Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Norwegian Society of Financial Analysts, Oslo (March 2002)
82 slides from Norsk Hydro Asa's conference presentation, Mar 7, 2002
Slide 1: Presentation of Norsk Hydro ASA
1 Presentation of Norsk Hydro ASA President & CEO, Eivind Reiten at the Norwegian Society of Financial Analysts Oslo, March 7, 2002 33047_1 - 01.2002 - * 1 - Hydro Media
Slide 2: Hydro's competitive position improved
2 Hydro’s competitive position improved ● VAW acquisition - a transforming step for aluminium ● Attractive international upstream positions established for Oil and Energy ● Agri Turnaround successfully completed, Light Metals improvement program underway ● Strong improvement in financial capacity (d
Slide 3: Creating a world class aluminium company
3 Creating a world class aluminium company ● Establishing Europe's no. 1 aluminium company ● An excellent strategic fit — new company well positioned ● Accretive to EPS already in 2002 ● Successful integration the main short term priority ● Ambitious programme to realise synergies and improve Hydro'
Slide 4: Creating a “top-tier” aluminium company
4 Creating a “top-tier” aluminium company Total production, thousand tonnes, 2000 Europe Global: World Integrated Aluminium Companies 1200 1000 4500 4000 800 3500 600 3000 2500 400 2000 1500 200 1000 500 0 0 oa an us W ey r an oa W y se A lc lc ne or in A lc lc V ai A A ch V C hi A A + K + ec Pe ro
Slide 5: Agri — potential for significant value creation
5 Agri — potential for significant value creation ● Successful turnaround exceeds original targets: ■ Greatly improved market balance in Europe ■ Annual costs and manning reduced by over 30%* ■ Platform for sustainable competitive earnings ● Strengthened positions outside of Europe ● Strong performa
Slide 6: Oil and Energy — positive growth outlook
6 Oil and Energy — positive growth outlook ● 2001 production target of 415,000 boe/d. reached, average annual production growth to 2005 of 5 - 6% ● Growing natural gas sales and adding value through commercial activities ● Exciting exploration acreage secured ● Finding and development costs on track
Slide 7: Safety performance
7 Safety performance Total Recordable Injury Rate, Employees 12 month rolling average Total recordable injuries/million hours worked 25 20 15 MTC rate RWC rate 10 LTI rate 5 0 1996 1997 1998 1999 2000 2001 MTC: Medical treatment cases RWC: Restricted work cases LTI: Lost time injuries 33047_1 - 01.2
Slide 8: Share price performance — a major challenge
8 Share price performance — a major challenge NHY OSE 450 400 350 300 250 200 Annual Total Shareholder Return 1991 - 2001 13% 150 100 mar-90 mar-91 mar-92 mar-93 mar-94 mar-95 mar-96 mar-97 mar-98 mar-99 mar-00 mar-01 33047_1 - 01.2002 - * 8 - Hydro Media
Slide 9: Creating shareholder value
9 Creating shareholder value Aluminium — NOK 1.6 billion programme Performance Oil & Energy — and People lower F&D costs Performance culture Non-core units Share- holder- Portfolio Underperforming units value management Divestment target NOK 10 billion Major portfolio Transforming transactions restr
Slide 10: CROGI – development
10 CROGI – development Actual and normalized prices CROGI % 14 12,3 12 ● Normalized prices: ■ NOK/USD: 8.00 10 8,5 9 9,1 ■ Brent Blend (USD/bbl): 18 8,4 7,7 8 ■ CAN27 (USD/t): 113 8 ■ LME 3M (USD/t): 1 500 6 4 ● Target: 10% over the cycle 2 0 1997 1998 1999 2000 2001 Normalized CROGI 33047_1 - 01.20
Slide 11: Challenging to reach 2002 CROGI target
11 Challenging to reach 2002 CROGI target ● Current plans imply an expected normalised CROGI level of between 8 and 9% in 2002 ● Challenge being met by continued drive for better performance ■ Implementing an aggressive restructuring and improvement programme in Aluminium ■ Developing an attractive
