Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Q3 2003 Earnings Presentation
56 slides from Norsk Hydro Asa's earnings presentation, Oct 20, 2003
Slide 1: Third quarter 2003
Third quarter 2003 Norsk Hydro ASA 20 October, 2003
Slide 2: Highlights third quarter 2003
Norsk Hydro – Third quarter 2003 2 Highlights third quarter 2003 A satisfactory quarter Strong Oil & Energy results Aluminium – good progress in internal improvements, challenging markets Solid Agri performance On track for Agri listing first half 2004 Divestment program close to completion 45554E -
Slide 3: Net income
Norsk Hydro – Third quarter 2003 3 Net income* Per quarter NOK million Gains from divestments 6 000 4 859 5 000 3 896 4 000 3 235 3 280 2 775 2 840 3 000 2 451 2 482 2 180 2 324 2 397 2 132 2 000 1 333 1 144 1 000 513 0 2000 2001 2002 2003* Accumulated 13 981 7 892 8 765 7 203 * Including the effect
Slide 4: Earnings per share
Norsk Hydro – Third quarter 2003 4 Earnings per share* NOK 20 18.6 Gains from divestments 18 16 14.9 14 12.7 12.4 12 10.6 11.0 10 9.4 9.0 9.3 8.4 8.3 8.5 8 6 5.2 4.4 4 2.0 2 0 2000 2001 2002 2003 Accumulated 53.4 30.5 34.0 26.8 * Before effect of change in accounting principles 45554E - 10.2003 - *4
Slide 5: Consolidated income statements
Norsk Hydro – Third quarter 2003 5 Consolidated income statements 3rd quarter 3rd quarter NOK million 2003 2002 Operating revenues 41 857 40 813 Operating income 5 730 3 945 Equity in net income of non-consolidated investees 181 (356) Interest income and other financial income 315 210 Other income 1
Slide 6: Net financial income (expense)
Norsk Hydro – Third quarter 2003 6 Net financial income (expense) 3rd quarter 3rd quarter NOK million 2003 2002 Interest income 278 305 Dividends and net gain (loss) on securities 37 (95) Interest income and other financial income 315 210 Interest expense (652) (761) Capitalized interest 207 162 Net
Slide 7: Operating income
Norsk Hydro – Third quarter 2003 7 Operating income Individual operating segment 3rd quarter 3rd quarter NOK million 2003 2002 Exploration and Production 4 579 2 583 Energy and Oil Marketing 739 587 Eliminations 4 - Hydro Oil and Energy 5 322 3 170 Metals 571 441 Rolled Products 18 (18) Extrusion an
Slide 8: Variance analysis Hydro group
Norsk Hydro – Third quarter 2003 8 Variance analysis Hydro group NOK million Year to date 3rd quarter 2003 30 855 10 414 2002 25 203 7 490 Variance EBITDA 5 652 2 924 - Prices and currency, E&P * 1 130 435 - Margin incl. currency effects (775) 335 - Volume 2 470 920 - Fixed costs (295) (595) - Depre
Slide 9: EBITDA
Norsk Hydro – Third quarter 2003 9 Earnings before interest, tax, depreciation and amortization (EBITDA) Per quarter NOK million 14 000 12 877 12 387 12 000 11 359 11 164 10 996 10 349 10 455 10 414 9 970 10 000 9 131 9 125 9 277 8 588 8 000 7 297 7 490 6 000 4 000 2 000 0 2000 2001 2002 2003 Accumu
Slide 10: Net interest-bearing debt/shareholders' equity
Norsk Hydro – Third quarter 2003 10 Net interest-bearing debt/ shareholders’ equity* Ratio 0.6 0.5 0.44 0.41 0.4 0.3 0.28 0.24 0.2 0.1 0 2000 2001 2002 30.09.2003 * Net interest-bearing debt divided by shareholders' equity plus minority interest 45554E - 10.2003 - *10 - Hydro Media
Slide 11: Divestments – status
Norsk Hydro – Third quarter 2003 11 Divestments – status Business unit Status Enterprise value NOK billion Flexible Packaging Completed 3.2 Treka assets Completed 2.6 Scanraff Signed 1.8 Various E&P assets Completed 0.6 Carmeda Completed 0.2 Gjøa Signed 0.2 Other Completed 0.4 Total 9.0 45554E - 10.
