22
1 Harald Martinsen BNCC & OCC, October 19 th , 2007 Hydro – set for further growth in Brazil

Hydro – set for further growth in Brazil

  • Upload
    sukey

  • View
    36

  • Download
    0

Embed Size (px)

DESCRIPTION

Hydro – set for further growth in Brazil. Harald Martinsen BNCC & OCC, October 19 th , 2007. Brazil – Norway trade Imports from Norway350 MUSD Exports to Norway580 MUSD Hydro in Brazil 34% in Alunorte Alumina purchase:330 MUSD 1 57% of Brazilian export to Norway 100% of Acro - PowerPoint PPT Presentation

Citation preview

Page 1: Hydro – set for further growth in Brazil

1

Harald Martinsen

BNCC & OCC, October 19th, 2007

Hydro – set for further growth in Brazil

Page 2: Hydro – set for further growth in Brazil

2

Brazil and Hydro

Brazil – Norway tradeImports from Norway 350 MUSDExports to Norway 580 MUSD

Hydro in Brazil

34% in AlunorteAlumina purchase: 330 MUSD1

- 57% of Brazilian export to Norway

100% of AcroExtrusion plant in Itú- 13% of Brazil’s extruded products

Hydro’s history in Brazil

1974 MRN investment

1977 Office established

1997 Acquisition of Acro in Itú

1999 Acquisition of Alunorte

2000 Acquisition of Adubos Trevo

(Now part of Yara)

2001 Remelter built at Acro

2000-08 Expansions of Alunorte

2006 Acquisition of Peregrino

2007 New alumina refinery

(MoU with CVRD)

1) Numbers from 2006

Page 3: Hydro – set for further growth in Brazil

3

Hydro in Brazil – a “picture” from 2003

Head office

Agri plants

Aluminium plants

Page 4: Hydro – set for further growth in Brazil

4

StatoilHydro – a strong combinationCompany effective as of 2007-10-01

Page 5: Hydro – set for further growth in Brazil

5

Hydro with strong Brazilian focus

BM-C-7 Peregrino Field

Hydro 50% operate blockAnadarko 50% operate

developmentShallow water heavy oil

SM-1109Petrobras (Op)

40%Hydro 30%Repsol 30%

SM– 1105Repsol (Op) 40%

Hydro 30%Petrobras 30%

SM-1233Hydro (Op) 40%Petrobras 30%

Repsol 30%

BM-J -3Petrobras (Op) 60%

Statoil 40%

BM-ES-32Petrobras (Op)

60% Statoil 40%

BM-C-33Repsol (Op) 50%

Statoil 50%

BM-CAL-10Statoil (Op) 60%Petrobras 40%

BM-CAL-8Statoil (Op)

100%

BM-CAL-7Petrobras (Op)

60% Statoil 40%

8th Round awaiting award resolution

Page 6: Hydro – set for further growth in Brazil

6

The Peregrino Field Development Project

Page 7: Hydro – set for further growth in Brazil

7

Significant value creation

NOK billion

* 4 January 1999 close, nominal value** 31 August 2007 close. Aluminium and Oil & Energy based on transaction equation adjusted for dividend payments

0

50

100

150

200

250

300

350

400

1999* 2007**

Dividend and buybacks

Yara

Oil and gas

Aluminium

Hydro

Page 8: Hydro – set for further growth in Brazil

8

A resourceful aluminium company

Aluminium Metal

1) Excluding oil and gas, Polymers, Meridian, Automotive Castings and smaller divestments in process

2) Close 18 October 2007

Aluminium Products

Energy

• 25 000 employees1)

• Operations in more than 30 countries

• Turnover• 2006: NOK 99 billion• First-half 2007: NOK 51 billion

• EBIT• 2006: NOK 7.5 billion• First-half 2007: NOK 7.0 billion

• Market capitalization NOK 100 billion2)

•Ranked as 5th largest aluminium company

Page 9: Hydro – set for further growth in Brazil

9

The Bauxite belt

Page 10: Hydro – set for further growth in Brazil

10

The world's largest bauxite company (~18 mill tpy)

Very high quality and profitability

Partnership with CVRD, Alcoa, Alcan, BHP Billiton and CBA

Hydro bought 5% in 1974 when the company was started.

