Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — BMO Global Metals & Mining Conference 2009
18 slides from Norsk Hydro Asa's conference presentation, Feb 23, 2009
Slide 1: Hydro – a resourceful aluminium company
Hydro – a resourceful aluminium company John Ove Ottestad, Executive Vice President and Chief Financial Officer BMO Global Metals & Mining Conference – February 23, 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: Highlights Q4 2008
Highlights Q4 2008 Underlying EBIT, NOK million 2 883 2 886 2 686 2 032 1 699 1 619 1 577 1 490 868 2007 2008 ● Result in line with Q3 ● Solid operational performance ● Higher realized aluminium prices, but continued input cost pressure ● Dramatic decline in aluminium market price and order intake ●
Slide 5: Aluminium Metal – corrective measures
Aluminium Metal – corrective measures Primary aluminium Alumina Remelt 1 000 tonnes 1 000 tonnes (11)% 1 000 tonnes (23)% (18)% 2 000 2 800 1 200 ~ 2 700 1 750 2 100 ~ 2 400 ~ 1 100 1 500 900 1 350 ~ 900 1 000 1 400 600 500 700 300 0 0 0 2008 Going forward 2008* Going forward 2007 2008 Reduced prima
Slide 6: Aluminium Products - corrective measures
Aluminium Products - corrective measures Average full time employee equivalents 10 000 (2 200) / (14%) 8 000 6 000 4 000 2 000 0 Q2 2008 Q4 2008 Going forward* Extrusion Rolled Products Automotive ● Manning reductions ● Inventory reduction ● Procurement initiatives ● Capital expenditures reduced by
Slide 7: Well covered with alumina
Well covered with alumina CAP positions Hydro for further growth in metal Alumina coverage Percent 140% 120% LME-linked contracts 100% 80% Equity from CAP* 60% 40% Equity 20% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 *CAP is illustrated with the first stage plus two expansi
Slide 8: Long-term power sourcing at competitive prices
Long-term power sourcing at competitive prices Indexation of power supplies ● Power consumption ~26 TWh in Percent Metal in 2008 100% 90% 80% ● Self-generation and long-term 70% contracts ensures predictability 60% 50% 40% ● Limited commodity exposure 30% ● Indexation to LME and coal with time- 20%
Slide 9: Qatalum – on target
Qatalum – on target Largest greenfield capacity built in one step ● 50/50 JV between Hydro and Qatar ● First-stage capacity Petroleum ● Smelter: 585 000 tonnes per year ● Investment USD 5.6 billion (100%) ● Hydro technology ● 60% complete by end-2008 ● Anode plant and cast houses ● On target for sch
Slide 10: Unprecedented fall in aluminium price
Unprecedented fall in aluminium price USD per tonne Primary aluminium LME USD/tonne NOK/tonne 3 400 3 200 Q4 2008 average 1 873 12 755 3 000 Q4 2008 end 1 497 10 397 2 800 Q3 2008 average 2 845 15 202 2 600 Q3 2008 end 2 425 14 210 2 400 2 200 Average 2008 2 621 14 791 2 000 1 800 Average 2007 2 661
Slide 11: 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 days *IAI and LME reported sto
Slide 12: Announced capacity curtailments
Announced capacity curtailments 11% 3% Alcoa China ~3.2 million tonnes 6% C entury Rest of world ~3.5 million tonnes Hydro 6% Rio Tinto Total ~6.7 million tonnes UC Rusal 52% Other 8% C hina 14% World production and consumption (excl. China), annualized 27 000 Production C onsumption 26 000 25 000 ~
Slide 13: Hydro improves cost position through closures and Qatalum
Hydro improves cost position through closures and Qatalum Business operating cash cost USD/tonne 3400 Dynamic cost curve 3000 ● Falling input costs ● Production curtailments 2600 and capacity closures 2200 1800 1400 Accumulated tonnage (1 000 tonnes) 1000 0 5000 10000 15000 20000 25000 30000 35000 4
Slide 14: 2009 outlook
2009 outlook ● Limited forward visibility ● Demand expected to remain depressed in 2009 ● Further curtailments expected ● Input costs will come further down (14)
Slide 15: 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 16: Financial position
Financial position No interest-bearing debt at end of 2008 Net cash/(debt) in NOK billion 12.8 10.8 Credit facilities 8.7 ● ~NOK 12 billion (USD 1.7 billion) in a multi- 6.7 currency revolving facility maturing in 2014 3.5 ● ~NOK 1.3 billion short-term ● Currently fully undrawn Q4 2007 Q1 2008 Q2 20
Slide 17: Preserve financial flexibility
Preserve financial flexibility Reduce capital expenditures Capital expenditures, NOK billion ● 2008-2009: ex-Qatalum spending reduced 40% ● 2009-2010: ex-Qatalum spending 12.3 ~11.5 reduced 15% Decisive measures implemented – cash focus ● Cost-cutting ● Production curtailment 6.0 ● Procurement initi
Slide 18: Priorities in 2009
Priorities in 2009 ● Proactive corrective measures ● Production curtailments ● Cost reductions and margin management ● Working capital and counter party risk ● Cash focus – maintain financial flexibility ● Operational excellence ● Qatalum execution (18)
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