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Hydros investor presentation for the first quarter in 2011. The presentation is based on the latest capital markets day presentation with subsequent updates.
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Investor presentation
May/June 2011
(2)
51Business overview
69– Primary Metal
78– Metal Markets
52– Bauxite & Alumina
82– Rolled Products
102Additional information
96– Energy
89– Extruded Products
29First quarter results 2011
11Market outlook
3Company overview
Table of contents Cautionary note
Certain statements included within this announcement 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 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 we believe 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 our 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: our continued ability to reposition and restructure our upstream and downstream aluminium business; changes in availability and cost of energy and raw materials; global supply and demand for aluminium and aluminium products; world economic growth, including rates of inflation and industrial production; changes in the relative value of currencies and the value of commodity contracts; trends in Hydro’s key markets and competition; and legislative, regulatory and political factors.
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.
(3)
Companyoverview
(4)
1 448
(800)
(400)
0
400
800
1 200
1 600
2 000
2 400
2 800
3 200
Hydro underlying EBIT quarterly, NOK million
Hydro: resource rich and fully integrated
2008 2009 20112007
• Based in Norway withoperations in 40 countries
• 23 000 employees
• Operating revenues• 2007: NOK 94 billion• 2008: NOK 89 billion • 2009: NOK 67 billion• 2010: NOK 76 billion
• Current market capitalization• NOK 100 billion/USD 18 billion
6 009 (2 555) 3 5519 930
2010
(5)
Hydro’s value proposition
• Transforming bauxite and alumina acquisition enhances earnings robustness and provides long alumina position for decades to come
• Repositioning of Primary Metal on track for USD 300 per tonne cost improvement by end-2013
• World-class Qatalum smelter in full production from June 2011
• Increasing value of Energy business and competence
• Exciting prospects for high-end downstream business in mature and emerging markets
• Proactive portfolio, performance and margin management
(6)
Strong positions across aluminium value chain
Bauxite& Alumina
Rolled Products
Metal Markets
Extruded Products
• Bauxite capacity 12.2 million tonnes
• Expansion potential to 17.2 million tonnes
• Alumina capacity 6.9 million tonnes
• Expansion potential to 14.5 million tonnes
• Long-term sourcing contracts for bauxite and alumina
• 2.4 million tonnes primary capacity
• High LME and USD sensitivity
• Improving cost position
• Leading in technology
• 3.8 million tonnes (primary, remelt, recycling and cold metal)
• Expertise in materials• Flexible system• Strong marketing
organization• Risk management
• 1 million tonnes• Margin business• Regional business• Close to customers• Innovation• Market leading in
litho and foil
• 0.6 million tonnes• Margin business• Local business• Close to customers• Innovation• Market leading in
Building Systems
Primary aluminium production,marketing and recycling
EnergyPrimary Metal
• Long-term power supply secured
• 9.4 TWh of renewable energy production in Norway
Raw materials processingand energy Aluminium in products
Pro forma capacity for end-2010 after Vale transaction. 100% of volumes for assets that are fully consolidated and pro rata volumes for other assets.
(7)
Aluminium is the metal of the future
• Formability• Extrusion, rolling, casting• Low melting point vs. steel
• Excellent conductivity• Thermal – electrical
• Alloying technology• Gives wide range of physical properties
• Lightweight• 1/3 density of steel
• Recyclability• 5% of original energy consumption• 75% of all aluminium produced still in use
• Corrosion resistant• Oxide layer
Properties leadto increasedmarket share
• Aluminium intensive urbanization and infrastructure• Climate challenge – aluminium as part of the solution• Recyclability more important with high energy prices
(8)
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
Alcoa Chalco Rusal Rio Tinto Hydro proforma
ChipingXinfa
Weiqiao BHPBilliton
Vale Hydro East HopeGroup
ChinaPower
Dubal XinfaGroup
YichuanPower
AluminiumBahrain
Century Vedanta
Alumina Aluminium
Hydro becomes first tier aluminium company
Source: CRU
Production capacity for 2010 in aluminium equivalents, million tonnes
(9)
Responsible business is our license to operate
10.3
7.0
6.0
5.4
4.0 4.1 3.9 3.7
2.9
2002 2003 2004 2005 2006 2007 2008 2009 2010
TRI rate
Safety remains a top priority Commitment to sustainable operations
• Reducing specific energy consumption and climate gas emissions
• Helping our customers reduce their climate footprint
• Responsible restructuring
• Welcoming new colleagues from Vale – drawing on their competence
• Hydro is recognized on key indexes
(10)
Strategy for further value creation
Bauxite & Alumina
Primary Metal
Energy
Mid- and downstream • Continue proven high-end product strategy• Pursue profitable life-cycle investments:
recycling, energy-efficient building systems, aluminum in transport
• Expand selectively in emerging markets
• Increase value of business and competence• Focus on operations and commercialization
of current assets• Implement global approach to power
sourcing
• Reposition• Keep solid cash flow in current assets• Expand in high-class assets
• Integrate• Expand• Commercialize
(11)
Marketoutlook
(12)
Significant aluminium demand growth expected
31
37
28
37
24
17
0
10
20
30
40
50
60
70
80
90
2010 2015 2020
World outside China ChinaDemand for primary aluminium
Fight for raw materials to continueResource-constrained world
Million tonnes
+80%
(13)
Aluminium price increase, strong premiums
0
25
50
75
100
125
150
175
200
Jan-0
8
Apr-0
8
Jul-0
8
Oct-0
8
Jan-0
9
Apr-0
9
Jul-0
9
Oct-0
9
Jan-1
0
Apr-1
0
Jul-1
0
Oct-1
0
Jan-1
1
US Mid West Japan Europe*
1 000
1 400
1 800
2 200
2 600
3 000
3 400
2001 2003 2005 2007 2009 2011 2013 2015
LME (3-month avg.) LME forward April 21, 2011
Aluminium price USD per tonne
Source: Reuters Ecowin
13 2572 199Average 2010
10 5751 702Average 2009
2 620
2 3682 468
2 5272 632
USD/tonne
14 453Average 2008
14 03614 368
Q4 2010 averageQ4 2010 end
14 43714 502
Q1 2010 averageQ1 2010 end
Primary aluminium LME NOK/tonne
* Duty-paid Source: Metal Bulletin, MW/MJP: Platts
Ingot premiums USD per tonne
79
95
120
116
113
Japan
159138Average 2010
58105Average 2009
93
138
140
US Mid West
83Average 2008
189Q4 2010 average
193Q1 2011 average
Ingot premiums, USD/tonne Europe
(14)
Volumes seasonally higherHydro’s downstream sales Q1 2011 vs Q4 2010 Total downstream
sales*
Extruded Products: +8%
Hydro’s upstream sales Q1 2011 vs Q4 2010 Total upstream sales
Rolled Products: +5%
4%2%
19%
Extrusion ingot Sheet ingot Foundry alloys
15%12%
Albras included from March 1, 2011
6% 6%
Q1 11 vsQ1 10
Q1 11 vsQ4 10
3%1%
14%16%
3%
10%
-13%
17%
-6%
17%
4%
Auto & heat
exchanger
Can beverage
General engineering
Packaging & building
LithoFoil Extrusion North
America
Precision Tubing
Extrusion South
America
Building Systems
Extrusion Eurasia
Q1 11 vsQ1 10
Q1 11 vsQ4 10
(15)
18 000
19 000
20 000
21 000
22 000
23 000
24 000
25 000
26 000
27 000
28 000
2006 2007 2008 2009 2010 2011 2012
Supply Demand
Source: CRU/Hydro
World outside China1 000 tonnes
Mid-term development scenario thinking
Supply influences• New projects
• Potential restart• Supply disruptions
Demand influences• GDP growth
• Further restocking• Emerging markets
5%–9%
3%–6%
19%
(16)
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
Q1 07 Q3 07 Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Q1 110
10
20
30
40
50
60
70
80
IAI Other
LME SHFE
Global inventory days
Global inventory days trending down
Source: CRU
