Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Day (November 2018)
177 slides from Norsk Hydro Asa's investor day presentation, Nov 29, 2018
Slide 1: Capital Markets Day
Capital Markets Day London, November 29, 2018
Slide 2: Table of contents
Table of contents Hydro 6 Finance 45 Market Outlook 73 Bauxite & Alumina 109 Corporate Social Responsibility 120 Extruded Solutions 126 Rolled Products 139 Primary Metal 146 Energy 157
Slide 3: Safety information at The Andaz
Safety information at The Andaz • There are no scheduled fire alarm tests today, so if the fire alarms go off please listen to the announcements and follow the instructions • The Fire Assembly point is by Alderman’s Walk • The Event Management Team will be on hand to assist • The nearest fire exits
Slide 4: Cautionary note in relation to certain forward-looking statements
Cautionary note in relation to certain forward-looking statements Certain statements included in this announcement contain forward-looking information, including, without limitation, information relating to (a) forecasts, projections and estimates, (b) statements of Hydro management concerning plans
Slide 5: Agenda
Agenda 07:30 – 08:00 Light breakfast and registration 11:10 – 11:25 Q&A 08:00 – 08:05 Welcome 11:25 – 11:45 Break 08:05 – 08:50 Hydro 11:45 – 12:00 Extruded Solutions 08:50 – 09:20 Finance 12:00 – 12:15 Rolled Products 09:20 – 09:35 Q&A 12:15 –12:30 Primary Metal 09:35 – 09:55 Break 12:30 – 12:45 En
Slide 6: Navigating challenging times, maintaining long-term focus
Navigating challenging times, maintaining long-term focus Svein Richard Brandtzæg, President & CEO
Slide 7: Key priorities from last Capital Markets Day
Key priorities from last Capital Markets Day • Maintaining financial strength and flexibility, Historical underlying EBIT and underlying RoaCE UEBIT in BNOK URoaCE in % providing attractive returns over the cycle • Strengthening competitiveness and resolving 12 12 operational challenges 10 10 • Diff
Slide 8: Safety – our top priority
Safety – our top priority Fatality in November - safety trend requires action TRI Rate1) 10.3 7.0 6.0 5.4 4.0 4.1 3.9 3.8 3.7 3.4 3.4 3.4 3.2 3.1 2.9 3.0 2.6 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD Oct 1) Total recordable incidents (TRI) rate defined
Slide 9: Sustainability and innovation is fully integrated into our business
Sustainability and innovation is fully integrated into our business People, Planet, Prosperity Making a positive difference Improving our footprint Driving innovation 9
Slide 10: Main developments during 2018
Main developments during 2018 Extruded Rolled Primary Energy Bauxite & Solutions Products Metal Alumina Acquiring 2 plants in Brazil, Restructuring foil business Karmøy Technology Pilot in ~2.2 TWh renewable Embargoes on Alunorte, 50% investing in new press in US full production, delivering as power
Slide 11: Our mid-term goals strongly affected by Alunorte situation
Our mid-term goals strongly affected by Alunorte situation Ambitions Target Timeframe Progress¹ Status • Improve safety performance, strive for injury free environment TRI<2 2020 3.42 Better • • Realize ongoing improvement efforts Better Secure new competitive sourcing contracts in Norway post 2020
Slide 12: Roadmap to full production in Brazil
01 Roadmap to full production in Brazil
Slide 13: Hydro in Brazil
Hydro in Brazil More than 40 years experience Significant exposure to Brazil Capital Employed in Brazil UEBITDA in Brazil 1974 Sept 30, 2018 2017 Enters Brazil with ownership in MRN bauxite mine 2000 Acquires 34% stake in Alunorte alumina refinery 2011 Brazil Acquires Vale’s aluminium assets Brazil
Slide 14: Hydro in Brazil
Hydro in Brazil More than 40 years experience Significant exposure to Brazil Capital Employed in Brazil UEBITDA in Brazil 1974 Sept 30, 2018 YTD 2018 Enters Brazil with ownership in MRN bauxite mine 2000 Acquires 34% stake in Alunorte alumina refinery 2011 Brazil Acquires Vale’s aluminium assets Bra
Slide 15: Alunorte site
Alunorte Communities site Pará river World’s largest alumina refinery outside China • Nameplate capacity of 6.3 mtpy, Bauxite residue Wastewater storage area with more than 2 000 employees treatment DRS2 plant • Connected to Paragominas bauxite Bauxite residue mine via 244 km slurry pipeline storage
Slide 16: Rainfall event of February 2018
Rainfall event of February 2018 Wastewater treatment plant Rainfall event on February 16-17 Flooded area & • No spills from bauxite residue disused areas DRS 1 and DRS2 pipes • Confirmed by IBAMA and SEMAS 2 • Unlicensed discharges of rain 1 water from: Unlicensed 1. Canal Velho discharge from Refin
Slide 17: Alunorte water management system upgrade
Alunorte water Communities management system upgrade Pará river Water management system being future-proofed 50% • Water basin capacity increased Bauxite residue Wastewater storage area 350 % to safeguard against future treatment DRS2 climate changes plant 350% Bauxite residue • Water treatment plan
Slide 18: Current status
Current status Production embargo • By federal court, on Ministerio Publico’s request • By state environmental agency Semas DRS2* embargo • By federal court, on Ministerio Publico’s request • Lifted by federal environmental agency Ibama in early October • Petition filed in court for lifting of DRS2
Slide 19: TAC and TC agreements important in creating common platform
TAC and TC agreements important in creating common platform towards normal operations Federal level State level Management President of Brazil Committee Governor of Para Federal & State courts Min. of Casa Civil SEMAS2 Environment TC TAC Agreements IBAMA1 Report Senate External State Report Report C
Slide 20: Way forward for Alunorte
Way forward for Alunorte Process addresses technical, environmental and social aspects Operations and environment Today End-Q4 2018 Q2 2019 Q2/Q3 2019 Alunorte, Paragominas, Increasing water basin Increasing waste water Adding additional Albras production at 50% capacity by 350% treatment capacity b
Slide 21: Process to restore normal production at Alunorte
Process to restore normal production at Alunorte • Timing for resuming 100% production remains uncertain • Operational, environmental and social investments in progress, totalling BRL ~1.1 billion • Continued dialogue with authorities on creating common platform to resume normal operations • Alunort
Slide 22: Financial framework, competitive positions
02 Financial framework, competitive positions
Slide 23: Driving long-term shareholder value
Driving long-term shareholder value Balancing capital allocation and financial strength Capital M&A Organic expenditures growth Solid balance sheet and liquidity Predictable and competitive dividend Distribution to shareholders * Allocation based on best risk-adjusted returns 23