Slide 12: Oil and Energy – highlights third quarter
Norsk Hydro – Third quarter 2003 12 Oil and Energy – highlights third quarter Strong results for oil and gas activities Good production performance – high regularity, cost discipline High oil and gas prices Projects Ormen Lange – principles for Norway-UK treaty in place Grane and Fram Vest in produc
Slide 13: Oil and Energy
Norsk Hydro – Third quarter 2003 13 Oil and Energy EBITDA Eliminations Energy and Oil Marketing NOK million Exploration and Production 9 000 8 668 7 976 7 986 7 894 7 887 7 745 8 000 7 697 7 425 6 982 7 000 6 757 6 155 6 274 6 000 5 847 5 528 5 451 5 000 4 000 3 000 2 000 1 000 0 2000 2001 2002 2003
Slide 14: Petroleum production
Norsk Hydro – Third quarter 2003 14 Petroleum production Per quarter 1 000 boe/day 600 Oil Gas 540 552 482 143 156 484 489 500 451 448 452 442 443 116 427 419 104 112 411 104 110 385 115 110 88 400 86 371 93 91 74 397 396 57 378 372 373 364 300 337 325 333 334 328 336 338 313 311 200 100 0 2000 2001
Slide 15: Operating costs per barrel
Norsk Hydro – Third quarter 2003 15 Operating costs per barrel NOK/boe 99.7 100 91.5 90.1 86.6 80 60 40 20 0 2000 2001 2002 Jan-Sep 2003 Exploration 11.2 9.1 20.3 7.8 Net transportation * 7.3 8.5 9.0 7.1 Other cost/income 1.7 2.3 2.0 2.5 Deprec.& aband. 49.0 46.4 46.4 47.1 Field/Prod. cost 22.3 23.8
Slide 16: Exploration activities third quarter
Norsk Hydro – Third quarter 2003 16 Exploration activities third quarter Hydro Location Status share Iran – Anaran (Azar well) 75% Ongoing - Q4 Canada – Terra Nova Far East 15% Dry Norway – Ringhorne Øst (PL169) 13.5% Discovery Norway – Klegg (PL036) 28.5% Discovery Norway – Isac (PL 189) 10% Dry No
Slide 17: Oil and Energy – prospects
Norsk Hydro – Third quarter 2003 17 Oil and Energy – prospects Production target 2003 increased to 520 000 boe/day Fourth quarter target is 560 000 boe/day Ormen Lange PDO expected fourth quarter Exploration activities in Iran, Libya and Angola Asset sales pending approval Scanraff – gain of NOK 600
Slide 18: Aluminium – highlights third quarter
Norsk Hydro – Third quarter 2003 18 Aluminium – highlights third quarter Earnings influenced by weak markets Higher aluminium prices offset by weaker USD Continued pressure on downstream margins Contributions from hedging and trading Improvement programs ahead of plan Important strategic decisions A
Slide 19: Aluminium
Norsk Hydro – Third quarter 2003 19 Aluminium EBITDA NOK million Other and Eliminations Extrusion and Automotive Rolled Products 2 000 1 803 1 430 Metals 1 750 1 659 1 566 1 572 1 619 1 498 1 500 1 316 1 292 1 250 1 000 889 899 526 827 750 473 500 250 (302) 0 - 250 - 500 2000 2001 2002 2003 Accumula
Slide 20: Aluminium – Business comments
Norsk Hydro – Third quarter 2003 20 Aluminium – Business comments Metals – satisfactory operational performance Volume increases as capacity comes on stream Strong performance by casthouse operations Rolled Products – improved results, still not satisfactory Extrusion & Automotive – challenging mark
Slide 21: Aluminium – improvement program on track
Norsk Hydro – Third quarter 2003 21 Aluminium – improvement program on track Workforce reduction Cost reductions 2 000 3 000 Magnesium Aluminium 2 500 Magnesium Aluminium 1 500 2 000 1 000 1 500 1 000 500 500 0 0 Q3- Q4- Q1- Q2- Q3- Target Q3- Q4- Q1- Q2- Q3- Target Target 2002 2002 2003 2003 2003 2
Slide 22: Aluminium – prospects
Norsk Hydro – Third quarter 2003 22 Aluminium – prospects Fourth quarter outlook Uncertainty on aluminium price development No imminent downstream market recovery, demand seasonally lower Downstream margins remain under pressure Lower contributions expected from hedging and trading Strengthen perfor