• Inventory days reduction driven by increased consumption
• Q1 LME stocks increase believed to partly reflect unreported metal moved into reported warehouses
• High inventories well known in market• Different views on unreported inventories
• Estimated total reported and unreported inventories ~11 million tonnes• Represents ~3 months of consumption
• Financial deals locking up metal• Profitable on a 3-6 month horizon
World reported primary aluminium inventories1 000 tonnes Days
(17)
(400)
(300)
(200)
(100)
0
100
200
300
400
500
600
Primary / alloyed Semis Fabricated Scrap Total
China balanced in primary aluminium
• Reduced production due to Chinese New Year celebration in February
• Production resumed after Chinese New Year• China expected to be broadly
balanced in 2011
• New capacity to be built in north and west China• Partly replacing high-cost
production in south and east
1 000 tonnes
Net
im
port
Net
exp
ort
2007 2008 2009 2010
Source: Hydro / Antaike, April 2011
(18)
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
20 000
22 000
24 000
26 000
28 000
30 000
Dec-0
7
Mar-0
8
Jun-0
8
Sep-0
8
Dec-0
8
Mar-0
9
Jun-0
9
Sep-0
9
Dec-0
9
Mar-1
0
Jun-1
0
Sep-1
0
Dec-1
0
Mar-1
1
Demand Production
Positive 2011 market outlook maintained
Source: CRU
World outside China (quarterly annualized)1 000 tonnes
• World outside China• Annualized demand at 25.3 million tonnes in Q1
• Up 1% vs Q4 2010
• 7% demand growth expected in 2011• Capacity development
• 1.2 million tonnes curtailed capacity restarted or in process of being restarted
• 1.2 million tonnes curtailed capacity may restart if current market conditions continue
• China• Annualized demand at 16.7 million tonnes in Q1
• Down 3% vs Q4 2010
• 10% demand growth expected in 2011• Broadly balanced in primary aluminium
(19)
-3
2
7
12
17
22
27
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Transport Construction PackagingFoil Electrical Consumer durablesMachinery & equipment Other
Source: CRU
Downstream demand development
Western Europe North America & Mexico
Demand, million tonnes
China
Share of semis consumption2010 – 54 million tonnes
Source: CRU LT October 2010
Electrical 10%
Machinery & equipment
10%
Transport 26%
Construction 24%
Other 6%
Foil stock 8%
Packaging 9%
Consumer durables
7%
(20)
66% of bauxite reserves in 3 countries
Big-league (Top- 3)
Mid-league (Top- 11; each > 2% of world total)
Total bauxite, billion tonnes: reserves, mine site resources *, and undeveloped resources **
Potential reserves, billion tonnes: associated with currently operating mines ***
*) Mine site resources are known bauxite resources that do not currently qualify as reserves for various reasons**) Undeveloped resources might or might not became feasible for new mines (quality, size, access, etc)***) Potential reserves = current reserves (economically extractible) + 70% of mine site resources. Undeveloped resources are excluded.Source: Roskill and Hydro analysis
Billion tonnes
Jamaica1.1 0.5
Venezuela1.8
0.3
Indonesia1.0 0.1
India
1.60.4
Australia
9.5
5.9
Cameroon1.2
0.0
Mali1.2
0.0
Guinea14.9
4.0
Brazil
8.2
2.0
Vietnam
2.30.0
China
2.10.9
(21)
9
29
49
7
4
5
2005 2010 2015
19
37
7330
42
2005 2010 2015
China dependent on bauxite imports
• Domestic bauxite reserves estimated at 1.3-2.0 billion tonnes
• Quality of domestic bauxite resources deteriorating
• Indonesia supplies ~75% of imported bauxite• The balance mainly from Australia
• China to be relatively balanced in alumina• Minor imports
• New alumina capacity mainly based on domestic bauxite
115
67
Chinese alumina sourcing
Chinese bauxite sourcing
35
16
54
Import
Domestic source
21
Import
Domestic source
Source: Antaike / Hydro
Million tonnes
Million tonnes
(22)
Significant alumina demand growth expected
52
70
8029
55
48
0
20
40
60
80
100
120
140
160
Million tonnes
202020152010
Production world outside China
Production China
Alumina demand
*2020 production world outside China includes 10 million tonnes of highly probable projectsSource: Hydro analysis/ Antaike
118
135
81
+80%
(23)
Alumina market expected to remain balanced
90
80
70
60
50
40
30
20
10
0202020152014201320122011
Alumina demand + export to China
Alumina production
Highly probable new capacity
Alumina balance world outside China, million tonnes
Source: Hydro analysis / CRU
6-10milliontonnes
3.5
5.0
3.53.54.24.25.1Idled capacity
4.54.54.03.53.5Export to China
(24)
Alumina market is consolidating
-1.0
Alba -0.9
Hydro -0.6
VAW -0.5
Pechiney 0.4
Rio Tinto 0.5
Sual
Rusal -1.2
Dubal
Vale 3.0
Alcoa 4.3
0.7
Alcan 0.8
Kaiser 1.0
BHP Billiton 1.9
Chalco 2.0
Glencore 2.4
Klesch
Dubal -2.2
Alba -1.7
Rusal -0.6
Rio Tinto 0.7
Hydro 1.5
BHP Billiton 2.1
Chalco 2.8
Alcoa 8.0
1.5Glencore
Tajik -0.8
-0.9Aluar
-0.5
Century
Vimetco
-1.1
-1.1
Source: CRU and Hydro analysis
2000 2011
Net long alumina position, million tonnes
(25)
Million tonnes
20100
Average - USD 243
70656055453525155 75 80 85 90
50
100
150
200
250
300
350
400
450
500
4030
Attractive cost position
Source: CRU
Global business operating cost curve 2010USD per tonne
Alunorte stand-alone
(26)
250
275
300
325
350
375
400
425
450
0
100
200
300
400
500
600
700
Alumina price development
USD per tonne
0
20
24
28
4
8
12
16
32
Alumina price
% of LME
Source: Reuters/CRU/Platts. *Platts started spot notifications in August 2010
Platts index in USD*Historical alumina price
16
14
12
USD per tonne
18
03.1101.1111.1009.10
20
04.1102.1112.1010.10
% of LME
Alumina price
2010200820062004200220001998
% LME % LME
(27)
Commodity prices drive industry costs
20
30
40
50
60
70
80
90
2005 2006 2007 2008 2009 2010 2011
20
40
60
80
100
120
140
160
2005 2006 2007 2008 2009 2010 2011
Crude oil – Brent (USD/bbl)
Source: Reuters Ecowin / PACE / CMAI
Power – EEX Germany (EUR/MWh)
Petroleum coke FOB USG (USD/tonne)
200
250
300
350
400
450
500
550
2005 2006 2007 2008 2009 2010 2011
Coal – CIF ARA (USD/mt)
0
35
70
105
140
175
210
245
2005 2006 2007 2008 2009 2010 2011
Freight – Baltic Dry Index
0
1 700
3 400
5 100
6 800
8 500
10 200
11 900
2005 2006 2007 2008 2009 2010 2011
Caustic soda (USD/tonne)
150
300
450
600
750
900
1 050
1 200
2005 2006 2007 2008 2009 2010 2011
(28)
Water reservoir levels Southwestern Norway (NO2)PercentNOK/MWh
45.3 %
42.8 %
Dec 31, 2010
498
469
Q4 2010
518
520
Q1 2011
18.1 %
15.4 %
Norway
Southwestern Norway (NO2)
System
Southwestern Norway (NO2)
Mar 31, 2011Reservoir levelsPrice NOK/MWh
Source: Nordpool and NVE
0
100
200
300
400
500
600
700
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
2010 2011
0
10
20
30
40
50
60
70
80
90
100
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
2010 2011
Market price Southwestern Norway (NO2)
Strong power prices, low reservoir levels
Week Week
Hydro’s snow and water reservoir levels assumed better than market average
(29)
First quarterresults 2011
(30)
• Vale transaction completed• Qatalum ramp-up on track• Positive market outlook
(31)
Q1 highlights• Underlying EBIT NOK 1 448 million• Stronger sales supported by seasonally improved markets• Stable Bauxite & Alumina result, weak production performance• Primary Metal up on higher prices, partly offset by increased raw material costs• Down- and midstream lifted by higher sales and lower costs• Solid Energy result
(32)
2008 2009 2010 Q1 2011
Estimated primary aluminium cash cost and marginUSD/tonne 1)
• USD 300 per tonne cost improvement • USD 50 per tonne realized in 2010• Further USD 125 per tonne targeted in 2011
• Cash cost up ~USD 125 from 2010due to increased raw material costs• Energy• LME-linked alumina prices• Petroleum coke• Weaker USD
• Program assumptions• Higher energy and petroleum coke costs may
offset some improvements• Improvements may be influenced by fluct-
uations in raw material prices and currencies• Applies to ~1 000 000 tonnes annual capacity1) Realized aluminium price minus EBITDA margin per tonne primary
aluminium. Excludes Qatalum earnings and volumes, but includes net earnings from primary casthouses.