Slide 24: Solid balance sheet, balanced capital allocation, competitive pay-out ratio
Solid balance sheet, balanced capital allocation, competitive pay-out ratio Adjusted net debt / Equity Uses of cash 2015-Q3 2018 Dividend per share and payout ratio 60 % 300 % <55 % 1.75 50 % 250 % 200 % 1.25 40 % 32 % 150 % 1.00 1.00 70% 30 % Average 26 % 26 % 27 % 24 % 0.75 22 % 100 % payout ratio
Slide 25: Solid balance sheet, balanced capital allocation, competitive pay-out ratio
Solid balance sheet, balanced capital allocation, competitive pay-out ratio Debt/equity compared to peers* Uses of cash 2015-Q3 2018 Dividend per share and payout ratio 300% 300 % 1.75 250% 250 % 200% 200 % 1.25 150% 150 % 1.00 1.00 70% Average 0.75 100 % payout ratio 100% 2013-2017 50 % 50% 0% Othe
Slide 26: Strong positions across the value chain
Strong positions across the value chain Upstream Midstream Downstream Competitive cash cost position upstream Strong position in value added products1 Improving NAV1,2 in Extruded Solutions Alumina BOC curve by company1 (2018) USD/mt 100% 1.2 1.0 90% 0.8 0.6 80% 0.4 0.2 70% 0.0 Extrusion Extrusion B
Slide 27: Better improvement program hit by Alunorte situation
Better improvement program hit by Alunorte situation Will not meet 2019-target of BNOK 3* Bauxite & Alumina Primary Metal BNOK 3.0 Better improvement program • 50% production at Alunorte and Paragominas • 50% production at Albras impacting progress with strong negative impact on improvement improvem
Slide 28: Market outlook
03 Market outlook
Slide 29: Geopolitical events impacting our industry
Geopolitical events impacting our industry Aluminium demand remains solid Geopolitical events impacting China moderating primary supply Underlying demand trade flows, EU struggling with growth, global climate concerns remains solid continued Brexit uncertainty continue to rise Rusal sanctions 2-3% G
Slide 30: Global aluminium market expected in deficit in 2019
Global aluminium market expected in deficit in 2019 Inventories gradually trending towards historical levels Inventory levels trending downwards Estimated primary market balance 2019 Global reported and unreported, in thousand tonnes Inventory days (‘000t) 16000 140 1 000 120 12000 100 0 80 8000 60
Slide 31: Aluminium’s reach is growing over the next decade
Aluminium’s reach is growing over the next decade in response to key long-term trends Substitution continues to be a key driver for aluminium Transport Packaging Building & construction Electrical Semis 3-4% 2-3% 2-3% 2-3% ~3 % Primary 2-3 % Urbanization Urbanization Substitution Light-weighting Sus
Slide 32: Strategic direction
04 Strategic direction
Slide 33: Better, Bigger, Greener
Better, Bigger, Greener Hydro’s aspiration for higher value creation Better Bigger Greener Raise performance and Expand the use of aluminium Lead the transition towards improve customer offering and strengthen Hydro’s platform sustainable solutions for growth 33
Slide 34: A complete value chain for higher value creation
A complete value chain for higher value creation Focus on cost efficiency and process technology Focus on margin management and product innovation Centralized business model Decentralized business model Rolling Recycling Bauxite Alumina Energy Primary Casting Products Extrusion Raw materials, proces
Slide 35: Summary of strategic focus areas going forward
Summary of strategic focus areas going forward On-going initiatives and strategic ambitions Bauxite & Alumina Energy Primary Metal Rolled Products Extruded Solutions • B&A operations • RSK solution • Pilot spin-offs • Further growth in • Selective growth back on track • New business • Husnes restart
Slide 36: Innovation and sustainability
05 Innovation and sustainability
Slide 37: Sustainability and innovation – key competitive advantages
Sustainability and innovation – key competitive advantages Lowest CO2 emissions Tonnes CO2/tonne aluminium, 2018 18.0 16.0 Direct Indirect 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Hydro Source: Republished under license from CRU International Ltd 37
Slide 38: Part of the solution – turning words into action
Part of the solution – turning words into action Industrial strategy, business development and climate ambitions hand in hand Hydro’s climate strategy: Carbon-neutral from a life-cycle perspective by 20201 2.5 2.0 1.5 1.0 0.5 0.0 2012 2013 2014 2015 2016 2017 2018 2019 2020 -0.5 -1.0 1) In million t
Slide 39: Responsible, low-carbon products for a greener future
Responsible, low-carbon products for a greener future
Slide 40: Electrification is ramping up, accelerating innovation
Electrification is ramping up, accelerating innovation • Aluminium is the fastest growing automotive material due to fuel economy focus and stricter emissions standards • E-mobility is speeding up the aluminium-in-automotive trend as the preferred lightweighting material • Electric vehicles (EV) cou
Slide 41: New innovative combinations for more efficient solutions
Extrusion New innovative combinations for more efficient solutions Coil • As a fully-integrated company, Hydro is now able to collaborate on innovations across the value chain • Combining extruded profiles and rolled aluminium, creating smarter, better and more cost-efficient solutions for a wide ra
Slide 42: Towards digital production
Towards digital production Digital twins Optimizing by combining physical models, sensors and advanced analytics of process data Process data Domain competence • Examples include electrolysis process and the complete value chain for extrusion 42
Slide 43: Building the future
Henninger Turm Residential building, Germany Building the future Aluminium systems can improve a wide range of a building’s performance indicators • Energy performance • Renewable energy production • Acoustic performance De Rotterdam Office building, Netherlands • Thermal comfort • Daylight optimiza
Slide 44: Hydro key focus areas
Hydro key focus areas Engineering the future, lightweighting our planet • Resolving Alunorte situation • Maintaining financial strength and flexibility • Providing attractive returns over the cycle • Strengthening competitiveness through continuous improvement, innovation and sustainability
Slide 45: Financial update - maintaining financial strength and flexibility
Financial update - maintaining financial strength and flexibility Eivind Kallevik, EVP & CFO
Slide 46: Prudent financial framework
01 Prudent financial framework
Slide 47: Prudent financial framework