MRN (Mineracao Rio do Norte)

Page 11: Hydro – set for further growth in Brazil

11

•World’s largest refinery

• 4.3 million tonnes (100%)

• Full scale (2009): ~6.5 million tonnes

•34% owned by Hydro

•Located in north-east Brazil

•Revenues ~USD 1.3 billion (100%)

•1 150 employees

•10 million tons bauxite (wet)

•Strong safety performance

•High environmental and corporate social responsibility standards

Alumina - Alunorte

Hydro34,0%

Aluvale57,0%

Japanese5,4%

CBA3,6%

Shareholders

Page 12: Hydro – set for further growth in Brazil

12

• MoU with the Brazilian mining group CVRD

• Important step to further expand global primary aluminium and raw materials sourcing

• Final alumina production 7.4 million tonnes per year

• Four-stage development, each 1.85 tonnes

• Investment estimate first stage USD 1.5 billion (100%)

• Hydro share 20%

• Production start-up scheduled first-half 2011

• Final build decision and construction start in 2008

MoU for new alumina project in Brazil

Page 13: Hydro – set for further growth in Brazil

13

0

500

1 000

1 500

2 000

2 500

3 000

3 500

2001 2002 2003 2004 2005 2006 2007E 2011E

Brazil(Alunorte and new refinery)Alpart

Brazil is key in Hydro’s growth strategy

Hydro’s equity alumina production

1 000 tonnes

Page 14: Hydro – set for further growth in Brazil

14

OtherEurope

Asia

NorthAmerica

Other

Norway

EU

Brazilian soccer teams participate in

Norway Cup with the support of Hydro

1500 teams from 40 countries participate in theworld’s largest soccer tournament. Several of the teams are from Brazil, 2 are sponsored by Hydro. Hydro and its partners take responsibility for positivedevelopment in the communities in which we operate.As part of this program boys are encouraged to attend school. If they do, they are eligible for the soccer team going to theNorway cup.Every year since 2001 the team has participated in Norway Cup

Norway Cup

Page 15: Hydro – set for further growth in Brazil

15

Cautious investment policy…

Almost 20 years in the country before heavy investments started.

Main investments have focused on bauxite mining and alumina production: Long term perspective Revenues linked to USD (commodities) Generating positive trade balance for Brazil (exports) Vertical integration with geographical proximity

Asset-light strategy (partial ownership)

Page 16: Hydro – set for further growth in Brazil

16

Careful Partnership selection…

We believe in partnership as often the best model Far away from home.. Cultural differences.. Political aspects.

Mix of international and local partners

Local partners must be strong and serious

All partners must have long term perspective

Partners with comparative strength

Page 17: Hydro – set for further growth in Brazil

17

Financial management…

Recruit competent, local people

Work closely with a small number of banks

Heavy focus on Tax and Cash

Currency Exposure and (natural) hedging

Flexibility

Make sure you have professional advisors

Page 18: Hydro – set for further growth in Brazil

18

Management

Management style & philosophy

Limited number of Ex-pats Relatively large local authority…, But close follow up through reporting Focus on training local managers and send then abroad for

exposure Keep the operation “close” to head office through

Use of English as corporate language (isolation) Frequent visits and team meetings

Page 19: Hydro – set for further growth in Brazil

19

Some challenges….

Tax system Very complex with almost 60 different taxes Ex. Tax on all payments and money transfers Tax heaven and tax hell…

Legal framework Business sometimes difficult crossing state boarders Federal Republic (Big differences from state to state) No consolidation between different legal units Solution: work with good local employees and advisors.

Other aspects Bureaucracy

Working permits, visa, other documentation Corruption Crime situation

Page 20: Hydro – set for further growth in Brazil

20

But Brazil is still more than anything else….

Page 21: Hydro – set for further growth in Brazil

21

But Brazil is still more than anything else….

The land of great opportunities….

Page 22: Hydro – set for further growth in Brazil

22

Certain statements contained in this announcement constitute “forward-looking information” within the meaning of Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as amended. In order to utilize the “safe harbors” within these provisions, Hydro is providing the following cautionary statement.

Certain statements included within this announcement contain (and oral communications made by or on behalf of Hydro may contain) forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management’s plans, objectives and strategies for Hydro, such as planned expansions, investments, drilling activity or other projects, (c) targeted production volumes and costs, capacities or rates, start-up costs, cost reductions and profit objectives, (d) various expectations about future developments in Hydro’s markets, particularly prices, supply and demand and competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, as well as (i) statements preceded by “expected”, “scheduled”, “targeted”, “planned”, “proposed”, “intended” or similar statements.

Although Hydro believes that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause Hydro’s actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. Factors that could cause these differences include, but are not limited to, world economic growth and other economic indicators, including rates of inflation and industrial production, trends in Hydro’s key markets, and global oil and gas and aluminium supply and demand conditions. For a detailed description of factors that could cause Hydro’s results to differ materially from those expressed or implied by such statements, please refer to the risk factors specified under “Risk review – Risk factors” on page 134 of Hydro’s Annual Report 2006 (including Form 20-F) and subsequent filings on Form 6-K with the US Securities and Exchange Commission.

No assurance can be given that such expectations will prove to have been correct. Hydro disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Cautionary note in relation to certain forward-looking statements

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 (www.hydro.com).

The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation material, such as expected recoverable resources, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. Investors are urged to consider closely the disclosure in our Form 20-F, SEC File No. 1-9159, available from us at our Corporate Headquarter: Norsk Hydro, N-0240 Oslo, Norway. You can also obtain this form from the SEC by calling 1-800-SEC-0330.

Use of non-GAAP financial measures/Cautionary note in relation to oil and gas reserves