2) 13% of LME 3 month price with 2.5 months delay3) Albras included from March 1, 2011
Ambitious cost improvement program on target
Estimated cash cost excluding LME-linked alumina cost 2)
Estimated LME-linked alumina cost 2)
2 175
1 6751 750
475
375
1 875
425
3)
Estimated EBITDA margin
475375
25
475
1 4751 275 1 225 1 275
(33)
Historic Vale transaction completed
• Platform for further growth as fully integrated resource-rich aluminium company
• Positions Hydro as a leading global bauxite and alumina player
• Integration process well under way
• Key priority: increase production towards nameplate capacity• Weak production performance in Q1
• Promising growth prospects
• Vale has become key shareholder in Hydro with 22% ownership
(34)
1 448
588
965
688
-618 -651-493
-793
1 110
Underlying EBIT
1 448
155
583
143
232
105
573
(344)
Q1 2011
588
113
86
62
105
24
482
(284)
Q4 2010
965
71
318
163
227
102
169
(85)
Q3 2010
1 110
288
382
31
309
201
177
(278)
Q2 2010
688
162
(169)
65
223
117
588
(297)
Q1 2010
(651)
(117)
(623)
(20)
57
68
295
(311)
Q4 2009
(793)
21
(780)
(15)
51
95
217
(382)
Q3 2009
(618)
(73)
(815)
196
(28)
(26)
281
(153)
Q2 2009
(493)
(228)
3
(245)
(53)
(204)
447
(213)
Q1 2009
Bauxite & Alumina 1)
Primary Metal 1)
Metal Markets
Rolled Products
Extruded Products
Energy
Other and eliminations 1)
Total
NOK million
1) Bauxite & Alumina, Primary Metal and Other and eliminations are reclassified from 2009.
(35)
Underlying EBIT development
1.40.1(0.2)0.2
0.3
0.4
0.6
Q4 2010 LME price andcurrency
Volume Equity accountedinvestments
Cost smelters Other Q1 2011
NOK billion
(36)
Key financials
2.89
0.65
1 244
5 154
(608)
(93)
5 762
1 448
4 408
5 855
21 138
Q1 2011
0.39
0.21
376
658
(401)
292
1 060
588
180
768
19 406
Q4 2010
1.33
1.14
1 852
2 118
(1 588)
522
3 706
3 351
(167)
3 184
75 754
Year 2010
924Net income (loss)
401Underlying net income (loss)
0.68
0.27
(605)
545
1 530
688
297
985
18 145
Q1 2010
Income tax expense
Financial income (expense)
Income (loss) before tax
Underlying EBIT
Items excluded from underlying EBIT
Reported EBIT
Reported EPS, NOK
Underlying EPS, NOK
Revenue
NOK million
(37)
Tax and financial expense
-4 222Revaluation gain Alunorte and CAP
(401)(608)Income tax expense
17(19)Equity accounted investments
38%11%Effective tax rate
1 0431 559Adjusted income before tax
38%39%Adjusted effective tax rate
1 0605 762Income before tax
Q1 2011 Q4 2010NOK million
22(10)Dividends received and net gain on securities
232(30)Net foreign exchange gain (loss)
(30)(80)Interest expense
10741Financial income
(16)(25)Other
292(93)Net financials
185(134)Financial expense
8451Interest income
Q1 2011 Q4 2010NOK million
• Low tax rate for Q1 due to tax-free revaluation gain on previous stakes in Alunorte and CAP
• Adjusted effective tax rate influenced by high share of earnings from Energy subject to power sur tax
• Lower interest income due to reduced cash balance in Q1
• Net foreign exchange loss due to weaker USD largely offset by gains on intercompany balances in EUR
Tax Finance
(38)
Items excluded from underlying EBIT
5 855
40
(136)
176
-
-
-
4 328
-
1 448
Q1 2011
3 184
(609)
(117)
560
(130)
(187)
74
-
242
3 351
Year 2010
768
(151)
283
92
(131)
(12)
7
-
91
588
Q4 2010
985Reported EBIT
688Underlying EBIT
(272)
230
314
19
(61)
67
-
-
Q1 2010
Unrealized effects power contracts
Unrealized LME and other derivative effects
Metal effect, Rolled Products
Rationalization charges and closure costs
Impairment charges
Gains (losses) on divestments
Vale transaction related effects
Other
NOK million
(39)
Pro forma underlying EBIT & EBITDA
91
588
1 448
9651 110
688253
266259
Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011
1 383
2 415
1 7201 877
1 440
467
830
835825
539
Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011
Underlying EBIT before transaction and contribution from acquired Vale assetsNOK million
Underlying EBITDA before transaction and contribution from acquired Vale assetsNOK million
698
1 3691 231
841
1 538
1 979
2 7022 555
2 213
2 881
3 351 + 790 = 4 141
6 420 + 3 030 = 9 450
(40)
Preliminary purchase price allocation
37.07.1
Net assets acquired by HydroMinority interests
44.1Net assets acquired
44.1Net assets acquired
~1.0
~4.2
37.0
20.06.31.59.2
44.82.79.2
(6.2)(6.4)
NOK billion
Revaluation gain on Alunorte and CAP recognized in Q1 2011 reported result
Consideration shares issued to ValeCash consideration paidDeferred cash payment ParagominasFair value of previously held shares in Alunorte and CAP
Net assets acquired by Hydro
Estimated annual excess value depreciation (exposed to NOK/BRL exchange rate)
Property, plant and equipmentGoodwillNet other assetsDeferred tax liabilitiesNet interest-bearing debt
(41)
Pro forma income statement Q1 2011
2.89
1125 043
5 154
5 762(608)11%
(93)
5 855
94018 877
25 672
21 138(19)
4 553
Hydro actual
21129
150
229(79)
(22)
251
2141 656
2 121
2 121--
Vale Aluminium combined
0.38
144782
925
1 468(543)37%
(137)
1 604
1 31619 981
22 902
22 815(45)132
Pro forma Hydro after transaction
11(4 390)
Net income (loss) attributable to minority interestNet income (loss) attributable to Hydro shareholders
(4 379)Net income (loss)
(4 523)144
(21)
(4 502)
162(551)
(4 891)
(444)(27)
(4 421)
Pro forma adjustments
Depreciation, amortization and impairmentOther expenses
Earnings before financial items and tax (EBIT)
Earnings per share attributable to Hydro shareholders
Income (loss) before taxIncome taxesTax rate
Financial income (expense), net
Total revenue and income
RevenueShare of the profit (loss) in equity accounted investmentsOther income, net
NOK million
(42)
223 237
348
448
205
Bauxite & Alumina
• Weak production performance in Alunorte and Paragominas• Higher realized alumina price driven by LME link• Lower sales volumes in Alunorte• Increased caustic and energy costs• Higher bauxite costs due to scheduled maintenance of
Paragominas bauxite pipeline and increased operating costs• Lower contribution from commercial activities
• Higher LME-linked alumina prices• Improved production at Alunorte and Paragominas• Reduced unit costs due to higher utilization
1 7452 0171 720Bauxite production, kmt
231251266Apparent alumina cash cost, USD/mt
293311329Realized alumina price, USD/mt
1 8432 0181 762Total alumina sales, kmt
1 3941 4481 336Alumina production, kmt
643693725Underlying EBITDA, NOK million
237
Q1 2011
223
Q4 2010
205Underlying EBIT, NOK million
Key figuresQ1
2010
1 225 237
2010 2011
Q1 operating results
Outlook
NOK million
Underlying EBIT
Pro forma
(43)
230
592
306
481
(203)
Primary Metal
• Prices and premiums lift result by NOK 480 million• Increased raw material costs, partly offset by lower fixed
costs, reduce result by NOK 170 million• Insurance compensation of NOK 145 million included in
positive NOK 20 million Qatalum result• Albras contributing NOK 50 million vs NOK 144 million in Q4
• Close to 100% of primary production affecting Q2 results priced at ~USD 2 450 mt, excluding Qatalum
• Increased alumina and petroleum coke cost• Restart of 15 000 mt at Sunndal 3 line in June
3208081 137Underlying EBITDA, NOK million
447475490Primary aluminium production, kmt
601624627Total sales, kmt
2 0392 1312 366Realized LME price, USD/mt
11 82612 73913 664Realized LME price, NOK/mt
592
Q1 2011
230
Q4 2010
(203)Underlying EBIT, NOK million
Key figuresQ1
2010
816 592
2010 2011
Q1 operating results
Outlook
NOK million
Underlying EBIT
Pro forma
(44)
62
143163
3165
Metal Markets
• Increased sales volumes for third-party products • Improved margins for remelters• Lower contribution from metal sourcing and trading• Positive currency and inventory valuation effects of
NOK 50 million
• Slightly increased volumes• Volatile trading and currency effects
9188168Underlying EBITDA, NOK million
1447395Underlying EBIT excl currency and inventory valuation effects, NOK million
670688772Total metal products sales, kmt
143
150
Q1 2011
62
147
Q4 2010
143Remelt production, kmt
65Underlying EBIT, NOK million
Key figuresQ1
2010
321 143
2010 2011
NOK million
