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Executive Vice President Eivind ReitenExecutive Vice President Eivind Reiten��
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Relative size of core areasRelative size of core areas
Non-current assets External sales0
20
40
60
80
100
Percent
OtherAgriLight MetalOil and Energy
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HydroMagnesium
Technologyand Projects
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Refining andMarketing
Explorationand ProductionInternational
Explorationand ProductionNorway
Gases and Chemicals
Hydro AgriMarkets
Hydro AgriProduction
Hydro RaufossAutomotive
Hydro AluminiumRolled Products
Hydro AluminiumExtrusion
Hydro AluminiumMetal Products
IndustrialInsurance
Pronova
Hydro Seafood
Petrochemicals
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Oil & Gas/Oil & Gas/EnergyEnergy
Light MetalsLight Metals AgriAgri OthersOthers
ProfitableProfitablegrowthgrowth
TurnaroundTurnaround
ReduceReduceengagementengagement
3
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'LYHVWPHQW�RI�1RQ�FRUH�%XVLQHVVHV'LYHVWPHQW�RI�1RQ�FRUH�%XVLQHVVHV
NOK 2.6 billion realized so far * in 1999,total gains NOK 1.4 billion
Main transactions:Pronova Biopolymers
Mabo
Hydro Coatin gs
Divestment target:NOK 10 billion over the next two-three years
* Sale of Dyno would give an estimated sales income ot NOK 2 billion11571_101/00 * 5
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6KDUH�SULFH�SHUIRUPDQFH6KDUH�SULFH�SHUIRUPDQFH
89 90 91 92 93 94 95 96 97 98 990
100
200
300
400
500
600
Index
Norsk Hydro
FTSE Eurotop 300
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1999 1996Profitability: Return on Capital Employed 15% Total shareholder returns* 15-20%
Debt/equity ratio** 0.5 0.5
Internal rate of return for investment projects (real, after tax) 10% 10%
Dividends, pay-out ratio 30% 30%
* Annual average over the long term** Long-term debt/equity plus minorities
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Agriculture
Oil and Energy
Light Metals
Petrochemicals
Hydro Seafood
Head office
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Agriculture
Oil and Energy
Light Metals
Petrochemicals
Head office
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Close Agenda 99 "gap" of NOK 5 billionNOK 1 billion improvement realized in 1999
Additional NOK 4 billion improvement by the end of 2001
Realize synergies from Saga integration of NOK 500 million
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19851986
19871988
19891990
19911992
19931994
19951996
19971998
1999 *0
0,5
1
1,5
Long-term interest-bearing debt divided by equity plus minority interests
* as per 30.9.99
Lon g-term interest-bearin g debt/equityLon g-term interest-bearin g debt/equity
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Acquisition of Saga Petroleum
Brazilian aluminium agreements
Restructuring og the Agri business initiated
Agenda '99 targets being reached
Value Based Management concept introduced
11
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12
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81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 980
5
10
15
20
25
30
35
40World- wide (2) full- cycle up- stream costs (USD/bbl)
Source: Cambridge Energy Research Associates,
DOE, BP/Amoco(1) BCG estimate (2) Excluding Middle East and FSU, nominal prices
(1)
Brent price developmentBrent price development
ProductionProduction
Finding & DevelopmentFinding & Development
+LVWRULFDO�SULFH�+LVWRULFDO�SULFH�
DQG�FRVW�UHGXFWLRQV�LQ�WKH�RLO�LQGXVWU\DQG�FRVW�UHGXFWLRQV�LQ�WKH�RLO�LQGXVWU\
13
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Oil and Energy central in Hydro's strategyOil and Energy central in Hydro's strategy
Oil and Energy Strategy geared towards Oil and Energy Strategy geared towards
Future growthFuture growth
Improved profitabilit yImproved profitabilit y
14
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6DJD�LQWHJUDWLRQ��6DJD�LQWHJUDWLRQ��
A first step of a growth strategyA first step of a growth strategy
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
0
100
200
300
400
500
600
700
800
1000 boe/d
SagaHydro Int.Hydro Norway
