Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — BofA Merrill Lynch Global Metals, Mining and Steel Conference 2013
37 slides from Norsk Hydro Asa's conference presentation, May 2013
Slide 1: Creating a global leader
Creating a global leader Svein Richard Brandtzæg Barcelona, May 2013
Slide 2: Cautionary note
Cautionary note 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 strategies for Hydro, such as planned expansions,
Slide 3: A resource rich global aluminium company
A resource rich global aluminium company 01
Slide 4: We are strengthening our asset base
We are strengthening our asset base Curtailing 26% of Launching USD 300 Climb Climb 1010 From B to A primary metal capacity program 2009 2010 2011 2012 Announcing SAPA JV Acquiring bauxite and Starting up Qatalum alumina assets Announcing SAPA JV
Slide 5: Attractively positioned, global reach
Attractively positioned, global reach Norway Continental Europe • 900,000 tpy hydro-powered aluminium capacity • Leading upstream, midstream and Rolled • Technology center, R&D for next-generation smelter Products positions • Hydropower developments • Recycling network • Recycling/remelting North Am
Slide 6: Strong foundation in our resource and asset base
Strong foundation in our resource and asset base Bauxite & Alumina Energy Primary Metal Rolled Strong resource base Improving production capabilities across Commercial focus, customer proximity across
Slide 7: Aluminium - Metal of the future
Aluminium - Metal of the future 02
Slide 8: Aluminium - Metal of the future
Aluminium - Metal of the future • Lightweight • Corrosion resistant • Excellent conductivity − 1/3 density of steel − Oxide layer − Thermal – electrical • Recyclability • Formability • Alloying technology − 5% of original energy − Extrusion, rolling, casting − Gives wide range of physical consumptio
Slide 9: Climate Change – the Biggest Challenge
Climate Change – the Biggest Challenge
Slide 10: Transforming the way we use energy
Transforming the way we use energy Energy efficient, Zero emission/ Packaging that Recycling and Enhance solar low-emission Lighter vehicles Energy surplus reduces food reusing energy growth electrolysis buildings waste aluminium Reduce energy Reduce fossil Reduce energy Reduce Reduce GHG Reduce was
Slide 11: Highly versatile metal, broad range of applications
Highly versatile metal, broad range of applications 6% 10% Transport 26% Construction 5% Packaging Foil Electrical 14% Consumer durables Machinery & Equipment 8% 25% Other 8% Source: CRU. Global demand per segment demand, 2012.
Slide 12: Aluminium Demand in Future
Aluminium Demand in Future Increasing demand from light-weighting of cars Al-content per car (EU27) 180 kg 150 kg 140 kg 134 kg 121 kg 2006 2010 2012 2015 2020 Source: Ducker 2012
Slide 13: Increasing use of aluminium in automotive
Increasing use of aluminium in automotive Hydro’s body-in-white applications Applications Why aluminium Weight reduction in front, pedestrian safety & Hoods driving dynamics Weight reduction, easy handling Doors Weight reduction in top, lower centre of gravity, Roofs easy car handling Weight reducti
Slide 14: Reducing weight through copper substitution
Reducing weight through copper substitution • Substitution to aluminium in cars: 12.5 kg/car • Weight reduction: about 50% vs. copper • Worldwide potential: about 875 000 mt annually Total wire harness in modern vehicle Aluminium has almost replaced copper in automotive precision tubing over last 30
Slide 15: Market
Market 03
Slide 16: Ingot premiums stable at high levels
Ingot premiums stable at high levels World reported primary aluminium inventories Regional ingot premiums 1 000 mt Days USD per mt 8,000 80 300 275 7,000 70 250 6,000 60 225 200 5,000 50 175 4,000 40 150 125 3,000 30 100 2,000 20 75 50 1,000 10 25 0 0 0 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Jan-
Slide 17: Alumina price retracting, holding up relative to LME
Alumina price retracting, holding up relative to LME Platts index* USD per mt Percent 430 20 • Average Platts alumina index rose to USD 340 per mt in Q1 2013 from 19 USD 327 per mt in Q4 2012 18 370 • Alumina price dropped towards end of 17 quarter, on the back of macro 16 uncertainty and easing sup
Slide 18: Alumina price retracting, holding up relative to LME
Alumina price retracting, holding up relative to LME Platts index* USD per mt Percent 430 20 • Average Platts alumina index rose to USD 340 per mt in Q1 2013 from 19 USD 327 per mt in Q4 2012 18 370 • Alumina price dropped towards end of 17 quarter, on the back of macro 16 uncertainty and easing sup
Slide 19: Increased bauxite imports into China
Increased bauxite imports into China Annualized aluminium equivalents*, million mt 2011 2012 2013 • Bauxite and alumina − Significant increased imports 15 of bauxite after removal of to China temporary export restrictions Import from Indonesia 10 − Slight drop in alumina imports • Primary aluminium
