Q4 Investor Presentation – Hydrocarb Corporation

Hydrocarb Corporation · Feb 1, 2014 · 103 slides

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Investor presentation February 2014 2013 (1)
Q4 2013 (3)
Q4 highlights Underlying EBIT NOK 483 million USD 300-program completed, yielding NOK 1.5 billion improvements Alunorte production rising, offset by ICMS charges Primary Metal lifted by Qatalum insurance proceeds Downstream…
Standard ingot premiums rise to record levels Regional standard ingot premiums Proposed changes to LME warehousing USD per mt 450 rules with effect from April 1, 2014 400 US and European standard ingot 350 premiums gained…
Aluminium prices weakening through the quarter USD per mt 3 400 Aluminium price continued trading in range of USD 1 750 - 1 900 per mt in Q4 3 000 Minor decrease in average USD/mt price, 2 600 offset by weaker NOK 2 200 Primary…
All-in metal price shows moderate rise Further strengthened when taking currency movements into account USD per mt 2 400 2 300 2 200 2 100 2 000 1 900 1 800 1 700 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13…
Stable inventories due to largely balanced market Slight reduction in unregistered inventories in 2013 World outside China reported primary aluminium inventories 1 000 mt Days 8 000 120 7 000 100 6 000 80 5 000 4 000 60 3 000 40…
Demand expected to slightly exceed production in 2014 World outside China World outside China (quarterly annualized) 2014 aluminium demand expected to 1 000 mt 30 000 grow 2-4 % in world outside China 25 000 Demand back at pre-crisis…
Alumina price strengthening through the quarter Platts alumina index (PAX) PAX increased both in USD/mt and USD per mt 450 Percent 20 percent of LME Average price 323 USD/mt, up 6 USD/mt from Q3 400 18 Alumina as % of LME…
China bauxite imports rise considerably in 2013 Preparing for Indonesian export restrictions Annualized aluminium equivalents*, million mt 2011 2012 2013 Bauxite and alumina 25 Increased bauxite imports, preparing for Indonesian…
Indonesia introduces ban on bauxite exports Complete ban on bauxite exports from Chinese bauxite import by origin (monthly) mid-January 2014 Million mt 8 7 Uncertainty around possibility of getting 6 export license for those…
Alunorte production increasing during the quarter Production, annualized million mt Maintenance progressing as planned Increased power self-sufficiency 5.8 Improved preparedness in organization 5.5 From B to A improvement program…
ICMS tax impacts Bauxite & Alumina Continued and increased dialogue on ICMS taxes and framework conditions Alunorte subject to ICMS tax on fuel oil, started February 1 2014 ICMS charges on electricity purchase Settlement…
Primary Metal delivered USD 300 improvement program Implied primary cost and margin, USD/mt 1) USD 300 program concluded on plan 475 475 Exploring new areas for improvements 300 425 400 2 000 Joint venture USD 180 improvement 1 775…
Rolled Products sales increased compared to 2012 Rolled Products sales by segment Q4 2013 vs Q3 2013 2013 vs 2012 Foil & Can Litho & Auto General engineering Total Rolled Foil & Can Litho & Auto General engineering Total Rolled &…
Continued Sapa JV restructuring amid mixed markets North America demand increased in Q4 2013 compared to last year Improvement in automotive and building Stable in transport and industrial segment Stable European demand…
Improved reservoir levels, softer prices at end of quarter Market price Southwestern Norway (NO2) Water reservoir levels Southwestern Norway (NO2) NOK/MWh Percent 600 100 2012 2013 2014 90 500 80 400 70 60 300 50 40 200 30…
Underlying EBIT 1 077 659 578 531 518 483 172 16 NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Bauxite & Alumina (144) (188) (386) (73) (63) (244) (370) (379) Primary Metal 36 245 (4) 58…
High-level quarterly result development NOK billion 0.3 (0.1) (0.2) 0.7 (0.2) 0.5 Underlying EBIT Q3 2013 Volumes and margins Energy volume and price Fixed and variable costs Sapa and other Underlying EBIT Q4 2013…