45 percent production increase in year 2000
40 percent increase in reserves
ProductionProven reserves 1998
Hydro Norway1,316
Saga - International
96Saga - Norway471
HydroInternational92
Total reserves 1,975 mill. bbl oe
15
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(Source: NPD)
Barents Sea
1.0
0.02
NorwegianSea
5.1
0.03
1.5
*URZWK�VWUDWHJ\�*URZWK�VWUDWHJ\�
Estimated undiscovered Norwe gian Continental ShelfEstimated undiscovered Norwe gian Continental Shelf
NorthSea
HighExpected
Low
Hydro has a strong position
High potential for undiscoveredresources
All numbers in bill. Sm 3
3.2
1.4
2.2
0.5
16
Probabilities:
Natural gas
Oil11571
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Substantial offshore operated production with 900,000 boed
Global PresenceActivities in 36 countries,
NCS Large operator presence Premium explorer High tech development skills Low cost operator
17
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competence as basis for international growthcompetence as basis for international growth
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Increased international focusIncreased international focus
NorwayNorway
CanadaCanada- Hibernia- Hibernia- Terra Nova- Terra Nova- Hebron- Hebron- Grand Banks &- Grand Banks & Scotian Shelf Exploration Scotian Shelf Exploration
AngolaAngolaBlock 17Block 17- Girassol- Girassol- Dalia- Dalia- Rosa & Lirio- Rosa & Lirio- Tulipa- TulipaBlocks 1, 5, 9Blocks 1, 5, 9
UK/IrelandUK/Ireland- Britannia- Britannia- Alba- Alba- Gryphon- Gryphon- Development licenses- Development licenses
LibyaLibya- Mabruk- Mabruk- Exploration in Mazuk/ - Exploration in Mazuk/ E.Ghadames / W. Sirte E.Ghadames / W. Sirte
Northwest RussiaNorthwest Russia- Kharyaga- Kharyaga- TPC- TPC- Shtokman- Shtokman- Development licenses- Development licenses
IranIranWell positioned inWell positioned inemerging areaemerging area- Abadan Plains / - Abadan Plains / Anaran exploration Anaran exploration- Dehluran- Dehluran
18
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Pee
r 1
Pee
r 2
Pee
r 3
Pee
r 4
Pee
r 5
Pee
r 6
Pee
r 7
Pee
r 8
Pee
r 9
Pee
r 10
Hyd
ro
Pee
r 12
Pee
r 13
Pee
r 14
Pee
r 15
0
1
2
3
4
5
6
7Hydro
Peer 1
Peer 2
Peer 3
Peer 4
Peer 5
Peer 6
Peer 7
Peer 8
Peer 9
Peer 10
Peer 11
Peer 12
Peer 13
Peer 14
Peer 15
Peer 16
0 1 2 3 4 5
0,4
2.9
:RUOG�ZLGH�SURGXFWLRQ�FRVWV��86'�EEO�������NCS finding cost 1991-1997 1)
($/boe of tech. resource)
Source: Schroder, Paras, Petrocompanies, WDR
19901991
19921993
19941995
19961997
0
2
4
6
8
10
12
14
Hydro
Mid-sizedplayers (2)
Majors (3)
��� \HDU WRWDO FRVWV �H[SORUDWLRQ � GHYHORSPHQW � DFTXLVLWLRQ FRVWV� �UHVHUYH DGGLWLRQ�H[WHQVLRQV DQG GLVFRYHULHV� UHYLVLRQV WR HVWLPDWHV� LPSURYHG UHFRYHU\ DQG SXUFKDVHV�
��(OI� (1,� 1RUVN +\GUR� '09� 3HWURILQD� 5HSVRO� 7RWDO� (QWHUSULVH� 6DJD� /DVPR
��'HILQHG DV� $PRFR� %3� &KHYURQ� ([[RQ� 0RELO� 5'�6KHOO DQG 7H[DFR
,QFUHDVHG�SURILWDELOLW\�,QFUHDVHG�SURILWDELOLW\�
through improvements reach target in finding and development of USD 5 per barrelthrough improvements reach target in finding and development of USD 5 per barrel
$/boe 1)
Good Good PoorPoor GoodGood
19
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0 20 40 60 80 100 120 140 160
Unit lifting cost (NOK/boe)
TrollOseberg
Top 25 % performers
Source: McKinsey
Median
20
Lifting cost on the Troll oil field: USD 0.75 bbl.
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EmployeesTotal synergiescost efficiencies
Expected May 1999 - 800 NOK 1.0 bill
To be realised(June 1999 - Jan. 2000)
-1,050 NOK 1.4 bill
6DJD�LQWHJUDWLRQ�6DJD�LQWHJUDWLRQ�
Cost efficiencies and syner giesCost efficiencies and syner gies
21
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1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 20000
500
1000
1500
2000
2500
3000
012345678910111213
�
�
�
�
�
�
�
No. of employers:Offshore
Onshore
2VH�$�% 2VH�& %UDJH 7UROO�% 1MRUG +HLPGDO 9LVXQG2VH�(7UROO�&
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An illustration of Hydro's scale effiency An illustration of Hydro's scale effiency
22
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1500
1000
500
19861990 1995 1999 2000
Troll B
Troll C"The majors"
said it wasimpossible...
we did it!
