Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Hydro — BMO Global Metals & Mining Conference 2010
25 slides from Norsk Hydro Asa's conference presentation, Mar 1, 2010
Slide 1: Hydro – a leading integrated aluminium and energy company
Hydro – a leading integrated aluminium and energy company Jørgen C. Arentz Rostrup, Executive Vice President and CFO BMO Global Metals & Mining Conference - March 1, 2010 (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's value proposition
Hydro’s value proposition • Leading integrated aluminium and energy company with global reach and attractive positions across the value chain • Upstream cost position to be improved by the world-class Qatalum smelter • Strong operational performance and cost focus • Financial discipline • Leading co
Slide 4: Business model
Business model Primary aluminium production Midstream, recycling Aluminium in products Primary Metal Rolled Extruded Energy Metal Markets Products Products • Revenue in NOK • Revenue in USD • EUR and USD • Margin business • Margin business • Cost in USD – alumina, business • Regional business • Loca
Slide 5: Inventories stabilized, at high level
Inventories stabilized, at high level 1 000 tonnes 7 000 LME IAI Nymex/TOC OM/Japan • Reported inventories outside China: ~6 million tonnes 6 000 5 000 • Large portion of LME inventories held by financial investors 4 000 • Unavailable to market • Time horizon depending on interest 3 000 rates, wareh
Slide 6: China returns to balance in primary aluminium
China returns to balance in primary aluminium 1 000 tonnes 600 550 • Swift response to drop in demand 500 • Production curtailments 450 400 • Strategic government purchases Net import 350 • Demand incentives 300 250 200 • Production up in 2009 150 100 • Restart of curtailed capacity 50 • New capacit
Slide 7: Market imbalance continues outside China
Market imbalance continues outside China World outside China (annualized), 1 000 tonnes 30 000 C onsumption Production • Demand down 18% in 2009 28 000 against 2008 26 000 24 000 • Annualized imbalance of 22 000 2.3 million tonnes end-2009 20 000 18 000 • Imbalance expected to continue in 2010, but
Slide 8: Stable volumes
Stable volumes Seasonal decline offset by restocking in Q4 2009 Hydro’s downstream sales Q4 2009 vs Q3 2009 Total downstream sales Rolled Extrusion Building Extrusion Automotive Precision Products Eurasia Systems Americas Structures Tubing Q4 09 vs Q3 09 Acc 09 vs Acc 08 9% 4% 5% 3% 2% -2% -11% -18%
Slide 9: Positive trend in underlying EBIT
Positive trend in underlying EBIT Downstream (1 In NOK million Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 554 389 421 192 138 -44 -31 Upstream (2 -211 In NOK million Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 1 722 1 358 1 236 984 17 1) Rolled Products and E
Slide 10: Mixed signals in markets and economy
Mixed signals in markets and economy • Risk of w-shaped recovery • Relatively strong NOK • Sales volumes increasing • LME inventories at record level Hydro • Margins stable • Supply/demand imbalance • Relatively strong LME-price in USD • World GDP and IP growing • Relatively strong equity markets (1
Slide 11: Historic downturn in 2009
Historic downturn in 2009 World outside China % change YoY World ex China 24% 20% 16% 12% 8% 4% 0% 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 -4% -8
Slide 12: 2010 market outlook
2010 market outlook • World outside China • Demand growth likely, but level uncertain • Supply/demand imbalance expected to continue • Curtailed capacity unlikely to restart • China • Balanced in primary aluminium • Increasing scrap imports • Limited new capacity • Partly offset by new curtailments
Slide 13: Solid measures executed in 2009
Solid measures executed in 2009 • Operating capital reduced by NOK 5.8 billion • Capital expenditure plans cut by 50% Hydro • Manning reduced by 4 500 • Redesigned and reduced staff and support functions • Cash costs reduced significantly Primary • Primary aluminium production curtailed by 26% Metal
Slide 14: Further upstream improvements necessary
Further upstream improvements necessary Ambitious plan to cut cost by 100 USD/tonne 100% • Accelerate operational performance 90% in Primary Metal production system 80% • Improved current efficiency • Reduced power consumption 70% • Reduced anode consumption 60% 50% • Reduce fixed cost 40% 30% • Lea
Slide 15: Qatalum – a world class smelter
Qatalum – a world class smelter Start-up on time, strong cash cost position (15)
Slide 16: Qatalum – a complex project
Qatalum – a complex project Contract structure HAL3000 Pot Control System ABB Casthouse FATA/ K-Home Anode Baking Plant FATA/ K-Home Pot Tending Machine NKM Noell Service Areas & Potroom Building FTP & Dist. Systems SNC - Lavalin Solios Busbars Power Plant Salztburger Al. Doosan Paste Plant Solios R
Slide 17: Qatalum – a complex project
Qatalum – a complex project Contract structure - Safety •84 million work hours •More than 20 000 workers at peak •LTI-rate 0.4 •TRI-rate 2.9 (17)
Slide 18: Qatalum – a complex project
Qatalum – a complex project Contract structure - Safety - Size •4 pot lines •Carbon plant •Power plant •Port •Casthouse (18)
Slide 19: Qatalum – a complex project
Qatalum – a complex project Contract structure - Safety - Size - Closing / hand-over of project •More than 10 000 workers still on site •Operating organization of 1 100 people •400 000 tags to be signed off (19)
Slide 20: Qatalum on schedule for full output by Q4 2010
Qatalum on schedule for full output by Q4 2010 • Production started December 20 • Investment (100%) ~USD 5.7 billion • Strong cash cost position when in full production • Leading smelter technology • Favorable location (20)
Slide 21: Attractive upstream growth pipeline
Attractive upstream growth pipeline Qatalum 2 – aluminium CAP – alumina Hydro power smelter, Qatar refinery, Brazil developments, Norway • Potential for expanding • Joint venture agreement • Development potential Qatalum up to 1.2 million mt between Vale (61%), Hydro 0.5 – 1 TWh • Utilize next-gener
Slide 22: Aiming for the next leap in primary technology
Aiming for the next leap in primary technology Next- generation smelter Future technology HAL 300 HAL4e vision • 13.3 kWh/kg • 12.8 kWh/kg • Significantly lower kWh/kg • 1.6 tonne CO2/tonne aluminium • 1.5 tonne CO2/tonne aluminium • 0 tonne CO2/tonne aluminium • Low diffuse emissions • Benchmark GH
Slide 23: Financial position
Financial position Net cash / (debt) in NOK billion • Net cash of NOK 2.0 billion end-2009 3.5 • Net pension liability after tax included in 3.0 adjusted debt reduced by NOK 4.0 billion due to updated actuarial assumptions 2.4 2.0 Dec 31, Jun 30, Sep 30, Dec 31, NOK billion 2008 2009 2009 2009 Net c
Slide 24: Priorities in 2010
Priorities in 2010 • Solid operations • Stay close to markets • Reposition upstream • Financial flexibility business • Proactive corrective • Qatalum ramp-up measures (24)
Slide 25: www.hydro.com
www.hydro.com