Slide 23: Agri – highlights third quarter
Norsk Hydro – Third quarter 2003 23 Agri – highlights third quarter Solid results Fertilizer prices further improved Negative impact from currency and energy costs Positive start of European fertilizer season Satisfactory demand for early deliveries Low imports to Europe Good results outside Europe
Slide 24: Agri
Norsk Hydro – Third quarter 2003 24 Agri EBITDA NOK million 1 800 1 570 1 600 1 383 1 400 1 198 1 202 1 200 1 078 1 099 1 073 1 008 989 951 1 000 819 800 705 725 719 645 600 400 200 0 2000 2001 2002 2003 Accumulated 3 553 4 402 3 945 3 264 45554E - 10.2003 - *24 - Hydro Media
Slide 25: Agri – prospects
Norsk Hydro – Third quarter 2003 25 Agri – prospects Favorable global market balance Positive market situation for nitrogen fertilizers in Europe High energy costs Negative currency effects also next quarter 45554E - 10.2003 - *25 - Hydro Media
Slide 26: Norsk Hydro – priorities ahead
Norsk Hydro – Third quarter 2003 26 Norsk Hydro – priorities ahead Successful Agri separation and listing Internal improvement measures Complete Aluminium improvement program Streamline support functions First class project execution Capital discipline 45554E - 10.2003 - *26 - Hydro Media
Slide 27: Additional information
Additional information
Slide 28: Adjusted income third quarter 2003
Norsk Hydro – Third quarter 2003 28 Adjusted income third quarter 2003 3rd quarter Adjust- Adjusted NOK million 2003 ments Income Operating revenues 41 857 - 41 857 Operating income 5 730 444 6 174 Equity in net income of non-consolidated investees 181 18 199 Interest income and other financial inco
Slide 29: Adjusted income third quarter 2003
Norsk Hydro – Third quarter 2003 29 Adjusted income third quarter 2003 NOK million 3rd quarter 2003 Adjustments Adj. Income Exploration and Production 4 579 - 4 579 Energy and Oil Marketing 739 - 739 Eliminations 4 - 4 Hydro Oil and Energy 5 322 - 5 322 Metals 571 - 571 Rolled Products 18 29 47 Extr
Slide 30: Infrequent and other items impacting third quarter 2003 earnings
Norsk Hydro – Third quarter 2003 30 Infrequent and other items impacting third quarter 2003 earnings NOK Item Segment Reporting line million Impairment charges Aluminium Operating income 63 Other infrequent items, net Aluminium Operating income 3 Provision for bad debt Agri Operating income 80 Provi
Slide 31: EBITDA
Norsk Hydro – Third quarter 2003 31 EBITDA Individual operating segment NOK million 3rd quarter 2003 3rd quarter 2002 Exploration and Production 6 814 4 624 Energy and Oil Marketing 927 827 Eliminations 4 - Hydro Oil and Energy 7 745 5 451 Metals 991 474 Rolled Products 184 101 Extrusion and Automot
Slide 32: Operating income – EBIT – EBITDA
Norsk Hydro – Third quarter 2003 32 Operating income – EBIT – EBITDA Third quarter 2003 Depr. Operating Non-cons Interest Selected Other NOK million EBIT and EBITDA income investees income fin. items income Amort. Exploration and Production 4 579 7 8 2 - 4 596 2 218 6 814 Energy and Oil Marketing 73
Slide 33: Depreciation
Norsk Hydro – Third quarter 2003 33 Depreciation Individual operating segment 3rd quarter 3rd quarter NOK million 2003 2002 Exploration and Production 2 217 2 021 Energy and Oil Marketing 148 187 Hydro Oil and Energy 2 365 2 208 Metals 388 316 Rolled Products 154 116 Extrusion and Automotive 359 256
Slide 34: Equity in net income of non-consolidated investees
Norsk Hydro – Third quarter 2003 34 Equity in net income of non-consolidated investees Individual operating segment 3rd quarter 3rd quarter NOK million 2003 2002 Exploration and Production 7 6 Energy and Oil Marketing (9) 48 Hydro Oil and Energy (2) 54 Metals 15 (329) Rolled Products (1) (18) Extrus