Continued technolo gy development
Basis for international growthOil reserves mboe
Troll Oil
SeparatorOiltoplatform
Wellstream
Water injectionwell
Subsea separator
7HFKQRORJLFDO�LQQRYDWLRQ�UHFRUG7HFKQRORJLFDO�LQQRYDWLRQ�UHFRUGThe Troll storyThe Troll story
23
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7RWDO�LQYHVWPHQWHVWLPDWH ��� 12.����ELOO
3URGXFWLRQ�VWDUW�XS��� 2FWREHU�����
2LO�UHVHUYHV ��� ����PLOO�EEO
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1R��RI�ZHOOV ���� ����
*UDQH�XQGHU�GHYHORSPHQW*UDQH�XQGHU�GHYHORSPHQW
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Main reservoirPossible additional reserves
Wells drilled 1997-98
Norsk Hydro
Shell
Statoil
BP Amoco
Esso
SDFI
Ownership
36.4%
7.5%
9.3%
11.2%
16.8%
18.7%
Estimated reserves: 13 500 bcf
Proposed o perator-develo pment: H ydro
Poposed o perator-o perations: Shell
Investments NOK 30 bill ex. gas pipeline to the Euro pean continent
Production start-u p expected 2006
2UPHQ�/DQJH���1RUZHJLDQ�JDV�JLDQW2UPHQ�/DQJH���1RUZHJLDQ�JDV�JLDQW
Reserves and ownershipReserves and ownership
25
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Portfolio development and exploration
Negotiating strategic alliance Hydro - Sonangol, comprising block 34
Exploration drilling: 9 wells on block 17
Exploration on block 1, 5 and 9
Development of block 17
Girassol, production start-up 2001
Dalia - under development
Appraisal of 5 finds block 17
Oil reserves
Girassol: 675 mill bbl, Hydro 10%
Dalia: 750 mill bbl, " 10%
26
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Hydro wishes to negotiate acquisition of SDFIHydro wishes to negotiate acquisition of SDFI 1)1) sharesshares
Hydro has as an ambition of continued growth as an oil company
Hydro seeks a strengthened position in its operating fields
Hydro's strong financial position gives opportunities for growth in the oil and energy segment through acquisition of SDFI shares
11571_101/00 * 28
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1) Norwegian - State Direkct Financial Interest
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Created a "fit-for-purpose" organization using zero-based dimensioning and benchmarking targets
Rapid integration process started in August.New organization fully operational from January 2000
Strong efforts to ensure a smooth staff reduction process
Going forward, it is important to have focus on how to keep and develop the strong competence retained in the new organization
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&DQDGD�&DQDGD�
A new significant E&P areaA new significant E&P area
Portfolio development and exploration
Exploration offshore Newfoundland and Nova Scotia
Tendering for participation offshore Newfoundland
Development and operations
Start-up of Terra Nova (Dec. 2000)
Mature the Hebron and Ben Nevis prospects
Production of 142,000 bbl/d from Hibernia
Oil reserves
Hibernia: 615 mill bbl, Hydro 5%
Terra Nova: 400 mill bbl, " 15%
Hibernia
Terra Nova Hebron
29
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Development of energy market provides new opportunities
Hydro is well positioned in converging European power and gas markets
Hydro's position as buyer and seller provides arbitrage opportunities
Gas 5.3 Bcm
Power 9.2 TWh
Gas 3.4 Bcm
Power 15.0 TWh
Norsk Hydrosupply
Gas Power
Norsk Hydrousage
30
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At the start of a new millenniumAt the start of a new millennium
Focus on increased profitability through performance as leading NCS operator and materialize potential resulting from this year's turn-around
Realize international E&P ambitions through profitable growth
Build on existing position for exploiting European energy market opportunities.
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/LJKW�0HWDOV/LJKW�0HWDOV
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Building on our position as a leading player in primary metal, extrusions and automotive
Securing Alumina supply
Exploiting opportunities in recycling
Maintaining global leadership in magnesium
Maintaining and further developing attractive niche positions in European rolling
33
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19801982
19841986
19881990
19921994
19961998
20002002
20048090
100110120130140150160170180190
Index 100 in 1985
Al-consumptionIndustrial production
Aluminum growth expected to continue at 2.5 to 3% p.a.Aluminum growth expected to continue at 2.5 to 3% p.a.