Prudent financial framework Managing industry cyclicality, driving long-term shareholder value Lifting cash flow Financial strength Disciplined Predictable dividend Effective risk potential and flexibility capital allocation policy management Improving efficiency, Investment grade credit Long-term s
Slide 48: Balanced capital allocation, solid free cash flow generation
Balanced capital allocation, solid free cash flow generation Uses and sources of cash 1) Free cash flow generation 2) Cash flows, 2015-Q3 2018, BNOK 2015 – LTM Q3 2018, BNOK 9,5 50 45 8,3 40 20% 35 5,6 30 40% 4,7 25 9.0 20 7.6 15 10 4.0 35% 5 0 Sources Uses 2015 2016 2017 LTM Q3 2018 Disposals Other
Slide 49: Earnings and improvement ambitions affected by the Alunorte situation
Earnings and improvement ambitions affected by the Alunorte situation Underlying EBIT development NOK billion Better 2016-2018 (0.5) BNOK 0,3 11.8 1.8 (2,6) 11.2 9,7 4.5 UEBIT 2015 Product price Sapa/ES Sapa Currency Raw materials Inflation UEBIT 20181) Better in Better in 2018 Curtailment UEBIT mar
Slide 50: Extruded Solutions continue to deliver with further improvement potential
Extruded Solutions continue to deliver with further improvement potential and growth opportunities Integration and synergies on track Sapa (100%) and Extruded Solutions Net added value 2) per kg • Ambition to deliver min 10% average Underlying EBITDA per mt 1) NOK and kmt, indexed to 2014 annual UEB
Slide 51: Focus on resolving operational issues in Rolled Products
Focus on resolving operational issues, strengthening performance and portfolio high-grading in Rolled Products Rolled Products Underlying EBIT per mt • Operational performance improving, issues not fully resolved NOK in 2018 • Alunorf hot mill and Hamburg – stabilized production performance 1,248 1,
Slide 52: Significant curtailment effects in Bauxite&Alumina and Primary Metal
Significant curtailment effects in Bauxite&Alumina and Primary Metal Curtailment effects on UEBIT in Bauxite & Alumina, BNOK* Curtailment effects on UEBIT in Bauxite&Alumina 7.4 • Aunorte and Paragominas 50% curtailment – lost volume and margin 2.8 5.0 4.6 • Higher alumina sourcing costs compensated
Slide 53: Hydro alumina portfolio before and after Alunorte curtailment
Hydro alumina portfolio before and after Alunorte curtailment Alumina sourcing and sales overview 1) Million tonnes Full Alunorte production (2017) After Alunorte curtailment (2018E) 8,4 8,4 1.6 6,8 6,8 0.9 4.1 2.6 2.6 65- 75- 70% 80% index 0.9 index 5.9 4.3 4.2 3.3 Alumina Alumina sales Alumina Alu
Slide 54: Additional alumina sourcing lifts upstream implied costs
Additional alumina sourcing lifts upstream implied costs Total alumina sales based on source Implied alumina cost 1), USD/t Kmt USD/mt 2,400 500 2,200 450 367 376 265 287 2,000 235 228 237 400 1,800 350 1,600 Q117 Q217 Q317 Q417 Q118 Q218 Q318 1 605 1,277 1576 1,693 300 1,400 1,523 829 821 Implied a
Slide 55: NOC build-up reflects higher prices and market uncertainty
NOC build-up reflects higher prices and market uncertainty Increased raw material inventories NOK billion* NOC days • Net operating capital generally follows LME 25 25 80 22 22 23 24 • Extruded Solutions average working 22 21 22 21 20 20 21 capital around 5-6 BNOK 20 20 20 70 20 • Lift in net operat
Slide 56: Maintaining a solid balance sheet and investment-grade credit rating
Maintaining a solid balance sheet and investment-grade credit rating Adjusted net debt Adjusted net debt / Equity NOK billion 60 % <55 % 50 % 40 % 32 % 7.7 (4.1) (6.9) (6.5) (9.9) 30 % 26 % 26 % 27 % 24 % 22 % End Q3-2017 19 % 20 % 20 % 14 % 11 % 10 % 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 57: Average sustaining capex ~6.5-7.0 BNOK 2018-2021E
Average sustaining capex ~6.5-7.0 BNOK 2018-2021E Majority of sustaining capex allocated upstream, including investments in Alunorte robustness NOK billion* 8 8 ~7.0-7.5 ~6.8 BNOK at CMD’17 7 7 ~6.5-7.0 ~6.4 6 5.7 5.8 5.7 6 5 5 4 4 3 3 2 2 1 1 0 0 2015 2016 2017 2018E 2019E 2020E / 2021E B&A sustain
Slide 58: Growth capex focused on incremental growth and productivity improvements
Growth capex focused on incremental growth and productivity improvements NOK billion • Sustaining projects for 2018-2021: • Pipeline replacement in B&A 12 • PM rectifiers and asset integrity Albras ~10 -10.5 • Smelter relining 10 8.8 ~8.5-9.5 • Alunorte robustness ~8.1 8 7.9 • Ongoing growth project
Slide 59: Aiming for competitive returns to shareholders
Aiming for competitive returns to shareholders • Aiming for competitive shareholder returns compared Dividend per share and payout ratio to alternative investments in peers 1.75 • Dividend policy: • Ordinary dividend: 40% of net income over the cycle 1.25 • Floor of NOK 1.25 per share, committed to
Slide 60: Limited financial hedging, flexible business model
Limited financial hedging, flexible business model Historical correlations between commodities and currencies indicate a natural earnings hedge • Hedging strategy Cross-correlations between currencies and commodities • Fluctuating with the market: revenues primarily exposed to LME, PAX and USD Month
Slide 61: Sensitivities and scenarios
02 Sensitivities and scenarios 61
Slide 62: Significant exposure to commodity and currency fluctuations
Significant exposure to commodity and currency fluctuations Sensitivities affected by the Alunorte and Albras curtailments Sensitivities with full production Sensitivities with 50% production Aluminium price sensitivity +10%, NOK million Aluminium price sensitivity +10%, NOK million 4,000 3,600 2,80
Slide 63: Bauxite & Alumina sensitivities
Bauxite & Alumina sensitivities Sensitivities affected by the Alunorte curtailment Sensitivities with full production Sensitivities with 50% production Annual sensitivities on underlying EBIT if +10% in price Annual sensitivities on underlying EBIT if +10% in price NOK million NOK million 1,810 630
Slide 64: Primary Metal sensitivities
Primary Metal sensitivities Sensitivities affected by the Albras curtailment Sensitivities with full production Sensitivities with 50% production Annual sensitivities on underlying EBIT if +10% in price Annual sensitivities on underlying EBIT if +10% in price NOK million NOK million 3,500 3,090 320
Slide 65: Basis for long-term scenarios
Basis for long-term scenarios Estimated UEBITDA YTD Q3 annualized at full production and average Q1 PAX alumina index 4.3 BNOK higher than the actual 23.9 23.0 18.7 UEBITDA, BNOK 16.4 15.5 11.2 UEBIT, BNOK YTD Q3 18 annualized at full YTD Q3 18 annualized at full YTD Q3 18 annualized 1) production a
Slide 66: UEBITDA potential at full production
UEBITDA potential at full production Scenarios are not forecasts, but represent earnings potential based on sensitivities Indicative UEBITDA-range in 3 scenarios NOK billion 30 25 Incl. 0.7 BNOK 1) in remaining Better 20 improvement ambitions YTD Q3 18 annualized 15 at full production and avg Q118 r