Slide 35: Consolidated balance sheet
Norsk Hydro – Third quarter 2003 35 Consolidated balance sheet NOK million 30.09.2003 30.09.2002 31.12.2002 Cash and cash equivalents 16 461 10 571 5 965 Other liquid assets 1 742 1 956 2 647 Receivables 41 299 39 643 40 553 Inventories 16 876 17 238 17 232 Non-current assets 143 845 139 638 140 814
Slide 36: Net interest bearing debt
Norsk Hydro – Third quarter 2003 36 Net interest bearing debt* NOK billion 40 34.2 35 29.7 30 25 21.1 20.1 20 15 10 5 0 2000 2001 2002 30.09.2003 * Interest bearing debt less cash and cash equivalents 45554E - 10.2003 - *36 - Hydro Media
Slide 37: Statement of Cash Flow
Norsk Hydro – Third quarter 2003 37 Statement of Cash Flow Year to date Year to date NOK million 2003 2002 Operating activities: Net income 7 203 5 485 Depreciation, depletion and amortization 11 079 10 206 Other adjustments 4 942 4 093 Net cash provided by operating activities 23 224 19 784 Investi
Slide 38: Variance analysis Oil and Energy
Norsk Hydro – Third quarter 2003 38 Variance analysis Oil and Energy NOK million Year to date 3rd quarter 2003 22 687 7 745 2002 17 453 5 451 Variance EBITDA 5 234 2 294 - Prices and currency - Oil 360 3 145 - Gas 320 240 - Currency (2 440) (180) - Put options 105 15 ___________________ ____________
Slide 39: Variance analysis Exploration and Production
Norsk Hydro – Third quarter 2003 39 Variance analysis Exploration and Production NOK million Year to date 3rd quarter 2003 19 812 6 814 2002 14 864 4 624 Variance EBITDA 4 948 2 190 - Prices and currency 3 145 360 - Oil 320 240 - Gas (2 440) (180) - Currency 105 15 - Put options ___________________
Slide 40: Variance analysis Energy and Oil Marketing
Norsk Hydro – Third quarter 2003 40 Variance analysis Energy and Oil Marketing NOK million Year to date 3rd quarter 2003 2 895 927 2002 2 589 827 Variance EBITDA 306 100 - Margin 359 4 - Volume (520) 115 - Fixed costs 120 (10) - Depreciation 130 40 - Other 10 5 Variance operating income 98 152 - Non
Slide 41: Price development – crude oil
Norsk Hydro – Third quarter 2003 41 Price development – crude oil Average Brent Blend dated per quarter USD/bbl NOK/bbl 35 280 USD/bbl NOK/bbl 30 240 25 200 20 160 15 120 10 80 5 40 0 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 3rd quarter 2003: 208.70 NOK/bbl 28.43 USD/bbl 45554E - 10.2003
Slide 42: New fields on stream 2003–2006
Norsk Hydro – Third quarter 2003 42 New fields on stream 2003–2006 Hydro share boe/day Development Jasmim 4 000 PDO Submittal International PDO Approval/ Dalia 22 000 Sanctioning Kharyaga 2+3 15 000 (phase 1-3) Start Production Murzuq 6 000 (A+D field) NCS Operator Grane 77 000 Fram Vest 14 000 Visu
Slide 43: Production per field
Norsk Hydro – Third quarter 2003 43 Production per field Boe/day Q3 2002 Q3 2003 Hydro share Hydro production Percent BOE/Day Oseberg 191 000 168 000 34.00 57 125 Snorre 197 000 241 000 17.65 42 619 Oseberg South 76 000 88 000 34.00 29 769 Ekofisk 381 000 349 000 9.65 23 238 Åsgard 232 000 230 000 9
Slide 44: Exploration activity and costs
Norsk Hydro – Third quarter 2003 44 Exploration activity and costs NOK million 1 400 1 200 1 000 800 600 Expensed share 400 200 0 - 200 - 400 1/00 2/00 3/00 4/00 1/01 2/01 3/01 4/01 1/02 2/02 3/02 4/02 1/03 2/03 3/03 4/03 Capitalized share Activity Expensed old wells Cost reduction repayment Angola
Slide 45: Variance analysis Aluminium
Norsk Hydro – Third quarter 2003 45 Variance analysis Aluminium NOK million Year to date 3rd quarter 2003 4 689 1 498 2002 3 018 827 Variance EBITDA 1 671 671 - Margin (960) (15) - Volume 550 180 - Fixed costs (220) (240) - Depreciation (355) (215) - Infrequent items and restructuring costs 540 110