Slide 12: Strategic Priorities
12 Strategic Priorities ● Forceful Light Metals improvement program and VAW integration ● Continued Agri improvements from strong base ● Promising international E&P positions to be explored ● Fast return to solid financials after VAW acquisition ● Proactive approach towards industrial solutions, inc
Slide 13: Performance and Financial Strength
Performance and Financial Strength Executive Vice President and CFO John O. Ottestad Norsk Hydro ASA
Slide 14: Creating shareholder value
14 Creating shareholder value Return on Capital and Performance asset productivity Share- Portfolio Capital discipline holder- value management Financial capacity Major portfolio restructuring 33047_1 - 01.2002 - * 14 - Hydro Media
Slide 15: VAW Transaction
15 VAW Transaction ● Total consideration is 2,645 mill Euro (21.2 Bn NOK* including net interest bearing debt of 757 mill Euro (NOK 6.1 bn) ● In addition Norsk Hydro takes over 450 mill. Euro (3.6 bn NOK) unfunded pension obligations ● Acquisition financed through cash and debt ● Subject to approval
Slide 16: VAW Financial impact on Norsk Hydro
16 VAW Financial impact on Norsk Hydro ● Pro forma 2001 EBITDA: + 8% EPS: + 1.30 NOK/share ● Estimated* debt/equity: 0.7 ● Hydro maintains emphasis on keeping A/A2 rating * Estimated after transaction 33047_1 - 01.2002 - * 16 - Hydro Media
Slide 17: Norsk Hydro and VAW combined
17 Norsk Hydro and VAW combined Pro Forma Total assets 31 Dec. 2001 Total assets Norsk Hydro + VAW Norsk Hydro 12 % 21 % 15 % 40 % 45 % 16 % 33 % 18 % Oil and Energy Aluminium Agri Other 33047_1 - 01.2002 - * 17 - Hydro Media
Slide 18: Norsk Hydro and VAW combined
18 Norsk Hydro and VAW combined Pro Forma EBITDA 2001 Norsk Hydro Norsk Hydro + VAW 8% 5% 12 % 13 % 16 % 7% 73 % 68 % Oil and Energy Aluminium Agri Other 33047_1 - 01.2002 - * 18 - Hydro Media
Slide 19: Speedy return to strong financial position
19 Speedy return to strong financial position Long-term debt/equity* illustrating expected effect of VAW acquisition 0,69 0.7 0,7 0,6 0.55 0,49 0.50 0.5 0,5 0.39** 0,4 0,37 0.27** 0,3 0,2 0,1 0 1997 1998 1999 2000 2001 After Target acq. 2003 * Long-term debt divided by shareholders' equity plus mino
Slide 20: Planned capital allocation 2002
20 Planned capital allocation 2002 Capital expenditures by business area Oil & Energy Oil and Energy* 8.5 bn. NOK Aluminium 8.0 bn. NOK Agri 2.0 bn. NOK Others 0.5 bn. NOK Other Total 19.0 bn. NOK *Excl. exploration budget of 2.4 bn. NOK Agri Aluminium* * 2002 VAW investments included. (VAW acquisit
Slide 21: Active divestment program
21 Active divestment program ● New divestment target of NOK 10 billion by end 2003 ■ Larger non-core candidates for divestment include: – Petrochemicals – KFK shareholding – VAW Flexible Packaging ● Continued divestments within core areas ■ Recent examples: – Pelican, non-core NCS licenses, Oleochem
Slide 22: CROGI — our key measure of return
22 CROGI — our key measure of return ● CROGI - Cash Return on Gross Investments: EBITDA less tax Gross invested capital ● CROGI at "normalised" prices — good indicator for: ■ Average over the cycle performance ■ Effects of internal improvement efforts ● CROGI at actual prices — good profitability in
Slide 23: CROGI performance
23 CROGI performance Actual prices Oil and Energy Aluminium Agri 16 14 12 10 8 6 4 2 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000 2001 1996 1997 1998 1999 2000 2001 2001 0 33047_1 - 01.2002 - * 23 - Hydro Media
Slide 24: Medium term CROGI outlook (normalised)
