Norsk Hydro ASA · OSL:NHY
Norsk Hydro ASA — Investor Presentation (May 2006)
42 slides from Norsk Hydro ASA's investor presentation, May 2006
Slide 1: Hydro 2006
Hydro 2006
Slide 2: Hydro at a glance – a Fortune 500 company
Hydro at a glance – a Fortune 500 company Hydro 2005 Distribution of shares 2005 Turnover * 174 billion NOK = 25.7 billion USD Norwegian State 43.8% Operating income 46 billion NOK = 6.8 billion USD Norway privately owned 16.2% Investments 41 billion NOK = 6.1 billion USD USA 18.6% Employees 33 000
Slide 3: A century of progress – what next?
A century of progress – what next? 55370_1 • Media Center • 05.2006 • 3
Slide 4: …continued progress!
A century of progress – what next? …continued progress! z Hydro is a Fortune 500 energy and aluminium supplier with: z 33 000 employees worldwide z activities in 40 countries z 2005 turnover 174 billion NOK z Our mission is to strengthen the viability of our customers and the communities we serve 55
Slide 5: What will happen when the world runs out of oil?
What will happen when the world runs out of oil? 55370_1 • Media Center • 05.2006 • 5
Slide 6: … by then, hopefully no one will care
What will happen when the world runs out of oil? … by then, hopefully no one will care z Energy consumption is increasing year by year z Climate challenges are mounting z Hydro creates useful products from natural resources z We have 100 years experience in renewable energy z Hywind combines our off
Slide 7: Is safety ignored for the sake of profit?
Is safety ignored for the sake of profit? 55370_1 • Media Center • 05.2006 • 7
Slide 8: … profitability and safe operations are two sides of the same coin
Is safety ignored for the sake of profit? … profitability and safe operations are two sides of the same coin z Tougher competition in a more global market – temptation to cut corners? z Our experience is that profitable – and safe and environmentally responsible – operations go hand in hand z We are
Slide 9: Can our planet sustain a high standard of living for everyone?
Can our planet sustain a high standard of living for everyone? 55370_1 • Media Center • 05.2006 • 9
Slide 10: … only if we start thinking outside the box
Can our planet sustain a high standard of living for everyone? … only if we start thinking outside the box z Today’s situation is similar to when Hydro was founded 100 years ago z Threatening challenges for a large part of the world population cry out for new solutions z We have both innovative answ
Slide 11: Is restructuring just another word for greed?
Is restructuring just another word for greed? 55370_1 • Media Center • 05.2006 • 11
Slide 12: … timely change is corporate responsibility in practice
Is restructuring just another word for greed? … timely change is corporate responsibility in practice z Changes in the global economy do not arrive at convenient intervals z Sometimes there are no alternatives to closure or radical restructuring z In our 100 years of doing business, we have learned
Slide 13: Hydro highlights 2005
Hydro highlights 2005 z Best results ever – net income NOK 15 716 million z International breakthrough for Oil & Energy – Spinnaker acquisition, successful drilling z New direction for Aluminium – greater concentration on primary aluminium production, downstream turnaround z Stronger on safety – con
Slide 14: Stronger on safety
Stronger on safety Total reported injuries per million working hours (TRI) Rate 15 10 5 0 2000 2001 2002 2003 2004 2005 55370_1 • Media Center • 05.2006 • 14
Slide 15: Best Hydro results ever
Best Hydro results ever NOK million 2002 2003 2004 2005 Accumulated 7 100 8 656 11 477 15 638 * Changes in accounting principles for 4th quarter 2005 resulted in a negative amount of NOK 78 million, while the effect in 1st quarter 2003 was a positive amount of NOK 281 million 55370_1 • Media Center
Slide 16: Adjusted EBITDA
Adjusted EBITDA NOK million 2002 2003 2004 2005 Accumulated 31 749 38 628 51 116 65 493 55370_1 • Media Center • 05.2006 • 16
