Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Q1 2003 Earnings Presentation
54 slides from Norsk Hydro Asa's earnings presentation, Apr 28, 2003
Slide 1: First quarter 2003
First quarter 2003 Norsk Hydro ASA 28 April, 2003
Slide 2: Highlights first quarter, 2003
Norsk Hydro – First quarter 2003 2 Highlights first quarter, 2003 ! Results confirm operational progress in all three core areas " Record high oil and gas production " Aluminium improvement program on track " Agri position further strengthened ! Strong cash earnings from operations " Reflecting good
Slide 3: Net income
Norsk Hydro – First quarter 2003 3 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 2 132 2 000 1 333 1 144 1 000 513 0 2000 2001 2002 2003 Accumulated 13 981 7 892 8 765 2 482 42330E - 04.2003 - *3 - Hydro Media
Slide 4: Earnings before interest, tax, depreciation and amortization (EBITDA)
Norsk Hydro – First quarter 2003 4 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 8 588 8 000 7 297 7 490 6 000 4 000 2 000 0 2000 2001 2002 2003 Accumulated 46 609
Slide 5: Consolidated income statements
Norsk Hydro – First quarter 2003 5 Consolidated income statements 1st quarter 1st quarter NOK million 2003 2002 Operating revenues 44 814 37 766 Operating income 6 772 4 823 Equity in net income of non-consolidated investees 277 108 Interest income and other financial income 424 586 Other income 40
Slide 6: Net financial income (expense)
Norsk Hydro – First quarter 2003 6 Net financial income (expense) 1st quarter 1st quarter NOK million 2003 2002 Interest income 415 473 Dividends and net gain (loss) on securities 9 113 Interest income and other financial income 424 586 Interest expense (740) (817) Capitalized interest 178 117 Net f
Slide 7: Variance analysis Hydro group
Norsk Hydro – First quarter 2003 7 Variance analysis Hydro group NOK million 1st quarter 2003 11 164 2002 8 588 Variance EBITDA 2 576 - Prices and currency, Exploration and Production 1 200 - Margin incl. currency effects (875) - Volume 1 840 - Fixed costs 200 - Depreciation (375) - Production and e
Slide 8: EBITDA
Norsk Hydro – First quarter 2003 8 EBITDA Individual operating segment 1st quarter 1st quarter NOK million 2003 2002 Exploration and Production 7 770 4 929 Energy and Oil Marketing 920 918 Eliminations (22) - Hydro Oil and Energy 8 668 5 847 Metals 1 047 550 Rolled Products 168 28 Extrusion and Auto
Slide 9: Operating income – EBIT – EBITDA
Norsk Hydro – First quarter 2003 9 Operating income – EBIT – EBITDA First quarter 2003 Depr. Operating Non-cons Interest Selected Other NOK million EBIT and EBITDA income investees income fin. items income Amort. Exploration and Production 5 482 5 38 3 - 5 528 2 242 7 770 Energy and Oil Marketing 71
Slide 10: Operating income
Norsk Hydro – First quarter 2003 10 Operating income Individual operating segment 1st quarter 1st quarter NOK million 2003 2002 Exploration and Production 5 482 3 008 Energy and Oil Marketing 715 699 Eliminations (22) - Hydro Oil and Energy 6 175 3 707 Metals 572 256 Rolled Products - (14) Extrusion
Slide 11: Earnings per share
Norsk Hydro – First quarter 2003 11 Earnings per share* NOK Gains from divestments 20 18.6 18 16 14.9 14 12.7 12.4 12 10.6 11.0 10 9.4 8.5 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 8.5 * Before effect of change in accounting principle 42330E - 04.2003 - *11 - Hydro
Slide 12: Net interest-bearing debt/shareholders' equity
Norsk Hydro – First quarter 2003 12 Net interest-bearing debt/ shareholders’ equity* Ratio 0.7 0.6 0.5 0.44 0.41 0.4 0.34 0.3 0.28 0.2 0.1 0 2000 2001 2002 31.03.2003 * Net interest-bearing debt divided by shareholders' equity plus minority interest 42330E - 04.2003 - *12 - Hydro Media
Slide 13: Oil and Energy – highlights first quarter
Norsk Hydro – First quarter 2003 13 Oil and Energy – highlights first quarter ! Record-high EBITDA " Improved upstream performance and high oil price " Low power production compensated by high refining and trading margins in oil and gas ! 23% production growth from Q1 2002 " Oil up 58 000 boe/day to