Slide 46: Variance analysis Metals
Norsk Hydro – Third quarter 2003 46 Variance analysis Metals NOK million Year to date 3rd quarter 2003 3 162 991 2002 1 739 474 Variance EBITDA 1 423 517 - Margin (875) (110) - Volume 255 115 - Fixed costs (90) (175) - Depreciation (150) (70) - Infrequent items and restructuring costs 290 - - Tradin
Slide 47: Variance analysis Rolled Products
Norsk Hydro – Third quarter 2003 47 Variance analysis Rolled Products NOK million Year to date 3rd quarter 2003 567 184 2002 211 101 Variance EBITDA 356 83 - Margin (40) 65 - Volume 165 45 - Fixed costs (50) 15 - Depreciation (75) (40) - Infrequent items (10) (5) - New/disposed business 200 - - Othe
Slide 48: Variance analysis Extrusion and Automotive
Norsk Hydro – Third quarter 2003 48 Variance analysis Extrusion and Automotive NOK million Year to date 3rd quarter 2003 1 006 377 2002 799 274 Variance EBITDA 207 103 - Margin 15 50 - Volume 130 20 - Fixed costs (80) (80) - Depreciation (130) (105) - Infrequent items 50 115 - New/disposed business
Slide 49: Aluminium – Key figures by segment
Norsk Hydro – Third quarter 2003 49 Aluminium – Key figures by segment Volumes and prices Q3 2003 Q2 2003 Q3 2002 Primary production (Kmt) 381 360 348 Total metal sales (Kmt) *) 651 558 521 LME, realized (USD/t) **) 1 445 1 417 1 377 USD/NOK, realized ***) 7.33 7.33 7.81 Rolled Products external shi
Slide 50: Aluminium price
Norsk Hydro – Third quarter 2003 50 Aluminium price 3 months LME price, average per quarter USD/tonne 2 000 1 800 1 600 1 400 1 200 1 000 90 91 92 93 94 95 96 97 98 99 00 01 02 03 45554E - 10.2003 - *50 - Hydro Media
Slide 51: Inventories – primary aluminium
Norsk Hydro – Third quarter 2003 51 Inventories – primary aluminium 1 000 tonnes LME (London Metal Exchange) 5 000 IAI (Producers' inventories) 4 000 3 000 2 000 1 000 0 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Sources: IAI and LME 2003: IAI
Slide 52: Variance analysis Agri
Norsk Hydro – Third quarter 2003 52 Variance analysis Agri NOK million Year to date 3rd quarter 2003 3 264 989 2002 3 300 719 Variance EBITDA (36) 270 - Margin 50 455 - Volume 15 (10) - Fixed costs (195) (375) - Depreciation 40 (35) - Infrequent items - - - Other (15) (5) Variance operating income (
Slide 53: Fertilizer prices
Norsk Hydro – Third quarter 2003 53 Fertilizer prices CAN Germany Ammonia USD/tonne Bulk delivered warehouse USD/tonne Fob Caribbean 250 250 200 200 150 150 100 100 50 50 0 0 93 94 95 96 97 98 99 00 01 02 03 93 94 95 96 97 98 99 00 01 02 03 Q3 Q3 DAP Urea USD/tonne Bulk fob US Gulf USD/tonne Bulk fo
Slide 54: Nitrate premium above urea price
Norsk Hydro – Third quarter 2003 54 Nitrate premium above urea price USD/mt Nitrogen CAN Germany Urea fob Middle East 600 500 400 300 200 100 Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- 98 98 99 99 99 99 00 00 00 00 01 01 01 01 02 02
Slide 55: Variance analysis Petrochemicals
Norsk Hydro – Third quarter 2003 55 Variance analysis Petrochemicals NOK million Year to date 3rd quarter 2003 253 28 2002 285 154 Variance EBITDA (32) (126) - Margin (90) (135) - Volume 35 30 - Fixed costs (20) (40) - Depreciation - (5) - Infrequent items - - - Other 10 15 Variance operating income
Slide 56: Forward-Looking Statements/Use of Non-GAAP Financial Measures
Norsk Hydro – Third quarter 2003 56 Forward-Looking Statements/ Use of Non-GAAP Financial Measures In order to utilize the “safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995, Hydro is providing the following cautionary statement: This presentation contain