Norsk Hydro ASA · OSL:NHY
Norsk Hydro ASA — Investor Presentation (February 2009)
99 slides from Norsk Hydro ASA's investor presentation, February 2009
Slide 1: Investor presentation
Investor presentation February 2009 (1)
Slide 2: Table of contents
Table of contents Company overview 3 Forward-looking statements Certain statements included within this announcement contain forward- looking information, including, without limitation, those relating to (a) Industry & market outlook 10 forecasts, projections and estimates, (b) statements of managem
Slide 3: Company overview
Company overview (3) QQ) HYDRO
Slide 4: A resourceful aluminium company
A resourceful aluminium company Aluminium ● 23 000 employees Metal ● Operations in more than 40 countries ● Turnover Aluminium ● 2006: NOK 99 billion Products ● 2007: NOK 94 billion ● 2008: NOK 89 billion ● Underlying EBIT ● 2006: NOK 10.2 billion Energy ● 2007: NOK 9.9 billion ● 2008: NOK 6.0 billi
Slide 5: Hydro's value proposition
Hydro’s value proposition ● Solid long-term fundamentals for aluminium ● Industry-leading captive power position ● World-class upstream growth projects ● Leading positions in attractive extrusion segments ● Competence in metallurgy and project execution – basis for solar growth ● Strong operational
Slide 6: Strong aluminium industry position
Strong aluminium industry position Integrated Emerging Market Mining & Metal Manufacturing 7,925 Alumina Primary Rolled 5,878 Extrusions Production in 1 000 tonnes* Other 4,680 4,494 4,049 3,990 3,151 2,327 2,317 1,769 1,489 1,237 1,192 1,162 1,030 985 910 900 639 625 598 260 328 230 114 163 Alcoa H
Slide 7: Hydro in the aluminium value chain
Hydro in the aluminium value chain Primary aluminium production Aluminium in products, recycling Bauxite/ Primary Metal Semi alumina Energy aluminium products fabrication Remelt 65% equity in Solid long-term 1.75 mill. mt/year 2.9 mill. mt/year 1.6 mill. mt/year 502 000 ton alumina coverage of power
Slide 8: Hydro improves cost position through closures and Qatalum
Hydro improves cost position through closures and Qatalum Business operating cash cost USD/tonne 3400 Dynamic cost curve 3000 ● Falling input costs ● Production curtailments 2600 and capacity closures 2200 1800 1400 Accumulated tonnage (1 000 tonnes) 1000 0 5000 10000 15000 20000 25000 30000 35000 4
Slide 9: Capital employed – upstream focus
Capital employed – upstream focus Energy Bauxite & Alumina Automotive 6% NOK million Dec 31, 2008 11% 2% Bauxite & Alumina 6 174 Primary Aluminium 25 654 Commercial 4 970 Extrusion Other and eliminations 47 11% Aluminium Metal 36 845 Rolled Products 9 790 Extrusion 6 253 Automotive 1 405 Other and e
Slide 10: Industry & market outlook
Industry & market outlook (10)
Slide 11: Healthy long term demand for aluminium
Healthy long term demand for aluminium ● Properties lead to increased market share ● Aluminium intensive urbanisation and infrastructure ● Climate challenge – aluminium as part of the solution ● Recyclability more important with high energy price ● Beyond current downturn ● Return to trend growth of
Slide 12: Unprecedented fall in aluminium price
Unprecedented fall in aluminium price USD per tonne Primary aluminium LME USD/tonne NOK/tonne 3 400 3 200 Q4 2008 average 1 873 12 755 3 000 Q4 2008 end 1 497 10 397 2 800 Q3 2008 average 2 845 15 202 2 600 Q3 2008 end 2 425 14 210 2 400 2 200 Average 2008 2 621 14 791 2 000 1 800 Average 2007 2 661
Slide 13: Declining sales volumes
Declining sales volumes Hydro Q4 2008 vs Q3 2008 Extrusion ingot Sheet ingot Foundry alloys Wire rod Standard ingot 11% -17% -19% -21% -29% Rolled Products Extrusion Eurasia Building Systems Extrusion Americas Automotive Structures Precision Tubing 0% -11% -18% -20% -24% -33% *Excluding Alumafel and
