Capital Markets Day 2004

Transcription

1 Capital Markets Day 24 Progress in Aluminium Jon-Harald Nilsen, Executive Vice President

2 Progress in Aluminium Improved financial and operational performance Strong strategic progress upstream and improved cost positions Building competitive strengths downstream 52358_ Hydro Media

3 We have delivered on our commitments Return on Capital target achieved one year ahead of plan CROGI : Actual prices Percent Improvement programs delivered Magnesium Date: Page: 66 All projects as planned Workforce reduction Aluminium Cost reductions 3 CROGI (normalised*) Magnesium Aluminium 21 5% Divestments 5 1,8 9,3 Q4- Q1- Q2- Q3- Q4- Target Q4- Q1- Q2- Q3- Q4- Target Delivering Run Target on strategic priorities 8,3 8, Rolled products 23 rateshipments 24 in Extrusion shipments in Europe 7,1 New capacity Europe 5,7 Annual change Annual change 2 Restructuring and rationalization costs (NOK million) in percent in percent Realized 8 Total Original Specialised product lines 8 6 estimate Magnesium * With normalised LME-price (1 Aluminium 5 USD/tonnes) and 8 NOK/USD 4,6-3 * Metal products margins and downstream margins are not normalised, neither metal part Restructuring nor currency and closures 2,8 1,1-4 Workforce and cost reductionsrelative to 21-2,4 * Of which NOK 89 million charged to VAW opening balance Date: Page: Improve global cost position -12 upstream 2. Strengthen leadership in Europe, midstream and downstream Date: Page: 68 Active portfolio development Strengthened market positions , E E Date: Page: 14 Sources: CRU; AA, EAA. Date: Page: Performance focus and selective growth outside Europe midstream and downstream 4. Performance focus and selective growth in global automotive Date: Page: _ Hydro Media

4 Operating income improving NOK million Metals Extrusion and Automotive Rolled Products Other and Eliminations (146) (997) Jan-Sep Accumulated _ Hydro Media

5 Improving financial performance Metals NOK million Jan- Sep Non-consolidated investees and depreciation Operating income EBITDA Jan-Sep _ Hydro Media

6 Improving financial performance Rolled Products NOK million Jan- Sep Non-consolidated investees and depreciation Operating income/loss EBITDA Jan-Sep _ Hydro Media

7 Improving financial performance Extrusion NOK million Jan- Sep Non-consolidated investees and depreciation Operating income EBITDA Jan-Sep _ Hydro Media

8 Improving financial performance Automotive NOK million Jan- Sep Non-consolidated investees and depreciation Operating income/loss EBITDA Jan-Sep _ Hydro Media

9 Improving financial performance North America NOK million Jan- Sep -2-3 Non-consolidated investees and depreciation Operating income/ loss EBITDA Jan-Sep _ Hydro Media

10 Improving financial performance Hydro Aluminium NOK million Jan- Sep Non-consolidated investees and depreciation Operating income EBITDA Jan-Sep _ Hydro Media

11 Strengthening strategic positions Improve alumina relative cost position Improve aluminium relative cost position Strengthen leadership position in Europe: Metal Products, Extrusion, Rolled Products and Automotive Selective growth outside Europe: Metal Products, Extrusion, Rolled Products and Automotive 52358_ Hydro Media

12 A unique and differentiated portfolio Estimates 24 and 29** 1 tonnes Equity Medium/long term contracts Alumina * E Equity Electrolysis metal 16 2E Equity 3 rd party Remelt Metal products E Rolled Extrusion & Automotive Downstream E * Aluminium equivalents (2 tonnes alumina per tonne aluminium) ** Including Qatar 52358_ Hydro Media

13 A unique portfolio: Higher capital turnover Revenues / gross investments Factor 1.4 Pechiney EBITDA / Revenues Percent Hydro Aluminium Alcan Alcoa Alcoa Hydro Aluminium Alcan Pechiney * Source: Company reports. Hydro-estimates. Proxy figures where needed to get comparative figures. * Jan-Sep 24 annualized * 52358_ Hydro Media

14 Western World* demand expected to grow in the coming years 1 tonnes E 27E * World excluding Central and Eastern Europe, China, Russia, Ukraine, North Korea Sources: BrookHunt; Hydro Aluminium % growth per segment Other Durables Electrical and engineering B&C Packaging Transportation 52358_ Hydro Media

15 Energy drives primary restructuring Net exports, 1 tonnes Asia* Europe USA -1 China Canada South America Australia and New Zeeland CIS ROW** E 212E * Excluding China ** Rest of the world, including the Middle East Source: CRU, Hydro Aluminium 52358_ Hydro Media

16 Increasing industry exposure to market power prices Aluminum production power sourcing 1 tonnes* To be renewed 15 Russia 1 Contract 5 Unknown contract expiry Captive * Excluding China Source:CRU, Hydro Aluminium 52358_ Hydro Media

17 Attractive power contract portfolio for Hydro Germany a challenge Norway Self generation and long term contracts Australia Canada Slovakia Germany Timeline _ Hydro Media

