Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Presentation (March 2017)
29 slides from Norsk Hydro Asa's investor presentation, Mar 8, 2017
Slide 1: Market Outlook
Market Outlook Investor presentation Kathrine Fog Corporate Strategy & analysis March 8th 2017
Slide 2: Agenda
Agenda 1 About Hydro 2 Market Outlook 3 Hydro strategy 2
Slide 3: Hydro – a fully integrated aluminium company
Hydro – a fully integrated aluminium company World class assets, high-end products and leading market positions Raw materials Primary aluminium production, Aluminium in products processing and energy marketing and recycling Bauxite Energy Primary Metal Metal Markets Rolled Products Sapa JV (50%) & A
Slide 4: Downstream
Downstream 4 HYDRO
Slide 5: Global aluminium demand first in class
Global aluminium demand first in class Chinese primary consumption (consensus forecast) Semis demand CAGR 2016 – 2025 Million tonnes 4–5% 2–3% Global semis demand 3–4% 3-4 % 3–4% 3–4% Source: CRU 5
Slide 6: Environmental regulations accelerate substitution across segments
Environmental regulations accelerate substitution across segments Copper substitution in HVAC&R, Steel substitution in automotive cabling and transmission lines Key enabler for energy-efficient buildings 6x 40% 15% HVAC&R** market growth of energy BiW 2015-2022 potential from worldwide consumed CAGR
Slide 7: Rolled products demand driven by transport segment
Rolled products demand driven by transport segment Transport share increasing in total rolled products demand General rolled products demand, Expected market development selected regions • Continued substitution trend in transport segment YoY-growth contributing to overall demand growth 10% • Packag
Slide 8: Continued growth in extrusion demand
Continued growth in extrusion demand Gradual improvement expected in Europe Extrusion demand, Expected market development selected regions • US housing market still sustaining positive momentum YoY-growth • Weakness in US truck and trailer segment 10% • Construction activity in Europe continues to i
Slide 9: Recycling gaining importance
Recycling gaining importance Growth in recycling will contribute to making Hydro carbon-neutral Primary demand versus recycled material, global Market Million tonnes − Substantial growth in post-consumed scrap 140 Forecast − Recycling driven by product markets and 120 customer demand 100 − Both recy
Slide 10: Primary
Primary 02 10
Slide 11: Global undersupply in 2016
Global undersupply in 2016 Moderate supply growth and continued strong demand growth Demand and production Production less demand Quarterly annualized, in 1 000 mt primary aluminium 12 month rolling quarterly average, in 1 000 mt primary aluminium 65 000 4 500 60 000 3 500 55 000 2 500 50 000 1 500
Slide 12: Primary aluminium market expected to be largely balanced in 2017
Primary aluminium market expected to be largely balanced in 2017 Expected global demand growth of 3-5%, increasing production growth in China on new projects and restarts World ex. China Primary market balances 2017 2-4 % (‘000t) (mill t.) 2-3 % 2000 29.1 Production Demand 1000 27.5 World ex. China
Slide 13: Environmental issues higher on the agenda in China
Environmental issues higher on the agenda in China What has been conducted • Environmental inspections conducted in November/December • Limited effects on primary & alumina, some effect downstream − Some extruders forced to shut down casthouses, but some have already restarted What has been proposed
Slide 14: Shandong will be key affected region in terms of primary production
Shandong will be key affected region in terms of primary production All the targeted regions have low air quality combined with a large population Regional population (million) Annual primary production Air quality index (higher=worse) 12.0 200 180 10.0 160 140 8.0 Average air quality per region in
