2 22.9 23.9 22.3 21.1 21.0 20.1 19.8 19.6 17.4 17.1 2002 2003 2004 2005 Weighted average 22.6 20.7 20.7 19.6 53948 04 2005 14 Hydro Media
Slide 15: High oil price driven by supply concerns
Norsk Hydro ASA – First quarter 2005 High oil price driven by supply concerns OPEC spare capacity at low levels USD/bbl million bbl/day 60 5 50 4 40 3 30 2 20 1 10 0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 OPEC spare capacity Brent dated Brent forward Sources: Pira, Reuters, Platts 53948
Slide 16: Oil & Energy – prospects
Norsk Hydro ASA – First quarter 2005 Oil & Energy – prospects z Continued high crude oil prices z Volatile European energy markets z 2005 production target maintained - 575 000 boe/day z 2005 production cost target maintained - NOK 24/boe z High exploration activity - Rig capacity secured 53948 04 2
Slide 17: Aluminium – highlights
Norsk Hydro ASA – First quarter 2005 Aluminium – highlights z Increased aluminium price – realized USD 1 793/tonne z Primary aluminium production up 7% z Strong contribution from improvement programs z Weaker downstream markets 53948 04 2005 17 Hydro Media
Slide 18: Aluminium – business comments
Norsk Hydro ASA – First quarter 2005 Aluminium – business comments z Metals - Record output, Sunndal at full capacity - Aluimprover successfully completed z Rolled Products - Flat European market - Increased sales of high-margin products - Reversal of loss accruals, NOK 100 million z Extrusion & Aut
Slide 19: Aluminium – operating income
Norsk Hydro ASA – First quarter 2005 Aluminium – operating income NOK million Metals Rolled Products Extrusion and Automotive Other and eliminations 1 629 1 341 1 269 858 711 709 653 564 530 412 230 345 (1 951) 2002 2003 2004 2005 Accumulated 1 698 2 456 1 805 1 341 53948 04 2005 19 Hydro Media
Slide 20: Primary aluminium market
Norsk Hydro ASA – First quarter 2005 Primary aluminium market Aluminium inventories (days of consumption) Aluminium price (LME 3m) 2 200 70 2 000 60 1 800 USD/tonne 50 days 1 600 40 1 400 30 1 200 1 000 20 1999 2000 2001 2002 2003 2004 2005 53948 04 2005 20 Hydro Media
Slide 21: Aluminium – prospects
Norsk Hydro ASA – First quarter 2005 Aluminium – prospects z Aluminium price supported by - Low inventories - High prices on input factors z Primary aluminium – Competitive production growth z Extrusion – Continued weak order intake z Rolled Products – Starting up new litho line, Germany 53948 04 20
Slide 22: Hydro – priorities
Norsk Hydro ASA – First quarter 2005 Hydro – priorities z Operational improvements z First-class project execution z Increase aluminium profitability z Strengthen oil & gas resource base 53948 04 2005 22 Hydro Media
Slide 23: Additional information
Additional information
Slide 24: Adjusted income first quarter 2005
Norsk Hydro ASA – First quarter 2005 Adjusted income first quarter 2005 NOK million 1st quarter 2005 Adjustments Adjusted income Exploration and Production 9 057 - 9 057 Energy and Oil Marketing 1 046 (250) 796 Eliminations (261) 271 10 Oil & Energy 9 842 21 9 863 Metals 1 239 6 1 245 Rolled Product
Slide 25: Infrequent and other special items impacting income statement first quarter 2005
Norsk Hydro ASA – First quarter 2005 Infrequent and other special items impacting income statement first quarter 2005 NOK million Accounting imbalance gas portfolio Energy and Oil Marketing (250) Eliminations of unrealized loss on internal gas contract Oil & Energy eliminations 271 Rationalization c
Slide 26: Adjusted income first quarter 2004