Underlying EBIT Q1 operating results
Outlook
(45)
105
232227
309
223
Rolled Products
• Seasonally higher sales improve resultby NOK 80 million
• Improved margins driven by general engineering applications
• Higher energy costs offset by lower maintenance costs
• Solid order book for 2011• Stable sales volumes in Q2
335226342Underlying EBITDA, NOK million
232
245
Q1 2011
105
234
Q4 2010
231External sales volumes, kmt
223Underlying EBIT, NOK million
Key figuresQ1
2010
864 232
2010 2011
NOK million
Underlying EBIT
Q1 operating results
Outlook
(46)
117
201
102
24
105
Extruded Products
• Weak European construction market• Seasonally higher volumes• Lower costs• Solid results in Precision Tubing and
Extrusion South America
• Current market conditions expected to continue, but increased volatility in demand
• Seasonally higher sales
252162237Underlying EBITDA, NOK million
105
136
Q1 2011
24
127
Q4 2010
128External sales volumes, kmt
117Underlying EBIT, NOK million
Key figuresQ1
2010
444 105
2010 2011
NOK million
Underlying EBIT
Q1 operating results
Outlook
(47)
482 573
169 177
588
Energy
• High and stable production• Strong spot prices• Lower transmission costs
• Significantly lower production and spot sales• Lower prices
623502600Underlying EBITDA, NOK million
430469520Southwest Norway spot price (NO2), NOK/MWh
2 7812 2632 308Power production, GWh
573
955
Q12011
482
827
Q42010
1 323Net spot sales, GWh
588Underlying EBIT, NOK million
Key figuresQ1
2010
1 416 573
2010 2011
NOK million
Underlying EBIT Q1 operating results
Outlook
(48)
Net cash development Q1
11.0
(2.0)
(0.6)
(1.2)
(1.9)2.4
End-Q4 2010 UnderlyingEBITDA
Operatingcapital
Otheradjustments
Investments /divestments
Net cashpayment Vale
Debt increase Other End-Q1 2011
Net cash flow from operations NOK (0.6 billion)
Net cash flow from investing NOK (6.4 billion)
NOK billion
(5.7)
(5.7)
(0.2)
(49)
Robust financial position
(2.0)
11.0
2.0
Dec 31, 2009 Dec 31, 2010 Mar 31, 2011
Net cash/(debt), NOK billion
(20.5)
(5.6)
(5.5)
(7.3)
(2.0)
(4.5)
(2.5)
1.3
3.7
Mar 31, 2011
(6.4)
(4.0)
(5.6)
(7.8)
11.0
(0.3)
(0.9)
1.3
10.9
Dec 31, 2010
2.0Net cash/(debt)
(2.0)Short-term debt
1.5Short-term investments
2.6Cash and cash equivalents
(0.1)Long-term debt
(5.6)Net pension liability at fair value, net of expected tax benefit
(8.0)Net int.-bearing debt in equity accounted invest.
(15.6)
(4.0)
Dec 31, 2009
Other adjustments*
Adjusted net debt
NOK billion
* Operating lease commitments and other
(50)
Priorities 2011
• Successful integration and improved performance in Bauxite & Alumina
• Primary Metal repositioning through USD 300 program and Qatalum ramp-up
• Solid operations with firm cost control and strong market focus
(51)
Businessoverview
(52)
Bauxite & Alumina
(53)
Alunorte alumina refinery
High-quality asset portfolio
MRN bauxite mine
Paragominas bauxite mine
CAP alumina refinery project
Alpart alumina refinery
Sales contract portfolio
External supply contracts
Refining and mining competencies
Bauxite licenses
• 5% ownership• Volume off-take
agreement for Vale’s 40% stake
• Capacity 18 million tonnes
• 60% ownership, 100% by 2015
• One of the world’s largest bauxite mines
• 2010 production 7.5 million tonnes
• Nameplate capacity of 9.9 million tonnes
• Possible expansion to 15 million tonnes
• Long-life resource
• 81% ownership• CAP refinery (Phase I)
is planned to be in operation in 2015
• Paragominas expansion to be developed in parallel
• Investment estimates and expansion concepts under evaluation
• Full utilization of the existing bauxite pipeline
• 91% ownership• World’s largest alumina
refinery• 2010 production
5.8 million tonnes• Nameplate capacity of
6.3 million tonnes• Bauxite supplied from
Paragominas and MRN• World-class conversion
cost position
• 35% ownership• Capacity 1.65
million tonnes of alumina
• Fully integrated with bauxite
• 100% curtailed since mid-2009
(54)
Integration process well underway
• Solid management team
• Global organization• Headquarters, Rio de Janeiro, Brazil• Operations, Para State, Brazil• Marketing, Lausanne, Switzerland• Workforce of 6 500 people in Brazil
• Stakeholder relations well established• Authorities • Customers
• Social dialogue developing positively
• Expansion projects maturing
Successful start
(55)
Paragominas – production process
• Production process• Strip mining allows for quick environmental
recovery• Bauxite found in 0.5-2.5 meter layers 4-18
meters below ground
• 244 km pipeline from Paragominas to Alunorte• Only bauxite slurry pipeline in the world• 15 million tonnes annual capacity• Low environmental impact
• High-quality bauxite• Gibbsite bauxite with 48-49% available
alumina and 4.5-5% of reactive silica• Absence of organics reduces investments
and cash cost at Alunorte
(56)
Paragominas – production process
Reclaimer Silo SAG mill
RecrusherBall mill Vibrating screen
ClassificationPumping station to pipeline
Tailings dam/recovered
waterClassification
(57)
Paragominas bauxite mining costs
• Labor largest cost factor• Influenced by Brazilian wage level• Productivity improvements
• Maintenance/consumables• Influenced by Brazilian inflation
• Energy cost – power and fuel
Paragominas bauxite mining costs 2010
Other costs; 19 %
Energy; 16 %Support & infrastructure; 12
%
Maintenance/ consumables,
19%
Sustaining capital; 9 %
Labor; 25 %
(58)
Paragominas priorities
• Operational improvements• Housekeeping and safety
• Improve performance stability
• Beneficiation plant
• Dewatering filters in Alunorte
• Stripping ratio
• Recovery rate
• Improved production system
• Target significant production increase • Nameplate capacity of 9.9 million tonnes
0
1
2
3
4
5
6
7
8
9
10
2007 2008 2009 2010 Target
Bauxite production, million tonnes
(59)
Alunorte - production process
Mud residue
Caustic sodaBauxite
Digestion
Powerhouse
Steam
DecantersPrecipitation
Hydrate(Al(OH)3)
Evaporation Test tank
Calcination
AluminaAl2O3
Classification
Bauxite dewatering
(60)
Alunorte priorities
0
1
2
3
4
5
6
7
1995 1997 1999 2001 2003 2005 2007 2009
Alumina production, million tonnes • Operational improvements
• Housekeeping and safety
• Improve plant efficiency
• Performance in older lines
• Availability of coal boilers
• Dewatering filters
• Port costs
• Improved production system
• Targeting stable production above 6 million tonnes
• Nameplate capacity of 6.3 million tonnes
(61)
Favorable integrated alumina cash cost position
• Integrated alumina cash cost position 2010• USD 238 per tonne• Alunorte, Paragominas and sourced alumina
• Bauxite• Cash cost to be improved as Paragominas increase
production and pipeline is fully utilized
• Energy • First-quartile energy consumption – 8 MJ/t• Energy mix of heavy fuel oil and coal
• Caustic soda• Competitive caustic soda consumption due to bauxite
with low level of reactive silica
• Other costs• Maintenance, labor and other
• Sourced alumina• Alumina purchased for resale
Energy; 31 %
Other costs; 15 %
Sourced alumina; 8 %
Bauxite; 36 %
Caustic soda, 10%
Integrated alumina cash cost position 2010
(62)
Expansion projects - CAP and Paragominas III
• Capacity• CAP alumina refinery I
• 1.9 million tonnes• Paragominas bauxite mine expansion III
• Up to 15 million tonnes
• Time schedule • CAP refinery I planned to produce in 2015• Paragominas expansion developed in
parallel
• Investment estimates and expansion concepts under evaluation
• Competitive cost position • Full utilization of existing bauxite pipeline
• Technology and project execution for CAP built on Alunorte experience
(63)
Business model – volume flows
1) Third party customers and non-consolidated joint ventures2) Fully owned smelters and consolidated joint ventures
1 000 tonnes, pro forma 2010
ParagominasProd (100%) 7 500
Hydro availability100%
MRNProd (100%) 17 000
Hydro availabilityEquity 5%
Contract 40%
AlunorteProd (100%)
5 800
Hydro availabilityEquity 91%
Commercial operations
Hydro availability
Alumina 7 400Bauxite 900
Internal 2)
alumina sales
External 1)
alumina sales
6 700
7 500
