Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Exane BNP Conference 2018
22 slides from Norsk Hydro Asa's conference presentation, Mar 20, 2018
Slide 1: Norsk Hydro
Norsk Hydro Exane BNP conference, March 20, 2018
Slide 2: Fully-integrated value chain
Fully-integrated value chain World class assets, high-end products and leading market positions Raw materials Primary aluminium production, Aluminium in products processing and energy marketing and recycling Bauxite & Alumina Energy Primary Metal Metal Markets Rolled Products Extruded Solutions • Hi
Slide 3: Global market balanced in 2017
Global market balanced in 2017 Continued deficit in world outside China, offset by similar surplus in China Demand and production (quarterly annualized) Production less demand*) 1 000 mt primary aluminium 1 000 mt primary aluminium 70 000 5 000 65 000 4 000 60 000 3 000 55 000 2 000 50 000 1 000 45
Slide 4: Supply-side reform and environmental shutdowns moderating Chinese primary supply growth
Supply-side reform and environmental shutdowns moderating Chinese primary supply growth Weiqiao reportetly selling alumina in the 3rd party market, indicating 1 800 compliance with primary cuts Shandong shutdowns Annual production effect (‘000t) 1 000 did not materialize Supply side reform Has purch
Slide 5: Primary aluminium market expected to be largely balanced in 2018
Primary aluminium market expected to be largely balanced in 2018 2018 global demand growth expected at 4-5% World ex. China 2018 3-4 % Estimated primary market balance 2018 (mill t.) (‘000t) 3-4 % 2 000 ~30.1 – 30.4 Production ~28.0 – 28.3 Demand 1 000 0 -1 000 China 2018 4-6 % (mill t.) -2 000 4-6
Slide 6: Aluminium and alumina prices
Aluminium and alumina prices LME and SHFE aluminium prices Platts alumina index (PAX) USD/mt USD/mt Percent 2 400 550 24% 500 2 200 22% 450 2 000 20% 400 1 800 350 18% 300 1 600 16% 250 1 400 14% 200 1 200 150 12% Jan-14 Nov-14 Sep-15 Jul-16 May-17 Mar-18 Jan-14 Nov-14 Sep-15 Jul-16 May-17 Mar-18 PA
Slide 7: Increasing Atlantic bauxite exports to China, primarily from Guinea
Increasing Atlantic bauxite exports to China, primarily from Guinea Monthly Chinese bauxite imports Million mt 8 7 6 5 4 3 2 1 0 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Dec-17 Australia India Brazil Guinea Malaysia Indonesia Other 7
Slide 8: Continued cost increases in the aluminium industry
Continued cost increases in the aluminium industry Increasing market prices for all input factors, expected to continue into 2018 Petroleum coke FOB USG (indexed) Pitch FOB USG (indexed) Alumina PAX index (indexed) 2.6 2.6 2.6 2.4 2.4 2.4 2.2 2.2 2.2 2.0 2.0 2.0 1.8 1.8 1.8 1.6 1.6 1.6 1.4 1.4 1.4 1
Slide 9: Net cash development Q4 2017
Net cash development Q4 2017 NOK billion Net cash flow from operations NOK 6.3 billion* 1.8 (1.1) 5.5 (14.1) 7.7 (3.9) (4.1) End Q3 2017 Underlying EBITDA Operating capital Taxes and other Investments and Other End Q4 2017 divestments * Net cash provided by operating activities, less change in restr
Slide 10: Barcarena site layout
Vila Nova Burajuba Barcarena site layout Pará River Water Bom Futuro treatment plant Port Bauxite residue Alunorte deposit DRS1 alumina refinery Bauxite residue deposit DRS2 Albras primary aluminium plant
Slide 11: Infinite Aluminium Hydro
INFINITE ALUMINIUM HYDRO
Slide 12: Fully integrated across the aluminium value chain and markets
Fully integrated across the aluminium value chain and markets Broad products and solutions offering from bauxite to end-user products Bauxite Transport & Building & Packaging Electronics & Machinery & Consumer automotive construction electrical equipment durables Alumina Energy Primary Metal Rolled
Slide 13: Hydro – differentiating through the integrated model
Hydro – differentiating through the integrated model Bauxite Alumina Energy Primary Metal Rolled Products Extrusion Recycling Source: graphical illustration based on company websites/reports, CRU 13
Slide 14: Strong global presence throughout the aluminium value chain
Strong global presence throughout the aluminium value chain Built on market understanding, customer closeness and competence Europe The complete aluminium company 10 TWh in North America the Nordic #1 position • High-quality bauxite and alumina production in Brazil power extruded market solutions •
Slide 15: Hydro - a first tier aluminium company
Hydro - a first tier aluminium company Equity production in 2017 in aluminium equivalents, thousand mt 9 000 Alumina Aluminium 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 Weiqao Alcoa/AWAC Rio Tinto UC Rusal Chalco Xinfa Norsk Hydro South32 Glencore/Century Hindalco Vedanta Emirates Global Alu
Slide 16: 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 2000-17 2017-27 Growth in automotive vehicle produc
Slide 17: On track for increased 2019 target of BNOK 3.0, despite 2017 setback
On track for increased 2019 target of BNOK 3.0, despite 2017 setback Realized 2017 improvements of MNOK 350 vs MNOK 500 target Better Bauxite & Alumina Primary Metal Rolled Products Target BNOK 1.3 in 2019 Target BNOK 1.0 in 2019 Target BNOK 0.7 in 2019 • Delivered MNOK 1 100 in 2016/17, • Delivered
Slide 18: Karmøy pilot now producing the world's most climate and energy-efficient aluminium
• Karmøy pilot now producing the world’s most climate and energy-efficient aluminium • Ramp-up during first half 2018 • Positive spin-off effects for the existing smelter portfolio • Net Hydro capex 2015-2018 BNOK 2.7 • Total capex BNOK 4.3 • Enova support BNOK 1.6 18
Slide 19: Hydro acquires ISAL, Aluchemie and Alufluor
Hydro acquires ISAL, Aluchemie and Alufluor Strengthening Hydro’s position as Europe’s #1 aluminium company and the integrated value chain Transaction details Strategic rationale • Binding offer to Rio Tinto to acquire • Increases Hydro’s total primary aluminium capacity to 2.4 million tonnes per ye
Slide 20: Husnes to resume full production
Husnes to resume full production • Investment decision to upgrade and start up the second line at Husnes, lifting production from current 95 000 mt/yr to 190 000 mt/yr • New technology elements to be introduced, leading to increased efficiency and profitability • Expected to begin production first h
Slide 21: Hydro acquires Arconic's two extrusion plants in Brazil
Hydro acquires Arconic’s two extrusion plants in Brazil • Acquisition strengthens downstream position in Brazil Alunorte Albras • Transaction in line with strategy of selected growth within Extruded Solutions Paragominas • Synergy potential with existing Extruded Solutions plant in Brazil • Agreed c
Slide 22: Proposing increased 2017 dividend of NOK 1.75 per share
Proposing increased 2017 dividend of NOK 1.751 per share Payout ratio of ~41% for the year • Aiming for competitive shareholder returns compared to alternative investments in peers • Reflects strong operational performance in 2017 and solid financial position, taking into account the volatility in t