Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Presentation (May 2014)
102 slides from Norsk Hydro Asa's investor presentation, May 2014
Slide 1: Investor presentation May 2014
Investor presentation May 2014 2014
Slide 2: Table of contents and cautionary note
Table of contents First quarter results 2014 3 Cautionary note Certain statements included within this announcement contain forward- looking information, including, without limitation, those relating to (a) Market 33 forecasts, projections and estimates, (b) statements of management’s plans, objecti
Slide 3: Q1 2014
Q1 2014 (3)
Slide 4: Q1 highlights
Q1 highlights • Underlying EBIT rises to NOK 772 million • Seasonally higher sales volumes • Increased power production • World ex-China primary aluminium demand continues to exceed production • Investment in new automotive line and in new recycling capacity (4)
Slide 5: Demand expected to exceed production in 2014
Demand expected to exceed production in 2014 World outside China World outside China (quarterly annualized) 1 000 mt 30 000 • Seasonally stronger demand 25 000 • 2014 aluminium demand expected to grow 2-4 % in world outside China 20 000 • New curtailments and delays partly 15 000 offsetting ramp-ups
Slide 6: Standard ingot premiums rise to record highs
Standard ingot premiums rise to record highs Regional standard ingot premiums USD per mt 500 • US and European standard ingot 450 premiums rose sharply in Q1 2014 400 • US premiums ~405 USD/mt, EU 350 premiums (duty-paid) ~375 USD/mt at 300 end-April 250 200 • Proposed changes to LME warehousing 150
Slide 7: Aluminium prices decrease through the quarter
Aluminium prices decrease through the quarter USD per mt 3 400 • Aluminium price declining to range of USD 1 700 - 1 800 per mt in Q1 3 000 • Minor decrease in average USD/mt price, 2 600 partly offset by weaker NOK 2 200 Primary aluminium LME USD/mt NOK/mt 1 800 Q1 2014 average 1 752 10 671 Q1 2014
Slide 8: All-in aluminium price rising
All-in aluminium price rising USD per mt 2400 2200 2000 1800 1600 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 LME cash LME cash + US Midwest LME cash + Europe duty paid LME cash + Japan Source: Metal Bulletin, MW/MJP: Platts, Reuter
Slide 9: Slight reduction in reported inventories world ex-China
Slight reduction in reported inventories world ex-China World outside China reported primary aluminium inventories 1 000 mt Days 8 000 120 7 000 100 6 000 80 5 000 4 000 60 3 000 40 2 000 20 1 000 0 0 Q1 00 Q1 01 Q1 02 Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14 IAI Other
Slide 10: Higher average alumina prices, falling through Q1
Higher average alumina prices, falling through Q1 Platts alumina index (PAX) USD per mt Percent 450 20 • Average PAX increased both in USD/mt and percentage of LME 400 18 − Average price 328 USD/mt, up 5 USD/mt from Q4 − Alumina as % of LME rose to close to 20 % 350 16 mid-quarter, highest since PAX
Slide 11: Indonesia bauxite export ban taking effect
Indonesia bauxite export ban taking effect • Complete ban on bauxite exports from Chinese bauxite import by origin (monthly) mid-January 2014 Million mt 9 • Closures by bauxite miners in Indonesia 8 7 • Uncertainty around possibility of getting 6 export license for those with plans to 5 build alumin
Slide 12: China bauxite imports decreasing through Q1
China bauxite imports decreasing through Q1 Indonesia export ban taking effect Annualized aluminium equivalents*, million mt YTD 2011 2012 2013 2014** 25 • Bauxite and alumina − Significant drop in bauxite China import 20 imports during Q1 as Indonesia export ban starts 15 − Q1 alumina imports at hi
Slide 13: Strong improvement focus in Brazil