24 Medium term CROGI outlook (normalised) ● Agri — well positioned to show levels above 10% in coming years ● Aluminium — programs initiated to bring normalised CROGI to 10% by 2004 ● Oil and Energy — currently around 9%. Build-up of international production takes time ● Asset productivity improveme
Slide 25: Main financial targets
25 Main financial targets ● Cash Return on Gross Investment (CROGI*), nominal after tax 10% ● Return on new investments, real rate after tax 10% ● Dividend: Share of net income, average over the cycle 30% ● Solidity: Long term interest-bearing debt/equity 0.5 * Based on "normalised" price set to ref
Slide 26: Consolidated income statements
26 Consolidated income statements NOK million 2001 2000 Operating revenues 152 835 156 861 Operating income 21 083 28 466 Equity in net income of non-consolidated investees 566 672 Interest income and other financial income 2 847 1 747 Other income 578 3 161 Earnings before interest expense and tax
Slide 27: Hydro Oil & Energy
Hydro Oil & Energy Senior Vice President David Nunn Norsk Hydro ASA
Slide 28: Hydro Oil and Energy
28 Hydro Oil and Energy Competitive edge: ● Large operator ● Strong and innovative technology ● Commercial track record 33047_1 - 01.2002 - * 28 - Hydro Media
Slide 29: Oil and Energy 2001 delivery
29 Oil and Energy 2001 delivery Objectives CMD Actions taken December 2000 ● Snorre B, Girassol and Terra Nova Production growth ● 2001 production in line with revised forecast ● 5-6% CAGR* 2001 - 2005 International build up ● 30% awarded in Angolan block 34 ● Farm-in Gulf of Mexico and Angolan bloc
Slide 30: Improving performance in 2001
30 Improving performance in 2001 ● Maintain positive safety trend ● Maintain operating performance in first quartile ● Delivering projects on cost and schedule ● High-grading of global exploration portfolio ● Divestment of non-core licences ● Capital discipline 33047_1 - 01.2002 - * 30 - Hydro Media
Slide 31: Strong production growth
31 Strong production growth 1,000 boe/day 700 05; 5-6% 2001-20 600 CAGR 500 400 300 200 100 0 1998 1999 2000 2001E 2002E 2003E 2004E 2005E Oil; Norway and Int. Oil Norway Oil Int. Gas NCS production cut first half 2002 included 33047_1 - 01.2002 - * 31 - Hydro Media
Slide 32: International activity
32 New fields on stream 2002 - 2005 NHY share Development International activity Terra Nova 20,000 boe/day PDO Submittal Jasmin 5,000 PDO Approval/ Sanctioning Dalia 20,000 Start Production 2005 Rosa/Lirio 8,000 2005 Kharyaga 2 9,000 (phase 1-2) NCS Operator Tune 22,000 Grane 50,000 Vale 6,000 Fram
Slide 33: Reserve replacement E&P
33 Reserve replacement E&P mill boe proven reserves Reserves 2000 2 040 Reserve upgrades 99* New reserves 89 Sales, purchase and swaps (1) Production (153) Reserves 31.12.2001 2 073 Reserve replacement** 122% Reserve life oil 8 years Reserve life gas 30 years * Of which 19 is new conversion factor f
Slide 34: Reserve Replacement (%)
34 F&D costs F&D costs excl. sale & purchase 200 20 Fields 18 Year booked Reserve Replacement (%) 150 F&D costs (USD/boe) 15 Kristin, Mikkel, 2001 Sigyn, Rosa 100 13 Lirio, Jasmin 10 Snøhvit, 50 8 2002* Murzuk A, Mabruk East 5 0 Ormen Lange, 3 2003* Tyrihans, Kharyaga ph. 3 -50 0 1995 1996 1997 1998
Slide 35: International activities — 2001 main events
35 International activities — 2001 main events Russia Kharyaga Shtokman East Coast Canada Libya: 4 finds Iran Gulf of Mexico T&T Block 27 Angola 33047_1 - 01.2002 - * 35 - Hydro Media
Slide 36: 2002 — shift in exploration focus
36 2002 — shift in exploration focus Exploration - 2002E MNOK Norway International Canada GoM 2000 Angola 1500 Iran 1000 500 Norway Libya, 0 Russia, Trinidad 1999 2000 2001E 2002E & Tobago 33047_1 - 01.2002 - * 36 - Hydro Media
Slide 37: Exploration 2002 — significant wells