$OXPLQLXP�JURZWK$OXPLQLXP�JURZWK
DERYH�WKH�LQGXVWULDO�SURGXFWLRQ�UDWHDERYH�WKH�LQGXVWULDO�SURGXFWLRQ�UDWH
Source: HAMP, CRU, WBMSUpdated: 16.09.99
34
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APA AR Hydro VAW Hoogovens0
500
1000
1500
2000
2500
'000 mt
PrimaryExtrusionRolled
Updated 16.09.99
1HZ�DOXPLQLXP�LQGXVWU\�VWUXFWXUH���(XURSH1HZ�DOXPLQLXP�LQGXVWU\�VWUXFWXUH���(XURSH
Capacity fi gures 1998Capacity fi gures 1998
35
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1992 1994 1996 1998 20000
200
400
600
800
1000
1200
1400
1600
1800
2000
2200
'000 mtCommercial agreementsAlliancesRemeltPrimary production
From asset-driven to commerciall y-driven metal supplierFrom asset-driven to commerciall y-driven metal supplier
+\GUR��,QFUHDVHG�EXVLQHVV+\GUR��,QFUHDVHG�EXVLQHVV
YROXPH�WKURXJK�OLPLWHG�DVVHW�LQYHVWPHQWVYROXPH�WKURXJK�OLPLWHG�DVVHW�LQYHVWPHQWV
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%XVLQHVV�SRVLWLRQV�LQ�DOXPLQXP�H[WUXVLRQV��%XVLQHVV�SRVLWLRQV�LQ�DOXPLQXP�H[WUXVLRQV��
Total Extrusion (Worldwide)
Heat Transfer (Worldwide)
Building Systems (Europe)
Alcoa Reynolds
830,000 14,000 53,000
Norsk Hydro 400,000 50,000 45,000
Alcan, Pechiney and Alusuisse
240,000 5,000 7,000
37
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Tons
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High growth area - potential for differentiationHigh growth area - potential for differentiation
Primary foundryPrimary foundry
alloys, extrusions alloys, extrusions & sheet& sheet
Current turnoverCurrent turnover
NOK 7 billionNOK 7 billion
Heat Heat TransferTransferproductsproducts
StructuralStructural
ComponentsComponents
Mg castings Mg castings
Die castingDie casting
alloysalloys
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JRLQJ�IRUZDUGJRLQJ�IRUZDUG
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11571_1pd.prz
19821983
19841985
19861987
19881989
19901991
19921993
19941995
19961997
199830-09-1999
0
5
10
15
20
Percent
)OXFWXDWLQJ�52&( ���+\GUR�$JUL����������)OXFWXDWLQJ�52&( ���+\GUR�$JUL����������
Average 9%
* ROCE = (Operating income + Share net income in non-cons. investees + Financial income** - Other expenses, net) / (Total assets - Current interest-free liabilities)** Financial income = Financial income ex. agio - Loss on sale of securities - Unrealized loss on trading-shares - Write-down o f shares <20%owned
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Next two years
Lon ger term
Restructuring EuropeNitrate overcapacityNPK phos acid plantsAmmonia/urea economicsTechnical urea/nitrate
Cost reductionOverhead and other fixed costsVariable costs
Revised investment policy
Gradual transfer of product sourcing
Alliances 11571_101/00 * 42
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$JUL�LPSURYHPHQW�WDUJHWV$JUL�LPSURYHPHQW�WDUJHWV
General fixed cost reductions
NOK 1,350 million reduction in 2000 compared to 1998
Mannin g reduction of 1200 employees
1 million tons of nitrate capacity closures
Additional fixed cost reductions expected
Mannin g reduction of 500-600 employees
Variable cost reductions of NOK 400 million (excludin g movements in market prices)
Divestment of non-core units11571_1
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42
11571_1pd.prz
����PLOOLRQ�WRQV�RI�(XURSHDQ����PLOOLRQ�WRQV�RI�(XURSHDQ
QLWUDWH�FORVXUHV�UHFHQWO\�DQQRXQFHGQLWUDWH�FORVXUHV�UHFHQWO\�DQQRXQFHG
Time of announcement CompanyCapacity to be closed (tons)
Nov 1999 Fertiberia 260
Nov 1999 BASF 400
Dec 1999 Hydro 1,000
Dec 1999 Grande Paroisse 250
Total as of Jan 1, 2000 1,910
Large share of previously estimated overcapacity of 2.5-3.0 million tons already decided to be closed
43
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11571_1pd.prz
19811982
19831984
19851986
19871988
19891990
19911992
19931994
19951996
19971998
1999E2000B
0
1
2
3
4
5
6
7Mill tons
CISAsia
Latin AmericaAfrica
6DOHV�GHYHORSPHQW�HPHUJLQJ�PDUNHWV6DOHV�GHYHORSPHQW�HPHUJLQJ�PDUNHWV
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44
11571_1pd.prz