Strong improvement focus in Brazil Implied alumina cost and margin, USD/mt 1) • Annualized alumina production stable from Q4 475 23 425 15 • Higher hydrate production at Alunorte, 11 263 increased production at Paragominas 260 258 • “From B to A” improvement program progressing according to plan − T
Slide 14: Primary Metal operational improvements continue
Primary Metal operational improvements continue Implied primary cost and margin, USD/mt 1) • Primary cost continues downward trend 475 − Improvement efforts with bottom-line effect 300 400 425 − Favorable exchange rate development 350 1 775 − Increasing premiums 1 500 1 400 • USD 180 JV program on t
Slide 15: Higher shipments in Rolled Products
Higher shipments in Rolled Products Rolled Products sales by segment Q1 2014 vs. Q4 2013 Q1 2014 vs. Q1 2013 Packaging & Litho, Auto & Heat General engineering Total Rolled Packaging & Litho, Auto & Heat General engineering Total Rolled Building exchanger Products Building exchanger Products 14% 15%
Slide 16: Expanding capacity for automotive growth market
Expanding capacity for automotive growth market • Regulations forcing light-weighting of vehicles to reduce CO2 emissions − Substitution gaining momentum • New body-in-white production line at Grevenbroich − Brings total capacity to 200kmt − Completion by end 2016 − EUR 130 million (16)
Slide 17: Expanding recycling capacity
Expanding recycling capacity • New recycling line for used beverage cans (UBC) at Neuss in Germany − Reduces cost of metal production − Increases capacity to more than 100kmt − Completion by end-2015 − EUR 45 million • In line with strategy to increase recycling capacity and become carbon neutral by
Slide 18: Seasonally stronger demand for extruded products
Seasonally stronger demand for extruded products • Seasonal demand increases from Q4 − Increases in North America and Europe − Signs of weakening in South America • Increased demand compared to same quarter previous year in US and Europe • Global demand for precision tubing supported by strong autom
Slide 19: Improved reservoir levels, lower prices
Improved reservoir levels, lower prices Market price Southwestern Norway (NO2) Water reservoir levels Southwestern Norway (NO2)* NOK/MWh Percent 700 100 2013 2014 90 600 80 500 70 400 60 50 300 40 200 30 2013 20 100 2014 10 10 year average 0 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 1 4 7
Slide 20: High-level quarterly result development
High-level quarterly result development NOK billion 1.1 0.4 (0.1) (0.1) 0.8 0.1 0.5 Underlying EBIT Q1 Underlying EBIT Q4 Energy volume and Sales volumes and Price and margin Other Underlying EBIT Q1 2013 2013 price SAPA 2014 Figures for 2013 throughout the presentation have been adjusted reflecting
Slide 21: Key financials
Key financials NOK million Q1 2014 Q4 2013 Q1 2013 2013 Revenue 18 282 16 570 16 109 64 877 Underlying EBIT 772 471 1 076 2 725 Items excluded from underlying EBIT 50 (485) (372) (1 063) Reported EBIT 822 (14) 704 1 663 Financial income (expense) 92 (772) (177) (2 576) Income (loss) before tax 914 (
Slide 22: Items excluded from underlying EBIT
Items excluded from underlying EBIT NOK million Q1 2014 Q4 2013 Q1 2013 2013 Underlying EBIT 772 471 1 076 2 725 Unrealized effects on power and raw material contracts 175 14 (269) (107) Unrealized derivative effects on LME related contracts (5) (78) (30) (202) Metal effect, Rolled Products - (87) 5
Slide 23: Bauxite & Alumina
Bauxite & Alumina Q1 Q4 Q1 Key figures 2014 2013 2013 Alumina production, kmt 1 428 1 452 1 361 Total alumina sales, kmt 1 906 1 959 1 874 Realized alumina price, USD/mt 269 263 296 Implied alumina cost, USD/mt* 258 259 261 Bauxite production, kmt 2 242 2 080 2 210 Underlying EBITDA, NOK million 122
Slide 24: Primary Metal