External sourcing alumina
2 100
900
2 100
4 500
2 9005 300
Externalbauxite sales
900
(64)
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Attractive alumina position
1 000 tonnes
*Sunndal 3 line assumed back in operation, Neuss and Søral at 2010 production level
Sourcing contracts
Alunorte equity
CAP equity
Smelter demand*
Open position not committed to sales contracts
(65)
Shift towards shorter contract durations
1990-2000 2000-2005 2005-2010
<2000 2011
13.00-14.00%
12.00-13.00%
Contract durations
13.25-15.25%
Long-term contracts (>6 years)
Medium-term contracts (3-5 years)
Spot (< 2 years)
Source: Hydro estimates
% of LME per tonne alumina for long-term contracts
45%
35%
20% 25%
55%
20%
(66)
Alumina pricing shifting from LME-link toalumina market fundamentals
• Future pricing should reflect the fundamentals of the bauxite and alumina value chain
• Bauxite, a fight for cost efficient resources going forward
• Index pricing and shorter term contracts
(67)
Hydro’s commercial strategy
• Move towards index pricing• Currently not offering medium/long-term LME
linked contracts
• Actively promote index pricing
• Focus on contracts with 1-4 year duration
• Focus on selling to end-users
• Hydro’s existing combined sales portfolio• Average alumina price ~13-14% of LME
• Similar percentage expected for 2011-2015
• Minor volumes available for sale before 2016• Majority of sales contracts expire in 2016-2018
(68)
Strong social and environmental commitment
• Strategic partnerships to establish basis for multi-party dialogue• Social program/community investments
based on input from stakeholders
• Reforestation • World-leading experts to review
rehabilitation program
• Health and safety top priority• Ambition to be industry benchmark • Hydro’s values and culture important
for further improvements
(69)
Primary Metal
(70)
World-wide production network
Qatar, 300 000 tonnes• Qatalum (50%): 300 000 tonnes• Ramping up during first half 2011• Expansion potential
Germany, 230 000 tonnes• Neuss (100%): 230 000 tonnes
Slovakia, 90 000 tonnes• Slovalco (55%): 90 000 tonnes
Canada, 115 000 tonnes• Alouette (20%): 115 000 tonnes• Expansion potential
Brazil , 235 000 tonnes• Albras: (51%): 235 000 tonnes
Australia, 240 000 tonnes• Kurri Kurri (100%): 175 000 tonnes• Tomago (20%): 65 000 tonnes
Norway, 880 000 tonnes• Sunndal (100%) : 375 000 tonnes• Årdal (100%): 190 000 tonnes• Karmøy (100%): 170 000 tonnes• Høyanger (100%): 60 000 tonnes• Søral (50%): 85 000 tonnes
Attributable capacity: 2.1 million mt. Consolidated capacity: 2.4 million tonnes, Slovalco and Albras are consolidated) The smelters have an additional remelt capacity: 0.6 million tonnes. Consolidated casthouse capacity: 3.0 million tonnes. Qatalum and Søral are equity accounted in Hydro’s results.
Primary aluminium annual production capacity
2.1million tonnes
11%
42%
4%
14%
12%
6%
11%
(71)
800
1 200
1 600
2 000
2 400
2 800
Rusal Rio Tinto Hydro Alcoa Century
Strong focus to further improve cost position
800
1 200
1 600
2 000
2 400
2 800
0 10 000 20 000 30 000 40 000 50 000 60 000
Source: CRU, BOC 2014: LME 2 145 USD/tonne (real 2010)
Estimated business operating cost 2014 by CRUUSD/tonne
Accumulated world capacity, 1 000 tonnes
Estimated primary aluminium production cash costsFull year 2010, USD/tonne
Hydro
Estimated primary aluminium production cash costs including casthouse margin based on company reports. Assumptions: Hydro cash costs increased by USD 50/tonne for relining cost in order to compare with Alcoa. Pricing: Century 1 month LME cash lag, Hydro 3 months and 20 days LME forward lag, Alcoa, Rio Tinto and Rusal 15 days LME cash lag.
HydroPeer companies
(72)
Technology costs/spin-offs
Maintenance and relining
Investments
Procurement
Organization and manning
Casthouse product margin
Logistics
Operational improvements• Improved current efficiency• Reduced power consumption• Reduced anode consumption
Fixed cost reductionsand lean operations
Further operational improvements
Improvement program: USD 300 per tonne
50
125
0
100
200
300
Realized2010
2011 2012 2013onwards
USD300/tonne
Cost reduction target from 2009 level for ~1 000 000 tonnes annual capacity
(73)
Attractive Qatalum fundamentals
Ideally located to serve all majormarkets in Asia, US and Europe
2011 focus• Ramp-up to be completed by June 2011• Stabilize production and cost optimization
World-class smelter• Cash costs estimated around
1 400-1 500 USD per tonne at 2010market conditions when in full production
Joint venture (50/50) betweenQatar Petroleum and Hydro• Capacity: 585 000 tonnes
(74)
• 440 of 704 cells producing by end-Q1• 80 000 tonnes produced in Q1 (100%)
• Ramp-up is continuing towards full production from June• Final ramp-up dependent on commissioning
of power plant steam turbines
• Insurance expected to cover a majorityof loss related to August power outage• NOK 145 million recognized in Q1 result• NOK 300 million recognized in Q4 result• Remaining insurance coverage expected to
be recognized at final insurance settlement
• World-class cost position• Cash costs estimated around USD
1 400-1 500 per tonne at 2010 market conditions when in full production
Qatalum in full production from June 2011
(75)
Qatalum facts
• Capacity• Smelter: 585 000 tonnes per year• 704 cells in 2 double-lined potrooms• Anode plant, casthouse and 1 350 MW power plant • Possible expansion to 1 200 000 tonnes per year• Hydro’s proprietary smelting technology
• Investment• ~USD 5.7 billion (100%)
• 46% equity, 54% project financed
• Satisfactory project economics at LME 1 900 USD/tonne• Engineering Procurement Construction (EPC) contract
philosophy • Maximize competition by involving resources and
experience of several principal aluminium contractors for 11 EPC packages
• Compensation formats mainly lump-sum
• Financials• Depreciated over ~20 years• Marginal tax implications• First quartile cash cost based on very competitive gas
contract
(76)
• Hydro is a majority owner• Owned 51% by Hydro and 49% by Nippon
Amazon Aluminium Company
• Industry average cash cost position• Long-term energy coverage with hydropower
based LME-indexed contract until end-2024• Alumina sourced from Alunorte located next to
Albras
• Among the largest smelters in the Americas and established in 1985-86
• Key operational facts• Capacity 100%: 460 000 tonnes• Production 2010: 450 000 tonnes• Technology: AP 13• Product mix: Standard ingot
Albras – world-scale smelter in key region
(77)
HAL 300 In operation
Develop technology to fulfill ambitions
HAL 300
• Operating for several years in Sunndal
• Ramping up in Qatar• Qatalum power outage
verified the robustness of the cells
• Operating at:• 13.3 kWh/kg• 313 kA• 1.6 tonne CO2/tonne
aluminium
Next-generation
smelter
HAL4e
• Benchmark technology –process parameters and environment
• 30 months of operations in Årdal, Norway
• First verification period surpassed targets
• Currently operating at:• 12.5 kWh/kg• 424 kA • 1.5 tonne CO2/tonne
aluminium
R&D portfolio
• HAL4e optimization – to be ready for next project
• HAL Ultra – future vision• Significantly lower kWh/kg• Carbon capture-ready cell• New materials and cell
design• Reduced investment costs
(78)
Metal Markets
(79)
Leading metal products supplier in Europe
Casthouse productionPrimary production
Remelting & recyclingCommercial agreements
The preferred partner in casthouse
products and services
• Growing marketing position in U.S. and Asia through Qatalum volumes
• Enhance value of market system and optimize value on top of LME price
• Strengthen margin management and contribute to improved earnings in primary casthouses
• Capitalize on strong market position through sourcing and trading strategies
• Firm operational LME risk management
Sheet ingot525 000 tonnes
Extrusion ingot1 550 000 tonnes
Foundry alloys450 000 tonnes
(80)
• Capacity in Europe• 1.3 mill tonnes of primary metal 1)
• 1.0 mill tonnes of remelting and recycling 2)
• 0.6 mill tonnes Qatalum (100%) 3)
• 0.2 mill tonnes of third party metal products