Norsk Hydro ASA – First quarter 2005 Adjusted income first quarter 2004 NOK million 1st quarter Adjustments Adjusted 2004 income Exploration and Production 7 082 (285) 6 797 Energy and Oil Marketing 733 - 733 Eliminations 3 - 3 Oil & Energy 7 818 (285) 7 533 Metals 968 - 968 Rolled Products 148 - 14
Slide 27: Infrequent and other special items impacting income statement first quarter 2004
Norsk Hydro ASA – First quarter 2005 Infrequent and other special items impacting income statement first quarter 2004 Item NOK million Exploration and Gain regarding sale of Gjøa (285) Production Aluminium, Other and Unrealized gain on LME postitions (350) Eliminations Elimination of unrealized loss
Slide 28: Adjusted EBITDA
Norsk Hydro ASA – First quarter 2005 Adjusted EBITDA Individual operating segment NOK million 1st quarter 2005 1st quarter 2004 Exploration and Production 11 456 9 593 Energy and Oil Marketing 1 220 907 Eliminations (260) 3 Oil & Energy 12 416 10 503 Metals 1 789 1 473 Rolled Products 395 335 Extrus
Slide 29: Depreciation, depletion and amortization
Norsk Hydro ASA – First quarter 2005 Depreciation, depletion and amortization Individual operating segment NOK million 1st quarter 2005 1st quarter 2004 Exploration and Production 2 397 2 472 Energy and Oil Marketing 139 148 Oil & Energy 2 536 2 620 Metals 380 412 Rolled Products 151 172 Extrusion a
Slide 30: Net financial income (expense)
Norsk Hydro ASA – First quarter 2005 Net financial income (expense) NOK million 1st quarter 2005 1st quarter 2004 Interest income 207 184 Dividends and net gain (loss) on securities 105 118 Interest income and other financial income 312 302 Interest expense (410) (565) Capitalized interest 165 132 N
Slide 31: Equity in net income of non-consolidated investees
Norsk Hydro ASA – First quarter 2005 Equity in net income of non-consolidated investees Individual operating segment NOK million 1st quarter 2005 1st quarter 2004 Exploration and Production 1 1 Energy and Oil Marketing 25 16 Oil & Energy 26 17 Metals 116 32 Rolled Products (5) - Extrusion and Automo
Slide 32: Variance analysis Hydro group
Norsk Hydro ASA – First quarter 2005 Variance analysis Hydro group NOK million 1st quarter 2005 15 852 2004 13 546 Variance adjusted EBITDA 2 306 - Prices and currency, Exploration and Production (E&P) 3 345 - Margin incl. currency effects ¹) 350 - Volume (815) - Fixed costs 590 - Depreciation 140 -
Slide 33: Investments
Norsk Hydro ASA – First quarter 2005 Investments 1) Individual operating segment NOK million 1st quarter 2005 1st quarter 2004 Exploration and Production 2 279 1 839 Energy and Oil Marketing 384 218 Oil & Energy 2 663 2 057 Metals 317 2) 2 002 Rolled Products 47 111 Extrusion and Automotive 177 374
Slide 34: Consolidated balance sheet
Norsk Hydro ASA – First quarter 2005 Consolidated balance sheet NOK million 31.03.2005 31.12.2004 Cash and cash equivalents 15 467 14 366 Other liquid assets 15 392 10 970 Receivables and other current assets 38 539 32 219 Inventories 13 824 12 851 Non-current assets 130 567 129 837 Total assets 213
Slide 35: Statement of cash flow
Norsk Hydro ASA – First quarter 2005 Statement of cash flow NOK million 1st quarter 2005 1st quarter 2004 Operating activities: Net income 3 693 4 218 Depreciation, depletion and amortization 3 547 3 696 Other adjustments 1 228 625 Net cash provided by operating activities 8 468 8 539 Investing acti
Slide 36: Operating income – Adjusted EBIT – Adjusted EBITDA
Norsk Hydro ASA – First quarter 2005 Operating income – Adjusted EBIT – Adjusted EBITDA First quarter 2005 Non- Selected Depr. Operating Interest Other Adj. NOK million income cons. income fin. income Adj. EBIT and EBITDA investees items amort. Exploration and Production 9 057 1 2 (1) - 9 059 2 397
