Norsk Hydro ASA · OSL:NHY
Norsk Hydro ASA — Q2 2004 Earnings Presentation
58 slides from Norsk Hydro ASA's earnings presentation, July 2004
Slide 1: Hydro Oil & Energy 2nd quarter 2004 – Presentation
Hydro Oil & Energy 2nd quarter 2004 – Presentation
Slide 2: Highlights second quarter
2 Norsk Hydro ASA – Second quarter 2004 Highlights second quarter z Best half-year financial result ever z High oil price, improved aluminium markets z Strong growth in oil and gas production z Further improvement in Aluminium performance z Strong financial position 50163_E • Hydro Media • 07.2004 •
Slide 3: Income from continuing operations
3 Norsk Hydro ASA – Second quarter 2004 Income from continuing operations* Per quarter NOK million Gains from divestments 3 500 3 100 3 135 2 991 3 000 2 500 2 342 2 224 1 851 2 005 2 000 1 809 1 500 1 417 1 000 500 241 0 2002 2003* 2004 Accumulated 7 100 8 656 5 359 * Including the effect of change
Slide 4: Earnings before interest, tax, depreciation and amortization (EBITDA)
4 Norsk Hydro ASA – Second quarter 2004 Earnings before interest, tax, depreciation and amortization (EBITDA) Per quarter NOK million 16 000 14 000 13 546 12 266 12 000 11 045 9 820 9 935 10 000 9 451 7 955 8 197 8 000 7 199 6 775 6 000 4 000 2 000 0 2002 2003 2004 Accumulated 31 749 38 628 25 812 5
Slide 5: Consolidated income statements
5 Norsk Hydro ASA – Second quarter 2004 Consolidated income statements 2nd quarter 2nd quarter NOK million 2004 2003 Operating revenues 38 250 31 354 Operating income 8 290 3 989 Equity in net income of non-consolidated investees 121 246 Financial income (expense), net (447) 152 Other income, net -
Slide 6: Earnings per share from continuing operations
6 Norsk Hydro ASA – Second quarter 2004 Earnings per share from continuing operations* NOK 14 Gains from divestments 12.0 12.3 12 11.7 10 9.1 8.7 7.8 8 7.0 6.1 6 5.5 4 2 0.9 0 2002 2003* 2004 Accumulated 27.5 32.5 21.0 * Before effect of change in accounting principles 50163_E • Hydro Media • 07.200
Slide 7: Operating income
7 Norsk Hydro ASA – Second quarter 2004 Operating income Individual operating segment 2nd quarter 1st quarter 2nd quarter NOK million 2004 2004 2003 Exploration and Production 6 606 7 082 3 107 Energy and Oil Marketing 573 733 547 Eliminations 5 3 (2) Hydro Oil & Energy 7 184 7 818 3 652 Metals 855
Slide 8: Financial solidity
8 Norsk Hydro ASA – Second quarter 2004 Financial solidity 0.7 0.60 0.6 0.5 0.4 0.38 0.34 0.3 0.20 0.2 0.1 0 2001 2002 2003 2004 Interest-bearing debt + net pension liability (tax adjusted) + operating lease commitments (discounted) – cash and cash equivalents – other liquid assets divided by shareh
Slide 9: Oil & Energy – highlights
9 Norsk Hydro ASA – Second quarter 2004 Oil & Energy – highlights z Oil and gas production 18% higher than Q2 2003 z High oil prices – realized USD 34.7 per barrel z 10 exploration wells completed 1st half 2004 – 5 discoveries z Awarded 4 licenses in 18th NCS Licensing Round, 2 as operator z Discuss
Slide 10: Oil & Energy – operating income
10 Norsk Hydro ASA – Second quarter 2004 Oil & Energy – operating income NOK million Exploration and Production Energy and Oil Marketing Eliminations 7 818 7 184 6 175 5820 5 551 5 994 5 384 5 322 4 622 3 707 3 686 3 652 3 184 3 170 2001 2002 2003 2004 Accumulated 19 177 15 947 21 143 15 002 50163_E
Slide 11: Petroleum production per quarter
11 Norsk Hydro ASA – Second quarter 2004 Petroleum production per quarter 1 000 boe/day 615 596 569 Oil Gas 540 552 482 484 489 173 166 451 448 452 147 427 143 156 419 385 104 112 116 88 430 442 93 115 110 422 91 397 396 74 378 372 373 364 334 328 336 338 311 2001 2002 2003 2004 Accumulated 421 480
Slide 12: Production costs per barrel