Key financials NOK million Q4 2013 Q3 2013 Q4 2012 2013 2012 Revenue 16 571 16 146 15 585 64 880 64 181 Underlying EBIT 483 659 172 2 737 1 297 Items excluded from underlying EBIT (485) (62) 532 (1 063) (725) Reported EBIT (3) 597…
Financial income (expense) Finance NOK million Q4 2013 Q3 2013 Interest income 65 53 Dividends received and net gain (loss) on 58 31 securities Financial income 123 84 Interest expense (118) (105) Net foreign exchange…
Items excluded from underlying EBIT NOK million Q4 2013 Q3 2013 Q4 2012 2013 2012 Underlying EBIT 483 659 172 2 737 1 297 Unrealized effects on power and raw material contracts 14 (7) 168 (107) 937 Unrealized derivative effects on…
Bauxite & Alumina Q4 Q3 Q4 Key figures 2013 2013 2012 Alumina production, kmt 1 452 1 316 1 397 Total alumina sales, kmt 1 959 1 879 1 880 Realized alumina price, USD/mt 263 267 285 Apparent alumina cash cost, USD/mt 245 265…
Primary Metal Q4 Q3 Q4 Key figures 2013 2013 2012 Primary aluminium production, kmt 492 491 485 Total sales, kmt 515 540 505 Realized LME price, USD/mt 1 802 1 822 1 940 Realized LME price, NOK/mt 10 916 10 938 11 069 Underlying…
Qatalum result lifted by insurance settlement Key figures Qatalum (50%) Q4 2013 Q3 2013 Q4 2012 Stable sales volumes Revenue, NOK million 1 072 1 074 1 034 Underlying net income up NOK 172 million from Q3 2013 Underlying…
Metal Markets Q4 Q3 Q4 Key figures 2013 2013 2012 Remelt production, kmt 123 127 119 Metal products sales, kmt 653 673 661 Underlying EBITDA, NOK million 214 149 92 Underlying EBIT excl currency and inventory 144 73 40 valuation…
Rolled Products Q4 Q3 Q4 Key figures 2013 2013 2012 External sales volumes, kmt 226 234 226 Underlying EBITDA, NOK million 244 304 189 Underlying EBIT, NOK million 111 182 70 Underlying EBIT NOK million 637 627 Q4 results…
Energy Q4 Q3 Q4 Key figures 2013 2013 2012 Power production, GWh 2 411 2 838 2 448 Net spot sales, GWh 1 089 1 673 1 099 Southwest Norway spot price (NO2), 287 267 268 NOK/MWh Underlying EBITDA, NOK million 420 522 363…
Sapa joint venture Key figures Sapa (50%) Q4 2013 Seasonally weaker quarter Revenue, NOK million 5 066 Impairments of inventories and Underlying EBITDA, NOK million (22) accounts receivables Underlying EBIT, NOK million (170)…
Net cash/(debt) development Q4 2013 NOK billion Net cash flow from operations NOK 2.5 billion 1.4 (0.5) (0.9) 1.6 (0.4) 0.7 (0.5) Net debt Q3 2013 Underlying EBITDA Operating Capital Other adjustments Investments…
Cash neutral after dividend at LME 1 900 USD/mt NOK billion 7.1 (2.5) (2.5) (2.0) 0.6 (1.8) 1.7 1.8 0.7 Net cash Q4 Underlying Other Investments Dividends Net cash after Operating Currency Net cash Q4 2012 EBITDA…
Increased net pension liability December December Defined benefit obligation up NOK billion 31, 2012 31, 2013 NOK 1.6 billion Defined benefit obligation (15.5) (17.1) New mortality rate table (K2013) Currency translation effects…
Proposed 2013 dividend NOK 0.75 per share Strong commitment to return cash to shareholders Solid financial position Uncertain market outlook Average five-year payout ratio* of 90% Dividend policy is 30% payout over the cycle…
2013 Challenging markets Concluding USD 300-program Strong Qatalum performance 2014 Stabilize Alunorte production Continued forceful improvement programs Capitalize on commercial opportunities (35)
Market (36)
Aluminium is part of the solution Demand for semis Share of semis consumption Million mt 2013 70 million mt Global trends 120 4-6% Consumer durables annual growth 5% 100 Electrical 13% Packaging 8% 55 80 Foil stock 8%…
Global FRP consumption growth of 6%, driven by transport Global - CAGR 2013-2017 10% 13% Transport 10% 11% Electrical 7% 4% 52% 9% Construction 6% Total 6% Transport Machinery & Equipment 5% Construction Electrical…
