Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — 2015 Global Metals, Mining & Steel Conference
32 slides from Norsk Hydro Asa's conference presentation, 2015
Slide 1: Norsk Hydro 2015 Global Metals, Mining & Steel Conference
Norsk Hydro Svein Richard Brandtzæg 2015 Global Metals, Mining & Steel Conference (1)
Slide 2: Cautionary note in relation to certain forward-looking statements
Cautionary note in relation to certain forward-looking statements Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management’s plans, objectives and
Slide 3: A resource-rich, global aluminium company
A resource-rich, global aluminium company With robust positions across the value chain • Global provider of alumina, aluminium and Bauxite & aluminium products Alumina • Leading businesses along the value chain; raw Energy materials, energy, primary metal production, aluminium products and recycling
Slide 4: Hydro has maintained a robust financial position
Hydro has maintained a robust financial position NOK billion Net cash/(debt) 3.5 (0.3) 31-Dec-08 31-Mar-15 Adjusted net debt excl. EAI1 31-Dec-08 31-Mar-15 (10.6) (13.4) 1) Net pension liability, operating lease commitments and other. (4)
Slide 5: 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 6: Targeted improvement efforts – world class results!
Targeted improvement efforts – world class results! TRI rate 10.3 Safety 2015YTD performance at Performance industry 2.7 benchmark 2.7 2002 YTD2015 (6)
Slide 7: Market Developments
n @ = oO = roe o oO > oO ja) _ oO X — O = HYDRO
Slide 8: 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 9: 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 10: Inventory reductions driven by primary curtailments
Inventory reductions driven by primary curtailments In world ex-China Production less demand world ex-China Quarterly annualized* Inventory days World ex-China reported primary aluminium inventories Primary aluminium, in thousand tonnes 3 500 150 2 500 100 1 500 500 50 - 500 -1 500 0 Dec-08 Mar-10 J
Slide 11: 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) Improved comp. adv. China 5 000 500 1000 450 800 4 000 400 350 600 3 000
Slide 12: 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 13: 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 14: 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% 60 350 17% 50 16% 40 300 15% 30 14% 20 250 13% 10 200 12% 0 Aug 2010 Apr 2012 Nov 2013 Mar 2015 2011 2012 2013 2014
Slide 15: Hydro’s aspiration for higher value creation
Hydro’s aspiration for higher value creation (15)
Slide 16: Better
Better HYDRO
Slide 17: 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 18: 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 19: 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 in NOK million Index spot price exposure • Increase productivity and NOK 1 Bauxite rightsize organization • Stabilize performance at billion nameplate capacity 1100 • Improve
Slide 20: Industry leading margin generation in Primary Metal
Industry leading margin generation in Primary Metal Primary Metal Primary Metal Underlying EBITDA per mt (USD) Underlying EBITDA per mt (USD) 1H 2012 2H 2014 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 21: 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 22: Step-change innovation keeps us one step ahead of the competition
Step-change innovation keeps us one step ahead of the competition Rolled Products (22)
Slide 23: 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 to the World’s NOK Million 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 24: 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 25: 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 26: Bigger
Bigger HYDRO
Slide 27: 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 28: Pursuing attractive growth opportunities
Pursuing attractive growth opportunities Hydro BiW development tonnes Brands 250 000 37 277 466 647 35 30 200 000 25 150 000 20 100 000 15 10 50 000 5 Major step in automotive Body-in-White (BiW) market 0 0 2008 2014 2017 2020 • Installation of automotive line 3 lifting capacity to 200 thousand tonn
Slide 29: Greener
Greener HYDRO
Slide 30: 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 31: 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 (31)
Slide 32: Infinite Aluminium
INFINITE ALUMINIUM HYDRO
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