Slide 14: Oil and Energy
Norsk Hydro – First quarter 2003 14 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 6 000 5 847 5 528 5 451 5 000 4 000 3 000 2 000 1 000 0 2000 2001 2002 2003 Accumulated
Slide 15: Operating costs per barrel
Norsk Hydro – First quarter 2003 15 Operating costs per barrel 99.7 NOK/boe 100 91.5 90.1 85 80 60 40 20 0 2000 2001 2002 2003 YTD Exploration 11.2 9.1 20.3 7.9 Net transportation * 7.3 8.5 9 7.8 Other cost/income 1.7 2.3 2 4.7 Deprec.& aband. 49 46.4 46.4 44.8 Field/Prod. cost 22.3 23.8 22 19.8 Tot
Slide 16: Petroleum production
Norsk Hydro – First quarter 2003 16 Petroleum production Per quarter 1 000 boe/day 600 Oil Gas 540 552 482 143 156 500 451 452 442 443 448 427 419 104 411 104 110 385 115 110 88 400 86 371 93 91 74 397 396 57 378 364 300 337 325 333 334 328 336 338 313 311 200 100 0 2000 2001 2002 2003 Average per y
Slide 17: Exploration activities first quarter
Norsk Hydro – First quarter 2003 17 Exploration activities first quarter Hydro Location Status share Angola – Bl 17 Acacia 10% Commercial Angola – Bl 17 Hortensia 10% Commercial USA – Lorien (GoM) 10% Ongoing – Q2 Iran – Anaran 75%* Q2 Canada – Mizzen (Flemish Pass) 33% Non-commercial Norway – Lerke
Slide 18: Oil and Energy – prospects
Norsk Hydro – First quarter 2003 18 Oil and Energy – prospects ! On track to meet production target of 510 000 boe/day ! Grane, Fram Vest and Tyin (power) projects progressing as planned ! Ormen Lange on track to PDO this year ! Exploration activities in Iran and Canada ! Continued cost discipline 4
Slide 19: Aluminium – highlights first quarter
Norsk Hydro – First quarter 2003 19 Aluminium – highlights first quarter ! Better underlying performance " Improvement programs on track ! Continued weak markets reflected in financial results " Realized aluminium price in NOK down 18% vs Q1 2002 " Downstream margins under pressure ! Major brownfiel
Slide 20: Aluminium
Norsk Hydro – First quarter 2003 20 Aluminium EBITDA NOK million Other and Eliminations Extrusion and Automotive 2 000 Rolled Products 1 803 1 430 1 750 1 659 Metals 1 566 1 572 1 500 1 292 1 316 1 250 1 000 889 899 827 526 750 473 500 250 (302) 0 - 250 - 500 2000 2001 2002 2003 Accumulated 5 501 2
Slide 21: Aluminium – Business comments
Norsk Hydro – First quarter 2003 21 Aluminium – Business comments ! Metals – satisfactory results " Product premiums maintained " Norwegian smelters suffer from strong NOK ! Rolled Products – unsatisfactory results " Weak margins " Rationalization program for Holmestrand rolling mill ! Extrusion & A
Slide 22: Aluminium – improvement program on track
Norsk Hydro – First quarter 2003 22 Aluminium – improvement program on track Workforce reduction Cost reductions 2 000 3 000 Magnesium Aluminium Magnesium Aluminium 2 500 1 500 2 000 1 000 1 500 1 000 500 500 0 0 Q2-2002 Q3-2002 Q4-2002 Q1-2003 Target Q2- Q3- Q4- Q1- Target Target 2003 2002 2002 200
Slide 23: Aluminium – prospects
Norsk Hydro – First quarter 2003 23 Aluminium – prospects ! Continued challenging markets ! Deliver on improvement program ! Capitalize on strengthened industry position ! Improve relative cost position through brownfield investments ! Fix, sell or close underperforming units 42330E - 04.2003 - *23
Slide 24: Agri – highlights first quarter
Norsk Hydro – First quarter 2003 24 Agri – highlights first quarter ! Good financial result " Increased prices " High energy costs and negative currency effects versus first quarter 2002 ! European fertilizer volumes up " Reduced imports " Increased Hydro market shares ! Continuing growth outside Eu
Slide 25: Agri
Norsk Hydro – First quarter 2003 25 Agri EBITDA NOK million 1 800 1 570 1 600 1 383 1 400 1 198 1 202 1 200 1 078 1 099 1 008 951 1 000 819 800 705 725 719 645 600 400 200 0 2000 2001 2002 2003 Accumulated 3 553 4 402 3 945 1 202 42330E - 04.2003 - *25 - Hydro Media
Slide 26: Agri – prospects