Slide 14: Rapidly increasing inventories
Rapidly increasing inventories USD per tonne Days 3 500 110 100 3 000 90 2 500 80 70 2 000 60 50 1 500 40 1 000 30 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Aluminium inventories (days of consumption)* LME 3 month average days *IAI and LME reported sto
Slide 15: China remains balanced
China remains balanced 1 000 tonnes Primary / alloyed Semis Fabricated Scrap Total ● Export taxes on metal and 250 low value-added products 200 ● 15% export tax on pure and alloyed primary aluminium Net import 150 100 50 ● Majority of export to Asia 0 ● Mainly semis and fabricated (50) (100) ● China
Slide 16: Significant capacity curtailments
Significant capacity curtailments Announced curtailments in percent of 2008 production 35% 31% 30% 25% 23% 21% 20% 19% 15% 11% 10% 10% 5% 0% C halco Hydro C entury Alcoa UC Rusal Rio Tinto (16)
Slide 17: Announced capacity curtailments
Announced capacity curtailments 11% 3% Alcoa China ~3.5 million tonnes 6% C entury Rest of world ~3.2 million tonnes Hydro 6% Rio Tinto Total ~6.7 million tonnes UC Rusal 52% Other 8% C hina 14% World production and consumption (excl. China), annualized 27 000 Production C onsumption 26 000 25 000 ~
Slide 18: Transport and construction related areas are hit hard by the economic downturn
Transport and construction related areas are hit hard by the economic downturn Share of semis consumption ● Transportation, construction and housing is weak “all over” C onsumer Electrical 11% durables 6% ● Engineering markets follow Packaging 9% construction and transport into Machinery & equipment
Slide 19: Commodity prices weakening
Commodity prices weakening Crude oil – Brent (USD/bbl) Coal – CIF ARA (USD/mt) Petroleum coke FOB USG (USD/tonne) 160 245 550 140 210 500 120 175 450 100 140 400 80 105 350 60 70 300 40 35 250 20 0 200 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Power – EEX Germany (EU
Slide 20: Hydro's cash cost to decline
Hydro’s cash cost to decline Cost* in USD per tonne indexed, 2008=100 ● Production curtailments at high-cost smelters ● Input costs decreasing into 2009 ~(30)% ● Alumina 2-3 months lag ● Carbon costs at high level into first half, decreasing in second half 2008 Second half 2009 run rate Alumina Powe
Slide 21: Climate policies – effects on aluminium
Climate policies – effects on aluminium Demand-effect ● Changed semi’s and end-product prices ● Aluminium vs. steel and plastics when CO2 emissions get a price tag ● Regulatory measures Supply – effects on production cost and long-term prices ● Cost per tonne CO2 increases over time ● Direct carbon
Slide 22: 2009 outlook
2009 outlook ● Limited forward visibility ● Demand expected to remain depressed in 2009 ● Further curtailments expected ● Input costs will come further down (22)
Slide 23: Aluminium Metal
Aluminium Metal (23) QQ) HYDRO
Slide 24: Aluminium Metal
Aluminium Metal ● Strong focus on operational performance and improvements ● Maintain competitive cost position ● Leverage strong market and customer position for metal products ● Leading in technology – HAL4e development ● Mature and realize growth projects in metal and alumina (24)
Slide 25: Strong growth in alumina production
Strong growth in alumina production Hydro’s equity alumina production Alunorte, Brazil 1 000 tonnes ● World’s largest alumina refinery ● Third expansion completed in 2008 ● Capacity: 6.3 million tonnes of 3 500 alumina (100%) ● 34% owned by Hydro 3 000 2 500 Alpart, Jamaica 2 000 ● Currently operati
Slide 26: Well covered with alumina