Slide 17: Return on capital significantly improved
Return on capital significantly improved Return on average Capital Employed – RoaCE 19.9% Adjustment for special events * Actual 16.8% 13.6% 13.0% 8.4% 7.2% 2002 2003 2004 2005 * Special events include, 2004: write downs in Aluminium and changes in tax regulation, 2005: write downs in Aluminium and
Slide 18: Adjusted net debt/equity ratio
Adjusted net debt/equity ratio 0.60 0.38 0.31 0.11 2002 2003 2004 2005 Interest-bearing debt + net pension liability (tax adjusted) + operating lease commitments (discounted) – cash and cash equivalents – other liquid assets divided by shareholders’ equity + minority interest 55370_1 • Media Center
Slide 19: Hydro financial overview 2005
Hydro financial overview 2005 Operating revenues – NOK 174 billion Employees 32 765 Other Oil & 5% Energy Other 14% 11% Aluminium Aluminium Products Oil & Metals 26% Energy 15% 49% Aluminium Aluminium Metal Products 60% 20% Adjusted EBITDA – NOK 65 billion Capital employed – NOK 109 billion Aluminiu
Slide 20: A world leader in oil and energy
A world leader in oil and energy z An integrated oil and energy company z Operates close to 1 million barrels a day z Strong position on Norwegian Continental Shelf z Increased international business – operations in more than six countries 55370_1 • Media Center • 05.2006 • 20
Slide 21: From source to market
From source to market Explore Design Execute Operate Market 55370_1 • Media Center • 05.2006 • 21
Slide 22: A large offshore operator
A large offshore operator HEIMDAL OSEBERG FELTSENTER OSEBERG OSEBERG C OSEBERG SØR ØST GRANE TROLL B TROLL C NJORD BRAGE VALE FRAM VEST TUNE TROLL PILOT STURE NORWAY z Hydro operates 1 million boe a day z 30 % of Norwegian oil production z 15 installations on Norwegian Shelf - 10 platforms, four sub
Slide 23: Oil and gas activities throughout the world
Oil and gas activities throughout the world Russia Norway Denmark Canada Iran Libya US Gulf of Mexico Nigeria Brazil Angola Current E&P activity 55370_1 • Media Center • 05.2006 • 23
Slide 24: Technological and operational leadership
Technological and operational leadership z Cost-effcient, safe and smart operations z Driving innovation and competence - Subsea technology - Advanced drilling - world leader in multilateral wells - Increased oil recovery - Front runner in environmental technology 55370_1 • Media Center • 05.2006 •
Slide 25: Ormen Lange – the world's most challenging gas field?
Ormen Lange – the world’s most challenging gas field? z On time and budget z NOK 66 billion investment Multiphase transport z Subsea production at 1100m z Langeled – the worlds longest Steep and subsea pipeline uneven terrain z Supplying 20% of UK gas needs z Production start October 2007 Seabed z T
Slide 26: Oil & Energy outlook
Oil & Energy outlook z Profitable production growth z Realize potential of a strong portfolio z Strengthen resource base z Technological and operational leadership z Significant investments in attractive projects 55370_1 • Media Center • 05.2006 • 26
Slide 27: Our global aluminium business
Our global aluminium business z Present on every continent z Primary metal production in Europe, Canada and Australia. Investing for repositioning and growth z Major supplier of aluminium products for the automotive, packaging, printing and building industries, as well as general engineering z Impro
Slide 28: International presence – Aluminium
International presence – Aluminium Employees* Germany 5 574 Norway 4 782 US 3 524 France 1 790 Italy 1 234 Denmark 840 UK 821 Austria 810 Hungary 696 Spain 655 Australia 529 Portugal 522 Sweden 472 Belgium 402 Canada 348 * 2005 55370_1 • Media Center • 05.2006 • 28
Slide 29: Aluminium value chain, 2005
Aluminium value chain, 2005 1 000 tonnes Equity Medium/long term contracts Alumina * 744 1 082 Equity ** Electrolysis metal 1 826 Equity ** 3rd party Remelt Casthouse products 1 826 240 1 755 Extrusion & Rolled Automotive Downstream 953 694 * Aluminium equivalents (2 tonnes alumina per tonne alumini