Primary Metal Q1 Q4 Q1 Key figures 2014 2013 2013 Primary aluminium production, kmt 484 492 478 Total sales, kmt 593 515 541 Realized LME price, USD/mt 1 749 1 802 2 043 Realized LME price, NOK/mt 10 702 10 916 11 533 Implied primary cost USD/mt 1 400 1 375 1 625 Underlying EBITDA, NOK million 753 9
Slide 25: Qatalum result improved when adjusting for insurance settlement
Qatalum result improved when adjusting for insurance settlement Key figures – Qatalum (50%) Q1 2014 Q4 2013 Q1 2013 • Stable production Revenue, NOK million 1 087 1 072 1 125 • Underlying net income down NOK 128 million from Q4 2013 Underlying EBITDA, NOK million 342 504 349 − Insurance settlement i
Slide 26: Metal Markets
Metal Markets Q1 Q4 Q1 Key figures 2014 2013 2013 Remelt production, kmt 139 123 135 Metal products sales, kmt* 720 648 697 Underlying EBITDA, NOK million 157 214 163 Underlying EBIT excl currency and inventory 161 144 110 valuation effects, NOK million Underlying EBIT, NOK million 141 190 146 Under
Slide 27: Rolled Products
Rolled Products Q1 Q4 Q1 Key figures 2014 2013 2013 External sales volumes, kmt 243 226 236 Underlying EBITDA, NOK million 351 284 311 Underlying EBIT, NOK million 181 100 152 Underlying EBIT NOK million 615 181 Q1 results • Seasonally higher shipments 181 • Lower costs due to efficiency gains and s
Slide 28: Energy
Energy Q1 Q4 Q1 Key figures 2014 2013 2013 Power production, GWh 2 964 2 411 2 904 Net spot sales, GWh 1 581 1 089 1 518 Southwest Norway spot price (NO2), 249 287 311 NOK/MWh Underlying EBITDA, NOK million 474 420 557 Underlying EBIT, NOK million 435 383 517 Underlying EBIT Q1 results NOK million •
Slide 29: Sapa joint venture
Sapa joint venture Key figures – Sapa (50%) Q1 2014 Q4 2013 • Seasonally stronger quarter − Higher sales volumes in all areas Revenue, NOK million 5 673 5 066 compared to Q4 2013 Underlying EBITDA, NOK million 220 (22) • Underlying net income up NOK 175 million from Q4 2013 Underlying EBIT, NOK mill
Slide 30: Other and Eliminations
Other and Eliminations Q1 Q4 Q1 Other and Eliminations 2014 2013 2013 Sapa JV 35 (140) - Other (127) (134) (125) Eliminations 84 (31) 87 Other and Eliminations (8) (306) (38) (30)
Slide 31: Net cash/(debt) development Q1 2014
Net cash/(debt) development Q1 2014 NOK billion Net cash flow from operations NOK (0.7) billion 1.9 (1.0) (1.5) 0.7 (0.6) (0.6) (0.1) Net cash Q4 2013 Underlying EBITDA Operating Capital Other adjustments Investments Dividends Net debt Q1 2014 (31)
Slide 32: Outlook
• Lift and stabilize bauxite and alumina production • Deliver on improvement programs • Demand expected to exceed production in primary aluminium market (32)
Slide 33: Market
(33) QQ) HYDRO
Slide 34: Aluminium is part of the solution
Aluminium is part of the solution Demand for semis Share of semis consumption Million mt 2013– 70 million mt Global trends 120 4-6% Consumer durables annual growth 5% 100 Electrical 13% Packaging 8% 55 80 Foil stock 8% Machinery 44 & equipment 10% Other 5% 60 30 40 Transport 25% Construction 25% Cap
Slide 35: Global FRP consumption growth of 6%, driven by transport
Global FRP consumption growth of 6%, driven by transport Global - CAGR 2013-2017 10% 13% Transport 10% 11% Electrical 7% 4% Construction 6% 52% 9% Total 6% Machinery & Equipment 5% Transport Construction Consumer durables/others 5% Electrical Machinery & Equipment Packaging 4% Packaging Consumer dur
Slide 36: Aluminium is the metal of the future
Aluminium is the metal of the future • Lightweight • Corrosion resistant • Excellent conductivity − 1/3 density of steel − Oxide layer − Thermal – electrical • Recyclability • Formability • Alloying technology − 5% of original energy − Extrusion, rolling, casting − Gives wide range of physical consu
Slide 37: Increased bauxite imports into China