Well covered with alumina CAP positions Hydro for further growth in metal Alumina coverage Percent 140% 120% LME-linked contracts 100% 80% Equity from CAP* 60% 40% Equity 20% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 *CAP is illustrated with the first stage plus two expansi
Slide 27: Aluminium Metal Production System
Aluminium Metal Production System AMPS is not a project – it’s a way of operating! A systemized method for development of operational Standardized work processes excellence and continuous improvements ● Product quality ● Cost ● Safety Defined customer and supplier Positive results relationships ● Pr
Slide 28: Strong performance culture
Strong performance culture TRI per million hours work1) Kg CO2e / kg aluminium2) 10 6 8 5 4 6 3 4 2 2 1 0 0 2005 2006 2007 2008 1990 2005 2006 2007 2008 2010E kwh / Kg aluminium3) Specific emissions kg fluorine / tonne aluminium4) 16.0 1.2 15.0 1.0 0.8 14.0 0.6 13.0 0.4 12.0 0.2 11.0 0.0 1993 1998 2
Slide 29: Aluminium Metal production facilities
Aluminium Metal production facilities North America Europe: ● 115 000 mt smelting capacity in 1 smelter ● 1 390 000 mt primary smelting capacity in 8 smelters ● 316 000 mt remelt capacity in 5 remelters ● 368 000 mt remelt capacity in 6 remelters Middle East: ● Qatalum 1 smelter under construction (
Slide 30: Casthouse products add value
Casthouse products add value Leading supplier in Europe – growing globally Own production Primary foundry alloys Extrusion ingot Remelting & recycling Wire rod Sheet ingot Commercial agreements Casthouse (30)
Slide 31: Develop technology to fulfill ambitions
Develop technology to fulfill ambitions 2007 2009 2020 HAL300 technology HAL4e technology Beyond HAL4e ● Low diffuse emissions ● Improved energy efficiency ● Zero PFC concept ● Good working environment ● Benchmark GHG ● Simpler CO2 capture ● SU4, Qatalum ● Prepared for CO2 ● New materials and concen
Slide 32: Qatalum on target
Qatalum on target ● 60% complete by end-2008 ● 16 300 workers by end-2008 ● On target for scheduled start-up 2009/2010 ● First decile position on cash cost curve (32)
Slide 33: Qatalum facts
Qatalum facts Capacity Investment ● Smelter: 585 000 tonnes per year ● Estimate ~USD 5.6 billion (100%) ● 704 cells in 2 double-lined potrooms ● Satisfactory project economics at LME 1 900 USD/tonne ● Anode plant and cast houses ● Engineering Procurement Construction (EPC) contract ● 1 250 MW power
Slide 34: Qatalum site layout
Qatalum site layout Mesaieed Industrial City Port Cast house Pot lines Power Plant Carbon (34)
Slide 35: Qatalum: well positioned to serve all major markets
Qatalum: well positioned to serve all major markets Qatar Hydro off-take agreement for 100% of Qatalum products ● First metal by end of 2009 ● Building up to a sales volume to ~600 000 tonners per year through 2010 ● Targeting markets in Asia, Europe and the U.S. ● Product focus: extrusion ingot, pr
Slide 36: Aluminium Products
Aluminium Products (36) QQ) HYDRO
Slide 37: Aluminium Products
Aluminium Products ● Extrusion and Building Systems – build on proven business concept, selective growth in Europe, Middle-East and Asia ● Rolled Products – focus on margin management and cash generation (37)
Slide 38: Distinct businesses with leading positions
Distinct businesses with leading positions Diverse markets – each with strong Hydro presence Rolled Products Extrusion Automotive (49% of revenues) (40% of revenues) (11% of revenues) Rolled Products Extrusion Eurasia Precision Tubing Extrusion Americas Automotive Structures Building Systems Reporti
Slide 39: Rolled products consumption
Rolled products consumption Falling demand in main markets1) Western Europe North America Asia Pacific Million tonnes Million tonnes Million tonnes 7 7 15% 7 15% 15% 13% 13% 13% 6 6 6 11% 11% 11% 5 9% 5 9% 5 9% 7% 7% 7% 4 4 5% 4 5% 5% 3 3% 3 3% 3 3% 1% 1% 1% 2 2 -1% 2 -1% -1% -3% -3% 1 -3% 1 1 -5% -