Aluminium is the metal of the future Lightweight Corrosion resistant Excellent conductivity 1/3 density of steel Oxide layer Thermal electrical Recyclability Formability Alloying technology 5% of original energy Extrusion,…
Increased bauxite imports into China Annualized aluminium equivalents*, million mt 2006 2007 2008 2009 2010 2011 2012 2013 20 to China Import 15 10 5 from China 0 Export -5 Bauxite Alumina Scrap Primary…
66% of available bauxite in 3 countries Billion mt Guinea 41.0 China1) 3.8 0.9 Jamaica Mali Vietnam 1.1 4.0 1.2 4.7 0.5 Venezuela 0.0 India 1.8 1.6 0.3 0.4 0.4 Indonesia Cameroon 1.0 1.2 0.5 0.0 Australia Brazil…
Alumina market is consolidating Net long equity alumina position, million tonnes Alcoa 4.3 Alcoa/AWAC 9.2 Vale 3.0 Rio Tinto Alcan* 2.8 Glencore 2.4 BHP Billiton 2.7 BHP Billiton 1.9 Hydro 2.0 Kaiser 1.0 Hindalco 0.2 Alcan 0.8…
Commodity prices drive industry costs Fuel oil A1 (USD/mt) Steam coal (USD/mt) Petroleum coke FOB USG (USD/mt) 750 180 600 600 150 500 120 400 450 90 300 300 60 200 150 30 100 0 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2006…
Business overview (44)
Hydro - Group (45)
Hydro: a resource rich global aluminium company Based in Norway, involved Hydro underlying EBIT quarterly, NOK million* in activities in more than 50 (2 555) 3 551 5 982 1 297 2 737 countries 2 200 13 000 employees 1 700…
Strong positions across aluminium value chain Raw materials Primary aluminium production, Aluminium in products processing and energy marketing and recycling Bauxite Rolled Sapa JV (50%) Energy Primary Metal Metal Markets &…
Hydro - a first tier aluminium company Equity production in 2013 in aluminium equivalents excl. China, thousand mt 9 000 Alumina Aluminium 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 Alcoa/AWAC Rio Tinto Alcan* UC…
Raw material is key to our aluminium future Aluminium equivalent consolidated capacity, million tonnes End-2010 End-2013 Post-CAP 4.3 Long position in bauxite and alumina creates 3.4 flexibility 3.3 Strategically attractive…
Hydros path towards global leadership Curtailing 26% of USD 300 Climb From B to A JV-program primary metal capacity program 2009 2010 2011 2012 2013 Starting up Acquiring bauxite Establishing Qatalum and alumina assets…
Strategy for further value creation Bauxite & Alumina Primary Metal Energy Mid- and downstream Improvement efforts and Reposition Increase value of energy Adjust capacity and cost cost reduction Keep solid cash flow in business…
Attractive Improvement Hydro positions throughout the culture and technological Financial strength value chain leadership (52)
Safe and responsible operations is a top priority 10.3 2013 Performance 7.0 3.4 6.0 5.4 4.0 4.1 3.9 3.8 3.7 3.4 2.9 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (53)
Hydro aims to be climate neutral Emissions User-phase benefits Recycling (54)
Hydros value proposition Improve relative industry position Capitalize on raw material positions Maintain financial strength and flexibility Ensure competitive shareholder return (55)
Bauxite & Alumina (56)
High-quality asset portfolio MRN Paragominas Alunorte alumina CAP alumina bauxite mine bauxite mine refinery refinery project 5% ownership Full financial exposure, increase 92% ownership 81% ownership Volume off-take agreement…
Strengthening the competitiveness of Bauxite & Alumina From B to A Alunorte Increase productivity and rightsize organization Stabilize performance at nameplate capacity Improve logistics efficiency Paragominas Increase productivity…
Paragominas One of the worlds largest bauxite mines 2013 production: 7.6 million mt Target to stabilize and continue to deliver production increases Possible expansion: up to 15 million mt Current reserve life: 30 years 300…
Bauxite operational mining costs in Paragominas Energy cost - Power and fuel Paragominas bauxite mining costs 2013 Labor cost 10% Influenced by Brazilian wage level 15% Productivity improvements 11% Maintenance and consumables…
