Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Day (November 2012)
38 slides from Norsk Hydro Asa's investor day presentation, Nov 29, 2012
Slide 1: Creating a global leader
Creating a global leader Svein Richard Brandtzæg Capital Markets Day 2012 (1)
Slide 2: Hydro's path towards global leadership
Hydro’s path towards global leadership Curtailing 26% of primary Launching USD 300 program Announcing SAPA JV metal capacity Creating the world’s leading aluminium solutions provider 2009 2010 2011 2012 Acquiring bauxite and Starting up Qatalum alumina assets (2)
Slide 3: Qatalum
Qatalum Building a world-class, first-quartile smelter (3)
Slide 4: Bauxite & Alumina
Bauxite & Alumina Acquiring high-quality raw materials in Brazil (4)
Slide 5: Sapa joint venture
Sapa joint venture Establishing a global extrusion champion (5)
Slide 6: The industry's most ambitious repositioning drive
The industry’s most ambitious repositioning drive Implementing improvement programs across the value chain Bauxite & Alumina Primary Metal Rolled Products Extruded Products ‘From B to A’ ‘USD 300 program’ ‘Climb 10’ ‘Mission 1000’ (6)
Slide 7: Hydro Capital Markets Day 2011
Hydro Capital Markets Day 2011 Recap • Improve relative position • Focus on operational excellence • Develop commercial opportunities • Manage portfolio actively (7)
Slide 8: A resource-rich global aluminium company
A resource-rich global aluminium company Robust positions across the value chain Recycling Rolling Bauxite Alumina Energy Primary Casting Products Extrusion Recycling (8)
Slide 9: Attractively positioned, global reach
Attractively positioned, global reach Norway Continental Europe • 900 000 tpy hydro-powered aluminium production • Leading upstream, midstream and • Technology centre, R&D for next-generation smelter Rolled Products positions • Hydropower developments • Recycling network • Recycling/remelting North
Slide 10: Challenging markets, positive long-term trends
Challenging markets, positive long-term trends (10)
Slide 11: Solid history of growth in aluminium demand
Solid history of growth in aluminium demand Yet industry’s ability to capitalize on the rising trend remains a concern Yearly consumption (Index 2000=100) 3-month LME price (Index 2000=100) 185 800 175 700 165 600 155 500 145 400 135 300 125 115 200 105 100 95 0 2000 2001 2002 2003 2004 2005 2006 20
Slide 12: Volatile world economy
Volatile world economy North America Europe China • Labor market improving • Ongoing sovereign debt crisis • Economic growth softening • Consumer sentiment picking up • Weak growth in industrial • Exports subdued by weaker production in line with poor PMI global demand • Industrial production modera
Slide 13: Aluminium prices reflecting current macroeconomic uncertainty
Aluminium prices reflecting current macroeconomic uncertainty LME 3-month in USD per mt 3,600 2,400 3,200 2,800 2,200 2,400 2,000 2,000 1,600 1,800 January April July October 1,200 2006 2007 2008 2009 2010 2011 2012 Source: Reuters Ecowin (13)
Slide 14: Demand-side indicators illustrating multi-speed world economy
Demand-side indicators illustrating multi-speed world economy Automotive indicators Construction indicators January 2008=100 January 2008=100 120 120 100 100 80 80 60 60 40 40 jan. 08 jul. 08 jan. 09 jul. 09 jan. 10 jul. 10 jan. 11 jul. 11 jan. 12 jul. 12 jan. 08 jul. 08 jan. 09 jul. 09 jan. 10 jul.
Slide 15: Global megatrends favor continued rise in aluminium demand
Global megatrends favor continued rise in aluminium demand Megatrends Impact Aluminium industry effect • Industrialization • Automotive, rail and aerospace • Infrastructure • Electrical cables Millions climb • Transport • Consumer goods out of poverty • Construction • Packaging • Consumer products •
Slide 16: Positive long-term outlook for growth in aluminium demand
Positive long-term outlook for growth in aluminium demand Demand for semis in million mt 120 4-6% annual growth 100 80 53 41 60 27 40 54 47 20 38 0 2012 2017 2022 World outside China China Source: CRU (16)
Slide 17: Highly versatile metal, broad range of applications
Highly versatile metal, broad range of applications 6% 10 % 26 % Transport 5% Construction Packaging Foil 13 % Electrical Consumer durables 8% 25 % Machinery & Equipment Other 8% Source: CRU. Global demand per segment demand, 2011. (17)
Slide 18: Strong trend in automotive light-weighting
Strong trend in automotive light-weighting Gaining ground in high-volume segments Body-In-White – 16% CAGR estimated 6% 10 % 26 % 5% 13 % CO2 emissions (g/km) 160 8% 25 % 150 8% 140 130 120 110 100 100 200 300 400 500 Aluminium substitution for steel (kg) (18)
Slide 19: Aluminium gaining from materials substitution
Aluminium gaining from materials substitution Strong potential in HVACR market 6% 10 % 26 % 5% Aluminium tube potential in HVACR industry 13 % 800 Thousand mt 600 8% 25 % 8% 400 200 0 Aluminium tube Global potential Residential A/C Refrigeration Heat pump Liquid lines A/C Liquid lines Refrig HVACR=
Slide 20: Construction turns to aluminium to create energy-efficient solutions
Construction turns to aluminium to create energy-efficient solutions Considerable global potential 6% 10 % 26 % 5% 13 % World energy use per sector 36 % 8% 25 % 28 % 27 % 8% 9% Buildings Industry Transport Other Source: IEA, 2010 (20)
Slide 21: Low prices despite balanced primary metal market
Low prices despite balanced primary metal market Balanced market Large inventories Low and volatile LME 30 000 8 000 80 3 400 7 000 70 25 000 3 000 6 000 60 20 000 2 600 5 000 50 15 000 4 000 40 2 200 3 000 30 10 000 1 800 2 000 20 5 000 1 400 1 000 10 0 0 0 1 000 Feb-10 May-10 Aug-10 Nov-10 Feb-11
Slide 22: Bauxite and alumina market in transition
Bauxite and alumina market in transition China bauxite import China alumina import Commercialization 1250 1250 450 20 Alumina price % of LME 1000 1000 400 18 750 750 350 16 500 500 300 14 250 250 0 0 250 12 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Aug-
Slide 23: Aiming to become the industry benchmark
Aiming to become the industry benchmark (23)
Slide 24: Highly attractive bauxite and alumina position
Highly attractive bauxite and alumina position Despite lower LME and weak EBITDA Underlying EBITDA per mt in USD for respective bauxite and alumina divisions 1H 2011 2H 2011 1H 2012 100 100 100 50 50 50 0 0 0 -50 -50 -50 Hydro Peers All figures based on public accounting data, not verified by Hydro.