Slide 40: Main products and applications
Main products and applications Rolled Products, 4 strong business units Foil ● Flexible packaging and technical applications Litho ● Offset plates for the printing industry Packaging & Building ● Cans, packaging and architecture Automotive, Heat Exchanger & General Engineering ● Transport, heat exch
Slide 41: Extruded products consumption
Extruded products consumption1) Falling demand in Europe, American demand still depressed Europe North America Million tonnes % growth (RHS) Million tonnes Million tonnes 3.5 11% 3.5 11% 3.0 7% 3.0 7% 2.5 3% 2.5 3% 2.0 -1% 2.0 -1% 1.5 -5% 1.5 -5% 1.0 -9% 1.0 -9% 0.5 -13% 0.5 -13% 0.0 -17% 0.0 -17% 2
Slide 42: Main products and applications
Main products and applications Innovative solutions Creative Technology TRIANGEL Germany The new stairway system SANITEC OTIS (42)
Slide 43: Building Systems
Building Systems Hydro the market leader in Europe, worldwide presence CHELSEA Customer INTERCOM, NY CHELSEA Customer INTERCOM, NY DIQUE IV – Puerto Madero Larnaka Airport, Cyprus Foch 94, Beirut Q-Tower, Manila (43)
Slide 44: Development in energy efficiency
Development in energy efficiency Reducing energy use in buildings InventSkin® multiple layer façade concept ● Several energy-efficiency functions ● Reduces primary energy and CO2 emissions ● Cooperation between Hydro building Systems and Ascent Solar (44)
Slide 45: Automotive applications
Automotive applications Global leadership in Precision Tubing Structures in a leading position in crash management systems ● Bumper beams ● Crash boxes ● Longitudinals ● Windshield frames ● Sub frame components ● Add-on frames/solutions (45)
Slide 46: Energy
(46) QQ) HYDRO
Slide 47: Energy
Energy ● Expand solid captive power position ● Long-term power sourcing at predictable costs ● Solar growth based on competence in metallurgy and project execution (47)
Slide 48: Strong power position
Strong power position – self-generated and renewable energy sources Share of self-generated power *) Share of renewable energy origin Percent Percent 50% 80% 45% 70% 40% 60% 35% 50% 30% 25% Industry avg 40% 2007 **) 20% 30% 15% 20% 10% 10% 5% 0% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2
Slide 49: Long-term power sourcing at competitive prices
Long-term power sourcing at competitive prices Indexation of power supplies ● Power consumption ~26 TWh in Percent Metal in 2008 100% 90% 80% ● Self-generation and long-term 70% contracts ensures predictability 60% 50% 40% ● Limited commodity exposure 30% ● Indexation to LME and coal with time- 20%
Slide 50: Developing Norwegian hydropower assets
Developing Norwegian hydropower assets Development potential Normal production capacity per region and terms ● 0.5 – 1 TWh ● Utilizing existing concession areas 3.0 0.5 and infrastructure Telemark ● Investment NOK 1.2 – 2.5 billion 2044- from 2011 onwards No reversion 2049 ● Normal production today
Slide 51: Power portfolio management
Power portfolio management – significant volatility in price and volume Quarterly production and spot price ● Norwegian power portfolio TWh NOK/MWh optimized versus market 3.5 550 500 ● Production and market prices 3.0 450 strongly impacted by hydrological 400 conditions 2.5 350 ● ”Dry” versus ”wet”
Slide 52: Nordic power market – forward curves
Nordic power market – forward curves NOK/MWh 650 600 550 500 450 400 350 300 250 200 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 End Q4 2006 End Q4 2007 End Q1 2008 End Q2 2008 End Q3 2008 End Q4 2008 (52)
Slide 53: Solar
