Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Chevreux Spring European and Middle East Large Cap Conference 2008
18 slides from Norsk Hydro Asa's conference presentation, May 20, 2008
Slide 1: Hydro - a resourceful aluminium company
Hydro - a resourceful aluminium company Arvid Moss, Senior Vice President and Head of Corporate Strategy Chevreux Spring European and Middle East Large Cap Conference– May 20, 2008 (1)
Slide 2: Cautionary note in relation to certain forward-looking statements
Cautionary note in relation to certain forward-looking statements 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
Slide 3: A resourceful aluminium company
A resourceful aluminium company Aluminium ● 22 000 employees Metal ● Operations in more than 30 countries ● Turnover Aluminium ● 2006: NOK 99 billion / EUR 12.3 billion Products ● 2007: NOK 94 billion / EUR 11.7 billion ● Underlying EBIT ● 2006: NOK 10.2 billion / EUR 1.3 billion ● 2007: NOK 9.9 bil
Slide 4: Capital employed – upstream focus
Capital employed – upstream focus Total NOK 43 billion1) March 31 2008 Bauxite & Energy; 9 % Alumina; 12 % Automotive; 4 % Extrusion; 9 % Rolled Products; Primary 19 % Aluminium; 41 % Commercial; 6 % 1) Including NOK 5.3 billion in negative capital employed in “Corporate and Other” not shown in grap
Slide 5: Underlying EBIT per segment
Underlying EBIT per segment NOK million Aluminium Metal Aluminium Products Energy Corporate and eliminations 2 885 2 938 2 883 369 266 2 455 229 2 538 2 692 398 498 492 558 383 207 2 235 2 440 288 269 2 375 2 370 294 2 032 367 2 102 2 130 1 697 399 1 831 341 1 755 370 1 331 1 255 2006 2007 2008 (5)
Slide 6: Improved return on capital
Improved return on capital RoaCE Hydro Aluminium Metal Aluminium Products Energy 22.5% 23.0% 19.1% 18.0% 14.6% 10.7% 4.70% -0.70% 2006 2007 2006 2007 2006 2007 2006 2007 Capital employed – March 31, 2007 (NOK billion) 42.8 28.0 15.9 4.1 (6)
Slide 7: 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 63% equity in Good long-term 1.74 mill. mt/year 3.2 mill. mt/year 1.7 mill. mt/year 728 000 ton alumina coverage of power
Slide 8: Growth and restructuring efforts
Growth and restructuring efforts Improved cost position Business operating cash cost USD/tonne 3 000 Business operating cost Weighted average Hydro (CRU) Qatalum Hydro CRU incl c losed c apac ity Hydro CRU incl Qatalum ex closed cap 2 600 Closed 250 000 tonnes capacity 2 200 in Norway and Germany (2
Slide 9: Qatalum smelter
Qatalum smelter Largest greenfield capacity built in one step ● First-stage capacity ● Smelter: 585 000 tonnes per year ● 704 cells in 2 double-lined potrooms ● Hydro technology ● Anode plant and cast houses ● 1 250 MW power plant ● Possible expansion to 1 200 000 tonnes per year ● Technology design
Slide 10: Hydro well covered with alumina
Hydro well covered with alumina New refinery positions Hydro for further growth in metal Alumina coverage Percent 140% 120% 100% LME-linked contracts 80% MoU new refinery equity 60% 40% Equity 20% 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Based on existing smelter capacity and decided smelter
Slide 11: Competitive power sourcing
Competitive power sourcing Critical for aluminium smelting Power coverage 100% ● Power represents 30% of Neuss production costs 75% Contract Contracts ● Long-term power sourcing ensures predictable costs 50% ● Globalization of Hydro’s power 25% Self generated Self generated activities 0% ● 9 TWh cap
Slide 12: 2008 outlook
2008 outlook ● Primary aluminium demand expected to grow by 8-9% ● Driven by China and despite weak US economy ● Moderate slowdown in market growth for semi-fabricated products in Europe ● Support for aluminium price at high level ● Healthy market balance, cost pressure for input factors and weak US
Slide 13: Significant change in forward curve
Significant change in forward curve LME forward price, USD/tonne 3 200 3 000 2 800 2 600 2 400 2 200 2 000 1 800 1 600 1 400 1 200 2003 2005 2007 2009 2011 2013 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 May-08 (13)
Slide 14: China net import / net export
China 1 000 tonnes ● Export tax on metal and low 500 value-added products Net import 400 300 ● Majority of export to Asian markets 200 100 ● China expected to be balanced, 0 medium to long-term in primary (100) aluminium (200) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 06 06 06 06 07 07 07 07 08* (300) ● Reduced pr
Slide 15: Capital allocation
Capital allocation NOK billion ● ~80% of 2008-2009 investments upstream 12-13 12-13 ● Qatalum: USD 2.8 billion ● Alunorte 3: USD 0.3 billion ● Aluminium Products ● Selective growth initiatives in Extrusion and Building Systems ● Sustaining capex NOK 3 billion annually 2008E 2009E Debt-financed inves
Slide 16: Business development
Business development Energy ● NorSun, Norway ● Increased stake from 16% to 18% ● Ascent Solar, U.S. ● Increased stake from 23% to 35% ● Convexa, Norway ● Venture capital fund investment Aluminium Metal ● Famco, Taiwan ● 45% in remelter under construction Aluminium Products ● Alumafel, Spain ● Buildi
Slide 17: Hydro's competitive strengths
Hydro’s competitive strengths ● Power position ● Close to markets and customers ● Operational performance ● Reputable partner in joint ventures ● Technological leadership ● Distinct project management skills across value chain ● Financial capacity to grow (17)
Slide 18: www.hydro.com
www.hydro.com
Norsk Hydro — Chevreux Spring European and Middle East Large Cap Conference 2008 on 6ix