Slide 15: US primary metal deficit increasing; potential restarts limited
US primary metal deficit increasing; potential restarts will reduce import requirements to a limited extent US primary supply & demand US primary metal deficit (’000t) (’000t) 0 Possible restarts 7000 -500 6000 Alcoa -1000 Wenatchee, 184,000tpy 5000 -1500 Warrick, 269,000tpy (slated for demolition)
Slide 16: Increasing average all-in aluminium prices
Increasing average all-in aluminium prices 2016 average all-in aluminium prices down from 2015 LME and SHFE aluminium prices All-in aluminium prices USD/mt USD/mt NOK/mt 2 200 3 000 18 000 2 000 2 600 16 000 1 800 2 200 14 000 1 600 1 800 12 000 1 400 1 200 1 400 10 000 Jan-15 Jul-15 Jan-16 Jul-16 J
Slide 17: Stable Chinese export levels 2016 vs 2015
Stable Chinese export levels 2016 vs 2015 Semis exports Competitive (monthly, kmt) advantage (USD/mt) 500 1 000 450 800 Improved comp. adv. China 400 350 600 300 400 250 200 200 150 0 100 ( 200) 50 0 ( 400) Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Dec.16 Semis exp
Slide 18: B&A
B&A 03 18
Slide 19: Bauxite production in China to level off, higher imports from the Pacific
Bauxite production in China to level off, higher bauxite imports from the Pacific increases freight exposure Chinese bauxite production and imports Monthly Chinese bauxite imports Mtpy Million mt 8 200 Imports (incl. alumina as bauxite equivalent) 7 Forecast domestic 6 150 Historical domestic 5 4 10
Slide 20: Chinese bauxite imports increasingly exposed to freight
Chinese bauxite imports increasingly exposed to freight Freight represents ~10 to 50% of the CIF price, freight rates at current low levels Chinese bauxite imports origin 2013 2016 Guinea Indonesia Mill. tonnes Mill. tonnes 40 40 20 20 Altantic Pacific 0 0 2013 2014 2015 2016 2013 2014 2015 2016 Bal
Slide 21: Alumina curtailments reduce oversupply outside China
Alumina curtailments reduce oversupply outside China Capacity curtailments in the Atlantic basin, offset by growth in Pacific World ex-China alumina supply/demand balance Mill. tonnes 60 40 Point Comfort 20 Corpus Christi Ras Al Khair 0 2015 2016e Paranam Atlantic Pacific Demand Kendawangan China al
Slide 22: Alumina prices rising amid smelter restarts and cost inflation
Alumina prices rising amid smelter restarts and cost inflation Recent alumina price drivers Platts alumina index (PAX) USD/t 450 Market balances • Smelter restarts and new projects ramping up in China 400 • Tight markets ex. China amid curtailments 350 Cost inflation • Rising coal prices 300 • Highe
Slide 23: Hydro's response
Hydro’s response
Slide 24: Aspiration = inspiration
Aspiration = inspiration HYDRO
Slide 25: Better: proven track-record of productivity gains continues
Better: proven track-record of productivity gains continues Hydro’s improvement drive until 2015 Hydro’s new improvement ambition Tailor-made ambitions across Total improvements 2009-2015: Total improvements of the value chain BNOK 4.5 BNOK 2.9 from 2016-20191, incl. BNOK 1.4 delivered in 2016 Bette
Slide 26: Bigger: a solid platform for building an even stronger Hydro
Bigger: a solid platform for building an even stronger Hydro Autoline 3 Recycling initiatives • Increase recycling of post-consumed scrap above 100,000 t/year incl. ramp-up of UBC* recycling line • Grow post-consumed scrap recycling to 150,000 mt/yr 26
Slide 27: Greener: The most ambitious climate strategy in global aluminium
Greener: The most ambitious climate strategy in global aluminium Carbon-neutral by 2020 from a life-cycle perspective Hydro has the lowest carbon footprint in the industry 20 18 Ton CO2 / ton aluminium 16 Energy efficiency and emissions in production 14 12 10 8 6 Use-phase benefits 4 2 0 Recycling A
Slide 28: Aspiration = inspiration
Aspiration = inspiration HYDRO
Slide 29: Infinite Aluminium
INFINITE ALUMINIUM HYDRO