Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Non-Deal Roadshow (2015)
27 slides from Norsk Hydro Asa's roadshow presentation, 2015
Slide 1: Norsk Hydro: Maintaining momentum in volatile markets
Norsk Hydro: Maintaining momentum in volatile markets Pål Kildemo Head of Investor Relations (1)
Slide 2: Our agenda for value creation continues through 2015
Our agenda for value creation continues through 2015 EUR 130 million Permanent closure New long-term Included on Dow Record results Record results automotive investment of 180,000 t/year power contracts of Jones Sustainability and investment Again, B&A in Germany to lift BiW Kurri Kurri smelter a to
Slide 3: Market Developments
Market Developments (3)
Slide 4: Aluminium's inherent qualities driving substitution driven demand
Aluminium’s inherent qualities driving substitution driven demand Copper and steel both have to pave way for the metal of the future Global Body-in-White demand in thousand tonnes Significant substitution potential within HVAC&R 2 100 CAGR 20% 1 400 2014 market 50 000 mt Potential market 275 000 mt
Slide 5: Limited expected supply growth going forward
Limited expected supply growth going forward World ex-China Supply Demand Demand growth Thousand tonnes base case: ~3% 28 000 Supply development 2015 26 000 (million tonnes) 24 000 Other ~0.4 Structural issues 22 000 Ramp-up challenges 20 000 Supply Potential influences curtailments, 18 000 Few new
Slide 6: Inventory reductions driven by primary curtailments
Inventory reductions driven by primary curtailments In world ex-China Production less demand world ex-China Inventory days Quarterly annualized* World ex-China reported primary aluminium inventories Primary aluminium, in thousand tonnes 150 3 500 2 500 100 1 500 500 50 - 500 0 Q1 05 Q3 07 Q1 10 Q3 1
Slide 7: Global primary aluminium market slightly oversupplied
Global primary aluminium market slightly oversupplied Chinese exports decline amid reduced metal advantage Production less demand (quarterly annualized)* Semis exports Comp. adv 1 000 mt primary aluminium (monthly, kt) (USD/t) 5 000 500 1000 Improved comp. adv. China 450 4 000 800 400 350 600 3 000
Slide 8: Decline in all-in ingot price partly offset by weak NOK
Decline in all-in ingot price partly offset by weak NOK Standard ingot premiums fall sharply Regional standard ingot premiums All-in ingot aluminium price USD per tonne USD per tonne NOK per tonne 600 3 000 18 000 500 400 2 500 300 14 000 200 2 000 100 0 Jan-08 Dec-08 Nov-09 Oct-10 Sep-11 Aug-12 Jul
Slide 9: Aluminium cost curve shifts down on USD appreciation
Aluminium cost curve shifts down on USD appreciation Many aluminium-producing nations are also oil exporters Top 15 aluminium producers World ex-China USD appreciation Million tonnes; % of total 2014 primary aluminium production Against currencies of major aluminium producers March14 - March-15 3.5
Slide 10: Resilient alumina prices, bauxite source diversification continues
Resilient alumina prices, bauxite source diversification continues Platts alumina index (PAX) Chinese bauxite imports by origin USD/mt Percent Million tonnes 450 20% 80 19% 70 400 18% 60 17% 50 350 16% 40 300 15% 30 14% 20 250 13% 10 200 12% 0 Aug 2010 Aug 2011 Aug 2012 Aug 2013 Aug 2014 May-15 2011
Slide 11: Hydro's aspiration for higher value creation
Hydro’s aspiration for higher value creation (11)
Slide 12: Better
Better HYDRO
Slide 13: Hydro improvement drive continues at full pace
Hydro improvement drive continues at full pace ‘Energy Aspiration’ Sapa JV Total contribution from Hydro’s improvement programs (excl. Sapa) ‘JV program’ ‘From B to A’ 2011*-2014 2015-2016** ‘Climb’ BNOK 3.7 BNOK 1.5 ‘USD 300 program’ CCIP II * USD 300 from 2009 ** Real 2014 terms Realized improveme
Slide 14: Significant improvements in margins in B&A, following operational issues of 2013