37 Exploration 2002 — significant wells Well expec. Location Norsk Hydro share finalised NCS Solsikke 50% 3Q 2002 Canada - Anapolis 25% 1Q 2002 Canada - Flemish pass 30% 3Q 2002 Trinidad Tobago - Catfish 19% 1Q 2002 Angola Block 34 30% 3Q 2002 GoM - 3 wells 25% 2002 Iran - Anaran 100% 3Q 2002 33047_
Slide 38: Third largest gas producer on the NCS
38 Third largest gas producer on the NCS Norsk Hydro expected natural gas production BCM ● Total Norwegian gas export 15 2010 approx. 110 BCM ● Company based sales 10 introduced ● Market development ■ Continental market driven 5 by gas to power needs ■ UK - need for imports 0 ■ New markets; Scandina
Slide 39: Ormen Lange — the most important gas discovery since Troll
39 Ormen Lange — the most important gas discovery since Troll ● Reserves: 400 bcm ● Hydro operator for the most challenging development on NCS ● Market gas at competitive costs; Target; 2 USD/mill. BTU ● Plan for development 4Q 2003 ● Production start 2007 33047_1 - 01.2002 - * 39 - Hydro Media
Slide 40: Flexibility gives value creation
40 Flexibility gives value creation ● Equity sales from NCS: 6 bcm 2002 Ormen Lange ● Marketing (mainly based on third Snorre party sourcing): 9 bcm 2002 Statfjord Gullfaks Mongstad Oseberg Troll Sture Kollsnes Bergen Heimdal Oslo Kårstø Sleipner Stavanger St. Fergus Cruden Bay Ekofisk Teesside Dorn
Slide 41: Ability to commercialise gas in a liberalising market
41 Norsk Hydro has the ability to commercialise gas in a liberalising market Emden Targeted Dutch end user Noordbroek sales in 2002: Balgzand ■ 300 end-users ■ 4.7 bill. sm3 (incl. portfolio management) Maasvlakte ■ Approx. 20% of Dutch industrial market Hydro Agri Sluiskil Hydro Sluiskil - Europe’s
Slide 42: Commercial innovation
42 Commercial innovation BCM ● Norsk Hydro natural gas sales 10 mainly based on third party 9 sourcing 8 7 ● Low capital requirement 6 ■ Trading 5 ■ Good margins: EBITDA of 4 100 MNOK 1- 3Q 2001 3 ■ Customers 2 ■ Industrial customers 1 ■ Internal consumption 0 ● Operations based in Brussels 1999 200
Slide 43: Key messages
43 Key messages ● Production growth 2001 - 2005 expected to average 5 - 6% ■ 2002 production target: 430,000 boed* ● Key exploration prospects to be tested in 2002 ● Using commercial innovation to add value to Norsk Hydro's upstream gas position ● F&D costs on track towards USD 5/bbl *Including NCS
Slide 44: Hydro Agri Turnaround and Way Forward
Norske Finansanalytikeres Forening Hydro Agri Turnaround and Way Forward Senior Vice President Hallgeir Storvik Norsk Hydro ASA Oslo, 7 March 2002
Slide 45: Hydro Agri - highlights
45 Hydro Agri - highlights ● Strong earnings improvement ● Annual costs and manning reduced by over 30%* ● Fertilizer volumes negatively affected by exceptionally wet spring in Europe ● Global marketing agreement for speciality fertilizers ● KFK: Turnaround in progress *compared to 1998 level 33047_
Slide 46: Hydro Agri EBITDA
46 Hydro Agri EBITDA NOK million Plant Nutrition KFK 2 000 Gas and Chemicals Eliminations 1 574 1 500 1 276 1 172 1 041 1 107 1 000 929 964 916 846 819 776 524 500 263 150 214 0 - 500 (309) -1 000 1998 1999 2000 2001 Accumulated 2 1998 370 11999 141 3 982 2000 4 769 2001 33324E - 02.2002 - *46 - Hyd
Slide 47: Hydro Agri Turnaround improvements
47 Hydro Agri Turnaround improvements* Annual cost Agri Operating Income Achieved Achieved savings Turnaround improvement MNOK 1999-2000 2001 compared to target by 2001 1998 level Plant Nutrition 2 065 597 2 662 - Gas and Chemicals 171 47 218 - Hydro Agri total 2 236 644 2 880** 2 400 - 2 700 Mannin
Slide 48: Many closures and divestments of non-core businesses since 1999
48 Many closures and divestments of non-core businesses since 1999 ● Plants ● Fertilizer marketing organizations ■ Immingham fertilizer production ■ Hungary ■ Landskrona fertilizer production ■ Ukraine ■ Montoir nitrate production ■ Bulgaria ■ Hurel Arc ■ Slovakia ■ Socadour ■ Rumania ■ Socofer La P
