Performance and strategic direction

Transcription

1 Hydro Aluminium Aluminium Jon-Harald Nilsen Executive Vice President Performance and strategic direction

2 51145_2 H ydro M edia Focus areas The aluminium market structural changes and outlook Value creation Strategy and priorities

3 51145_2 H ydro M edia A fully integrated global aluminium company Bauxite/ alumina Electrolysis metal Casthouse products Rolling Extrusion Fabrication & Systems Automotive

4 51145_2 H ydro M edia Hydro Aluminium 23 Revenues NOK 69.2 bn Hydro Aluminium CEO EBITDA Gross Investment *) CAPEX Employees *) NOK 6.5 bn NOK 7.4 bn NOK 5.6 bn 26 7 Primary Metal (Oslo) Metal Products (Oslo) Rolled Products (Cologne) Extrusion (Lausanne) Automotive (Cologne) North America (Baltimore) Metals segment Rolled products segment Extrusion and Automotive segment * Gross Investment and employees by

5 51145_2 H ydro M edia Western World*demand expected to grow in the coming years 4.4% average annual growth 24 27E 1 tonnes 4 % growth per segment Other Durables Electrical & engineering B&C Packaging Transportation E 27E * World excluding Central and Eastern Europe, China, Russia, Ukraine, North Korea Sources: BrookHunt; Hydro Aluminium

6 51145_2 H ydro M edia China is emerging as a major aluminium market Global primary demand million tonnes Other Asia 13% Other 1% US 24% Other Asia 14% Global primary demand 212E 42 million tonnes CIS 5% Other 8% US 18% China 19% Japan 9% Europe 25% China 28% Japan 6% Europe 21% Sources: CRU; Hydro Aluminium

7 51145_2 H ydro M edia The metal deficits in Europe and the US will continue to grow Net exports, primary aluminium 1 tonnes E 212E Asia* Europe USA China Canada South Americ a * Excluding China ** Rest of the World, including the Middle East Source: CRU, Hydro Aluminium Australia & NZ CIS ROW **

8 51145_2 H ydro M edia China expected to be balanced 1 tonnes Production Consumption E 26E 28E Main permanent challenges Limited bauxite reserves Alumina deficit Semi-permanent Energy deficit in most provinces high prices Grid High inland transport costs of alumina and metal Short term/policy items Reduced/eliminated VAT rebate for export Increased power taxes especially for old plants Tighter credit terms Source: CRU, Hydro Aluminium

9 51145_2 H ydro M edia Metal balance 24 better than expected 1 tonnes Underlying "oversupply"- speed 23 Net 24- restarts/new closures Net new capacity Increased consumption (primary shipments) Change export China Total inventory decrease - 5

10 51145_2 H ydro M edia A changing industry structure Production Million tonnes Primary Rolled Products Extrusions Alcoa* Alcan** Rusal Hydro BHP Billiton SUAL Chalco Newco FRP *Excluding effect of agreement in principle to acquire part of Rusal s rolled products capacity ** After spin-off Sources: Company reports; CRU; Urandaline; Hydro Aluminium

11 51145_2 H ydro M edia We have delivered on our commitments CROGI target achieved one year ahead of plan CROGI : Actual prices Percent ,3 Improvement programs delivered Workforce reduction Cost reductions 2 3 CROGI (normalised*) Magnesium Al umi nium Magnesium Aluminium Active portfolio % development Divestments 5 1,8 Q4- Q1 - Q2 - Q3- Q4- Target Q4- Q1 - Q2 - Q3- Q4 - Target Run Target 8, ,6 Rolled products shipmen ts in rate 24 New 7,1 capacity Europe 5,7 Annual change Restructuring and rationalization costs (NOK million) in per cent Real ized 8 Total Original Specialised product lines estimate Magnesi 1999um * With normalised LME-price Aluminium (1 5 USD/tonnes) and - 8 NOK/USD 3 * 176 Metal products margins and downstream margins are not normalised, neither metal part nor currency W orkforce and cost reducti ons relati ve to 21-2,4 * Of which NO K 89 million charged to VAW opening balance Date: P age: 64-4 Date: P age: 66 All projects as planned Date: Page: 68 Strengthened market positions Da te: Page: 14Sources: CRU; AA, EAA. 69 4,6 476 Restructuring and closures Delivering on strategic priorities -8,9 2, ,1 1. Improve global cost position -12upstream Extrusion shipments in Europe Annual c hange in percent E E Strengthe n leadersh ip in Eu rope, midstream and downstream Date: Pa ge: Performance focus and selective grow th outside Europe midstream and downstream 4. Performance focus and selective grow th in global automotive Date: P age: 17