Slide 37: Financial solidity – calculation
Norsk Hydro ASA – First quarter 2005 Financial solidity – calculation 31 31 31 31 31 Amounts in NOK million December December December December March 2001 2002 2003 2004 2005 [A] Cash and cash equivalents 27 148 5 965 15 249 14 366 15 467 [B] Other liquid assets 2 421 2 647 1 581 10 970 15 392 [C] B
Slide 38: Net income
Norsk Hydro ASA – First quarter 2005 Net income* By quarter NOK million 4 218 3 765 3 693 3 638 3 280 2 840 2 482 2 480 2 324 2 397 2 224 2 132 513 2002 2003* 2004 2005 Accumulated 8 765 10 968 12 560 3 693 * Including the effect of change in accounting principles for 1st quarter 2003 amounting to a
Slide 39: Oil & Energy
Norsk Hydro ASA – First quarter 2005 Oil & Energy Adjusted EBITDA Eliminations Energy and Oil Marketing 12 416 Exploration and Production NOK million 11 583 10 503 9 928 9 764 9 139 8 668 7 887 7 745 6 155 6 274 5 847 5 451 2002 2003 2004 2005 Accumulated 25 340 31 826 41 778 12 416 53948 04 2005 39
Slide 40: Variance analysis Oil & Energy
Norsk Hydro ASA – First quarter 2005 Variance analysis Oil & Energy NOK million 1st quarter 2005 12 416 2004 10 503 Variance adjusted EBITDA 1 913 - Prices and currency 3 175 - Oil 885 - Gas (715) __ - Currency 3 345 - Margin (75) - Volume (635) - Fixed costs 45 - Depreciation 80 - Production costs
Slide 41: Variance analysis Exploration and Production
Norsk Hydro ASA – First quarter 2005 Variance analysis Exploration and Production NOK million 1st quarter 2005 11 456 2004 9 593 Variance adjusted EBITDA 1 863 Prices and currency - Oil 3 175 - Gas 885 - Currency (715) _ 3 345 - Volume (720) - Depreciation 75 - Production costs (225) - Exploration c
Slide 42: Variance analysis Energy and Oil Marketing
Norsk Hydro ASA – First quarter 2005 Variance analysis Energy and Oil Marketing NOK million 1st quarter 2005 1 220 2004 907 Variance adjusted EBITDA 313 - Margin 190 - Volume 85 - Fixed costs 45 - Depreciation 5 - Other (10) Variance operating income 313 - Non-consolidated investees 10 - Interest in
Slide 43: Production per field – Q1 2005
Norsk Hydro ASA – First quarter 2005 Production per field – Q1 2005 Boe/day (oil including NGL Hydro share Hydro Q1 2004 Q1 2005 and percent production condensate) Grane 110 000 164 000 38 62 254 Oseberg 185 000 165 000 34 56 008 Snorre 224 000 130 000 17.65 22 974 Ekofisk 373 000 366 000 6.65 24 36
Slide 44: Operating costs per barrel
Norsk Hydro ASA – First quarter 2005 Operating costs per barrel NOK/boe 99.7 100 90.1 83.8 82.1 83.7 80 60 40 20 0 2001 2002 2003 2004 1Q 2005 Exploration 9.1 20.3 8.1 6.0 5.9 Net transportation * 8.5 9.0 6.8 8.3 9.7 Other cost/income 2.0 1.4 1.8 0.7 3.1 Deprec. and aband. 46.4 46.4 46.4 46.4 45.4 P
Slide 45: Exploration activity and costs
Norsk Hydro ASA – First quarter 2005 Exploration activity and costs NOK million 1 500 1 200 900 Expensed 600 share 300 0 - 300 2002 2003 2004 2005 Capitalized share Activity Expensed old wells Cost reduction repayment Angola 53948 04 2005 45 Hydro Media
Slide 46: New fields on stream 2005 – 2007
Norsk Hydro ASA – First quarter 2005 New fields on stream 2005 – 2007 Field Hydro Plateau (boe/day) 2001 2002 2003 2004 2005 2006 2007 International Murzuq 5000 ▼ ▼ Kharyaga 10 000 ▼ ▼ Dalia 22 000 ▼ Rosa 13 000 ▼ ▼ ▼ Oseberg South J 6 000 Operator NCS ▼ Oseberg Vestflanken 14 000 ▼ Oseberg East Dri
Slide 47: UK gas prices – NBP forward curves
Norsk Hydro ASA – First quarter 2005 UK gas prices – NBP forward curves pence/th End of 2003 End of Q3 2004 End of 2004 End of Q1 2005 70 60 50 40 30 20 10 2004 2005 2006 2007 2008 2009 53948 04 2005 47 Hydro Media