Slide 67: FCF potential at full production and average 2018-2021E sustaining capex
FCF potential at full production and average 2018-2021E sustaining capex Scenarios are not forecasts, but represent earnings potential based on sensitivities Indicative Free cash flow (FCF) range in 3 scenarios NOK billion 20 Incl. 0.7 BNOK 1) in 15 remaining Better improvement ambitions YTD Q3 18 a
Slide 68: URoaCE potential at full production
URoaCE potential at full production Scenarios are not forecasts, but represent earnings potential based on sensitivities Indicative URoaCE range in 3 scenarios 18% 16% 14% Incl. 0.7 BNOK 1) in remaining Better 12% improvement ambitions 10% YTD Q3 18 annualized at full production and 8% avg Q118 real
Slide 69: Financial targets and aspiration
03 Financial targets and aspiration
Slide 70: Driving long-term shareholder value
Driving long-term shareholder value Balancing capital allocation and financial strength Solid balance Capital Long-term sheet and liquidity expenditures shareholder M&A Organic Sustaining capex to ensure value* growth operational excellence Maintain financial flexibility Investments to keep market •
Slide 71: Hydro’s aspiration underpinned by firm financial targets
Hydro’s aspiration underpinned by firm financial targets Medium and long-term Ambition Timeframe CMD 2018 status Better improvement ambition 3.0 BNOK 2016-2019 (0.5) BNOK 2018E Dividend payout ratio 40% of net income Over the cycle ~70%1) 2013-2017 FFO/adjusted net debt 2) > 40% Over the cycle 68% L
Slide 72: Maintaining financial strength and flexibility
Maintaining financial strength and flexibility • Balance sheet strength and liquidity • Predictable and competitive dividend • Continuous cost and margin improvements • Disciplined capital allocation • Focus on net operating capital management • Effective risk management
Slide 73: Market Outlook
Market Outlook Kathrine Fog, SVP Corporate Strategy & Analyses
Slide 74: Macro and trade
01 Macro and trade
Slide 75: Macro sentiment still moderately positive despite trade tensions
Macro sentiment still moderately positive despite trade tensions Increasing uncertainty on GDP-effects from trade disputes Manufacturing PMI’s Annual GDP-growth, key regions 65 8% USA ISM Eurozone China NBS China Caixin 7% 60 6% Increasing production 55 5% 4% 50 3% Contracting 2% production 45 1% 40
Slide 76: Trade sanctions and tariffs impacting global flows of aluminium
Trade sanctions and tariffs impacting global flows of aluminium Russia Europe • Rusal sanctions • Monitoring of aluminium imports • Potential safeguards China US • Limitations on scrap imports • Section 232: aluminium India • Section 232: auto (potential) • Duties on primary • Section 301 and scrap
Slide 77: Section 232 impacting US metal premiums
Section 232 impacting US metal premiums Premiums reflecting high underlying metal deficit US primary demand and production Ingot premiums (‘000t) USD/t Section 232 7000 500 • 10% duty on aluminium imports • The US has a large underlying metal 6000 deficit and needs to attract large metal 400 volumes
Slide 78: Rusal sanctions leading to price volatility
Rusal sanctions leading to price volatility Large producer of value added products, impacting regional product premiums LME 3m Rusal primary production per product (USD/t) (total 2017: 3.8 million tonnes) Rusal sanctions 2,700 750 • Deadline for imposition of UC Rusal sanctions further extended to R
Slide 79: Chinese limitations on scrap imports leaving more scrap in North America and Europe
Chinese limitations on scrap imports leaving more scrap in North America and Europe Chinese scrap imports, monthly Scrap prices as a percentage of (‘000 tonnes) Regional ingot price Chinese limit scrap imports 250 90% • Stricter import policy and 50% import duty on US scrap has led to a sharp YTD: 8
Slide 80: Chinese semis exports increasing in 2018, less volumes going to the US
Chinese semis exports increasing in 2018, less volumes going to the US US imports of sheet and plate from China Semis exports 000s tonnes (monthly, kmt) Chinese semis exports 80 600 • Increasing volumes in 2018 amid higher export arbitrage 70 • YTD + 19% 500 • Export arbitrage supported by 60 weak R
Slide 81: Downstream
02 Downstream
Slide 82: Aluminium continues to be the fastest growing base metal
Aluminium continues to be the fastest growing base metal Gaining market share from other metals in key segments Global metal demand New segments and applications supporting aluminium demand Index 2000=100 300 250 200 150 Offshore / Marine applications, e.g. Railway, including new technologies HVAC&R
Slide 83: Substitution trend in automotive progressing
Substitution trend in automotive progressing Positive US demand despite moderate auto sales, Europe gaining ground Aluminium vehicle penetration* Rolled products demand in transport Extrusions demand in transport Demand per vehicle, kg/car (annual growth) (annual growth) 300 Estimate 15% 15% 280 260
Slide 84: Extrusion demand in US & Canada strongly impacted by moderation in truck & trailer
Extrusion demand in US & Canada strongly impacted by expected moderation in truck & trailer Extrusions demand in transport Extrusions demand per transport Extrusions demand in transport (cars & trucks*), segment split (cars & trucks) segment (cars & trucks) (Average share 2016-2018) (annual growth)
Slide 85: E-mobility trend favourable for aluminium demand
E-mobility trend favourable for aluminium demand High aluminium content in BEVs, increasing share of total car sales Electric vehicle* share of new car sales (%) Net increase in aluminium content in electric vehicle’s Average kg aluminium per vehicle type in 2018 30% ~200 Rolled Castings Extrusions
Slide 86: Emerging softness in key housing market indicators
Emerging softness in key housing market indicators, moderating growth rates Housing market indicators Extrusions demand in B&C Rolled products demand in B&C Index, Jan 2000=100 (annual growth) (annual growth) 160 6% 6% 140 120 100 4% 4% 80 60 40 2% 2% 20 0 US Building permits 0% 0% US Housing starts
Slide 87: 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, selected regions Global segment composition, rolled products YoY-growth (2017) 8% 4% 2% Packaging 5% Transport 8% Construction 6% Machinery & Equipment 14% 50
Slide 88: Moderating extrusion demand growth in Western Europe and North America
Moderating extrusion demand growth in Western Europe and North America, improving in Asia Extrusion demand, selected regions European segment composition, extrusion YoY-growth (2017) 10% North America 10% Western Europe 10% China 5% 5% 5% 5% 5% 5% 0% 0% 0% 2017 2018E 2019E 2017 2018E 2019E 2017 2018