Slide 25: Improvement drive yields results in primary production
Improvement drive yields results in primary production Underlying EBITDA per mt in USD for respective primary aluminium divisions 1H 2011 2H 2011 1H 2012 700 700 700 500 500 500 300 300 300 100 100 100 -100 -100 -100 Hydro Peers All figures based on public accounting data, not verified by Hydro. Dat
Slide 26: Upstream raw material cost challenge
Upstream raw material cost challenge LME continues to lag key raw material prices Indexed (Q1 2010=100) 3-month LME Caustic price Coal price Fuel oil price* Pet coke price +127% +119% +105% +87% +88% +84% +67% +67% +56% +50% +35% +36% +15% +17% +10% +1% +3% -1% -8% -12% Q1 Q1 Q1 Q2 Q3 Q1 Q1 Q1 Q2 Q3
Slide 27: Strengthening the competitiveness of Bauxite & Alumina
Strengthening the competitiveness of Bauxite & Alumina From B to A Alunorte Improvements in million NOK • Increase productivity and rightsize organization 1000 • Stabilize performance at nameplate capacity • Improve logistics efficiency 800 Paragominas • Increase productivity and rightsize organizat
Slide 28: Primary Metal to complete USD 300 improvement program in 2013
Primary Metal to complete USD 300 improvement program in 2013 • Estimated to deliver according to target for 2012 Improvements in USD per mt − USD 235 per mt improvements by end-2012 300 − Challenging markets put pressure on margin 65 above standard ingot premium − Outperforming on cost reductions a
Slide 29: Extruded Products improvement program continues
Extruded Products improvement program continues • Sale of Portalex Completed • Closure of ~50 sites • 3 presses idled / 2 presses closed • Manning reduced by ~900 Under • Closure of Monett extrusion plant in US execution • Closure of Guaymas fabrication site in Mexico • Further rightsizing of organi
Slide 30: Enhancing performance in Rolled Products
Enhancing performance in Rolled Products • Portfolio optimization • High-grading product portfolio • Cost programs and margin management • Capital discipline (30)
Slide 31: No. 1 flat rolled products producer in Europe
No. 1 flat rolled products producer in Europe • World leader in high-end products foil and litho • Focus production system on core assets − Alunorf (50%) – world’s largest rolling mill − Grevenbroich plant – world’s largest finishing mill • Technology leadership and innovation − Developing new produ
Slide 32: Energy: optimization of equity hydropower production
Energy: optimization of equity hydropower production • First-class hydropower assets in Norway − 9.5 TWh normal annual production − Highly competitive cost position − Stable operations • Focus on optimization − Commercial activities − Production • Solid cash-flow generation (32)
Slide 33: Securing energy across the value chain and growing equity portfolio
Securing energy across the value chain and growing equity portfolio • Sourcing energy across the value chain • Growing and upgrading portfolio − 2012 achievements: competitive power secured − Expansions completed: Holsbru, Vasstøl for Neuss and Søral − 2013 focus: new contract for Slovalco and − Suc
Slide 34: HSE, CSR and compliance are key components in a performance culture
HSE, CSR and compliance are key components in a performance culture TRI rate 10.3 HSE YTD performance 7.0 6.0 3.4 5.4 CSR Performance 4.0 4.1 3.9 3.7 3.8 3.4 2.9 Compliance 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD2012 People (34)
Slide 35: Ideally positioned for growth
Ideally positioned for growth Attractive growth Partnerships and project portfolio joint ventures Hydro Financial strength Structural changes and flexibility (35)
Slide 36: Our value proposition
Our value proposition (36)
Slide 37: Our value proposition priorities
• Improve relative industry position • Capitalize on raw material positions • Maintain financial strength and flexibility • Ensure competitive shareholder return (37)
Slide 38: Infinite Aluminium Hydro
INFINITE ALUMINIUM HYDRO