Norsk Hydro – First quarter 2003 26 Agri – prospects ! European fertilizer consumption in line with last season, low inventories ! High US gas price supports ammonia and urea prices ! Continued high European energy costs ! Further strengthening of market positions 42330E - 04.2003 - *26 - Hydro Medi
Slide 27: Norsk Hydro – priorities ahead
Norsk Hydro – First quarter 2003 27 Norsk Hydro – priorities ahead ! Bottom line over top line growth ! Achieve CROGI target 8.5% - 9.5% ! Capital discipline ! Complete NOK 10 billion divestment program ! Continued excellent project execution 42330E - 04.2003 - *27 - Hydro Media
Slide 28: Additional information
Additional information
Slide 29: Equity in net income of non-consolidated investees
Norsk Hydro – First quarter 2003 29 Equity in net income of non-consolidated investees Individual operating segment 1st quarter 1st quarter NOK million 2003 2002 Exploration and Production 5 6 Energy and Oil Marketing 53 24 Hydro Oil and Energy 58 30 Metals 105 26 Rolled Products 7 (3) Extrusion and
Slide 30: Infrequent items – EBITDA
Norsk Hydro – First quarter 2003 30 Infrequent items – EBITDA Individual operating segment 1st quarter 1st quarter NOK million 2003 2002 Exploration and Production - 77 Hydro Oil and Energy - 77 Metals 50 (169) Rolled Products (9) (48) Extrusion and Automotive (2) (18) Hydro Aluminium 39 (234) Hydro
Slide 31: Major special items impacting first quarter earnings
Norsk Hydro – First quarter 2003 31 Major special items impacting first quarter earnings NOK Item Reporting line million Reversal of unrealized gains, Energy and Oil Marketing (130) power contracts Reversal of unrealized gains, Corporate and eliminations (300) power contracts Non-recurring pension c
Slide 32: Statement of Cash Flow
Norsk Hydro – First quarter 2003 32 Statement of Cash Flow 1st quarter 1st quarter NOK million 2003 2002 Operating activities: Net income 2 482 2 132 Depreciation, depletion and amortization 3 622 2 967 Other adjustments 491 1 250 Net cash provided by operating activities 6 595 6 349 Investing activ
Slide 33: Consolidated balance sheet
Norsk Hydro – First quarter 2003 33 Consolidated balance sheet NOK million 31.03.2003 31.03.2002 31.12.2002 Cash and cash equivalents 12 111 12 899 5 965 Other liquid assets 1 596 2 553 2 647 Receivables 43 940 43 394 40 553 Inventories 17 438 19 319 17 232 Non-current assets 146 124 139 259 140 814
Slide 34: Depreciation
Norsk Hydro – First quarter 2003 34 Depreciation Individual operating segment 1st quarter 1st quarter NOK million 2003 2002 Exploration and Production 2 241 1 837 Energy and Oil Marketing 143 188 Hydro Oil and Energy 2 384 2 025 Metals 351 194 Rolled Products 148 36 Extrusion and Automotive 267 207
Slide 35: Net interest bearing debt
Norsk Hydro – First quarter 2003 35 Net interest bearing debt* NOK billion 40 34.2 35 29.7 30 28.5 25 21.1 20 15 10 5 0 2000 2001 2002 31.03.2003 * Interest bearing debt less cash and cash equivalents 42330E - 04.2003 - *35 - Hydro Media
Slide 36: Variance analysis Oil and Energy
Norsk Hydro – First quarter 2003 36 Variance analysis Oil and Energy NOK million 1st quarter 2003 8 668 2002 5 847 Variance EBITDA 2 821 - Prices and currency - Oil 2 670 - Gas (200) - Currency (1 340) - Put options 70 ___________________ 1 200 - Margin 245 - Volume 1 420 - Fixed costs 10 - Deprecia
Slide 37: Variance analysis Exploration and Production
Norsk Hydro – First quarter 2003 37 Variance analysis Exploration and Production NOK million 1st quarter 2003 7 770 2002 4 929 Variance EBITDA 2 841 - Prices and currency - Oil 2 670 - Gas (200) - Currency (1 340) - Put options 70 __________________ 1 200 - Volume 1 725 - Depreciation (405) - Produc
Slide 38: Variance analysis Energy and Oil Marketing
Norsk Hydro – First quarter 2003 38 Variance analysis Energy and Oil Marketing NOK million 1st quarter 2003 920 2002 918 Variance EBITDA 2 - Margin 245 - Volume (305) - Fixed costs 30 - Depreciation 45 - Other - Variance operating income 16 - Non-consolidated investees 29 - Interest income and other
Slide 39: Price development – crude oil
Norsk Hydro – First quarter 2003 39 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 1st quarter 2003: 221.5 NOK/bbl 31.4 USD/bbl 42330E - 04.2003 -