Slide 89: Primary metal market
03 Primary metal market 89
Slide 90: Recap CMD 2017: Global primary market expected to be largely balanced in 2018
Recap CMD 2017: Global primary market expected to be largely balanced in 2018 Primary supply and demand growth expected to be largely similar Global (’000 mt) Global growth expectations 2018 70,000 Supply Demand Supply and demand: 4-5 % 65,000 60,000 Demand 55,000 Supply influences 2018 influences 2
Slide 91: Global primary market in deficit in 2018
Global primary market in deficit in 2018 Demand progressing largely as expected, supply growth falling short of expectations Global (’000 mt) Global growth 2018 Happened to a limited extent Happened to a large extent Supply: 1 % 70,000 Supply Demand Demand: 4 % 65,000 60,000 Demand 55,000 Supply inf
Slide 92: Global primary market expected to be in deficit also in 2019
Global primary market expected to be in deficit also in 2019 Supply growth picking up, demand growth slowing Global (’000 mt) Global growth 2019 Supply: 3 – 4 % 70,000 Supply Demand Demand: 2 – 3 % 65,000 60,000 Demand 55,000 influences 2019 Supply influences 2019 Continued growth in transport 50,00
Slide 93: High input costs challenging smelter profitability
High input costs challenging smelter profitability Higher end of the cost curve dominated by Chinese smelters Input costs aluminium production Business operating cost (BOC) Index: Q1 2016 = 100 USD/t 300 2,800 2,400 250 2,000 200 1,600 150 1,200 100 2016 800 Cost pressure in 2018 1) 2017 Continued h
Slide 94: High input costs challenging smelter profitability
High input costs challenging smelter profitability Higher end of the cost curve dominated by Chinese smelters Input costs aluminium production Business operating cost (BOC) Index: Q1 2016 = 100 USD/t 300 2,800 2,400 250 Current LME 2,000 200 1,600 150 1,200 100 2016 800 Cost pressure in 2018 1) 2017
Slide 95: Primary supply in China impacted by policy and cost
Primary supply in China impacted by policy and cost, captive power market reform influencing power cost Chinese primary supply forecasts Shandong power price for captive power plants Million tons Power price in real 2018 USD/MWh 42 80 75 40 70 38 65 60 36 55 50 34 45 32 40 35 30 30 2015 2016 2017 20
Slide 96: China expected to be largely balanced in 2019, global market in deficit
China expected to be largely balanced in 2019, global market in deficit World ex. China 2019 Estimated primary market balance 2019 (mill t.) 1-3 % (‘000t) 1 000 3-4 % ~30.2 – 30.8 Production ~28.6 – 28.8 Demand 0 China 2019 (mill t.) 2-4 % 2-4 % -1 000 ~36.9 – 37.6 ~36.9 – 37.6 Production Demand -2
Slide 97: Stocks outside China continue to decrease
Stocks outside China continue to decrease Inventory days approaching pre-crisis levels world outside China China World ex. China (‘000t) (‘000t) 12000 180 12000 180 160 160 10000 10000 140 140 8000 120 8000 120 100 100 6000 6000 80 80 4000 60 4000 60 40 40 2000 2000 20 20 0 0 0 0 Reported Unreported
Slide 98: Bauxite and alumina market
04 Bauxite and alumina market 98
Slide 99: Volatile alumina market due to supply disruptions
Volatile alumina market due to supply disruptions Alunorte embargo and Rusal sanctions lead to increased volatility Alumina price (PAX) and share of LME USD/t Supply tightness, Alunorte 100% 750 Alcoa strike curtailment Rusal sanctions 32% 650 Alunorte 550 disruption 27% PAX % of LME 3m 450 22% 350
Slide 100: PAX increase triggers Chinese exports
PAX increase triggers Chinese exports Chinese alumina required to balance the global market China alumina export arbitrage Chinese alumina trade balance by month (USD/t) 2017-2018 (kt) 250 421 2017 2018 200 287 275 2018 to date 266 285 278 150 253 0.1 Mt 211 alumina net exports 100 140 143 99 74 70
Slide 101: Limited new capacity ex-China expected short term
Limited new capacity ex-China expected short term Chinese additions continue to dominate China (3-5) Point Comfort (2.3) Al Taweelah (2.0) Alpart (1.6) Friguia (0.6) Anrak (1.5) Curtailed 50% Alunorte (3.2) Restarted capacity Kendawangan Phase II (1.0) Capacity additions during 2019 Atlantic curtail
Slide 102: Higher alumina costs in 2017 and 2018
Higher alumina costs in 2017 and 2018 Upper half of cost curve dominated by Chinese refineries Input costs alumina production Site Operating Costs Index: Jan 2016 = 100 (USD/t) in 2018 real $ 450 400 350 400 300 350 250 300 200 250 150 200 100 50 150 2016 2017 Q3 2018 0 100 0 20,000 40,000 60,000 80
Slide 103: China increasingly reliant on bauxite imports
China increasingly reliant on bauxite imports Guinea bauxite increasingly filling Chinese demand Growing need for bauxite imports amid domestic depletion Guinea bauxite production increasing, but still need for other sources Mt Mt 300 80% 100 Chinese imports Domestic prod Forecast ROW China 90 split
Slide 104: More imported bauxite going to inland refineries
More imported bauxite going to inland refineries Delivered bauxite prices 1) 2018 refinery production forecast: total ~73 Mt Other • Extremely tight domestic bauxite 180 Guizhou 4% Shandong market leading to price escalations 7% 33% for poor quality (high silica) 4 160 Guangxi 4 • Not economic for s
Slide 105: Long-term outlook and summary
05 Long-term outlook and summary 105
Slide 106: Strong growth drivers across segments providing solid demand outlook
Strong growth drivers across segments providing solid demand outlook Still encouraging demand outlook from strong base – converging demand China and outside China Strong demand drivers in key aluminium segments Global semis demand per segment, CAGR 2000-18 2018-28 Growth in automotive vehicle produc
Slide 107: Growth in global semis demand creates opportunities for primary and recycled material
Growth in global semis demand creates opportunities for both primary and recycled material Solid growth for semis, primary and recycling 2018-2028 Semis Primary Recycling1) ~3 % 2-3 % ~4 % Source: CRU, Hydro Analysis 1) Post-consumer and fabrication scrap 107
Slide 108: Summary
Better Summary • Solid long-term demand outlook, trade Bigger disputes and geopolitical tensions adding uncertainty Greener • Global primary market in deficit in both 2018 and 2019 • Chinese metal exports facing headwinds in key consumer regions • China increasingly dependent on imported bauxite, Gu
Slide 109: Bauxite & Alumina – path to full operations
Bauxite & Alumina –path to full operations John Thuestad, EVP Bauxite & Alumina
Slide 110: Strong assets and organization
Strong assets and organization Capable of quickly adapting to changes Better Bigger • Highly qualified and engaged organization in Brazil • High-quality assets Greener • Cost position • Product quality • Operational flexibility • February events drives even faster improvements in: • Refinery operati