Other trade
68%
Hydro trade32%
Other trade
85%
Hydro trade
15%
Other trade
89%
Hydro trade
11%
Other trade
97%
Hydro trade3%
Ammonia: Total trade 13.1 mill.tons Nitrogen: Total trade 21.2 mill.tons
P205: Total trade 12.4 mill.tons K20: Total trade 23 mill.tons
:RUOG�IHUWLOL]HU�SURGXFWLRQ�����:RUOG�IHUWLOL]HU�SURGXFWLRQ�����
Hydro Agri's share of tradeHydro Agri's share of trade
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11571_1pd.prz
19871988
19891990
19911992
19931994
19951996
19971998
0
2
4
6
8
10
12
14
Mill tons nitrogen
Source: Nitrex-Complex
ExportExport
ConsumptionConsumption
19871988
19891990
19911992
19931994
19951996
19971998
0
5
10
15
20
25
30
mill tons product
Source: Fertecon
ProductionProduction
ImportImport
*OREDO�IHUWLOL]HU�PDUNHWV�RYHUVXSSOLHG*OREDO�IHUWLOL]HU�PDUNHWV�RYHUVXSSOLHG
FSU (Former Soviet Union) China
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)HUWLOL]HU�SULFHV�DUH�QRZ�DW�D�KLVWRULFDO�ORZ)HUWLOL]HU�SULFHV�DUH�QRZ�DW�D�KLVWRULFDO�ORZ
Urea, CAN and DAP pricesUrea, CAN and DAP prices
Source: Fertecon1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
0
50
100
150
200
250
USD/mt
0
50
100
150
200
250
Urea fob Middle East
CAN cif Germany
DAP
11571_101/00 * 48
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European nitro gen fertilizer market shares 1998European nitro gen fertilizer market shares 1998
Next 4 companies Next 4 companies (Kemira, GP,(Kemira, GP,BASF, Fertiberia)BASF, Fertiberia)
ImportsImportsHydroHydro
~20%
~20%
~35%
~25%
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Targets vs. 1998 actualTargets vs. 1998 actual
* Not including potential closures
600
1.350
1999 total 2000 total0
500
1.000
1.500
MNOK
Manning reduction 470 1,200(all employees)
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Kynoch - South Africa
Trevo - Latin America
Hydro acquires 50 % + 1 share of South Africa's leading fertilizer company - Kynoch Fertilizer in December 1999
~ 40 % market shareUSD ~ 200 million revenues
Kynoch's former nitrogen plants will be closed by the previous owner contributing to a restructuring of the industry
Hydro will supply Kynoch with approximately 250 tons pa of nitrogen fertilizer
Potential acquisition of Brazil's third largest fertilizer company, Trevo~7% market shareUSD ~200 million revenues
Trevo does not have own chemical production, but concentrates on blending and distribution
Trevo will be partly supplied with fertilizer produced by other Hydro plants
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http://www.hydro.com
..or contact Investor Relations directly
Telephone +47 2243 2313
E-mail [email protected]
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The nature of the Company's operations and the environment in which it operates is subject to changing economic, competitive, regulatory and technological conditions, risks and uncertainty.In connection with the United States Private Securities LitigationReform Act of 1995, Hydro is providing the following factors,which among others, could cause future results to differ materiallyfrom the forward looking statements, expectations and assumptionsexpressed orally or written herein. The statements include management aims, objectives, plans as well as targets for long-term debt to equity ratio, dividend pay-out ratio and return to shareholders.Management does not anticipate that all targets would necessarilybe met in any individual period and targets must be seen over a longer time perspective. Factors which could cause results to differ include, but are not limited to: fluctuations in supply and demand affecting product prices and raw materials, changes in governmental laws and regulations, including income taxes and environmental protection control, political developments, adverse effects of fluctuations in exchange ratesand changes in market sentiment, evaluation of risk, economic or otherconditions affecting the valuation of share price.
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