• Capacity outside Europe• 0.6 mill tonnes of primary metal• 0.2 mill tonnes of remelting and recycling
• Stand-alone remelters close to customers
• Business concept• Increased business volume with low investments• Optimized system costs for sourcing, casthouse
operations and marketing of metal products• Maximize casthouse capacity utilization• Basis for strategic alliances• Gain leading position in scrap conversion
Flexible and extensive supply network Europe
1) Including ~320 000 tonnes presently curtailed 2) Excluding downstream capacities in Rolled Products and Extruded Products3) Ramp-up to 600 000 tonnes by June 2011
Karmøy
Høyanger
Sunndal
Årdal
Azuqueca
Deeside
Luce
Clervaux
RackwitzRheinwerk
Slovalco
Hannover
Product customer (illustration)
Primary casthouse
Remelters
Third-party & part-owned primary source
(81)
Metal Markets earnings drivers
• Remelters• Revenue impact – volume and product
premiums above LME• Cost impact
• Scrap and standard ingot premiums above LME
• Raw material mix• Freight cost – proximity to market• Gas and electricity consumption and prices
• Other main businesses• Physical and LME trading• Third-party products• High purity aluminium
• Results influenced by currency fluctuations -150
-100
-50
0
50
100
150
200
250
300
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Underlying EBIT excluding currency effects and ingot stock valuation effect, NOK million
2008 2009 2010 2011
(82)
Rolled Products
(83)
No. 1 flat rolled products producer in Europe
• World leading positions in high-end products: foil, litho and automotive
• Solid cash generation
• Record results in 2010
• Technology leadership and innovation
• Strategy• Margin management and cash generation
• Focus production system on core assets
• High-grading product portfolio
Automotive, heat
exchangers & general
engineering
Revenues:NOK 6.8 billion
Packaging & building
Revenues:NOK 11.3 billion
Litho
Revenues:NOK 3.7 billion
(84)
012345678
2004 2006 2008 2010-16%-13%-10%-7%-4%-1%2%5%8%11%14%17%20%23%
Source: CRU February 2011 1) Source: EAA
Million tonnes
% growth (RHS)
012345678
2004 2006 2008 2010-16%-13%-10%-7%-4%-1%2%5%8%11%14%17%20%23%
Western EuropeMillion tonnes
North AmericaMillion tonnes
012345678
2004 2006 2008 2010-16%-13%-10%-7%-4%-1%2%5%8%11%14%17%20%23%
Asia PacificMillion tonnes
Flat rolled products consumption
European market4.3 million tonnes
Solid market share for Rolled Products 1)
• 75% of shipments in Europe• 6% of business in North America• 19% of business in Asia/rest of the worldOther
81 %
Hydro19 %
(85)
• 1 million tonnes flat rolled products annually
• Operating revenues ~NOK 21.2 billion
• Hydro operates 7 rolling assets in 4 countries
• Operating world-class benchmark assets• Alunorf (JV 50%)
• World’s largest rolling mill
• Grevenbroich plant• World’s largest finishing mill
• ~4 000 employees
Hydro’s Rolled Products operations
Rolling Mill Sales Office
Malaysia
KarmøyHolmestrand
Cisterna
Hamburg
Norf/Grevenbroich
(86)
Attractive market position and customers
GE/Building
Auto
Can
Foil
Litho
Our products
Leading position in Europe
Our positionOur customers
Leading position in Europe
World market leader
More than 50% of products with global reach
Globalreach
Regionalreach
(87)
European producer with global reach
Source: Hydro analysis; based on export sales by region 2010 (YTD Nov annualized);
Asia-Pacific79 000, 8%
Middle East76 000, 8%
Latin Lamerica27 000, 3%
North America56 000, 6%
25% export share for high-end markets serving key global customers & markets
World943 000
100%
Tonnes
(88)
Rolled Products earnings drivers
• Contract structure• Margin business based on conversion price
• LME element passed on to customers• Medium-term contracts
• Range from spot contracts to multi-year contracts
• High share of fixed costs - volume sensitive
• Preferred supplier market position in high-end products
• Hydro’s market position key advantage in cost and volume driven industry
-200
0
200
400
600
800
1 000
1 200
1 400
Underlying EBIT per tonne, NOK
2006 2007 2008 2009 2010 2011
(89)
Extruded Products
(90)
Strong position in Europe, U.S. and Brazil
• Leading position in Europe in Extrusion and Building Systems
• Strong position in the U.S. and Brazil
• Global leader in precision tubing
• Strategy• Reinforce European extrusion base
• Specialist in energy-neutral building solutions, including solar
• Selective acquisitions
• Entry into emerging markets
• Operating revenues ~NOK 19.4 billion
• ~9 500 employeesStrong
entrepreneur-ship,
management culture and competence
Product innovation through strong
customer relations
Extrusion EurasiaRevenues: NOK 8.8 billion
Building SystemsRevenues: NOK 5.6 billion
Extrusion North America
Revenues: NOK 2.5 billion
Extrusion South America
Revenues: NOK 0.8 billion
Precision TubingRevenues NOK 2.4 billion
(91)
• “Mastering” Europe/gaining market share in the US
• Close to customers with strong regional presence
• More then 40 locations in 19 countries
• Top innovation and design
• Main segments• Building and construction• Automotive• Transport• Solar
• 2010 sales volume• 388 000 tonnes
A true entrepreneurial driven enterpriseExtrusion Eurasia, Extrusion North America and Extrusion South America
Location
(92)
Winning in a demanding marketPrecision Tubing
• Competence - our proven resource
• Strike a new path
• Strong global presence
• 2010 sales volume: 67 000 tonnes
(93)
Building the future with aluminum
Aluminium used for
construction to double by
2020
The future is energy-
neutral buildings
Energy saving
• Reduce materials • High insulation
Energy gaining
• Active• Passive
100% recyclable
• Design• Limited types of,and non-harming
materials
Building Systems
2010 sales volume: 73 000 tonnes
(94)
North AmericaMillion tonnes
0.00.51.01.52.02.53.03.5
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011e-24%-20%-16%-12%-8%-4%0%4%8%12%16%
0.0
0.51.0
1.5
2.0
2.53.0
3.5
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011e-24%-20%-16%-12%-8%-4%0%4%8%12%16%
EuropeMillion tonnes
Extruded products consumption
Million tonnes % growth (RHS)
Solid market share for Extrusion in Europe 1)
Other56 %
Aleris3 %
Alcan8 %
Sapa16 %
Hydro17 % • 74% of shipments in Europe
• 14% of business in North America• 12% of business in Asia/rest of the world
European market2.4 million tonnes
Source: European and North American consumption figures from CRU February 2011. 1) Best estimates shown for competitor 2009 market share. Market share Hydro ~17% excluded divested Automotive Structures.Hydro ~15% for EE/HBS
(95)
• Contract structure• Mainly short-term contracts• Large number of small orders to
small/medium-sized customers• Produce to order - limited share of
commodity type products
• Strong cost focus
• Margin management is key
• Volume sensitive - but flexible production system
• Support customers in product development• Value creation in excess of metal price
-500
-250
0
250
500
750
1 000
1 250
1 500
1 750
2 000
Extruded Products earnings drivers
* Excluding divested businesses (Structures, Castings, Magnesium)
Underlying EBIT per tonne*, NOK
2006 2007 2008 2009 2010 2011
(96)
Energy
(97)
Solid long-term power coverage for Primary Metal
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Self-generated Long-termMedium-term Consumption
• 90% of power needs secured until 2020
• High share of renewable energy• More than 2/3 of power needs from
renewable sources
• Albras smelter in Brazil has hydropower based contracts through 2024
• High share of general inflation linked and fixed price contracts• Limited commodity price exposure
• Securing acceptable power sourcing in Europe requires CO2 compensation
(98)
North AmericaPower 1.6 TWh
Australia/AsiaPower 3.8 TWhNatural gas 0.1 TWh
Middle EastPower 4.6 TWh
South AmericaPower 4.2 TWhCoal 5.6 TWhFuel oil 7.4 TWh
2011 estimate for Hydro’s equity production including Vale assets acquisition. Sunndal 3 line and Alpart curtailed, Neuss and Søral at current production level.