Slide 49: Large productivity improvements
49 Large productivity improvements European plants Production per employee Fixed costs per tonne* tonnes NOK 5,000 300 4,500 4,000 250 3,500 3,000 200 2,500 2,000 150 1994 1996 1998 2000 P2002 1994 1996 1998 2000 P2002 1995 1997 1999 E2001 1995 1997 1999 E2001 * Excluding non-recurring items 33047_1
Slide 50: Seizing business opportunities at the bottom of the cycle
50 Seizing business opportunities at the bottom of the business cycle Ownership share in parentheses ● Trevo, Brazil (91%) ● Kynoch, South Africa (100%) ● Philphos marketing agreement, Philippines (0%) ● SQM marketing agreement, Chile (0%) ● Qafco IV expansion and marketing agreement (25%) 33047_1 -
Slide 51: Strong leadership and focus on main value drivers
51 Strong leadership and focus on main value drivers ● Productivity ■ Productivity improvements will be our trademark ● Portfolio ■ We own assets by design, not by default ● Growth ■ Asset light strategy with focus on supply/demand balance 33047_1 - 01.2002 - * 51 - Hydro Media
Slide 52: Shareholder value - the best fertilizer performers have done well
52 Shareholder value - the best fertilizer performers have done well Average annual Total Shareholder Return* across the business cycle (1991-2000) PCS 23,4 Agrium** 17,8 Dow Chemicals 12,5 DuPont 11,5 Kali & Salz 3,9 Kemira** 3,3 0 5 10 15 20 25 Annual TSR (%) * TSR = Share price appreciation + div
Slide 53: Top quartile Hydro Agri performance in 2001
53 Top quartile Hydro Agri performance in 2001 Gross return on assets* Jan. - Sep. 2001 Kali & Salz 12,2 Hydro Agri 10,8 Kemira 10,6 DuPont 9,2 Agrium 8,8 PCS 8,7 IMC 6,9 Dow Chemicals 2,9 0 2 4 6 8 10 12 14 Percent * Gross return on assets is similar to CROGI and defined as EBITDA divided by Total
Slide 54: Unique combination of size and global presence
54 Our agri business is a unique combination of size and global presence Hydro Agri All fertilizer products Non-European sales reduce seasonality 7 25 6 Mill. tonnes products 20 Mill. tonnes fertilizer product sales 2000 5 sold 2000 15 4 3 10 2 5 1 0 0 First Second Third Fourth m ro lz C S iu PC IM
Slide 55: Strong leverage based on purchasing power
55 Strong leverage based on purchasing power Hydro Agri's fertilizer purchasing is similar to the entire imports of large countries 9,7 Brazil 9,2 China 6,5 France 4,0 India Hydro Agri 7,4 0,0 2,0 4,0 6,0 8,0 10,0 12,0 Mill. tonnes fertilizer * Products included are Urea, AN, CAN, AS, DAP, MAP, TSP,
Slide 56: Hydro Agri, the global leader in
56 Hydro Agri, the global leader in ● Ammonia - the basis for all nitrogen fertilizer ● Nitrates - the most important fertilizer in Europe ● Balanced fertilization (NPK) - serving value-added segments ● Speciality fertilizers - serving high margin cash crop markets ● Industrial applications - mainly
Slide 57: Hydro is the leading ammonia player
57 Hydro is the leading ammonia player Production capacity Trade Mill. tonnes Mill. tonnes 6 5,2 5 5 4,5 3,8 3,8 4 4 3 3 1,6 1,5 1,5 2 2 0,5 0,7 0,65 1 1 0 0 0 Hydro* Agrium PCS Kali+Salz IMC Hydro PCS Agrium IMC Trammo Mitsui Shipping capacity Maritime storage capacity ‘000 mts ‘000 mts 175 159 140
Slide 58: Leading market position in speciality fertilizers
58 Leading market position in speciality fertilizers Calcium Nitrate (CN) Potassium Nitrate (PN) Market Market share (%) share (%) 100 50 88 41 41 80 40 60 30 20 18 40 20 10 12 0 0 Hydro Others SQM/ Haifa Others Hydro Calcium Nitrate and Potassium Nitrate constitute approximately 65% of total specia
Slide 59: Hydro Agri's global leadership strategies