12 51145_2 H ydro M edia Strong improvement within safety Total recordable injuries per million worked hours Hydro Aluminium excluding VAW VAW only Hydro aluminium * H1 * Constructed based on each company s performance prior to acquisition

13 The Hydro Way Building a Strong Company Culture Hydro Way Dialogue Forums Institutional talen ts An ability to develop source businesses A drive to optimize An instinct to commercialize A passion for social commerce Values Courage Respect Cooperation Determination Foresight Our mission is to help create a more viable society by developing natural resources and products in innovative and efficient ways 51145_2 H ydro M edia

14 51145_2 H ydro M edia Creating value through innovative solutions Agile organisation Customer responsiveness Unique portfolio Business concepts Applications Technology

15 51145_2 Date: H ydro M edia Page: Hydro 15Aluminium Continued strong focus on bottom line growth EBITDA NOK million Depreciation and amortization EBIT + Full effect of implemented and new improvement programs + Volume increase from investments and better asset utilisation + Best practice sharing and focus on continuous improvements + Strengthening market positions + Turnaround, sell or close underperforming units - Increased energy prices in Europe H 24 - Cost increases raw materials for anode production and freight EBITDA 1H 23

16 51145_2 H ydro M edia A unique portfolio composition 23 and development to 27E 1 tonnes Alumina * Equity 82 Medium/long term contracts 65 17E Equity Electrolysis metal E Metal products Equity 3 rd party alliances Remelt Rolled Extrusion & Automotive 43 47E Downstream E * Aluminium equivalents (2 tonnes alumina per tonne aluminium)

17 51145_2 H ydro M edia Key elements in our strategy 1. Improve global cost position upstream 2. Strengthen leadership in Europe, midstream and downstream 3. Performance focus and selective growth outside Europe midstream and downstream 4. Performance focus and selective growth in global automotive

18 51145_2 H ydro M edia 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 portfolio profile and value chain integration in an environment of structural change Improve relative cost position primary Energy in Europe a particular challenge Sharing of Best Practice throughout the value chain Active portfolio development

19 51145_2 H ydro M edia 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 (

20 Appendix Hydro Aluminium Aluminium

21 51145_2 Date: H ydro M edia Page: Hydro 21Aluminium Aluimprover New improvement program Aluimprover Norway Annual cost reduction: NOK 35~4 million Cost of program: NOK 8 million Demanning: 8 employees Completed in first quarter 25 Aluimprover Germany under evaluation Strong focus on best practice transfer in all smelters

22 51145_2 H ydro M edia Active portfolio development Alumina Alunorte expansions I, II Comalco agreement Alpart transaction Primary smelters Sunndal 4 Alouette Søral Slovalco expansion and increased ownership Carbon Ardal expansion Aluchemie expansion Metal Products Sayansk casthouse Talum agreement New casthouses in North America, Brazil and Spain Rolled Products Grevenbroich: new litho line Upgrading of Hamburg and Slim Extrusions New press in Brazil Automotive Precision Tubing press in Tønder New Precision Tubing plants in China and Mexico New engine casting line in Alucast Divestments Flexible Packaging AOS HALCO Closures & restructuring Headquarters and commercial offices Moultrie Sanquhar Leeds Decision taken on Søderberg capacity in Ardal, Høyanger and Karmøy