EuropePower 14.8 TWhNatural gas 2.4 TWh
Hydro is a global energy playerEnergy consumption in smelters, rolling mills and alumina refineries
(99)
Substantial values in long-term assets in Norway
• Stable and solid cash generation• Indicative annual EBITDA NOK 1.6 – 1.8 billion
• Hydro’s power balance, normal year
• Normal production ~9.4 TW
• Sourcing on long-term contracts ~7.0 TWh
• Consumption in Primary Metal* ~12.5 TWh
• Contract sales and concession power ~1.0 TWh
• Spot sales ~3.0 TWh
• Value enhancement potential• Growth opportunities in Norway
• Holsbru project to add 84 GWh from 2012• Vasstøl project to add 26 GWh from 2012• Rjukan system and Herva upgrades• Represents NOK 1.2 billion in investments during
2011-2015• Optimization of power value in market, and in
cooperation with smelters
Power production capacity (TWh) per region and reversion year
2023
2051-2057
No reversion
Telemark
Røldal-Suldal
SognNormal
production
9.4
* Including Sunndal 3 line currently curtailed
3.1
2.8
3.0 0.5
2044-2049
(100)
Reversion regime secures Hydro’s 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 reviewed
concurrently• Participate in restructuring of power sector• Actively working on framework conditions
(CO2 and grid)
• Value of assets protected by several possible types of transaction• Sell or merge into state or municipality
owned entity (minimum 2/3 of asset)
• Maintaining ownership to Røldal-Suldalassets means owning an option
(101)
Energy earnings drivers
• Production and market prices strongly linked to hydrological conditions
• Relatively stable annual EBIT contribution • Large quarterly variations due to volatile spot
sales and spot prices
• Seasonal market variations in demand and supply
• Occasional delink between area prices
• Power portfolio optimized versus market
• Stable cost base
0
200
400
600
800
2006 2007 2008 2009 2010 20110
100
200
300
400
500
0
500
1 000
1 500
2 000
2003 2004 2005 2006 2007 2008 2009 20100
100
200
300
400
500
Underlying EBIT* and spot price
Underlying EBIT and spot price
* Underlying EBIT 2003–2006 based on USGAAP
NOK million
NOK million
NOK/MWh
NOK/MWh
Underlying EBIT Spot price
(102)
Additionalinformation
(103)
Shareholder and financial policy
(6.4)
(1.4)
(5.6)
(1.7)
(7.8)
(0.9)
11.0
10.9
1.3
(0.9)
(0.3)
Dec 31,2010
(20.5)
(1.4)
(5.5)
(1.7)
(7.3)
(2.4)
(2.0)
3.7
1.3
(2.5)
(4.5)
Mar 31,2011
(15.5)
(1.5)
(5.6)
(1.7)
(8.0)
(0.9)
2.0
2.5
1.5
(1.9)
(0.1)
Dec 31,2009
(15.4)
(1.7)
(9.6)
(1.9)
(4.9)
(0.9)
3.5
3.3
1.6
(1.2)
(0.3)
Dec 31,2008
Cash and short-term investments
in captive insurance company
Net pension liability at fair value,
net of expected tax benefit
Operating lease commitments,
net of expected tax benefit
Net interest-bearing debt in
equity accounted investments
Other financial obligations, net of
expected tax benefit
Net cash/(debt)
Net adjusted cash/(debt)
Cash and cash equivalents
Short-term investments
Short-term debt
Long-term debt
NOK billion
• 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 pay-out ratio 2007-2010: 57%
• NOK 0.75 per share proposed for 2010
• Share buybacks and extraordinary dividends as supplement in periods with strong financials
Maintain investment-grade rating• Currently: BBB (S&P) & Baa2 (Moody’s) stable outlook• Competitive access to capital and important for Hydro’s
business model (counterparty risk and partnerships)
Financial ratios over the business cycle• Funds from operations to net adjusted debt > 40%• Net adjusted debt to equity < 0.55
• USD 1.7 billion in multi-currency revolving credit facility maturing in 2014
(104)
Hedging policy
Upstream• Primarily remain exposed to LME prices
• Partly off-setting effects through raw material prices and negative currency correlations with LME
• Majority of 2011 LME exposure in Vale transaction hedged
• Operational LME hedging• Three months forward sales to manage customers’ pricing
• Currency exposure, mainly USD and BRL• Policy of maintaining long-term debt in USD• Partly natural hedge through negative correlation between
LME and major exposed currencies
Mid- and downstream• Operational LME and currency hedging to
secure margin
Volatility mitigated by strong balance sheet
(105)
Capital allocation mainly upstream
2009 2010E 2011E
Capex ValeDebt-financed investments QatalumInvestments QatalumNew growth projectsSustaining capex
NOK billion
~6.21
10.2
1) Including net operating capital in Qatalum2) Excluding Vale assets acquisition
• Qatalum capital expenditure completed in 2010• Equity contribution ~NOK 3.5 billion
• Sustaining capex NOK 3.5 billion annually from 2011 including Vale assets
• Growth projects in 2011• Holsbru hydro power development • Recycling center Karmøy• Extruded Products expansion China• Paragominas and CAP development under
evaluation
~5.02
(106)
Price and currency sensitivities
(230)Pet coke
(100)Caustic soda
(50)Coal
EBITNOK million
(280)
2 900Aluminium
Oil
Currency sensitivities +/- 10%Commodity price sensitivity +/- 10%
• Annual sensitivities based on expected business volumes for 2011 (including Vale assets for the full year), LME USD 2 500, Oil USD 880 per tonne, petroleum coke USD 550 per tonne, caustic soda USD 300 per tonne, coal USD 90 per tonne, NOK/USD 5.50, NOK/BRL 3.42, NOK/EUR 7.70.
• Aluminium price sensitivity is net of aluminium price indexed costs and exclusive of Vale-hedge and unrealized effects related to operational hedging
(1 150)
-
2 000
Income before tax Net
income
Financial itemsEBITNOK
million
(50)
(700)
2 450
(1 100)
700
(450) 1 300USD
(850)EUR
100BRL
(107)
Items excluded from underlying results - 2011
(23)Primary metalUnrealized derivative effects on LME related contracts
30Primary metalUnrealized derivative effects on power contracts (Søral)
93Primary metalTransaction related effects (Vale Aluminium)
(4 406)Bauxite & aluminaTotal impact
(4 421)Bauxite & aluminaTransaction related effects (Vale Aluminium)
16Bauxite & aluminaDerivative effects on LME related contracts (Vale Aluminium)
16Primary metalUnrealized derivative effects on raw material contracts
27Primary metalDerivative effects on LME related contracts (Vale Aluminium)
(3 911)
467
(4 378)
30
(4 408)
61
54
8
7
7
(3)
(3)
(117)
(176)
59
(8)
(8)
59
(84)
(1)
Q1 2011
Metal marketsTotal impact
Metal marketsUnrealized derivative effects on LME related contracts
Rolled productsUnrealized derivative effects on LME related contracts
Rolled productsMetal effect
Rolled productsTotal impact
EnergyUnrealized derivative effects on power contracts
Other and eliminationsTotal impact
Other and eliminationsUnrealized derivative effects on LME related contracts
Hydro Net income (loss)
Hydro Income (loss) before tax
Hydro Total EBIT
Other and eliminationsUnrealized derivative effects on power contracts
Bauxite & aluminaUnrealized derivative effects on currency contracts (Alunorte)
HydroNet foreign exchange (gain)/loss
Extruded productsTotal impact
Energy Total impact
Extruded productsUnrealized derivative effects on LME related contracts
Hydro
Primary metal
Primary metal
Total impact
Calculated income tax effect
Unrealized derivative effects on power contracts
NOK million (+=loss/()=gain)
(108)
Items excluded from underlying results - 2010
(2)147(22)-Primary metalDerivative effects on LME related contracts (Vale Aluminium)
(214)2228(286)23Bauxite & aluminaTotal impact
(91)(91)---Primary metalInsurance compensation (Qatalum)
(7)(7)---Other and eliminations(Gains)/Loss on divestments
2828---Extruded productsImpairment charges
6464---Extruded productsRationalization charges and closure costs