Solar Industrial ambitions within Solar NorSun (18%) – mono-crystalline wafers ● Total investments NOK 400 million ● Hydro largest industrial owner ● 155 MW production on Årdal, started 2008 ● Seeking polysilicon production opportunities Ascent Solar (35%) – thin-film ● Total investments NOK 260 mil
Slide 54: Secured opportunities across the value chain
Secured opportunities across the value chain Investments of around NOK 800 million Polysilicon Ingot Wafer Cell Module System/ Installation HyCore (49%) NorSun (18%) Hydro Building Ascent (35%) Systems Metallurgy Industrialization Internal synergies / building systems (54)
Slide 55: Fourth quarter results 2008
Fourth quarter results 2008 (55)
Slide 56: Highlights
Highlights Underlying EBIT, NOK million 2 883 2 886 2 686 2 032 1 699 1 619 1 577 1 490 868 2007 2008 ● Result in line with Q3 ● Solid operational performance ● Higher realized aluminium prices, but continued input cost pressure ● Dramatic decline in aluminium market price and order intake ● Decisiv
Slide 57: Aluminium Metal
Aluminium Metal Primary aluminium Alumina Remelt 1 000 tonnes 1 000 tonnes (11)% 1 000 tonnes (23)% (18)% 2 000 2 800 1 200 ~ 2 700 1 750 2 100 ~ 2 400 ~ 1 100 1 500 900 1 350 ~ 900 1 000 1 400 600 500 700 300 0 0 0 2008 Going forward 2008* Going forward 2007 2008 Reduced primary aluminium productio
Slide 58: Aluminium Products
Aluminium Products Average full time employee equivalents 10 000 (2 200) / (14%) 8 000 6 000 4 000 2 000 0 Q2 2008 Q4 2008 Going forward* Extrusion Rolled Products Automotive ● Manning reductions ● Inventory reduction ● Procurement initiatives ● Capital expenditures reduced by 50% ● Capitalize on fa
Slide 59: Key financials
Key financials Year Year NOK million 2008 2007 Revenue 88 643 94 316 Underlying EBIT 6 009 10 153 Items excluded from underlying EBIT (4 815) (1 128) Reported EBIT 1 194 9 025 Financial income/(expense) (5 026) 3 208 Income from continuing operations before tax (3 832) 12 233 Income tax expense 565
Slide 60: Items excluded from underlying EBIT
Items excluded from underlying EBIT Year Year NOK million Q4 2008 Q3 2008 Q4 2007 2008 2007 Underlying EBIT 868 1 490 1 699 6 009 10 153 Unrealized effects power contracts 1 481 1 038 (666) (768) (928) Unrealized LME and other derivative effects (2 249) (185) (96) (1 434) 6 Metal effect, Rolled Prod
Slide 61: Bauxite & Alumina
Bauxite & Alumina Key figures Q4 operating results Q4 Q3 Q4 ● Alunorte 3 expansion at full production 2008 2008 2007 ● Lower alumina price Alumina production, kmt 684 589 541 Alunorte, NOK million 1) 225 126 53 ● Lower energy costs Other, NOK million (65) (31) (25) ● Positive hedge effect in Alunort
Slide 62: Primary Aluminium
Primary Aluminium Key figures Q4 operating results Q4 Q3 Q4 ● Higher realized LME price in NOK 2008 2008 2007 Primary production, kmt 442 439 439 ● Increased carbon costs Total casthouse production, kmt 494 563 539 ● Reduction in casthouse volumes Total sales volumes, kmt 460 544 516 ● Inventory wri
Slide 63: Commercial
Commercial Key figures Q4 operating results Q4 Q3 Q4 ● Sharp drop in sales leading to remelt 2008 2008 2007 production cut Remelted production, kmt 97 121 153 ● Inventory write-down of NOK 156 million Total metal products sales, kmt 610 723 753 Underlying EBIT, NOK million (79) (147) 105 ● Positive
Slide 64: Rolled Products
Rolled Products Key figures Q4 operating results Q4 Q3 Q4 ● Shipments sharply down, except high 2008 2008 2007 value-added lithographic products External sales volumes, kmt 213 240 246 ● Firm margins Underlying EBIT, NOK million 89 175 (31) Underlying EBIT Outlook NOK million 562 652 ● Continued mar
Slide 65: Extrusion