59 Hydro Agri's global leadership strategies Ammonia ■ Grow business by playing on strengths Nitrates ■ Maintain market share in Europe Balanced fertilization ■ Growth in cash crop market (NPK) Speciality fertilizers ■ Develop alliance with SQM Selected industrial applications ■ Develop new products
Slide 60: Hydro Agri: Key messages
60 Hydro Agri: Key messages ● Agri Turnaround targets exceeded ● Unique business model based on global strengths ● Strong platform for future value creation ● Good industry performers deliver competitive shareholder returns 33047_1 - 01.2002 - * 60 - Hydro Media
Slide 61: Ambitious financial targets
61 Ambitious financial targets ● Have an average profitability across the cycle which is ■ higher than Hydro's general requirement of 10% CROGI ■ in the best quartile of chemical industry peers ■ leading among agri companies ● Pursue an asset light growth strategy ● Make good profits at bottom of bu
Slide 62: Hydro Aluminium
62 Hydro Aluminium Senior Vice President Arvid Moss Hydro Aluminium Oslo, March 7, 2002 33047_1 - 01.2002 - * 62 - Hydro Media
Slide 63: Milestones 2001
63 Milestones 2001 ● VAW -acquisition ● Technal Building Systems ● Magnesium restructuring ● Sunndal-expansion ● Expansion Søral, Slovalco, Alunorte ● Remelters in Spain & Texas ● Cost-reduction programmes initiated 33047_1 - 01.2002 - * 63 - Hydro Media
Slide 64: The industry structure
64 The industry structure Total consumption of aluminium, Western World Rolled Cast Extruded Other Products products products 5% 50% 20 % 25% Degree of Casting integration: 10% 1000 mt Degree of Rolling integration, 80% 1000 mt Degree of Extrusion integration, 50% 7000 7000 6000 6000 5000 5000 Indep
Slide 65: Hydro Light Metals and VAW (2000 - figures)
65 Hydro Light Metals and VAW (2000 - figures) Hydro Light Metals VAW Gross revenues 6,400 mill Euro 3,700 mill Euro EBITDA 680 mill Euro 450 mill Euro Flexible Other pack. Rolled 10 % 13 % products 5% Castings Metal 7% 34 % Extrusion Metal 27 % 58 % Extrusion Rolled 6% products 40 % Hydro Light Met
Slide 66: The new entity: Hydro Aluminium Pro Forma 2000 combined
66 The new entity: Hydro Aluminium Pro Forma 2000 combined Flexible pack. Other Asia/Pacific Other Other Europe 4% 2% 7% 12 % 9% Norway 2% North America 16 % Rolled products Metal 18 % 49 % EU(ex. Germany) 40 % Germany 21 % Extrusion 20 % Sum sector gross revenues Sum Business Area’s external sales
Slide 67: Hydro – VAW: An attractive combination
67 Hydro – VAW: An attractive combination Attractive financials Innovative global force More value for customers Significant synergies and value creation Rapid integration 33047_1 - 01.2002 - * 67 - Hydro Media
Slide 68: Creating a “top-tier” company
68 Creating a “top-tier” company Total production, thousand tonnes, 2000 Europe Global: World Integrated Aluminium Companies 1200 1000 4500 4000 800 3500 3000 600 2500 400 2000 1500 200 1000 500 0 0 W an y r oa W oa an ey us se ne A A lc lc lc lc in or ai V hi +V A A A A ch K C + ec ro ro Pe P yd yd
Slide 69: A full range aluminium company
69 A full range aluminium company Global Volumes 2000 Hydro VAW LT Contracts Alumina* Hydro remelt and 3rd party** Primary production Downstream 0 500 1000 1500 2000 2500 3000 Thousand tonnes * Aluminium equivalent. VAW metallurgical alumina only ** Remelt + Hydro non-equity primary: Contracts to se
Slide 70: Leadership in global market segments
70 Leadership in global market segments Foil Litho Building systems Magnesium alloys Structures Heat Transfer Engine castings 33047_1 - 01.2002 - * 70 - Hydro Media
Slide 71: Strong market positions