12 Norsk Hydro ASA – Second quarter 2004 Production costs per barrel NOK/boe 25.3 25.6 24.1 24.1 23.9 22.9 23.2 22.9 21.1 21.0 20.1 19.8 17.4 17.1 2001 2002 2003 2004 Accumulated 24.1 22.6 20.7 18.5 50163_E • Hydro Media • 07.2004 • 12
Slide 13: Oil & Energy – prospects
13 Norsk Hydro ASA – Second quarter 2004 Oil & Energy – prospects z Well on track to deliver 560 000 boe/day in 2004 z Seasonally lower gas volume and planned maintenance in Q3 z Ongoing rig strike impacts drilling of production wells – limited effect on 2004 production z Q3 exploration in Libya and
Slide 14: Aluminium – highlights
14 Norsk Hydro ASA – Second quarter 2004 Aluminium – highlights z Higher aluminium prices z Increased demand, but still pressure on downstream margins z Higher volumes z New upstream capacity, higher downstream capacity utilization z Effects of improvement programs evident in results z Expansion pro
Slide 15: Aluminium – operating income
15 Norsk Hydro ASA – Second quarter 2004 Aluminium – operating income NOK million Metals Rolled Products 1 629 Extrusion and Automotive Other and Eliminations 1 269 833 711 709 653 564 530 495 412 230 345 (146) (997) 2001 2002 2003 2004 Accumulated 185 1 698 2 456 2 898 50163_E • Hydro Media • 07.20
Slide 16: Aluminium – business comments
16 Norsk Hydro ASA – Second quarter 2004 Aluminium – business comments z Metals z Higher aluminium prices and increased volume z Rolled Products z Increased volumes and improved product mix z Lower margins in EUR – higher in NOK z Significant inventory gain z Extrusion and Automotive z Extrusion vol
Slide 17: Aluminium – prospects
17 Norsk Hydro ASA – Second quarter 2004 Aluminium – prospects z Positive outlook for aluminium metal market z Positive market development for Extrusion and Automotive z Continued weak margins for rolled products z Seasonally lower downstream demand in 2nd half z Substantial charges expected 2nd hal
Slide 18: Hydro – priorities ahead
18 Norsk Hydro ASA – Second quarter 2004 Hydro – priorities ahead z Continue improving operational performance z Strengthen competitive position z Deliver first class projects z Ensure profitable growth 50163_E • Hydro Media • 07.2004 • 18
Slide 19: Additional information
Additional information
Slide 20: Adjusted income second quarter 2004
20 Norsk Hydro ASA – Second quarter 2004 Adjusted income second quarter 2004 Adj. operating NOK million 2nd quarter 2004 Adjustments income Exploration and Production 6 606 - 6 606 Energy and Oil Marketing 573 (31) 542 Eliminations 5 - 5 Hydro Oil & Energy 7 184 (31) 7 153 Metals 855 - 855 Rolled Pr
Slide 21: Infrequent and other special items impacting income statement second quarter 2004
21 Norsk Hydro ASA – Second quarter 2004 Infrequent and other special items impacting income statement second quarter 2004 Item NOK million Inventory gains Energy and Oil Marketing (31) Inventory gains Rolled Products (121) Rationalization costs due to closure of plant Extrusion and Automotive 46 Un
Slide 22: Adjusted income second quarter 2003
22 Norsk Hydro ASA – Second quarter 2004 Adjusted income second quarter 2003 Adj. operating NOK million 2nd quarter 2003 Adjustments income Exploration and Production 3 107 - 3 107 Energy and Oil Marketing 547 172 719 Eliminations (2) - (2) Hydro Oil & Energy 3 652 172 3 824 Metals 542 (25) 517 Roll
Slide 23: Infrequent and other special items impacting income statement second quarter 2003
23 Norsk Hydro ASA – Second quarter 2004 Infrequent and other special items impacting income statement second quarter 2003 NOK Item Reporting line million Inventory loss Oil & Energy Operating income 172 Provision for loss regarding loan to Goldendale 140 Reversal of environmental accruals (65) Alum
Slide 24: Consolidated income statements
24 Norsk Hydro ASA – Second quarter 2004 Consolidated income statements Year to date Year to date NOK million 2004 2003 Operating revenues 77 848 67 117 Operating income 17 566 9 971 Equity in net income of non-consolidated investees 252 433 Financial income (expense), net (1 071) (499) Other income