18 Qatar the future pattern Heads of agreement signed Annual capacity - 57 tonnes - Expansion potential up to 1 2 tonnes Investments - Smelter and casthouse: USD billion - Power plant: USD.7-.8 billion Excellent location Hydro ownership - 49 % in smelter and power station - 51 % in casthouse - Hydro to market total tonnage Production start-up end 28 Exceed 1% IRR after tax at USD 14/tonne HAL Technology 52358_ Hydro Media

19 Ambitious primary production growth Million tonnes E 29E Production growth, % Hydro Total world % 24% 25-29* 27% 2% Source: Hydro Aluminium, Brook Hunt long -term outlook 24. * incl. Qatar for Hydro 52358_ Hydro Media

20 Improving relative cost position Cash cost USD/tonne Hydro 9 To be closed Høyanger SØ, 22 kt Årdal SØ, 5 kt Karmøy SØ,122 kt Hydro Total average USD 1 97/tonne New capacity Alouette, 6 kt Sunndal, 25 kt Qatar, 28 kt Cumulative production (%) Assumptions: Aluminium price USD 1 5, USD/NOK 7., Cumulative production 27.8 million tonnes Source: CRU, Hydro Aluminium 52358_ Hydro Media

21 Increasing equity alumina at lower cost Cash cost USD/tonne World weighted average 23: USD 134/tonne 2: Hydro average USD 165/tonne *: Hydro average USD 12/tonne Cumulative production, million tonnes per year * After sale of alumina plant in Germany. Bauxite to Alunorte at cost. Source: CRU 23 : Major Western World Refineries (43 mill tons, i.e 8% of world production) Hydro Aluminium estimates 52358_ Hydro Media

22 Medium term price outlook favourable USD/tonne 2 5 Strong market fundamentals Increased production costs Energy Alumina Carbon raw materials Freight 1 Weakening USD Nominal prices 52358_ Hydro Media

23 Downstream activities Rolled Products Extrusion Total revenue*: NOK 35 bn Europe 8% North America 12% Others 8% Automotive 45% * Jan-Sep 24, split on sectors based on revenue 37% 18% 52358_ Hydro Media

24 Rolled Products: Building a stronger business Growth in high margin segments - New litho line in 25 - Foil mills upgraded - Increased heat exchanger volume Delivered on improvement programs - Cost reduction and demanning - Turnaround of underperforming units - Modernization of Slim plant (Italy) Optimize plants product mix High capacity utilization through strong market position 52358_ Hydro Media

25 Rolled Products: Increasing focus on higher margin segments Annualized shipments* 95 tonnes Operating income Jan-Sep 24: NOK 593 million Litho 15% Foil 16% Litho 3% Foil 22% *Jan-Sep 24: 71 tonnes Strip 69% Strip 48% 52358_ Hydro Media

26 Extrusion: Global growth from leading position in Europe Consolidating leadership in Europe Closing performance gap in USA Expanding in emerging and low cost markets Growing value added business Realizing system benefits 52358_ Hydro Media

27 Extrusion: Strong financial performance EBITDA / Sales Capital Turnover * Percent SAPA Hydro Extrusion Percent SAPA Hydro Extrusion Jan- Sep * Sales / Gross investment Jan- Sep 52358_ Hydro Media

28 Automotive: Leading market positions in focus areas Market positions 23 % of total market incl. steel/cast iron solutions Europe NAFTA Precision tubing 17 Bumper beams Cylinder heads Engine blocks 52358_ Hydro Media

29 Automotive: Building on strengths and fixing underperformance Precision Tubing - Strong financial performance - New plants in China and Mexico 25 Structures - Improving financial performance from low level - Focusing product portfolio - Restructuring ongoing Castings - Improved financial performance - New diesel engine line in Dillingen - Production shifting towards low cost countries - Leeds closure to be finalized in _ Hydro Media

30 Continued strong focus on bottom line growth Continue to strengthen European leadership and build global presence in selected segments and geographical areas Capitalize on a unique and differentiated portfolio profile and value chain integration in an environment of structural change Improve relative cost position upstream - Energy in Germany a particular challenge Sharing of best practice throughout the value chain Active portfolio development 52358_ Hydro Media

31 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 contains certain forward-looking statements with respect to the financial condition, results of operations and business of the Company and certain of the plans and objectives of the Company with respect to these items. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. The actual results and developments may differ materially from those expressed or implied in the forward-looking statements due to any number of different factors. These factors include, but are not limited to, changes in costs and prices, changes in economic conditions, and changes in demand for the Company's products. Additional information, including information on factors which may affect Hydro's business, is contained in the Company's 23 Annual Report on Form 2-F filed with the U.S. Securities and Exchange Commission. With respect to each non-gaap financial measure Hydro uses in connection with its financial reporting and other public communications, Hydro provides a presentation of what Hydro believes to be the most directly comparable GAAP financial measure and a reconciliation between the non-gaap and GAAP measures. This information can be found in Hydro s earnings press releases, quarterly reports and other written communications, all of which have been posted to Hydro s website ( _ Hydro Media

32 Hydro is a Fortune 5 energy and aluminium supplier founded in 195, with 36, employees in nearly 4 countries. We are a leading offshore producer of oil and gas, the world's third-largest integrated aluminium supplier and a pioneer in renewable energy and energy-efficient solutions. As we look forward to our next 1 years, we celebrate a century of creating value by strengthening the viability of the customers and communities we serve 52358_ Hydro Media