Increased bauxite imports into China Currently affected by Indonesia export ban Annualized aluminium equivalents*, million mt 2006 2007 2008 2009 2010 2011 2012 2013 2014* 20 to China Import 15 10 5 from China 0 Export -5 Bauxite Alumina Scrap Primary aluminium Fabricated Semis Total aluminium impor
Slide 38: Large and concentrated bauxite resources
Large and concentrated bauxite resources with many challenges to overcome for future developments Billion mt Guinea 41.0 China 4.1 2.9 India Jamaica 6.2 3.0 1.1 0.5 1.0 Venezuela Vietnam 1.8 0.3 4.7 Indonesia 0.5 5.0 2.0 Brazil 8.7 Australia 2.5 9.5 5.6 Atlantic Pacific Big-league (Top- 3) Total bau
Slide 39: Alumina market is consolidating
Alumina market is consolidating Net long equity alumina position, million tonnes Alcoa 4.3 Alcoa/AWAC 9.2 Vale 3.0 Rio Tinto Alcan* 2.8 Glencore 2.4 BHP Billiton 2.7 BHP Billiton 1.9 Hydro 2.0 Kaiser 1.0 Hindalco 0.2 Alcan 0.8 Glencore/Century 0.0 Sual 0.7 Vedanta (1.1) Rio Tinto 0.5 UC Rusal (1.2)
Slide 40: Commodity prices drive industry costs
Commodity prices drive industry costs Fuel oil A1 (USD/mt) Steam coal (USD/mt) Petroleum coke FOB USG (USD/mt) 750 180 600 600 150 500 120 400 450 90 300 300 60 200 150 30 100 0 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2006 2007 2008 2009 2010 2011 2012 2013 2006 2007 2008 2009 2010 2011 2012 201
Slide 41: Business overview
Business overview (41)
Slide 42: Hydro - Group
Hydro - Group (42)
Slide 43: Hydro: a resource rich global aluminium company
Hydro: a resource rich global aluminium company • Based in Norway, involved Hydro underlying EBIT quarterly, NOK million in activities in more than 50 (2 555) 3 551 5 982 1 297 2 725 772 countries 2 200 • 13 000 employees 1 700 • Operating revenues 1 200 − 2012: NOK 64 billion − 2013: NOK 65 billion
Slide 44: Strong positions across aluminium value chain
Strong positions across aluminium value chain Raw materials Primary aluminium production, Aluminium in products processing and energy marketing and recycling Bauxite Rolled Sapa JV (50%) Energy Primary Metal Metal Markets & Alumina Products • Bauxite capacity • Long-term power supply • 2.5 million t
Slide 45: Hydro - a first tier aluminium company
Hydro - a first tier aluminium company Equity production in 2013 in aluminium equivalents excl. China, thousand mt 9 000 Alumina Aluminium 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 Alcoa/AWAC Rio Tinto Alcan* UC Rusal BHP Billiton Norsk Hydro Glencore/Century Hindalco Vedanta Emirates Global
Slide 46: Raw material is key to our aluminium future
Raw material is key to our aluminium future Aluminium equivalent consolidated capacity, million tonnes End-2010 End-2013 Post-CAP 4.3 • Long position in bauxite and alumina creates 3.4 flexibility 3.3 • Strategically attractive 2.3 2.5 2.5 assets 1.9 • New business 1.4 opportunities 0.5 • Resource c
Slide 47: Hydro's path towards global leadership
Hydro’s path towards global leadership Curtailing 26% of USD 300 Climb From B to A JV-program primary metal capacity program 2009 2010 2011 2012 2013 Starting up Acquiring bauxite Establishing Qatalum and alumina assets Sapa JV (47)
Slide 48: Strategy for further value creation
Strategy for further value creation Bauxite & Alumina Primary Metal Energy Mid- and downstream • Improvement efforts and • Reposition • Increase value of energy • Adjust capacity and cost cost reduction • Keep solid cash flow in business base to market • Commercialize current assets • Develop curren
Slide 49: Hydro positions throughout the value chain
Attractive Improvement Hydro positions throughout the culture and technological Financial strength value chain leadership (49)
Slide 50: Safe and responsible operations is a top priority
Safe and responsible operations is a top priority 10.3 7.0 6.0 5.4 4.0 4.1 3.9 3.9 3.7 3.8 3.4 3.4 2.9 2002 2004 2006 2008 2010 2012 YTD 2014 (50)
Slide 51: Hydro aims to be climate neutral