Slide 25: EBITDA
25 Norsk Hydro ASA – Second quarter 2004 EBITDA Individual operating segment NOK million 2nd quarter 2004 2nd quarter 2003 Exploration and Production 8 990 5 228 Energy and Oil Marketing 769 1 048 Eliminations 5 (2) Hydro Oil & Energy 9 764 6 274 Metals 1 354 1 124 Rolled Products 456 215 Extrusion
Slide 26: Depreciation
26 Norsk Hydro ASA – Second quarter 2004 Depreciation Individual operating segment NOK million 2nd quarter 2004 2nd quarter 2003 Exploration and Production 2 371 2 136 Energy and Oil Marketing 153 148 Hydro Oil & Energy 2 524 2 284 Metals 420 351 Rolled Products 166 147 Extrusion and Automotive 349
Slide 27: Operating income
27 Norsk Hydro ASA – Second quarter 2004 Operating income Individual operating segment Year to date Year to date NOK million 2004 2003 Exploration and Production 13 688 8 589 Energy and Oil Marketing 1 306 1 262 Eliminations 8 (24) Hydro Oil & Energy 15 002 9 827 Metals 1 844 1 114 Rolled Products 4
Slide 28: Net financial income (expense)
28 Norsk Hydro ASA – Second quarter 2004 Net financial income (expense) NOK million 2nd quarter 2004 2nd quarter 2003 Interest income 201 172 Dividends and net gain (loss) on securities 21 169 Interest income and other financial income 222 341 Interest expense (600) (670) Capitalized interest 166 18
Slide 29: Equity in net income of non-consolidated investees
29 Norsk Hydro ASA – Second quarter 2004 Equity in net income of non-consolidated investees Individual operating segment NOK million 2nd quarter 2004 2nd quarter 2003 Exploration and Production - 4 Energy and Oil Marketing 25 18 Hydro Oil & Energy 25 22 Metals 50 204 Rolled Products (3) (5) Extrusio
Slide 30: Variance analysis Hydro group
30 Norsk Hydro ASA – Second quarter 2004 Variance analysis Hydro group NOK million 1 st half 2nd quarter 2004 25 812 12 266 2003 18 132 8 197 Variance EBITDA 7 680 4069 - Prices and currency, Exploration and Production (E&P) 2 490 2 325 - Margin incl. currency effects ¹) 1 095 290 - Volume 4 580 2 2
Slide 31: Investments
31 Norsk Hydro ASA – Second quarter 2004 Investments Individual operating segment NOK million 2nd quarter 2004 2nd quarter 2003 Exploration and Production 2 175 2 369 Energy and Oil Marketing 378 241 Hydro Oil & Energy 2 553 2 610 Metals 767 797 Rolled Products 67 56 Extrusion and Automotive 207 313
Slide 32: Investments
32 Norsk Hydro ASA – Second quarter 2004 Investments Individual operating segment NOK million Year to date 2004 Year to date 2003 2) Exploration and Production 4 014 5 726 Energy and Oil Marketing 596 445 Hydro Oil & Energy 4 610 6 171 Metals 1) 2 775 1 539 Rolled Products 178 114 Extrusion and Auto
Slide 33: Consolidated balance sheet
33 Norsk Hydro ASA – Second quarter 2004 Consolidated balance sheet NOK million 30.06.2004 30.06.2003 31.12.2003 Cash and cash equivalents 26 773 11 717 14 873 Other liquid assets 1 487 1 553 1 553 Receivables 36 435 33 587 33 444 Inventories 12 093 12 036 12 024 Current assets discontinued operatio
Slide 34: Statement of cash flow
34 Norsk Hydro ASA – Second quarter 2004 Statement of cash flow NOK million 1st half 2004 1st half 2003 Operating activities: Net income 6 442 4 806 Depreciation, depletion and amortization 7 288 6 616 Other adjustments (1 513) (160) Net cash provided by operating activities 12 217 11 262 Investing
Slide 35: Operating income – EBIT – EBITDA
35 Norsk Hydro ASA – Second quarter 2004 Operating income – EBIT – EBITDA Second quarter 2004 Selected Depr. Operating Non-cons Interest Other EBITD NOK million fin. EBIT and income investees income items income amort. A Exploration and 6 606 - 15 (2) - 6 619 2 371 8 990 Production Energy and Oil Ma
Slide 36: Financial solidity – calculation