Slide 20: Ambitious improvement efforts across the company
Ambitious improvement efforts across the company 04
Slide 21: Ambitious improvement efforts throughout the value chain
Ambitious improvement efforts throughout the value chain Bauxite & Alumina Primary Metal Rolled Products ‘From B to A’ ‘USD 300 program’ ‘Climb 10’
Slide 22: Operational focus in Bauxite & Alumina
Operational focus in Bauxite & Alumina • Stable production volume in Paragominas at 9 million tonnes yearly run rate • Weak Alunorte production − Continued production effects from power outage end 2012 − Operational issues with coal boilers • «From B to A» program target to reach NOK 1 billion impro
Slide 23: USD 300 program to reach target by end-2013
USD 300 program to reach target by end-2013 Estimated primary aluminium cash • Improvement program progressing cost and margin according to plan USD/mt 1) 475 475 425 300 2 000 425 • Downward trend in cash cost 1 775 − Improved casthouse margins 1 625 − Increased contribution from Qatalum 1 375 1 25
Slide 24: Ambitious Primary Metal improvement programs delivering results
Ambitious Primary Metal improvement programs delivering results Underlying EBITDA per mt in USD for respective primary metal divisions 1H 2011 2H 2011 1H 2012 2H 2012 750 750 750 750 550 550 550 550 350 350 350 350 150 150 150 150 -50 -50 -50 -50 Hydro Peers All figures based on public accounting da
Slide 25: Creating the world leader in aluminium solutions
Creating the world leader in aluminium solutions Demonstrating our capability to shape the industry through transactions − 50/50 Joint Venture with two strong owners – new company to be named Sapa − Pending regulatory approvals − No. 1 position in North America and Europe, solid foothold in emerging
Slide 26: Capital allocation mainly upstream
Capital allocation mainly upstream NOK billion • Sustaining capex NOK 3 billion Debt-f inanced investments Qat alum annually Invest ment s Qat alum 10.2 Growt h capex • No major growth projects planned for Sust aining capex 2013 • ~85% of capital to be allocated 6.2 upstream in 2013 4.61 4.1 • Depre
Slide 27: Competitive yield through tough times
Competitive yield through tough times Hydro compared to its aluminium peers Dividend yield in percentage, based on year-end share-prices 2009 2010 2011 2012 3.00% 3.00% 3.00% 3.00% 2.70% 2.70% 2.00% 2.00% 2.00% 2.00% 1.76% 1.61% 1.52% 1.39% 1.38% 1.03% 1.00% 1.00% 1.00% 1.00% 0.78% 0.78% 0.39% 0.19%
Slide 28: Profitability – The industry challenge
Profitability – The industry challenge 05
Slide 29: The big dilemma of our industry
The big dilemma of our industry A demand-side winner, yet a looser in the market place Yearly consumption (Index 2000=100), global 3-month LME price (Index 2000=100) 800 195 700 175 600 500 155 400 135 300 200 115 100 95 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2000 2001 20
Slide 30: Overproduction playing a part in price movements
Overproduction playing a part in price movements LME and BoC World ex. China (USD/t) Stock days 3 000 120 2 800 2 600 100 2 400 2 200 2 000 80 1 800 1 600 60 1 400 1 200 1 000 40 800 600 20 400 200 0 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201
Slide 31: Overproduction playing a part in price movements
Overproduction playing a part in price movements LME and BoC World ex. China (USD/t) Stock days 3 000 120 2 800 2 600 100 2 400 2 200 2 000 80 1 800 1 600 60 1 400 1 200 1 000 40 800 600 20 400 200 0 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201
Slide 32: Overproduction playing a part in price movements
Overproduction playing a part in price movements LME and BoC World ex. China (USD/t) Stock days 3 000 120 2 800 2 600 100 2 400 2 200 2 000 80 1 800 1 600 60 1 400 1 200 1 000 40 800 600 20 400 200 0 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201
Slide 33: Overproduction playing a part in price movements
Overproduction playing a part in price movements LME and BoC World ex. China Metal balance (USD/t) (’000 tonnes) 3 000 4,000 2 700 2 400 3,000 2 100 1 800 1 500 2,000 1 200 900 1,000 600 300 0 0 - 300 - 600 -1,000 - 900 -1 200 -1 500 -2,000 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Slide 34: Hydro's strategy
Hydro’s strategy 06
Slide 35: Strategy for further value creation from strong resource and asset base
Strategy for further value creation from strong resource and asset base Bauxite & Alumina Energy Primary Metal Rolled • Improvement efforts and • Increase value of energy • Reposition • Adjust capacity and cost cost reduction business • Keep solid cash flow in base to market • Commercialize • Develo
Slide 36: Hydro's value proposition
Hydro’s value proposition • Improve relative industry position • Capitalize on raw material positions • Maintain financial strength and flexibility • Ensure competitive shareholder return
Slide 37: INFINITE ALUMINIUM HYDRO
INFINITE ALUMINIUM HYDRO
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