Alunorte Worlds largest alumina refinery 2013 production: 5.4 million mt Targeting stable production above 6 million tonnes World-class conversion cost position Modern technology Bauxite supplied from Paragominas and MRN (61)
Favorable integrated alumina cash cost position Integrated alumina cash cost position 2013 Integrated alumina cash cost position 2013 USD 256 per mt Alunorte, Paragominas and sourced alumina 5% Bauxite Internal bauxite from…
External alumina sourcing 2.0 million mt of external alumina sourcing in 2013 Long term off-take agreement with Rio Tinto 900 000 mt annually from Yarwun Short- and medium term contracts To balance and optimize position…
Alumina pricing shifting from LME-link to market fundamentals 100% Future pricing should reflect fundamentals of bauxite and alumina value chain New norm for the industry Index pricing and short to medium-term contracts Getting wider…
Primary Metal (65)
World-wide production network Primary aluminium annual production capacity 43% Norway, 925 000 tonnes Sunndal (100%) : 390 000 tonnes rdal (100%): 190 000 tonnes 6% Karmy (100%): 190 000 tonnes Canada, 120 000 tonnes Hyanger (100%):…
Delivering on ambitious USD 300 improvement program Total annual improvement effect of NOK 1.5 billion Improvement categories Improvements in USD per mt* Operational improvements 300 Improved current efficiency Reduced power…
Primary Metal joint ventures improvement program USD 180 per mt improvements by end-2016, corresponding to NOK 1.2billion Improvement categories Improvements in USD per mt* 180 160 Fixed cost reductions and lean operations 140…
Improvement drive yields results in primary production Underlying EBITDA per mt in USD for respective primary aluminium divisions 1H 2011 2H 2011 1H 2012 2H 2012 1H 2013 700 700 700 700 700 500 500 500 500 500 300 300 300…
Develop technology to fulfill ambitions HAL 300 HAL4e R&D portfolio Operating for several years in Benchmark technology HAL4e optimization to be Sunndal process parameters and ready for next project environment Ramping up in Qatar…
Metal Markets (71)
Preferred partner in casthouse products Capitalizing on value-added casthouse products portfolio Extensive multi-sourcing system Extrusion ingot including fully- and part-owned 1.5 million mt primary casthouses and stand- alone…
Metal Markets earnings drivers Remelters Underlying EBIT excluding currency effects and Revenue impact volume and product ingot stock valuation effect, NOK million premiums above LME 250 Cost impact Scrap and standard ingot…
Rolled Products (74)
No. 1 flat rolled products producer in Europe External sales in tonnages World leader in high-end products foil and litho Foil 12% Litho 19% Strategy of high-grading product portfolio Margin management and cash generation…
Attractive market position and customers More than 50% of products with global reach Our products Our customers Our position Litho World market leader Global reach Foil Can Leading position in Europe Auto Regional reach…
Rolled Products earnings drivers Underlying EBIT per tonne, NOK 1 400 Contract structure 1 200 Margin business based on conversion price LME element passed on to customers 1 000 Range from spot contracts to multi-year 800…
Sapa joint venture (78)
Global leader in extruded products established Sapa, 50/50 joint venture, between Hydro and Orkla Positioned for restructuring and value creation Established September 1, 2013 Hydro has agreed to supply the new company with…
Sapa joint venture - facts North American and European leader with global presence No. 1 position in North America External sales in tonnages (2013)* and Europe Precision Tubing 7% Building System 6% Strong foothold in emerging…
Energy (81)
Power production increased to 10 TWh Power production capacity (TWh), per region and reversion year Power producing assets and ongoing projects Telemark Normal Maintain cost control in operations and projects production 3.0 0.5…