Extrusion Key figures Q4 operating results Q4 Q3 Q4 ● Volumes significantly down, beyond 2008 2008 2007 seasonal decline External sales volumes, kmt 103 122 117 ● Continued solid results from Building Underlying EBIT, NOK million (88) 239 179 Systems ● US operations impacted by inventory impairments
Slide 66: Automotive
Automotive Key figures Q4 operating results Q4 Q3 Q4 ● Volume down more than 30% 2008 2008 2007 External sales volumes, kmt 18 26 29 ● Results remain unsatisfactory Underlying EBIT, NOK million (235) (92) (75) Underlying EBIT Outlook NOK million (67) (326) ● No signs of recovery in automotive 57 mar
Slide 67: Energy
Energy Key figures Q4 operating results Q4 Q3 Q4 ● High spot prices 2008 2008 2007 ● High production and high net spot sales Power production, GWh 2 813 2 677 2 321 Net spot sales, GWh 1 130 1 233 748 Southern Norway spot price (NO1), 433 403 338 NOK/MWh Underlying EBIT, NOK million 592 475 341 Unde
Slide 68: Return on capital
Return on capital Underlying RoaCE Hydro Aluminium Metal Aluminium Products Energy 23.1% 22.3% 21.2% 20.2% 16.2% 16.3% 14.5% 7.4% 6.8% 5.8% 4.6% 4.5% 2006 2007 2008 2006 2007 2008 2006 2007 2008 2006 2007 2008 Capital employed – December 31, 2008 (NOK billion) 50.6 36.8 16.1 3.5 (68)
Slide 69: Cash flow development
Cash flow development Operations negatively affected by realized NOK billion 2008 losses on USD hedging Operations 2.9 Investments * (8.8) Main growth investments in 2008 Divestments 5.8 ● Qatalum NOK 3.1 billion ● Alunorte NOK 0.5 billion Dividends and share buybacks (6.5) ● Alumafel NOK 0.5 billio
Slide 70: Pensions
Pensions December 31, December 31, Weighted average December 31, December 31, NOK million 2008 2007 assumptions at end of year 2008 2007 Projected benefit obligation (23 440) (20 584) Discount rate 4.7% 5.0% Fair value of plan assets 12 386 15 579 Expected return on plan assets 5.7% 6.3% Termination
Slide 71: Financial position
Financial position No interest-bearing debt at end of 2008 Net cash/(debt) in NOK billion 12.8 10.8 Credit facilities 8.7 ● ~NOK 12 billion (USD 1.7 billion) in a multi- 6.7 currency revolving facility maturing in 2014 3.5 ● ~NOK 1.3 billion short-term ● Currently fully undrawn Q4 2007 Q1 2008 Q2 20
Slide 72: Preserve financial flexibility
Preserve financial flexibility Reduce capital expenditures Capital expenditures, NOK billion ● 2008-2009: ex-Qatalum spending reduced 40% ● 2009-2010: ex-Qatalum spending 12.3 ~11.5 reduced 15% Decisive measures implemented – cash focus ● Cost-cutting ● Production curtailment 6.0 ● Procurement initi
Slide 73: Priorities in 2009
Priorities in 2009 ● Proactive corrective measures ● Production curtailments ● Cost reductions and margin management ● Working capital and counter party risk ● Cash focus – maintain financial flexibility ● Operational excellence ● Qatalum execution (73)
Slide 74: Financial policy
Financial policy (74) QQ) HYDRO
Slide 75: Financial policy
Financial policy Maintain investment-grade rating Dec 31, Dec 31, NOK billion 2008 2007 ● Currently: BBB (S&P), Baa1 (Moody’s) Cash and cash equivalents 3.3 9.3 ● Competitive access to capital and important Short-term investments 1.6 2.7 for Hydro’s business model Short-term debt (1.2) (1.0) Long-te
Slide 76: Hedging policy
Hedging policy Hydro to remain exposed to LME prices ● Partly natural hedge through alumina contracts and power contracts Operational LME hedging ● Three months forward ● Managing customers’ pricing ● Marked-to-market valuations of positions result in unrealized gain/losses Currency exposure, mainly
Slide 77: Price and currency sensitivities
Price and currency sensitivities Aluminium price sensitivity +/- 100 USD per tonne NOK/USD sensitivity +/- 0.1 NOK 900 850 200 800 140 700 650 100 600 100 500 400 0 300 EBIT Net income 200 100 0 0 EBIT Net income Financial items Net income ● Annual sensitivities -100 ● Aluminium price sensitivity is