Slide 48: Nordic power market – forward curves
Norsk Hydro ASA – First quarter 2005 Nordic power market – forward curves NOK/MWh End of Q2 2004 End of Q3 2004 End of 2004 End of Q1 2005 350 300 250 200 150 2005 2006 2007 2008 53948 04 2005 48 Hydro Media
Slide 49: Average Realized Gas Prices
Norsk Hydro ASA – First quarter 2005 Average Realized Gas Prices NOK/Sm3 1Q 2Q 3Q 4Q 1.47 1.50 1.20 1.07 1.10 1.07 1.03 1.01 1.06 0.98 0.99 0.98 1.00 0.89 0.86 0.50 0.00 2002 2003 2004 2005 53948 04 2005 49 Hydro Media
Slide 50: Aluminium
Norsk Hydro ASA – First quarter 2005 Aluminium Adjusted EBITDA 2 708 NOK million Other and Eliminations 2 436 Extrusion and Automotive 2 335 2 096 Rolled Products Metals 1 809 1 619 1 572 1 498 1 517 1 292 1 316 899 827 2002 2003 2005 2004 Accumulated 4 334 6 498 8 656 2 436 53948 04 2005 50 Hydro M
Slide 51: Variance analysis Aluminium
Norsk Hydro ASA – First quarter 2005 Variance analysis Aluminium NOK million 1st quarter 2005 2 436 2004 2 708 Variance adjusted EBITDA (272) - Margin (100) - Volume (150) - Fixed costs 530 - Depreciation 60 - Infrequent items (155) - Trading and hedging (50) - Unrealized LME effects (435) - Other 1
Slide 52: Variance analysis Metals
Norsk Hydro ASA – First quarter 2005 Variance analysis Metals NOK million 1st quarter 2005 1 789 2004 1 473 Variance adjusted EBITDA 316 - Margin 30 - Volume 110 - Fixed costs 155 - Depreciation 30 - Infrequent items (5) - Trading & price hedging (50) Variance operating income 271 - Non-consolidated
Slide 53: Variance analysis Rolled Products
Norsk Hydro ASA – First quarter 2005 Variance analysis Rolled Products NOK million 1st quarter 2005 395 2004 335 Variance adjusted EBITDA 60 - Margin (125) - Volume (10) - Fixed costs 185 - Depreciation 20 - Infrequent items 5 - Other 5 Variance operating income 82 - Non-consolidated investees (5) -
Slide 54: Variance analysis Extrusion and Automotive
Norsk Hydro ASA – First quarter 2005 Variance analysis Extrusion and Automotive NOK million 1st quarter 2005 343 2004 568 Variance adjusted EBITDA (225) - Margin (20) - Volume (250) - Fixed costs 190 - Depreciation 10 - Infrequent items (155) - Other 5 Variance operating income (218) - Non-consolida
Slide 55: Aluminium – operational data
Norsk Hydro ASA – First quarter 2005 Aluminium – operational data Q1 Q4 Q3 Q2 Q1 Q4 Q3 Volumes and prices 2005 2004 2004 2004 2004 2003 2003 Primary production (1 000 tonnes) * 444 446 441 418 415 388 381 Total metal products sales excluding trading 702 639 648 676 688 483 506 (1 000 tonnes) LME rea
Slide 56: Inventories – primary aluminium
Norsk Hydro ASA – First quarter 2005 Inventories – primary aluminium 1 000 tonnes IAI (Producers' inventories) LME (London Metal Exchange) 5 000 4 000 3 000 2 000 1 000 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Sources: IAI and LME. 53948 04 2005 56 Hydro Media
Slide 57: Variance analysis Polymers
Norsk Hydro ASA – First quarter 2005 Variance analysis Polymers NOK million 1st quarter 2005 326 2004 211 Variance adjusted EBITDA 115 - Margin 145 - Volume (40) - Fixed costs 15 - Depreciation - Variance operating income 121 - Non-consolidated investees (10) - Interest income and other 3 - Deprecia
Slide 58: Forward-looking statements/ use of non-GAAP financial measures
Norsk Hydro ASA – First quarter 2005 Forward-looking statements/ use of non-GAAP financial measures 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 contain
Slide 59: Norsk Hydro ASA – First quarter 2005
Norsk Hydro ASA – First quarter 2005 53948 04 2005 59 Hydro Media