36 Norsk Hydro ASA – Second quarter 2004 Financial solidity – calculation 31 31 31 31 31 30 Amounts in NOK million December December December December December June 1999 2000 2001 2002 2003 2004 [A] Cash and cash equivalents 7 435 21 766 27 148 5 965 15 249 26 773 [B] Other liquid assets 2 535 2 490
Slide 37: Net income
37 Norsk Hydro ASA – Second quarter 2004 Net income* Per quarter NOK million Gains from divestments 4 500 4 218 4 000 3 765 3 500 3 235 3 280 2 840 3 000 2 482 2 324 2 397 2 500 2 180 2 132 2 224 2 000 1 500 1 333 1 144 1 000 513 500 0 2001 2002 2003* 2004 Accumulated 7 892 8 765 10 968 6 442 * Incl
Slide 38: Earnings per share
38 Norsk Hydro ASA – Second quarter 2004 Earnings per share* NOK Gains from divestments 18 16.5 16 14.7 14 12.4 12.7 12 11.0 10 9.0 9.3 8.4 8.5 8.7 8.3 8 6 5.2 4.4 4 2.0 2 0 2001 2002 2003 2004 Accumulated 30.5 34.0 41.5 25.2 * Before effect of change in accounting principles 50163_E • Hydro Media •
Slide 39: Oil & Energy EBITDA
39 Norsk Hydro ASA – Second quarter 2004 Oil & Energy EBITDA NOK million Eliminations Energy and Oil Marketing 10 503 9 764 10 000 Exploration and Production 9 139 8 668 7 894 7 887 7 745 8 000 7 425 6 757 6 155 6 274 6 000 5 847 5 528 5 451 4 000 2 000 0 2001 2002 2003 2004 Accumulated 27 604 25 34
Slide 40: Variance analysis Oil & Energy
40 Norsk Hydro ASA – Second quarter 2004 Variance analysis Oil & Energy NOK million 1st half 2nd quarter 2004 20 267 9 764 2003 14 942 6 274 Variance EBITDA 5 325 3 490 - Prices and currency - Oil 2 625 2 565 - Gas 195 (95) - Currency (330) __ (145) __ 2 490 2 325 - Margin (185) (130) - Volume 3 245
Slide 41: Variance analysis Exploration and Production
41 Norsk Hydro ASA – Second quarter 2004 Variance analysis Exploration and Production NOK million 1st half 2nd quarter 2004 18 583 8 990 2003 12 998 5 228 Variance EBITDA 5 585 3 762 Prices and currency - Oil - Gas 2 625 2 565 195 (95) - Currency (330)_ _____ (145) _ ____ 2 490 2 325 - Volume 2 805
Slide 42: Variance analysis Energy and Oil Marketing
42 Norsk Hydro ASA – Second quarter 2004 Variance analysis Energy and Oil Marketing NOK million 1st half 2nd quarter 2004 1 676 769 2003 1 968 1 048 Variance EBITDA (292) (279) - Margin (215) (135) - Volume 440 230 - Fixed costs (20) 5 - Depreciation (10) (5) - New/disposed business (160) (65) - Oth
Slide 43: Production per field
43 Norsk Hydro ASA – Second quarter 2004 Production per field Boe/day Q2 2003 Q2 2004 Hydro Share Hydro Production (oil including NGL and condensate) Percent Oseberg 158 000 161 000 34.00 54 886 Grane 0 105 000 38.00 39 925 Snorre 227 000 212 000 17.65 37 338 Oseberg South 87 000 85 000 34.00 28 817
Slide 44: Operating costs per barrel
44 Norsk Hydro ASA – Second quarter 2004 Operating costs per barrel NOK/boe 99.7 100 90.1 83.8 80 73.2 60 40 20 0 2001 2002 2003 2004 Exploration 9.1 20.3 8.1 4.2 Net transportation * 8.5 9.0 6.8 7.4 Other cost/income 2.0 1.4 1.8 -1.7 Deprec. & aband. 46.4 46.4 46.4 44.8 Production cost 24.1 22.6 20
Slide 45: Exploration activity and costs
45 Norsk Hydro ASA – Second quarter 2004 Exploration activity and costs NOK million 1 400 1 200 1 000 800 Expensed 600 share 400 200 0 - 200 - 400 Capitalized 1/01 2/01 3/01 4/01 1/02 2/02 3/02 4/02 1/03 2/03 3/03 4/03 1/04 2/04 share Activity Expensed old wells Cost reduction repayment Angola 50163
Slide 46: Strong production growth
46 Norsk Hydro ASA – Second quarter 2004 Strong production growth 1 000 boe/day 700 a l gr owth 600 annu a ve rage 8% 500 400 300 200 100 0 1998 1999 2000 2001 2002 2003 2004E 2005E 2006E 2007E Norwegian fields Oil, international Gas 8% CAGR* * Compound annual growth rate, 2001 baseline 50163_E • Hy
Slide 47: New fields on stream 2004 – 2007