Hydros energy map Energy consumption in alumina refineries, smelters and rolling mills Europe Power 16.7 TWh North America Natural gas 3.3 TWh Power 1.7 TWh Middle East Power 4.6 TWh South America Power 4.6 TWh…
Reversion regime secures Hydros values Pursue value enhancement strategy Develop and enhance value of power assets Power assets remain an integrated part of aluminium production in Norway Power and smelter portfolio will be…
Energy earnings drivers Underlying EBIT* and spot price Production and market prices strongly NOK million NOK/MWh 2000 500 linked to hydrological conditions 1500 400 Relatively stable annual EBIT contribution 300 1000 Large quarterly…
Additional information (86)
Adjusted net debt increased to NOK 9.5 billion NOK billion Dec 31, 2013 Dec 31, 2012 Net cash/(debt), NOK billion 1.7 Cash and cash equivalents 8.4 7.0 Short-term investments 2.5 4.3 Short-term debt (6.2) (6.0) Long-term debt (4.0)…
Shareholder and financial policy Hydro aims to give its shareholders competitive returns compared to alternative investments in peers Maintained dividend policy Ordinary dividend: 30% of net income over the cycle Average ordinary…
Hedging policy Bauxite & Alumina, Primary Metal Remain primarily exposed to LME prices Operational LME hedging One-month forward sales Currency exposure, mainly USD, NOK and BRL Policy of maintaining long-term debt in USD BRL…
Capital allocation mainly upstream NOK billion Debt-financed investments Qatalum Investments Qatalum Sustaining capex NOK 3.5 billion 10.2 Growth capex annually Sustaining capex Minor growth projects planned for 2014 85% of…
Price and currency sensitivities Commodity price sensitivity +10%* Currency sensitivities +10%* NOK million EBIT NOK million EBIT Financial items Aluminium 2 530 USD 2 080 (1 050) Oil (185) BRL (840) 820 Pet coke (190) EUR…
Items excluded from underlying results - 2013 NOK million (+=loss/()=gain) Q1 2013 Q2 2013 Q3 2013 Q4 2013 2013 Unrealized derivative effects on LME related contracts Bauxite & Alumina 13 (3) - 3 12 Legal settlements Bauxite & Alumina…
Items excluded from underlying results - 2012 NOK million (+=loss/()=gain) Q1 2012 Q2 2012 Q3 2012 Q4 2012 2012 Unrealized derivative effects on LME related contracts Bauxite & Alumina (8) 11 1 (11) (8) Total impact Bauxite & Alumina…
Operating segment information Underlying EBIT NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Year 2012 Year 2013 Bauxite & Alumina (144) (188) (386) (73) (63) (244) (370) (379) (791) (1 057) Primary…
Operating segment information EBIT NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Year 2012 Year 2013 Bauxite & Alumina (136) (199) (387) (62) (76) (241) (370) (491) (783) (1 178) Primary Metal (91) (1…
Operating segment information Total revenue NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Year 2012 Year 2013 Bauxite & Alumina 3 195 3 573 3 032 3 465 3 304 3 147 3 354 3 546 13 265 13 350 Primary…
Operating segment information Internal revenue NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Year 2012 Year 2013 Bauxite & Alumina 1 241 1 356 1 111 1 098 1 322 1 253 1 277 1 375 4 806 5 226 Primary…
Operating segment information Depreciation, amortization and impairment NOK million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Year 2012 Year 2013 Bauxite & Alumina 475 439 428 409 429 448 417 424 1 750 1 718…
Income statements NOK million Q4 2013 Q3 2013 Q4 2012 Year 2013 Year 2012 Revenue 16 571 16 146 15 585 64 880 64 181 Share of the profit (loss) in equity accounted investments (164) (77) (95) (312) (450) Other income, net 100 245 257…
Balance sheets NOK million Dec 31 2013 Sep 30 2013 Jun 30 2013 Mar 31 2013 Dec 31 2012 Cash and cash equivalents 8 412 8 396 7 399 6 410 7 034 Short-term investments 2 480 1 433 1 273 3 572 4 343 Accounts receivable 9 719 10 949 10 009…
Operational data Pro forma Bauxite & Alumina Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Year 2012 Year 2013 Alumina production (kmt) 1 464 1 491 1 441 1 397 1 361 1 248 1 316 1 452 5 792 5 377 Sourced alumina (kmt)…