Significant improvements in margins in B&A, following operational issues of 2013 Bauxite & Alumina 2H 2013 Bauxite & Alumina 2H 2014 Underlying EBITDA per mt (USD) Underlying EBITDA per mt (USD) 100 100 80 80 60 60 40 40 20 20 0 0 -20 -20 -40 -40 -60 -60 -80 -80 -100 -100 All figures based on public
Slide 15: Additional improvements to be delivered and contracts to be repriced
Additional improvements to be delivered and contracts to be repriced Bauxite and Alumina Improvement categories Improvements Index spot price exposure in NOK million NOK 1 • Increase productivity billion 1100 Bauxite and rightsize organization • Stabilize performance 1000 • at nameplate capacity 900
Slide 16: Industry leading margin generation in Primary Metal
Industry leading margin generation in Primary Metal Primary Metal 1H 2012 Primary Metal 2H 2014 Underlying EBITDA per mt (USD) Underlying EBITDA per mt (USD) 900 900 700 700 500 500 300 300 100 100 -100 -100 -300 -300 All figures based on public accounting data, not verified by Hydro. Data not adjus
Slide 17: Research and development allows world leading improvement programs
Research and development allows world leading improvement programs Primary Metal Fully-owned smelters – increasing output from existing lines, gaining productivity Production development in Norwegian fully-owned smelters, indexed from 2005 130 125 ~100 000 mt1 120 ~100 000 mt1 115 110 Technology and
Slide 18: Step-change innovation keeps us one step ahead of the competition
Step-change innovation keeps us one step ahead of the competition Rolled Products (18)
Slide 19: Earning improvements on the back of restructuring and strong US demand
Earning improvements on the back of restructuring and strong US demand Sapa Underlying EBITDA development. Rolling 4 quarters* Sapa and Ford F-150, a multi-plant delivery NOK Million to the World’s most selling vehicle 600 550 500 450 400 350 300 250 200 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 20
Slide 20: Increasing our cash returns to shareholders
Increasing our cash returns to shareholders Hydro compared to its aluminium peers Dividend yield in percentage, based on year-end share-prices 2010 2011 2012 2013 2014 5.10% 5.00% 5.00% 5.00% 5.00% NOK NOK 5.00% NOK NOK NOK 0.75 0.75 0.75 0.75 1.00 4.00% 4.00% 4.00% 4.00% 4.00% 3.00% 3.00% 3.00% 2.7
Slide 21: Several alternatives for capital allocation
Several alternatives for capital allocation Strong balance sheet and credit grade rating are high priorities in cyclical industry • Maintain investment-grade rating − Currently: BBB (S&P), Baa2 (Moody’s), both with stable outlook − Competitive access to capital important for Hydro’s business model •
Slide 22: Bigger
Bigger HYDRO
Slide 23: High-grading portfolio and fully utilizing existing assets
High-grading portfolio and fully utilizing existing assets Bauxite & Alumina Energy Primary Aluminium Rolled Products • Move beyond nameplate • Mature captive growth • Enhance position in • Expand automotive capacity capacity opportunities high-margin segments to 200,000 t/yr by end-2016 • Further i
Slide 24: Greener
Greener HYDRO
Slide 25: The industry's most ambitious climate strategy: Carbon-neutral by 2020
The industry’s most ambitious climate strategy: Carbon-neutral by 2020 Supported by the three pillars of Hydro’s technology strategy Energy and primary production Reduce emissions, increase efficiency Aluminium in use Maximize user- phase benefits ‘End-of-life’ Increase recycling, back to the loop (
Slide 26: Hydro 2015
Hydro 2015 Lifting performance and shareholder value • Delivering on improvement programs • Targeting high-margin markets and maturing growth portfolio, while maintaining tight capital discipline • Increasing energy-efficiency and lowering climate footprint (26)
Slide 27: Infinite Aluminium
INFINITE ALUMINIUM HYDRO