Hydro aims to be climate neutral Emissions User-phase benefits Recycling (51)
Slide 52: Hydro's value proposition
Hydro’s value proposition • Improve relative industry position • Capitalize on raw material positions • Maintain financial strength and flexibility • Ensure competitive shareholder return (52)
Slide 53: Bauxite & Alumina
Bauxite & Alumina (53)
Slide 54: High-quality asset portfolio
High-quality asset portfolio MRN Paragominas Alunorte alumina CAP alumina bauxite mine bauxite mine refinery refinery project • 5% ownership • Full financial exposure, increase • 92% ownership • 81% ownership • Volume off-take agreement for ownership to 100% by 2016 • World’s largest alumina refiner
Slide 55: Strengthening the competitiveness of Bauxite & Alumina
Strengthening the competitiveness of Bauxite & Alumina From B to A Alunorte • Increase productivity and rightsize organization • Stabilize performance at nameplate capacity • Improve logistics efficiency Paragominas • Increase productivity and rightsize organization • New methods to support producti
Slide 56: Paragominas – One of the world's largest bauxite mines
Paragominas – One of the world’s largest bauxite mines • 2013 production: 7.6 million mt • Target to deliver production increases and stabilize • Possible expansion: up to 15 million mt • Current reserve life: 30 years − ~300 million mt − Long-life resource (56)
Slide 57: Bauxite operational mining costs in Paragominas
Bauxite operational mining costs in Paragominas • Energy cost - Power and fuel Paragominas bauxite mining costs 2013 • Labor cost 10% − Influenced by Brazilian wage level 15% − Productivity improvements 11% • Maintenance and consumables − Influenced by Brazilian inflation 23% • Large fixed cost base
Slide 58: Alunorte – World's largest alumina refinery
Alunorte – World’s largest alumina refinery • 2013 production: 5.4 million mt • Targeting stable production above 6 million tonnes • World-class conversion cost position • Modern technology • Bauxite supplied from Paragominas and MRN (58)
Slide 59: Favorable integrated alumina cash cost position
Favorable integrated alumina cash cost position • Implied alumina cash cost position 2013 Implied alumina cash cost position 2013 − USD 260 per mt − Alunorte, Paragominas and sourced alumina 4% • Bauxite − Internal bauxite from Paragominas at cost, sourced 17% bauxite from MRN 33% • Energy − First-q
Slide 60: External alumina sourcing
External alumina sourcing • 2.0 million mt of external alumina sourcing in 2013 • Long term off-take agreement with Rio Tinto − 900 000 mt annually from Yarwun • Short- and medium term contracts − To balance and optimize position geographically − Various pricing mechanisms − Older contracts linked t
Slide 61: Alumina pricing shifting from LME-link to market fundamentals
Alumina pricing shifting from LME-link to market fundamentals 100% • Future pricing should reflect fundamentals of bauxite and alumina value chain • New norm for the industry − Index pricing and short to medium-term contracts − Getting wider acceptance in the market • Hydro’s commercial strategy − M
Slide 62: Primary Metal
Primary Metal (62) W) HYDRO
Slide 63: World-wide production network
World-wide production network Primary aluminium annual production capacity 43% Norway, 925 000 tonnes • Sunndal (100%) : 390 000 tonnes • Årdal (100%): 190 000 tonnes 6% • Karmøy (100%): 190 000 tonnes Canada, 120 000 tonnes • Høyanger (100%): 65 000 tonnes • Alouette (20%): 120 000 tonnes • Søral (
Slide 64: Delivering on ambitious USD 300 improvement program
Delivering on ambitious USD 300 improvement program Total annual improvement effect of NOK ~1.5 billion Improvement categories Improvements in USD per mt* Operational improvements 300 • Improved current efficiency • Reduced power consumption • Reduced anode consumption 250 Fixed cost reductions and