Slide 111: Alunorte’s operating mode under curtailment
Alunorte’s operating mode under curtailment Currently rotating all 7 lines – operating mode continuously evaluated Alunorte’s competitive cash cost is mostly variable and therefore not materially affected by the production level 7 lines 3 lines cold 1 rotating 2 shutdown Alunorte’s Cash Cost Energy
Slide 112: Bauxite supply to Alunorte
Bauxite supply to Alunorte Maintaining the bauxite mix • Alunorte has declared Force Majeure to its bauxite suppliers MRN and Paragominas • Alunorte continues to be supplied with bauxite from both MRN and Paragominas, in same proportion as before production reduction • Paragominas costs are 60-70% f
Slide 113: Significant negative curtailment effects on Better improvement program
Significant negative curtailment effects on Better improvement program • 50% production at Alunorte and Paragominas with Bauxite & Alumina Better program progress strong negative impact on improvement program In BNOK 2016-2018E BNOK -1.1 1,4 1,3 • 2016-17 improvements more than offset by negative 1,
Slide 114: Enhancing Alunorte robustness, preparing for more extreme weather
Enhancing Alunorte robustness, preparing for more extreme weather • Improved water treatment and holding capacity • Short-term improvements of the water management systems and treatment capacity, maintenance systems, as well as emergency preparedness plans and training Time Amount Purpose frame Wate
Slide 115: Status of main commitments under technical agreement (TAC)
Status of main commitments under technical agreement (TAC) All activities on track Q4 2018 Q1 2019 Q2 2019 • Insurance bond • Updated Risk Management Plan • New camera monitoring system in DRS area and access to SEMAS • Payment of fines • Mud characterization (press filters) • Automatic stream flow
Slide 116: Path towards normal operations, building a common platform
Path towards normal operations, building a common platform Timing for embargoes being lifted remains uncertain TAC/TC signed on September 5 Lifting of Press Filter / Lifting of production embargo DRS 2 embargos • Technical TAC agreement • Key stakeholders • Audits, studies and monitoring of • Press
Slide 117: Press filter is best available technology
Press filter is best available technology – Hydro in the forefront DRS2 with press filter technology only long-term sustainable solution for Alunorte • Improves geotechnical safety of deposit • Cuts CO2-emissions from transportation • Reduces environmental footprint by storing 4-5x more residues in
Slide 118: Environment and CSR – our social license to operate
Environment and CSR – our social license to operate Environment • Third-party environmental study on quality of air, water, springs, soil and forest • Toxicological study to evaluate health conditions of people in the communities nearby Alunorte (Red Cross) • Update of emergency procedures, includin
Slide 119: Key priorities 2019
Key priorities 2019 • Resume normal operations • Continued focus on safety • Deliver on all improvements and commitments • Further contribute to sustainable development in Barcarena • Maintain competitive cost position
Slide 120: Corporate Social Responsibility in Hydro
Corporate Social Responsibility in Hydro Anne-Lene Midseim, EVP CSR & General Counsel
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Slide 122: Targeting the fundamental drivers of long-term development
Targeting the fundamental drivers of long-term development Making a positive difference by strengthening local communities and our business partners Strategic drivers Strategic goal 2030 Contribute to quality education in our communities1) Hydro will contribute to quality education and Promote decen
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Slide 124: Building trust and support in Pará – several elements
Building trust and support in Pará – several elements Balancing short term actions and long term change 124
Slide 125: Sustainable Barcarena Initiative
Sustainable Barcarena Initiative An independent process for sustainable development • A long term process; Hydro’s commitment 10 years • Separate legal entity with own organization and staff, financed by, but independent of Hydro • Bringing all stakeholders together to: • Discuss, prioritize and dec
Slide 126: Extruded Solutions – value over volume
Extruded Solutions – value over volume Egil Hogna, EVP Extruded Solutions
Slide 127: Organized in four business units to maximize synergies across units
Organized in four business units to maximize synergies across units 22,400 highly competent people across the world, total turnover of BNOK 63 Extrusion Europe Extrusion North America Precision Tubing Building Systems • Market leader focusing on • Uniquely positioned as the only • Technology leader
Slide 128: Extruded Solutions is growing and moving ahead with sustainability certifications
Extruded Solutions is growing and moving ahead with sustainability certifications Acquisition of ASI certified in the accessories for Netherlands Itu picture windows company Extruded Solutions got Important competence the first certificate in add-on with accessories November and several for windows
Slide 129: Hydro acquired two Brazilian extrusion plants from Arconic
Hydro acquired two Brazilian extrusion plants from Arconic, integration well on track, but EBIT still negative Regional distribution Assets overview 1) Tubarão 2) Utinga 3) Itu Employees ~310 ~320 ~380 Installed Capacity ~35 000 tonnes/year ~23 000 tonnes/year ~22/8 000 tonnes/year general extrusion
Slide 130: Notter, inhouse competence center for proprietary accessories and hardware
Notter, inhouse competence center to develop proprietary accessories and hardware Short facts: • Acquired in May, 2018 • Located in Mainhardt, Germany • Turnover MEUR 2.1 • Customers: 85% Europe, 15% North America and Asia • 30 employees Key products: • Tilt/turn hardware with visible and concealed
Slide 131: Leveraging the uniqueness of being a fully integrated aluminium company
Leveraging the uniqueness of being a fully integrated aluminium company • 75R enables offering customers certified product to help them meet their own ambitious climate strategies • Hydro only fully integrated aluminium producer that can offer products based on minimum 75% recycled post- New headqua
Slide 132: Moderate aluminium extrusion market growth
Moderate aluminium extrusion market growth, but 3-4% annual growth from 2009 levels Extrusion market, in thousand tonnes 3,200 3,000 +3% Europe 2,800 2,600 2,400 +2% 2,200 2,000 +4% 1,800 1,600 +1% North America 1,400 1,200 1,000 800 600 400 200 0 85 86 87 99 89 90 91 92 93 94 95 96 97 98 99 00 01 0
