Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Hydro — Exane BNP Paribas 11th European Seminar 2009
22 slides from Norsk Hydro Asa's conference presentation, Jun 10, 2009
Slide 1: Hydro: A focused aluminium and energy company
Hydro A focused aluminium and energy company Jørgen C. Arentz Rostrup, Executive Vice President and CFO Exane BNP Paribas – 11th European Seminar – June 10, 2009 (1)
Slide 2: Cautionary note in relation to certain forward-looking statements
Cautionary note in relation to certain forward-looking statements Certain statements contained in this announcement constitute “forward-looking information” within the meaning of Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as a
Slide 3: 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 4: Unprecedented fall in aluminium price
Unprecedented fall in aluminium price USD per tonne 3 400 Primary aluminium LME USD/tonne NOK/tonne 3 200 3 000 Q1 2009 average 1 397 9 593 2 800 Q1 2009 end 1 405 9 555 2 600 2 400 Q4 2008 average 1 882 12 690 Q4 2008 end 1 497 10 397 2 200 2 000 Average 2008 2 620 14 446 1 800 1 600 Average 2007 2
Slide 5: Declining downstream sales volumes
Declining downstream sales volumes Hydro’s sales Q1 2009 vs Q4 2008 Automotive Rolled Products Extrusion Eurasia Building Systems Extrusion Americas Structures Precision Tubing Total 10 % -6 % -7 % -9 % -10 % -10 % -10 % Hydro’s sales Q1 2009* vs Q1 2008 Automotive Rolled Products Extrusion Eurasia
Slide 6: 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 *IAI and LME reported stocks.
Slide 7: China remains balanced in the long term
China remains balanced in the long term 1 000 tonnes Primary / alloyed Semis Fabricated Scrap Total • Swift response to drop in demand 550 • Production curtailments 500 • Strategic government purchases 450 Net import 400 350 • Shanghai price currently significantly 300 250 higher than LME 200 • Enco
Slide 8: Year-on-year growth RoW (excluding China)
Year-on-year growth RoW (excluding China) (8) -5 % -20 % -15 % -10 % 0% 5% 10 % 15 % 20 % 25 % 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 GDP 1989 1990 1991 1992 1993 1994 Al consumption 1995 1996 1997 1998 1999 2000 expected globally ex. China in 2009
Slide 9: Announced capacity curtailments
Announced capacity curtailments 12% 3% Alcoa C entury 7% Hydro China ~3.5 million tonnes* Rio Tinto Rest of world ~3.4 million tonnes 51% 6% UC Rusal Total ~6.9 million tonnes Other C hina 7% 14% Source: CRU / company reports / Hydro estimates. *Not adjusted for reports of restarts in China of 1 mil
Slide 10: April speed indicates a need for additional curtailments ex China
April speed indicates a need for additional curtailments ex China Production Consumption 27000 26000 1000 t production and consumption ~1.9 mill tons World ex China, annualised 25000 24000 23000 3.6 mill tons 22000 21000 20000 19000 18000 2007 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 speed speed spe
Slide 11: 2009 outlook
2009 outlook • Aluminium prices to remain low • Limited forward visibility • Indication of slowing LME inventory build-up • No substantial pick-up in demand • Primary aluminium consumption excluding China could decline up to 15-20% from 2008 • Chinese consumption in line with 2008 • Industry input c
Slide 12: 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 13: Hydro's upstream production curtailments
Hydro’s upstream production curtailments 1 000 tonnes 2 000 1 750 1 500 29% ~1 750 1 250 22% ~1 350 1 000 ~1 250 750 ~1 050 50% ~1 000 500 250 ~ 500 0 Alumina (metal equivalents) Primary aluminium Remelt End-2008 capacity Run rate Q3 2009 (13)
Slide 14: Hydro's flexible production system
Hydro’s flexible production system Primary aluminium Remelt 1 000 tonnes 1 000 tonnes 2 000 1 920 2 000 380 1 750 1 600 420 1 600 290 1 200 1 250 1 250 1 200 1 000 1 040 100 500 900 800 800 500 400 400 0 0 2008 Q1 2009* 2011 2008 Q1 2009* 2011 C urtailed primary capacity available for restart Availa
Slide 15: Significant manning reductions
Significant manning reductions 5 000 1 450 4 500 4 500 4 000 3 500 1 700 3 000 2 500 2 000 1 500 750 1 000 600 500 0 Q3 2008 Q4 2008 Q1 2009 Q2-Q4 2009E Total Reduction in number of permanent and temporary employees and contractors (15)
Slide 16: Hydro improves cost position
Hydro improves cost position Business operating cash cost USD/tonne 3 400 Dynamic cost curve 3 000 • Falling input costs 2 600 • Production curtailments and capacity closures 2 200 1 800 1 400 Accumulated tonnage (1 000 tonnes) 1 000 0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 BOC Q1 20
Slide 17: 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 • Fuel oil, caustic soda, coal, freight and
Slide 18: Focus on preserving cash
Focus on preserving cash Capital expenditures, NOK billion Capital expenditures reductions* 12.3 ~11.5 • 2008-2009: 40% • 2009-2010: 15% CAP alumina project postponed, production ~4.5 start-up in 2012 subject to market conditions 2008 2009E 2010E Investments Qatalum funded by Hydro Qatalum project f
Slide 19: Financial position
Financial position Net cash / (debt) in NOK billion Secured financing: ~NOK 20 billion 10.8 • New EUR 750 million in 3-year bank facility 8.7 • New NOK 1 billion in commercial paper • USD 1.7 billion in a multi-currency revolving facility maturing in 2014 3.5 1.7 • NOK 1.3 billion short-term • Curre
Slide 20: Qatalum on target
Qatalum on target • 50/50 joint venture between Hydro and • First-stage capacity Qatar Petroleum • Smelter: 585 000 tonnes per year • Investment USD 5.6 billion (100%) • Hydro technology • 73% complete by end-Q1 • Anode plant and cast houses • 1 250 MW power plant • On target for scheduled start-up
Slide 21: Priorities in 2009
Priorities in 2009 • Proactive corrective measures • Cost reductions and margin management • Working capital and counterparty risk • Production curtailments • Cash focus – maintain financial flexibility • Operational excellence • Qatalum execution (21)
Slide 22: www.hydro.com
www.hydro.com