Slide 65: Primary Metal joint ventures improvement program
Primary Metal joint ventures improvement program USD 180 per mt improvements by end-2016, corresponding to NOK 1.2billion Improvement categories Improvements in USD per mt* 180 160 Fixed cost reductions and lean operations 140 120 100 USD 180 per mt Operational improvements 80 • Improved current eff
Slide 66: Improvement drive yields results in primary production
Improvement drive yields results in primary production Underlying EBITDA per mt in USD for respective primary aluminium divisions 1H 2011 2H 2011 1H 2012 2H 2012 1H 2013 2H 2013 700 700 700 700 700 700 500 500 500 500 500 500 300 300 300 300 300 300 100 100 100 100 100 100 -100 -100 -100 -100 -100 -
Slide 67: Develop technology to fulfill ambitions
Develop technology to fulfill ambitions HAL 300 HAL4e R&D portfolio • Operating for several years in • Benchmark technology • HAL4e optimization – to be Sunndal – process parameters and ready for next project environment • Ramping up in Qatar • HAL Ultra – future vision • 30 months of operations in
Slide 68: Metal Markets
Metal Markets (68)
Slide 69: Preferred partner in casthouse products
Preferred partner in casthouse products • Capitalizing on value-added casthouse products portfolio Extrusion ingot • Extensive multi-sourcing system 1.3 million mt including fully- and part-owned primary casthouses and stand- alone remelters Foundry alloys 0.4 million mt • Flexible sourcing system e
Slide 70: Metal Markets earnings drivers
Metal Markets earnings drivers • Remelters Underlying EBIT excluding currency effects and − Revenue impact – volume and product ingot stock valuation effect, NOK million premiums above LME 250 − Cost impact − Scrap and standard ingot premiums 200 above LME − Raw material mix 150 − Freight cost – pro
Slide 71: Rolled Products
Rolled Products (71) Q) HYDRO
Slide 72: No. 1 flat rolled products producer in Europe
No. 1 flat rolled products producer in Europe External sales in tonnages • World leader in high-end products foil and litho Foil 12% − Alunorf (JV 50%) – world’s largest rolling mill Litho 19% − Grevenbroich plant – world’s largest finishing mill Can 22 % • Strategy of high-grading product portfolio
Slide 73: Attractive market position and customers
Attractive market position and customers More than 50% of products with global reach Our products Our customers Our position Litho World market leader Global reach Foil Can Leading position in Europe Auto Regional reach Leading position in Europe GE/ Building (73)
Slide 74: Rolled Products earnings drivers
Rolled Products earnings drivers Underlying EBIT per tonne, NOK 1 400 • Contract structure 1 200 − Margin business based on conversion price − LME element passed on to customers 1 000 − Range from spot contracts to multi-year 800 contracts 600 • High share of fixed costs - volume 400 sensitive 200 •
Slide 75: Sapa joint venture
Sapa joint venture HYDRO
Slide 76: Global leader in extruded products established
Global leader in extruded products established • Sapa, 50/50 joint venture, between Hydro and Orkla • Positioned for restructuring and value creation • Established September 1, 2013 • Hydro has agreed to supply the new company with extrusion billets, ~400 000 mt per year at market prices (76)
Slide 77: Sapa joint venture - facts
Sapa joint venture - facts North American and European leader with global presence External sales in tonnages (2013)* Precision Tubing 7% Building • No. 1 position in North America System 6% Extrusions and Europe Asia 2% Extrusions Europe 46 % • Strong foothold in emerging markets • External sales o
Slide 78: Energy
Energy (78)
Slide 79: Power production increased to 10 TWh