Slide 133: We continue our value-over-volume strategy
We continue our value-over-volume strategy Simplify and Deliver value-added Grow to lift margins collaborate to our customers and profitability Simplification drive to Higher share of value-added solutions Lifting margins and creating increase focus, reduce to customers through commercial more custo
Slide 134: Continued improvements in net added value
Continued improvements in net added value, driven by our value over volume strategy • Growth will take place through Net added value per kg 12 month rolling material substitution and delivering (NOK, indexed to Q3 2016) on our strategy 1.2 • Average extrusion content per car 1.0 in Europe increased
Slide 135: Simplification, value-added to customers and profitable growth translates into value creation
Simplification, value-added to customers and profitable growth translates into value creation • Extruded Solutions aims to deliver minimum 10% average annual underlying EBIT growth over the next three years • Ambition includes smaller bolt-on acquisitions 1),larger acquisitions would come in additio
Slide 136: Development of extruded tubing parts
Development of extruded tubing parts • Thin-walled tubing requires world-class material and world-class processes • Hydro produces precision parts for the automotive heat exchanger industry • Metal cleanliness is critical for product quality and process stability • Cooperation and development betwee
Slide 137: Extruded Solutions and Rolled Products meet the automotive market demands together
Extruded Solutions and Rolled Products meet the automotive market demands together • Hydro is working globally on several battery solution projects • The battery frame for electrical vehicles is extrusion intensive and can easily reach up to 100 kg, especially for premium vehicles and SUVs • In a fi
Slide 138: Extruded Solutions key focus areas
Extruded Solutions key focus areas • Safety – considerable reduction in high-risk incidents and accidents • >10% annual EBIT growth on product mix change, simplification and cooperation • Selective growth through bolt-on acquisitions
Slide 139: Rolled Products - building on our strengths, driving a lightweight future
Rolled Products - building on our strengths, driving a lightweight future Kjetil Ebbesberg, EVP Rolled Products
Slide 140: Step forward in 2018
Step forward in 2018 Better Rolled Products one year in delay Underlying EBIT improvement YTD Q3 2018 vs YTD Q3 2017 Development YTD Q3 2018 vs YTD Q3 2017 In BNOK 0.6 526 • High-grading benefits driven by automotive 0.5 • Increased shipments despite impact from Alunorf performance 0.4 issues in Q3
Slide 141: Strong positions in rolled products market segments
Strong positions in rolled products market segments Portfolio high-grading and strong focus on quality and service as key elements for success Automotive Foil Beverage can Lithography Special products Ambition Gain No.2 position Strengthen global No. 1 Grow into No.2 position Strengthen global Stren
Slide 142: Automotive growth on track, UBC with delays but ramping up
Automotive growth on track, UBC with delays but ramping up Positive development of automotive deliveries • Automotive line 3 with significant volume ramp-up in H2-18 and on track to meet original plan during 2019 • Overall customer deliveries on plan, supported by automotive line 1 and 2 • Quality l
Slide 143: We are closing the loop with sustainable solutions
We are closing the loop with sustainable solutions • Circular economy is key for modern viable societies • Recycling of post-consumer and customer process scrap is growing • Developing scrap sorting technology e.g. for automotive recycling +30.000 tonnes 1) Recycling of post-consumer and external sc
Slide 144: Engineering the future, enabling progress
Engineering the future, enabling progress Aluminium solutions for growth in e-mobility • New solutions needed to meet future urbanization and mobility challenges • Hydro developed new electrical vehicle concept that is aluminium intensive • Collaboration between Primary Metal, Rolled Products and Ex
Slide 145: Rolled Products key focus areas
Rolled Products key focus areas • Safety performance • Production and operational reliability • Commercial excellence • Specific focus areas • Foil product portfolio • Alunorf performance • Automotive Line 3 • Used beverage can recycling line
Slide 146: Primary Metal – staying focused through challenging times
Primary Metal – staying focused through challenging times Hilde Merete Aasheim, EVP Primary Metal
Slide 147: Working on influenceable parameters to improve robustness and profitability
Working on influenceable parameters to improve robustness and profitability Smelter Power Costs USD/t 800 600 Total Business Operating Costs 400 USD/t 200 0 2 600 Hydro 2 400 Net Realization Costs USD/t 2 200 200 2 000 1 800 0 1 600 -200 Hydro 1 400 -400 1 200 Smelter Labor Costs 1 000 USD/t 800 400
Slide 148: Improvement program in 2018 impacted by Alunorte situation
Improvement program in 2018 impacted by Alunorte situation Primary Metal keeps focus on continuous improvements Primary Metal Better program progress 2018 Improvement program influenced by: In BNOK 1,0 • 50% curtailment of Albras 1,0 • Operational instability due to different alumina sources 0,9 0,8
Slide 149: On track with verifying world’s most climate and energy efficient electrolysis technology
On track with verifying world’s most climate and energy efficient electrolysis technology • Karmøy technology pilot • 48 HAL4e cells, 12.3 kWh/kg • 12 HAL4e Ultra cells, < 11.8 kWh/kg • All 60 cells in normal operation • Fine tuning of process parameters, pot tending equipment, and operational pract
Slide 150: Spin-off implementation from Karmøy technology pilot started
Spin-off implementation from Karmøy technology pilot started • Spin off elements are an integral part of improvement programs at all plants • Business cases carefully considered for each improvement step Creep ambition, in 1000 tonnes • Volume vs. energy consumption improvements part of the 200 busi
Slide 151: Husnes restart with spin-off effects
Husnes restart with spin-off effects From 3rd to 2nd quartile on CRU cost curve • Attractive business case with robust rate of return and solid annual cash contribution • Technology spin-offs from the Karmøy technology pilot • Potline B capacity increased by 13 000 tonne/year compared to pre-curtail
Slide 152: Unlocking new improvements through Industry 4.0 initiatives