Slide 78: Revenue impact of aluminum price / Input commodities
Revenue impact of aluminum price Bauxite & Alumina Primary Aluminium Alumina price to Primary Aluminium Operational LME hedging ● ~13% of 3-month LME price per tonne alumina ● Realized price lags 3-month LME price by ~3-4 ● ~One month lag months Input commodities Bauxite & Alumina Primary Aluminium
Slide 79: Underlying income
Underlying income Q4 2008 NOK million Reported income Adjustments Underlying income Aluminium Metal (1 725) 2 160 435 Aluminium Products (2 946) 2 706 (239) Energy 276 315 592 Corporate and other 1 288 (1 207) 81 Total EBIT (3 106) 3 975 868 Financial income (expense), net (4 487) 4 629 142 Income (
Slide 80: Underlying income
Underlying income Q3 2008 NOK million Reported income Adjustments Underlying income Aluminium Metal 1 692 (760) 932 Aluminium Products (288) 610 322 Energy 515 (39) 475 Corporate and other 495 (734) (239) Total EBIT 2 414 (924) 1 490 Financial income (expense), net (1 980) 2 015 35 Income continuing
Slide 81: Underlying income
Underlying income Q4 2007 NOK million Reported income Adjustments Underlying income Aluminium Metal 1 194 139 1 333 Aluminium Products (326) 399 74 Energy 376 (35) 341 Corporate and other (907) 858 (50) Total EBIT 338 1 361 1 699 Financial income (expense), net 131 (74) 57 Income continuing operatio
Slide 82: Reported and underlying results
Reported and underlying results Hydro Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Year Year Year NOK million 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2006 2007 2008 Reported EBIT 3 111 2 697 2 056 (664) 3 672 3 001 2 013 338 1 179 708 2 414 (3 106) 7 200 9 025 1 194 Underlying EBIT 2 455
Slide 83: Items excluded from underlying results
Items excluded from underlying results 2008 NOK million Q1 2008 Q2 2008 Q3 2008 Q4 2008 2008 Unrealized derivative effects on currency contracts (Alunorte) Bauxite and Alumina (16) (106) 203 271 352 Unrealized derivative effects on LME related contracts (Alunorte) Bauxite and Alumina 83 (8) (134) (3
Slide 84: Items excluded from underlying results
Items excluded from underlying results 2007 NOK million Q1 2007 Q2 2007 Q3 2007 Q4 2007 2007 Equity accounted units – Monetary adjustments Alunorte Bauxite & Alumina (33) (64) (35) (35) (167) Equity accounted units - unrealized (gains)/losses on LME contracts Alunorte Bauxite & Alumina (13) 40 (108)
Slide 85: Operating segment information
Operating segment information Underlying EBIT Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Year Year Year NOK million 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2006 2007 2008 Bauxite & Alumina 92 274 288 244 257 298 100 27 10 70 93 160 898 681 334 Primary Aluminium 1 621 1 966 1 714 1 351 1
Slide 86: Operating segment information
Operating segment information Underlying EBITDA Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Year Year Year NOK million 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2006 2007 2008 Bauxite & Alumina 97 278 293 249 262 302 104 31 14 74 98 166 917 699 352 Primary Aluminium 2 072 2 407 2 161 1 913
Slide 87: Operating segment information
Operating segment information EBIT Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Year Year Year NOK million 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2006 2007 2008 Bauxite & Alumina 134 263 315 119 303 322 243 144 (57) 184 24 (585) 831 1 011 (433) Primary Aluminium 1 015 1 975 1 915 968 1 7
Slide 88: Operating segment information