Power production increased to 10 TWh Power production capacity (TWh), per region and reversion year Telemark • Power producing assets and ongoing projects Normal 3.1 0.5 − Maintain cost control in operations and projects production 2044- − Holsbru and Vasstøl power plants into operation in No revers
Slide 80: Hydro's energy map
Hydro’s energy map Energy consumption in alumina refineries, smelters and rolling mills Europe Power 16.7 TWh North America Natural gas 3.3 TWh Power 1.7 TWh Middle East Power 4.6 TWh South America Power 4.6 TWh Australia/Asia Coal 5.3 TWh Power 1.0 TWh Fuel oil 7.3 TWh Based on Hydro’s equity produ
Slide 81: Reversion regime secures Hydro's values
Reversion regime secures Hydro’s values • Pursue value enhancement strategy − Develop and enhance value of power assets − Power assets remain an integrated part of aluminium production in Norway − Power and smelter portfolio will be reviewed concurrently − Participate in restructuring of power secto
Slide 82: Energy earnings drivers
Energy earnings drivers Underlying EBIT* and spot price • Production and market prices strongly NOK million NOK/MWh 2000 500 linked to hydrological conditions 1500 400 • Relatively stable annual EBIT contribution 300 1000 − Large quarterly variations due to volatile spot 200 sales and spot prices 50
Slide 83: Additional information
Additional information (83)
Slide 84: Adjusted net debt increased to NOK 11.2 billion
Adjusted net debt increased to NOK 11.2 billion NOK billion Mar 31, 2014 Dec 31, 2013 Cash and cash equivalents 6.5 8.4 Short-term investments 3.1 2.5 Short-term debt (6.3) (6.2) Long-term debt (3.9) (4.0) Net cash/(debt) (0.6) 0.7 Net pension liability at fair value, net of (5.2) (5.5) expected tax
Slide 85: Shareholder and financial policy
Shareholder and financial policy • Hydro aims to give its shareholders competitive returns compared to alternative investments in peers • Maintained dividend policy − Ordinary dividend: 30% of net income over the cycle − Average ordinary pay-out ratio 2009-2013 is ~90%* − Share buybacks and extraord
Slide 86: Hedging policy
Hedging policy • Bauxite & Alumina, Primary Metal − Remain primarily exposed to LME prices − Operational LME hedging − One-month forward sales − Currency exposure, mainly USD, NOK and BRL − Policy of maintaining long-term debt in USD − BRL hedged for 2014 • Metal Markets, Rolled Products − Operation
Slide 87: Capital allocation mainly upstream
Capital allocation mainly upstream NOK billion Debt-financed investments Qatalum Investments Qatalum • Sustaining capex NOK ~3.5 billion 10.2 Growth capex annually Sustaining capex • Minor growth projects planned for 2014 • ~85% of sustaining capital to be 6.2 allocated upstream in 2014 4.6 1 ~4.3 •
Slide 88: Price and currency sensitivities
Price and currency sensitivities Commodity price sensitivity +10%* Currency sensitivities +10%* NOK million EBIT NOK million EBIT Financial items Aluminium 2 530 USD 2 080 (1 200) Oil (185) BRL (840) 855 Pet coke (190) EUR (155) (180) • Annual sensitivities based on normal annual business volumes, L
Slide 89: Items excluded from underlying results - 2014
Items excluded from underlying results - 2014 NOK million (+=loss/()=gain) Q1 2014 Unrealized derivative effects on LME related contracts Bauxite & alumina (4) Total impact Bauxite & alumina (4) Unrealized derivative effects on LME related contracts Primary metal (12) Unrealized effects on physical
Slide 90: Items excluded from underlying results - 2013
Items excluded from underlying results - 2013 NOK million (+=loss/()=gain) Q1 2013 Q2 2013 Q3 2013 Q4 2013 2013 Unrealized derivative effects on LME related contracts Bauxite & Alumina 13 (3) - 3 12 Legal settlements Bauxite & Alumina - - - 109 109 Total impact Bauxite & Alumina 13 (3) - 112 121 Unr