Slide 30: Global aluminium demand increases 4–5% annually
Global aluminium demand increases 4 – 5% annually Primary demand to increase by 4% while recycling to increase by 5 – 6% Global Metal Product Demand 2005 Global Metal Product Demand 2020 45 million tonnes 90 million tonnes Other Africa Africa Other Asia Asia 1% Europe 1% 12% 13% 18% Europe India 25%
Slide 31: Primary production will grow in new areas …
Primary production will grow in new areas … z Favorable energy contracts in traditional locations expiring z Increasing power prices in mature economies z Available low-cost power sources in Middle East, Russia, parts of Africa and South America 55370_1 • Media Center • 05.2006 • 31
Slide 32: Future aluminium metal capacity increases in areas with low energy costs
Future aluminium metal capacity increases in areas with low energy costs 55370_1 • Media Center • 05.2006 • 32
Slide 33: New projects strengthen primary production
New projects strengthen primary production Expansion 3 of Alunorte alumina refinery Smelter project in Qatar z Expansion of 1.9 million tonnes to 6.5 million z World class aluminium project tonnes – 585 000 tonnes per year z Hydro stake 34% z Expansion potential up to 1 200 000 tonnes per year z Amo
Slide 34: Aluminium downstream activities
Aluminium downstream activities Total revenues 2005: NOK 46 billion Revenue split: Europe 74%, North America 16%, Others 10% Rolled Products Extrusion Automotive 43% 37% 20% 55370_1 • Media Center • 05.2006 • 34
Slide 35: Differentiation through innovation
Differentiation through innovation z DaimlerChrysler engine block - The first ever high-volume aluminum diesel V6 block - Offers lightweight designs for diesel engines - Contracts exceeding EUR 100 million per year - Diesel engines >50% of total market in Europe z TEmotion™ Self-sustained building f
Slide 36: Strong position in building and construction segments
Strong position in building and construction segments z Extruded and rolled products based applications, surface-treated products z Broad range of solutions and products: from residential solutions to large international tender projects z More than a product supplier: - Building systems: Wicona, Tec
Slide 37: Leading in lightweight automotive applications
Leading in lightweight automotive applications z Strategy focused on enhancing strong presence in selected market segments z Key competencies in extruded, rolled and cast applications: - Material understanding and alloy development - Design and process capabilities - Leading manufacturing technologi
Slide 38: Strong position in packaging market
Strong position in packaging market z Using best available technology on dedicated product lines z Setting standards for flexible packaging worldwide z Supplies the packaging market with more than metal: - Broad range of services to customers - Continuous product and service improvements - Contribut
Slide 39: Global leadership in lithographic strip
Global leadership in lithographic strip z Global leader in a niche market z Three fully automated, dedicated production lines z 50% capacity expansion in 2005 z Dedicated R&D resources for process design and alloy development z Pioneer in the use of aluminium for litho plates for more than 40 years
Slide 40: Other Businesses
Other Businesses z Hydro Polymers a leading European producer of polyvinyl chloride (PVC), vinyl chloride monomers (VCM) and lye z Center of excellence and leading supplier of IS services, maintenance and production support z Industrial Park infrastructure management and support z Communication and
Slide 41: Hydro Polymers, one of Europe's largest PVC manufacturers
Hydro Polymers, one of Europe’s largest PVC manufacturers z Total turnover 5 356 MNOK z A world leader in polymer technology z 1 200 employees z A commercial approach to environmentally and socially friendly z The only PVC producer in Norway solutions and Sweden, one of two producers in the UK z A s
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