71 Strong market positions Market shares, per cent Hydro Combined Hydro VAW VAW position Primary metal 3* 2.5 5.5 #3 production (Global) Rolled products Europe 4 19 23 #2 Extrusion Europe** 15 0 15 #1 Extrusion US 6 3 9 #3 * Not including 3rd party sourcing & remelting ** Soft alloys 33047_1 - 01.20
Slide 72: Combining positions and competencies within Rolled Products
72 Combining positions and competencies within Rolled Products VAW: Efficient, high Hydro: Niche focus and volume capacity differentiating technology - Positioned in high value and - Recycling based products attractive markets - Continuous casting - Has the world benchmark plants in thin foil and li
Slide 73: Synergy & cost improvement actions 2002 - 2003
73 Synergy & cost improvement actions 2002 - 2003 Effect approx. 1.6 Bn NOK in 2004 EBITDA impact 2004 Million NOK Key drivers Operating synergies 650 Procurement & logistics Best practice sharing operations Utilization of recycling Capacity optimization Streamlining SG&A 950 Cost & manning reductio
Slide 74: Going Forward
74 Going Forward 33047_1 - 01.2002 - * 74 - Hydro Media
Slide 75: Recovery in downstream shipments in Europe is expected
75 Recovery in downstream shipments in Europe is expected Est. European rolled products shipments Est. European extrusion shipments annual annual change change (%) 5 (%) 5 4,5 4 3,8 3 2,5 3 1 1 1 1 -1 -1 -1,5 -3 -3 -5 -5 -4 1995-2000 2001 2002 2003-2005 1995-2000 2001 2002 2003-2005 Source: EAA, CRU
Slide 76: Effect of slowdown in the US has been extreme
76 Effect of slowdown in the US has been extreme Extrusion shipments 2000 -21% 69 - 2000: 2.7% growth p.a. 000 tpa -20% 1500 -25% 1000 500 0 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2002E 33047_1 - 01.2002 - * 76 - Hydro Media
Slide 77: Clearly weaker financial performance in 2001
77 Clearly weaker financial performance in 2001 "CROGI"- proxi" % = EBITDA less tax*/ Gross investment 10 % 9% 8% 7% 6% 5% 4% Hydro Aluminium Pechiney Alcoa Alcan 3% 1997 1998 1999 2000 2001 Source : Hydro *assumes standard taxrate of 30% for all companies 33047_1 - 01.2002 - * 77 - Hydro Media
Slide 78: Substantial financial effects of main programmes 2002-2003
78 Substantial financial effects of main programmes 2002-2003 (full effect 2004) Mill.NOK Cost reductions EBITDA - investment projects 2500 Income increase Fixed and variable 2000 Fixed cost 1500 1000 500 0 Magnesium Hydro/VAW Investment Porsgrunn Optimize/SG&A Projects* * Projects : Including appro
Slide 79: The way forward
79 The way forward ✔ Forceful integration of VAW and Technal ✔ Realise significant short term improvement potentials ✔ Successful restructuring of magnesium ✔ Execution of large projects 33047_1 - 01.2002 - * 79 - Hydro Media
Slide 80: Organisational structure and first level management identified
80 Organisational structure and first level management identified (effective from after closing) CO-CEO Integration Hydro Aluminium Integration Team Helmut Burmester CEO: Jon-Harald Jon-Harald Nilsen Oslo Support functions Primary Metal Rolled Extrusions Automotive North Flexible Metal Products Prod
Slide 81: Substantial reduction in manning
81 Substantial reduction in manning Manning 1800 1600 Hydro/VAW SG&A Magnesium 1400 1200 1000 800 600 400 200 0 Mid 2002 End 2002 End 2003 Expected effect approx. 1.2 - 1.4 bn NOK Net financial effect in 2002 will be negative due to upfront restructuring costs 33047_1 - 01.2002 - * 81 - Hydro Media
Slide 82: Safe harbour statement
82 Safe harbour statement In order to utilize the "Safe Harbor" provisions of the United States Private Securities Litigation Reform Act of 1995, Hydro is providing the following cautionary statement: This presentation contains certain forward-looking statements with respect to the financial conditi
Norsk Hydro — Norwegian Society of Financial Analysts, Oslo (March 2002) on 6ix