Unlocking new improvements through Industry 4.0 initiatives 40 ongoing projects Robotics & Automation projects Trusted Data Layer Casthouse Soft Sensor incl. Trusted Data Layer Mobile Maintenance Worker Trusted Data Layer Carbon + Analytics Bring Your Own Device workbench improvements Digital Founda
Slide 153: Significant value creation through value added products
Significant value creation through value added products Sheet Ingot Adjustable Flexible Mould investment enabled enhanced product portfolio and shift to automotive sector products Strategy to sustain and develop portfolio In % of total sheet ingot sales 100% Automotive - Other Automotive - Body shee
Slide 154: Recycling delivers robust returns
Recycling delivers robust returns Focus on post-consumer and difficult scrap World-leading technology Average recycling RoaCE last increases scrap sources five years at 12% Scrap costs reduction (% pts of LME)* UEBIT (MNOK) URoaCE (%) 01.2016 07.2016 01.2017 07.2017 01.2018 07.2018 450 20% 0% 400 18
Slide 155: Market-driven expansion in recycling
Market-driven expansion in recycling Developing and investing in capacity and solutions Azuqueca expansion Lucé remelter upgrade Remelter at Slovalco Hydro 75R • Specifically set up to handle • Total capacity increases by • Helps maintain position as • Lowest industry carbon footprint, post-consumer
Slide 156: Primary Metal key focus areas
Primary Metal key focus areas • Safe and stable operations • Prepare Albras and Husnes restart • Sustain and improve competitive position
Slide 157: Energy – competitive sourcing and new business opportunities
Energy – competitive sourcing and new business opportunities Arvid Moss, EVP Energy & Corporate Business Development
Slide 158: Energy developments since last CMD
Energy developments since last CMD ~2.2 TWh renewable power sourcing1 Statkraft (hydro power) Blakliden (wind power) Tonstad (wind power) Overtüringen (wind power) CMD CMD 2017 2018 Suldal power Røldal-Suldal Investment in wind Build-decision made for new station upgrade dam upgrades power developme
Slide 159: The European power sector is changing
The European power sector is changing Hydro well-positioned to capitalize on structural changes Power generation Grid, market and storage Consumption Less flexible production Storage can solve some of the issues Demand flexibility becomes important Data aggregation, ownership and control New busines
Slide 160: Power generation
01 Power generation
Slide 161: Captive hydropower production of 10 TWh per year
Captive hydropower production of 10 TWh per year Power production capacity (TWh), per region and reversion year Normal annual production Sogn 10 TWh 2051-2057 1) 3.2 Telemark Røldal-Suldal 2044-2049 1) 2022 1) 0.5 3.0 3.1 No reversion Subject to reversion Bubble size = production in TWh Vigeland 0.2
Slide 162: Strategic perspective on new power generation
Strategic perspective on new power generation Hydropower Wind power Solar power Important attributes for Hydro: Low carbon footprint – Sustainabillity – Long term – Solid counterparts – Low cost 162
Slide 163: Value of Nordic wind power higher than in Germany
Value of Nordic wind power higher than in Germany Wind power analysis indicating increasing differentials Key characteristics of Nordic Statnett's long term analysis* wind power Average Basis price Achieved power price - wind power 50 • High capacity factor 47 45 • Excellent wind conditions 42 39 (-
Slide 164: Well-positioned for competitive PPA terms
Well-positioned for competitive PPA1 terms ~8.5 TWh power secured since 2014, 50% wind Market attributes, Norway & Sweden: Good wind quality + Low «cannibalization» of price at high wind production + Large wind farms, good ground conditions (lower CAPEX) + Long term PPAs for «green power» enables lo
Slide 165: Energy Consumption
02 Energy Consumption
Slide 166: Hydro’s global primary energy demand
Hydro’s global primary energy demand Spanning the entire aluminium value chain, all global regions and energy carriers Europe Power 19.8 TWh North America Natural gas 10.6 million MMBtu Power 2.2 TWh Natural gas 8.1 million MMBtu Middle East Natural gas 43.8 million MMBtu South America Power 4.8 TWh
Slide 167: Energy is a key differentiator in the aluminium industry
Energy is a key differentiator in the aluminium industry Center of energy excellence in Hydro Bauxite Alumina Primary Rolling Extrusion ~25% ~35% ~35% Energy cost* ~10% ~8% ~50% Energy business area’s • Power sourcing • Power sourcing • Power sourcing and • Power sourcing • Power sourcing contributi
Slide 168: Grid, market and storage
03 Grid, market and storage
Slide 169: Energy markets have trended upwards
0 20 40 60 80 100 120 USD/t 2015-10 2016-01 2016-04 Source: Montel, 2018 2016-07 2016-10 2017-01 2017-04 Coal API2 forward 2019 2017-07 Coal-2019 2017-10 2018-01 2018-04 2018-07 2018-10 0 5 10 15 20 25 30 2015-10 EUR/t 2016-01 2016-04 2016-07 2016-10 2017-01 2017-04 CO2 EUA forward 2019 2017-07 EUA-
Slide 170: The European power sector is changing
The European power sector is changing Hydro well-positioned to capitalize on structural changes Power generation Grid, market and storage Consumption Less flexible production Storage can solve some of the issues Demand flexibility becomes important Data aggregation, ownership and control New busines
Slide 171: The Corvus investment in a wider context
The Corvus investment in a wider context Data ownership and management even more important when sector coupling Transport sector Why invest? (current focus: maritime) • Attractive market and future returns • Hydro competence and industrial ownership should add value Local battery storage? Local batt
Slide 172: The value chain perspective
The value chain perspective Aluminum System supplier Applications Recycling components 172
Slide 173: Financials and way forward
04 Financials and way forward
Slide 174: Historical EBIT Developement
Historical EBIT Developement Strong development mainly due to higher prices Energy - Historical underlying EBIT and ROACE • Positive EBIT development on high prices MNOK ROACE • ROACE affected by increased effective tax rate 2500 20% 2000 • Expiry of legacy supply contract entered in 2008 will have
Slide 175: Energy key focus areas
Energy key focus areas • Safe and stable operations • Commercial excellence • Energy center of excellence • Develop solution to secure continued RSK production • Develop New Business portfolio
Slide 176: Hydro – We are aluminium
Slide 177: Investor Relations in Hydro
Investor Relations in Hydro Next event Fourth quarter results Stian Hasle Head of Investor Relations February 7, 2019 t: +47 97736022 e: stian.hasle@hydro.com Olena Lepikhina Investor Relations Officer t: +47 96853035 e: olena.lepikhina@hydro.com Aud Helen Halvorsen Investor Relations Assistant For