Slide 40: New fields on stream 2003 – 2006
Norsk Hydro – First quarter 2003 40 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/Lirio 12 000 Start Production Kharyaga 2+3 18 000 (phase 1-3) Murzuq A-field 4 000 NCS Operator Grane 77
Slide 41: Production per field
Norsk Hydro – First quarter 2003 41 Production per field Boe/day Q1 2002 Q1 2003 Hydro share % Hydro production Oseberg 196 000 194 000 34.00 65 916 Snorre 223 000 250 000 17.65 44 101 Oseberg South 75 000 85 000 34.00 28 979 Ekofisk 349 000 371 000 6.65 24 695 Åsgard 180 000 241 000 9.60 23 125 Gul
Slide 42: Exploration activity and costs
Norsk Hydro – First quarter 2003 42 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 43: Variance analysis Aluminium
Norsk Hydro – First quarter 2003 43 Variance analysis Aluminium NOK million 1st quarter 2003 1 572 2002 899 Variance EBITDA 673 - Margin (505) - Volume 180 - Fixed costs 140 - Depreciation (45) - Infrequent items and restructuring costs 290 - Trading and hedging 85 - Unrealized LME-effects (95) - Ne
Slide 44: Variance analysis Metals
Norsk Hydro – First quarter 2003 44 Variance analysis Metals NOK million 1st quarter 2003 1 047 2002 550 Variance EBITDA 497 - Margin (380) - Volume 30 - Fixed costs 130 - Depreciation (50) - Infrequent items and restructuring costs 225 - Trading & price hedging 85 - New / disposed business 305 - Ot
Slide 45: Variance analysis Rolled Products
Norsk Hydro – First quarter 2003 45 Variance analysis Rolled Products NOK million 1st quarter 2003 168 2002 28 Variance EBITDA 140 - Margin (50) - Volume 40 - Fixed costs - - Depreciation (5) - Infrequent items 40 - New / disposed business (10) - Other - Variance operating income 14 - Non-consolidat
Slide 46: Variance analysis Extrusion and Automotive
Norsk Hydro – First quarter 2003 46 Variance analysis Extrusion and Automotive NOK million 1st quarter 2003 329 2002 194 Variance EBITDA 135 - Margin (70) - Volume 110 - Fixed costs 10 - Depreciation 10 - Infrequent items 25 - New / disposed business (10) - Other 5 Variance operating income 76 - Non
Slide 47: Aluminium – Key figures by segment
Norsk Hydro – First quarter 2003 47 Aluminium – Key figures by segment Volumes and prices Q1 2003 Q4 2002 Q1 2002 Primary production (Kmt) 343 349 220 Total metal sales (Kmt) *) 532 480 332 LME, realized (USD/t) 1 377 1 313 1 356 USD/NOK, realized **) 7.21 7.63 9.01 Rolled Products external shipment
Slide 48: Aluminium price
Norsk Hydro – First quarter 2003 48 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 42330E - 04.2003 - *48 - Hydro Media
Slide 49: Inventories – primary aluminium
Norsk Hydro – First quarter 2003 49 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: IAI
Slide 50: Variance analysis Agri
Norsk Hydro – First quarter 2003 50 Variance analysis Agri NOK million 1st quarter 2003 1 202 2002 1 383 Variance EBITDA (181) - Margin (315) - Volume 110 - Fixed costs 110 - Depreciation 35 - Infrequent items - - Other (90) Variance operating income (151) - Non-consolidated investees 34 - Interest
Slide 51: Fertilizer prices
Norsk Hydro – First quarter 2003 51 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 Q1 Q1 DAP Urea USD/tonne Bulk fob US Gulf USD/tonne Bulk fo
Slide 52: Nitrate premium above urea price
Norsk Hydro – First quarter 2003 52 Nitrate premium above urea price USD/mt N CAN Germany Urea fob Middle East Diff 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 42330E - 04.2003 - *52 - Hydro Media
Slide 53: Variance analysis Petrochemicals
Norsk Hydro – First quarter 2003 53 Variance analysis Petrochemicals NOK million 1st quarter 2003 93 2002 28 Variance EBITDA 65 - Margin 15 - Volume 15 - Fixed costs 15 - Depreciation 5 - Infrequent items - - Other - Variance operating income 47 - Non-consolidated investees 23 - Interest income and
Slide 54: Forward-Looking Statements/Use of Non-GAAP Financial Measures
Norsk Hydro – First quarter 2003 54 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 contain