Slide 91: Operating segment information
Operating segment information Underlying EBIT NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Year 2012 Year 2013 Bauxite & Alumina (144) (188) (386) (73) (63) (244) (370) (379) (288) (791) (1 057) Primary Metal 36 245 (4) 58 364 237 337 484 312 335 1 422 Metal Ma
Slide 92: Operating segment information
Operating segment information EBIT NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Year 2012 Year 2013 Bauxite & Alumina (136) (199) (387) (62) (76) (241) (370) (491) (284) (783) (1 178) Primary Metal (91) (1 227) (48) 112 19 122 338 377 303 (1 254) 855 Metal Mark
Slide 93: Operating segment information
Operating segment information Total revenue NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Year 2012 Year 2013 Bauxite & Alumina 3 195 3 573 3 032 3 465 3 304 3 147 3 354 3 546 3 511 13 265 13 350 Primary Metal 7 458 7 578 6 169 5 485 5 945 5 896 5 884 5 554 6 61
Slide 94: Operating segment information
Operating segment information Internal revenue NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Year 2012 Year 2013 Bauxite & Alumina 1 241 1 356 1 111 1 098 1 322 1 253 1 277 1 375 1 304 4 806 5 226 Primary Metal 6 331 6 341 5 097 4 442 5 132 4 856 4 860 4 566 5 3
Slide 95: Operating segment information
Operating segment information Depreciation, amortization and impairment NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Year 2012 Year 2013 Bauxite & Alumina 475 439 428 409 429 448 417 424 410 1 750 1 718 Primary Metal 542 1 645 482 356 470 472 461 452 437 3 026
Slide 96: Income statements
Income statements NOK million Q1 2014 Q4 2013 Q1 2013 Year 2013 Revenue 18 282 16 570 16 109 64 877 Share of the profit (loss) in equity accounted investments 40 (150) 34 (240) Other income, net 132 103 237 801 Total revenue and income 18 454 16 523 16 380 65 438 Raw material and energy expense 12 2
Slide 97: Balance sheets
Balance sheets NOK million Mar 31 2014 Dec 31 2013 Sep 30 2013 Jun 30 2013 Mar 31 2013 Cash and cash equivalents 6 476 8 412 8 397 7 399 6 411 Short-term investments 3 081 2 480 1 433 1 273 3 572 Accounts receivable 11 116 9 539 10 769 9 811 10 070 Inventories 9 599 10 070 9 758 9 669 10 266 Other c
Slide 98: Operational data
Operational data Bauxite & Alumina Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Year 2012 Year 2013 Alumina production (kmt) 1 464 1 491 1 441 1 397 1 361 1 248 1 316 1 452 1 428 5 792 5 377 Sourced alumina (kmt) 324 332 399 335 476 427 711 395 550 1 390 2 009 Total alumin
Slide 99: Operational data
Operational data Metal Markets Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Year 2012 Year 2013 Remelt production (1 000 mt) 152 142 136 119 135 132 127 123 139 548 517 Third-party metal products sales (1 000 mt) 76 82 81 85 84 78 76 78 84 323 317 Metal products sales excl
Slide 100: Sapa joint venture information
Sapa joint venture information Sapa JV (100 % basis), underlying (unaudited) NOK million, except sales volumes Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Sales volume (1000 mt) 343 311 346 360 346 314 359 Revenues 10 414 9 654 10 367 10 974 10 797 10 132 11 346 Underlying EBITDA 365 154
Slide 101: Price and currency sensitivities
Price and currency sensitivities Commodity price sensitivity +10%* Currency sensitivities +10%* NOK million EBIT NOK million EBIT Financial items Aluminium 2 530 USD 2 080 (1 200) Oil (185) BRL (840) 855 Pet coke (190) EUR (155) (180) • Annual sensitivities based on normal annual business volumes, L
Slide 102: Investor Relations in Hydro
Investor Relations in Hydro Next events Pål Kildemo Annual General Meeting Head of Investor Relations t: +47 970 96 711 May 7, 2014 e: pal.kildemo@hydro.com & Second Quarter Results July 22, 2014 For more information see www.hydro.com/ir (102)