Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — 2016 Credit Suisse Global Steel & Mining Conference
24 slides from Norsk Hydro Asa's conference presentation, Sep 13, 2016
Slide 1: Norsk Hydro
Norsk Hydro Stian Hasle, Head of Investor Relations 2016 Credit Suisse Global Steel & Mining Conference
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: Well positioned in challenging markets
Norsk Hydro Well positioned in challenging markets 3
Slide 4: A resource-rich, global aluminium company
A resource-rich, global aluminium company Robust positions along the entire value chain A complete aluminium company Norway’s • Primary aluminium production in Norway, Germany, Primary Qatar, Slovakia, Brazil, Canada, Australia aluminium Long 2nd largest • 10 TWh captive hydropower production hydrop
Slide 5: Leading performance compared to aluminium peers
Leading performance compared to aluminium peers First-quartile aluminium producer, 2016 Smelter BOC curve by company Strongest balance sheet, USD/t Total Debt/Total Equity, 2011-2015 2,000 1,500 288 % 275 % 1,000 72 % 25 % 13 % 500 0 10,000 20,000 30,000 40,000 50,000 60,000 First quartile alumina p
Slide 6: Building competitiveness through HSE, CSR and compliance
Building competitiveness through HSE, CSR and compliance Safety performance Carbon-neutral from a (TRI) at industry benchmark life-cycle perspective High focus on compliant On track 3.5/2.2* Own employees/ Contractors behavior and practices • HSE, CSR and compliance always first on the Hydro • Clear
Slide 7: Uncertain markets
Uncertain markets Solid demand growth 7
Slide 8: Strong long-term growth drivers across all segments
Strong long-term growth drivers across all segments Recycling taking a bigger share Strong demand drivers in key aluminium segments Semis demand CAGR 2015 – 2025 Growth in automotive vehicle production Primary Transport Aluminium content in cars increasing 5–6% 3–4% Growth in other transport modes,
Slide 9: Environmental regulations accelerate substitution across segments
Environmental regulations accelerate substitution across segments Copper substituion in HVAC&R, Steel substitution in automotive cabling and transmission lines Key enabler for energy-efficient buildings 13% 6x 40% HVAC&R* BiW 2016-2023 market growth of energy CAGR potential from worldwide consumed ~
Slide 10: Primary aluminium market expected to be largely balanced in 2016
Primary aluminium market expected to be largely balanced in 2016 Limited effect of capacity restarts in China in first half, more expected in second half Supply development 2016 Market balance 2016 Mill tonnes Mill tonnes 1.0 – 1.5 mill tonnes Oversupply ~2.4 (0.5) – 0.5 mill tonnes ~1.3 (1.0 – 1.5)
Slide 11: Aluminium prices up Q2 vs Q1
Aluminium prices up Q2 vs Q1 USD/mt USD/mt 2 100 2 100 1 900 1 900 1 700 1 700 1 500 1 500 1 300 1 300 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 LME 3m USD SHFE* ex. VAT in USD Source: Metal Bulletin, MW/MJP: Platts, Reuters Ecowin, Hydro analysis * Shanghai Future
Slide 12: Limited arbitrage, stable export levels
Limited arbitrage, stable export levels given wider arbitrage in Q1 Semis exports Comp. adv. (monthly, kmt) (USD/mt) 500 1 000 450 800 Improved comp. adv. China 400 350 600 300 400 250 200 200 150 0 100 ( 200) 50 0 ( 400) Jan-07 May-08 Sep-09 Jan-11 May-12 Sep-13 Jan-15 May-16 Semis exports (Left ax
Slide 13: Alumina prices up in Q2, lower Chinese bauxite imports from Malaysia offset by Guinea
Alumina prices up in Q2, lower Chinese bauxite imports from Malaysia offset by Guinea Platts alumina index (PAX) Monthly Chinese bauxite imports USD/mt Percent Million mt 450 20% 8 19% 7 400 18% 6 350 17% 5 300 16% 4 15% 3 250 14% 2 200 13% 1 PAX % of LME 150 12% 0 Nov 2011 Apr 2012 June 2013 Nov 20
Slide 14: Strengthening relative industry position with ambitious targets
Norsk Hydro Strengthening relative industry position with ambitious targets 14
Slide 15: Proven track-record of productivity gains continues
Proven track-record of productivity gains continues Hydro’s improvement drive until 2015 Hydro’s new improvement ambition Tailor-made ambitions across Total improvements 2011-2015: Total improvements of the value chain BNOK 4.5¹ BNOK 2.9 from 2016-20192 Better ‘Energy Primary Better Metal Aspiration
Slide 16: Structurally improved cost position
Structurally improved cost position Productivity gains supported by currency All-in implied primary cost and margin, USD/mt 1) Implied alumina cost and margin, USD/mt 1) 475 2400 325 13 2300 550 2175 300 59 2000 325 1 925 1 875 250 39 1600 1 775 200 1 500 1200 1 3752) 1 2252) 150 1 175 2) 263 800 23
Slide 17: Extending the technology and innovation lead
Extending the technology and innovation lead Key to maintain and further improve Hydro’s competitive position Step-change Instability Stability Bauxite & Alumina Primary Metal Rolled Products Technology approach • Debottlenecking to go beyond • Testing aluminium production • Automotive line 3 to lif
Slide 18: Taking productivity beyond lean operations with the Karmøy technology pilot
Taking productivity beyond lean operations with the Karmøy technology pilot With spin-off effects for the entire portfolio • Technology pilot with production of 75 000 mt − 48 cells HAL4e technology – 12.3 kWh/kg − 12 cells HAL4e Ultra - 11.5 – 11.8 kWh/kg • Spin-off technology elements for existing
Slide 19: Optimizing product portfolio by expanding in higher-margin segments
Optimizing product portfolio by expanding in higher-margin segments Pursuing attractive automotive growth opportunity Increasing share of automotive in Hydro in car models Rolled Products’ portfolio 20 % 14 % 12 % Audi Q7 Peugeot BMW 7 series 308 Porsche Macan Audi A6 New Mercedes C Class T 2010 201
Slide 20: Strong improvement trend in Sapa JV
Strong improvement trend in Sapa JV 1 BNOK in restructuring gains and synergies delivered one year ahead of plan Sapa restructuring agenda* Sapa results (100 % basis), MNOK Sapa 100% basis MNOK 1,407.0 1 907 1 284 1 021 595 Underlying EBIT Underlying Net income Q3’14-Q2’15 Q3’15-Q2’16 • Strong deman
Slide 21: Managing industry cyclicality through a prudent financial framework
Managing industry cyclicality through a prudent financial framework Reliable Financial Disciplined Lifting cash flow shareholder Effective risk strength capital potential remuneration management and flexibility allocation policy Cost improvements: Investment grade • Long-term sustaining Revised divi
Slide 22: Hydro 2016
Hydro 2016 Well-positioned to create value in challenging markets • Deliver on Better improvement program • Strengthen competitive position through technology pilot and new automotive line • Maintain financial strength and flexibility 22 Better Bigger Greener
Slide 23: Infinite Aluminium
: INFINITE ALUMINIUM
Slide 24: Hydro aspiration supported with ambitious mid-term strategic goals
Hydro aspiration supported with ambitious mid-term strategic goals Ambitions Target Timeframe • Improve safety performance, strive for injury free environment TRI<2 2020 • Deliver on Better improvement ambition BNOK 2.9 2019 • Secure new competitive sourcing contracts in Norway post 2020 4-6 TWh 202
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