Operating segment information Total revenue Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Year Year Year NOK million 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2006 2007 2008 Bauxite & 952 1 062 1 167 1 300 1 108 1 192 929 948 698 931 1 281 1 500 4 481 4 176 4 411 Alumina Primary 9 620 9 545
Slide 89: Operating segment information
Operating segment information External revenue Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Year Year Year NOK million 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2006 2007 2008 Bauxite & Alumina 1 - - - - - - 3 - - - - 1 3 - Primary Aluminium 827 735 347 435 594 684 602 670 574 582 546 387 2
Slide 90: Operating segment information
Operating segment information Internal revenue Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Year Year Year NOK million 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2006 2007 2008 Bauxite & 951 1 062 1 167 1 300 1 108 1 192 929 944 698 931 1 281 1 500 4 480 4 173 4 410 Alumina Primary 8 793 8 8
Slide 91: Operating segment information
Operating segment information Share of profit /(loss) in equity accounted investments Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Year Year Year NOK million 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2006 2007 2008 Bauxite & Alumina 93 195 258 78 238 228 219 169 (37) 180 57 (520) 624 854 (3
Slide 92: Operating segment information
Operating segment information Depreciation, amortization and impairment Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Year Year Year NOK million 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2006 2007 2008 Bauxite & Alumina - - - - - - - - - - - - - - - Primary Aluminium 447 437 441 557 490 471
Slide 93: Income statement
Income statement Year Year NOK million Q4 2008 Q3 2008 Q4 2007 2008 2007 Revenue 21 368 21 765 21 651 88 643 94 316 Share of the profit (loss) in equity accounted investments (1 154) 77 160 (915) 1 000 Other income, net 161 123 174 865 1 093 Total revenue and income 20 375 21 965 21 986 88 593 96 40
Slide 94: Balance sheets
Balance sheets December 30, September 30, June 30, March 31, December 31, NOK million 2008 2008 2008 2008 2007 Cash and cash equivalents 3 333 3 583 7 985 11 735 9 330 Short-term investments 1 648 4 454 2 112 2 444 2 742 Receivables and other current assets 18 833 19 744 19 967 19 871 16 531 Invento
Slide 95: Aluminium Metal – operational data
Aluminium Metal – operational data Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Volumes and prices 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 Realized premium above LME (USD/mt) 264 273 278 292 329 353 344 346 362 360 340 289 Realized premium above LME (NOK/mt) 1 758 1 725 1 760 1 887 2 056
Slide 96: Aluminium Metal – operational data
Aluminium Metal – operational data Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Volumes and prices 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 Commercial: Remelt production (1 000 mt) 186 191 177 165 190 179 163 153 141 145 121 97 Sale of metal products from 764 756 714 682 771 738 699 680 72
Slide 97: Aluminium Products – operational data Energy – operational data
Aluminium Products – operational data Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 Rolled Products external shipments (1 000 253 251 249 246 264 262 253 246 253 259 240 213 tonnes) Extrusion external shipments (1 000 tonnes) 136 138 129 124 134 135
Slide 98: Investor Relations in Hydro
Investor Relations in Hydro t: +47 22 53 92 80 Stefan Solberg Head of Investor Relations m: +47 917 27 528 e: stefan.solberg@hydro.com t: +47 22 53 25 22 Stian Hasle Investor Relations Officer m: +47 977 36 022 e: stian.hasle@hydro.com t: +47 22 53 92 24 Irene Raposo Investor Relations Assistant m:
Slide 99: www.hydro.com
www.hydro.com