47 Norsk Hydro ASA – Second quarter 2004 New fields on stream 2004 – 2007 Hydro share boe/day Dalia 22 000 International Kharyaga 2+3 15 000 (phase 1-3) Murzuq 6 000 (A + D field) Rosa 13 000 NCS operator Ormen Lange 70 000 Oseberg 14 000 Vestflanken Oseberg South J 7 000 NCS non-operator Visund gas
Slide 48: Price development – crude oil
48 Norsk Hydro ASA – Second quarter 2004 Price development – crude oil Average Brent blend dated per quarter USD/bbl NOK/bbl 40 280 USD/bbl NOK/bbl 35 240 30 200 25 160 20 120 15 80 10 5 40 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2nd quarter 2004: NOK 239/USD 34.9 per barrel 50163_E •
Slide 49: Aluminium EBITDA
49 Norsk Hydro ASA – Second quarter 2004 Aluminium EBITDA NOK million Other and Eliminations 2 750 Extrusion and Automotive 2 708 2 500 Rolled Products 2 335 Metals 2 250 2 000 1 430 1 809 1 750 1 572 1 619 1 498 1 500 1 292 1 316 1 250 1 000 889 899 827 526 750 500 (302) 250 0 - 250 - 500 2001 2002
Slide 50: Variance analysis Aluminium
50 Norsk Hydro ASA – Second quarter 2004 Variance analysis Aluminium NOK million 1st half 2nd quarter 2004 5 043 2 335 2003 3 191 1 619 Variance EBITDA 1 852 716 - Margin 765 440 - Volume 1 355 625 - Fixed costs (595) (175) - Depreciation (225) (95) - New/disposed business 195 195 - Infrequent items
Slide 51: Variance analysis Metals
51 Norsk Hydro ASA – Second quarter 2004 Variance analysis Metals NOK million 1st half 2nd quarter 2004 2 883 1 354 2003 2 171 1 124 Variance EBITDA 712 230 - Margin 295 255 - Volume 540 190 - Fixed costs (125) (25) - Depreciation (70) (20) - New/disposed business 215 215 - Infrequent items (20) (25
Slide 52: Variance analysis Rolled Products
52 Norsk Hydro ASA – Second quarter 2004 Variance analysis Rolled Products NOK million 1st half 2nd quarter 2004 791 456 2003 383 215 Variance EBITDA 408 241 - Margin 345 195 - Volume 95 25 - Fixed costs - 30 - Depreciation (45) (20) - New/disposed business (20) (20) - Infrequent items - (5) - Other
Slide 53: Variance analysis Extrusion and Automotive
53 Norsk Hydro ASA – Second quarter 2004 Variance analysis Extrusion and Automotive NOK million 1st half 2nd quarter 2004 1 068 556 2003 629 300 Variance EBITDA 439 256 - Margin 155 (20) - Volume 720 410 - Fixed costs (470) (180) - Depreciation (110) (55) - Infrequent items 75 90 - Other (85) (70) V
Slide 54: Aluminium – key figures by segment
54 Norsk Hydro ASA – Second quarter 2004 Aluminium – key figures by segment Volumes and prices Q2 2004 Q1 2004 Q2 2003 Primary production (Kmt) 387 384 360 Total metal products sales (Kmt) *) 676 688 546 LME, realized (USD/t) **) 1657 1 528 1 417 USD/NOK, realized ***) 7.10 7.13 7.33 Rolled Products
Slide 55: Inventories – primary aluminium
55 Norsk Hydro ASA – Second quarter 2004 Inventories – primary aluminium 1 000 tonnes 5 000 LME (London Metal Exchange) IAI (Producers' inventories) 4 000 3 000 2 000 1 000 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Sources: IAI and LME. 2004: IAI numbers as of May, LME
Slide 56: Aluminium price
56 Norsk Hydro ASA – Second quarter 2004 Aluminium price 3 months LME price, average per quarter USD/tonne 2 000 1 800 1 600 1 400 1 200 1 000 91 92 93 94 95 96 97 98 99 00 01 02 03 04 50163_E • Hydro Media • 07.2004 • 56
Slide 57: Variance analysis Petrochemicals
57 Norsk Hydro ASA – Second quarter 2004 Variance analysis Petrochemicals NOK million 1st half 2nd quarter 2004 298 87 2003 225 132 Variance EBITDA 73 (45) - Margin 65 (10) - Volume 55 25 - Fixed costs (90) (60) - Depreciation (5) - Variance operating income 27 (45) 34 (8) - Non-consolidated investe
Slide 58: Forward-looking statements/ use of non-GAAP financial measures
58 Norsk Hydro ASA – Second quarter 2004 Forward-looking statements/ use of non-GAAP financial measures In order to utilize the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, Hydro is providing the following cautionary statement: This presentation con