(156)(156)---Primary metalUnrealized derivative effects on raw material contracts
(266)
80
(346)
(513)
167
569
61
(112)
(9)
637
(21)
(21)
18
(67)
(25)
18
(350)
(560)
(12)
222
162
(2)
164
2
98
95
(56)
49
66
(164)
(50)
Year 2010
(282)
129
(412)
(232)
(180)
149
-
-
(26)
182
(7)
(7)
92
-
-
-
(114)
(92)
-
(22)
(53)
-
(53)
(269)
(16)
(61)
(46)
21
66
41
(20)
Q4 2010
114--Primary metalImpairment charge (Qatalum)
608
(328)
936
246
690
(127)
-
-
50
(178)
1
1
(18)
-
-
(18)
(34)
52
-
(86)
145
-
145
696
424
2
150
-
93
(65)
Q3 2010
(112)-Other and eliminationsPension – curtailment and settlement
(25)-Extruded productsPension – curtailment and settlement
(12)-Rolled productsPension – curtailment and settlement
(2)-Metal MarketsPension – curtailment and settlement
(298)-Bauxite & aluminaDerivative effects on LME related contracts (Vale Aluminium)
(68)
38
(106)
(59)
(47)
271
-
(30)
413
1
1
(1)
-
24
259
(206)
476
(28)
(26)
(264)
(56)
(18)
(186)
18
12
Q2 2010
(67)Extruded products(Gains)/Loss on divestments
61Other and eliminationsImpairment charges
(523)
241
(764)
(468)
(297)
277
(3)
220
(16)
(16)
(55)
12
(461)
(314)
(147)
97
97
(161)
(212)
5
64
(19)
23
Q1 2010
Metal marketsTotal impact
Metal marketsUnrealized derivative effects on LME related contracts
Rolled productsUnrealized derivative effects on LME related contracts
Rolled productsMetal effect
Rolled productsTotal impact
Primary metalRationalization charges and closure costs
EnergyUnrealized derivative effects on power contracts
Other and eliminationsTotal impact
Other and eliminationsUnrealized derivative effects on LME related contracts
Hydro Net income (loss)
Hydro Income (loss) before tax
Hydro Total EBIT
Other and eliminationsUnrealized derivative effects on power contracts
Primary metalUnrealized derivative effects on LME related contracts
Primary metalUnrealized derivative effects on power contracts (Søral)
Bauxite & aluminaUnrealized derivative effects on currency contracts (Alunorte)
HydroNet foreign exchange (gain)/loss
Extruded productsTotal impact
Energy Total impact
Extruded productsUnrealized derivative effects on LME related contracts
Hydro
Primary metal
Primary metal
Total impact
Calculated income tax effect
Unrealized derivative effects on power contracts
NOK million (+=loss/()=gain)
(109)
Items excluded from underlying results - 2009
6363---ExtrusionRationalization charges and closure costs
138138---Other and eliminationsImpairment charges
(19)(19)---Other and eliminations(Gains)/Loss on divestments
472472---Extrusion(Gains)/Loss on divestments
231231---Rolled products(Gains)/Loss on divestments
(3 481)
441
(3 922)
(2 774)
(1 148)
(548)
34
83
(784)
(146)
(152)
14
(9)
346
(247)
44
14
(1 160)
286
588
(2 265)
(487)
(487)
846
285
12
(52)
(77)
671
363
(357)
-
Year 2009
(204)
(275)
71
(216)
287
286
-
13
153
(2)
(13)
-
11
490
(47)
2
-
(585)
-
(157)
(659)
(59)
(59)
158
8
(2)
-
(42)
196
-
(18)
16
Q4 2009
286--Rolled productsImpairment charges
(52)--Primary metalDefined pension plan (Søral)
(16)--Primary metalUnrealized derivative effects on LME related contracts (Alunorte)
(2 224)
280
(2 504)
(992)
(1 512)
(135)
-
(23)
(112)
(101)
(73)
-
(28)
(14)
(48)
34
-
(433)
(141)
(578)
(222)
(222)
(607)
(519)
3
6
81
(4)
(105)
Q3 2009
34-Other and eliminationsRationalization charges and closure costs
14-EnergyRationalization charges and closure costs
(66)-EnergyInsurance compensation
7-AutomotiveRationalization charges and closure costs
(199)
174
(373)
(1 478)
1 105
(922)
(7)
(915)
(4)
(4)
(17)
(27)
10
325
662
(337)
70
70
1 652
1 027
(8)
1
338
305
(11)
Q1 2009
(275)Metal marketsTotal impact
(275)Metal marketsUnrealized derivative effects on LME related contracts
(692)Rolled productsUnrealized derivative effects on LME related contracts
225Rolled productsMetal effect
(466)Rolled productsTotal impact
62Primary metalRationalization charges and closure costs
4AutomotiveImpairment charges
12EnergyUnrealized derivative effects on power contracts
224Other and eliminationsTotal impact
100Other and eliminationsUnrealized derivative effects on LME related contracts
(854)Hydro Net income (loss)
(1 117)Hydro Income (loss) before tax
(1 029)Hydro Total EBIT
90Other and eliminationsUnrealized derivative effects on power contracts
(231)Primary metalUnrealized derivative effects on LME related contracts
(41)Primary metalUnrealized derivative effects on power contracts (Søral)
18Primary metalUnrealized derivative effects on currency contracts (Qatalum)
(222)Primary metalUnrealized derivative effects on currency contracts (Alunorte)
(88)HydroNet foreign exchange (gain)/loss
(114)Extruded productsTotal impact
(40)Energy Total impact
(125)Other and eliminationsUnrealized derivative effects on LME related contracts
Hydro
Primary metal
Primary metal
262
(357)
57
Q2 2009
Total impact
Calculated income tax effect
Unrealized derivative effects on power contracts
NOK million (+=loss/( )=gain)
(110)
Operating segment information
2 415
(328)
600
237
342
168
1 055
340
Q12011
845
(1 004)
1 355
585
532
36
(375)
(283)
Year 2009
6 420
(887)
1 540
987
1 318
428
2 374
661
Year 2010
1 383
(266)
502
162
226
88
553
118
Q42010
1 720
(72)
201
236
338
189
752
76
Q32010
1 877
(265)
214
337
419
59
817
295
Q22010
172 (83)39 (17)(222)Bauxite & Alumina
1 440
(284)
623
252
335
91
252
Q12010
189
(297)
325
232
179
8
(174)
Q42009
38
(367)
254
246
175
14
(324)
Q32009
266
(137)
305
139
100
226
(349)
Q22009
352
(203)
471
(32)
79
(212)
472
Q12009
Rolled Products
Primary Metal
Energy
Other and eliminations
Extruded Products
Metal Markets
Total
NOK million
Underlying EBIT
Underlying EBITDA
(2 555)
(1 059)
1 240
(67)
26
(83)
(2 215)
(397)
Year 2009
3 351
(945)
1 416
444
864
321
617
633
Year2010
588
(284)
482
24
105
62
86
113
Q42010
965
(85)
169
102
227
163
318
71
Q3 2010
1 110
(278)
177
201
309
31
382
288
Q22010
155 162 (117)21 (73)(228)Bauxite & Alumina
1 448
(344)
573
105
232
143
583
Q12011
(651)
(311)
295
68
57
(20)
(623)
Q42009
(793)
(382)
217
95
51
(15)
(780)
Q32009
(493)
(213)
447
(204)
(53)
(245)
3
Q12009
(618)
(153)
281
(26)
(28)
196
(815)
Q22009
688
(297)
588
117
223
65
(169)
Q12010
Rolled Products
Primary Metal
Energy
Other and eliminations
Extruded Products
Metal Markets
Total
NOK million
(111)
Operating segment information
2 881
(328)
600
237
342
168
1 137
725
Q12011
9 450
(889)
1 540
987
1 318
428
3 006
3 061
Year 2010
2 213
(266)
502
162
226
88
808
693
Q42010
2 555
(72)
201
236
338
189
850
813
Q32010
2 702
(265)
214
337
419
59
1 026
912
Q22010
643Bauxite & Alumina
1 979
(285)
623
252
335
91
320
Q12010
Rolled Products
Primary Metal
Energy
Other and eliminations
Extruded Products
Metal Markets
Total
NOK million
Pro forma underlying EBIT
Pro forma underlying EBITDA
4 141
(945)
1 416
444
864
321
816
1 225
Year2010
841
(285)
482
24
105
62
230
223
Q42010
1 231
(84)
169
102
227
163
306
348
Q3 2010
1 369
(278)
177
201
309
31
481
448
Q22010
237 205Bauxite & Alumina
1 538
(344)
573
105
232
143
592
Q12011
698
(297)
588
117
223
65
(203)
Q12010
Rolled Products
Primary Metal
Energy
Other and eliminations
Extruded Products
Metal Markets
Total
NOK million
(112)
615(3 177)525355(378)645(8)(783)(294)(649)(1 451)Primary Metal*
5 855
(405)
566
108
349
151
4 561
Q12011
(1 407)
(511)
1 386
(413)
1 186
403
(282)
Year 2009
3 184
(1 514)
1 438
426
1 214
160
847
Year 2010
768
(433)
489
(68)
219
115
91
Q42010
274
42
167
120
261
18
43
Q32010
1 157
(549)
176
202
50
59
574
Q22010
985
(574)
605
172
684
(32)
139
Q12010
(938)
(597)
297
(422)
642
39
(115)
Q42009
719
(247)
318
108
484
207
142
Q32009
410
(377)
321
87
438
472
117
Q22009
451Energy
(426)Bauxite & Alumina*
(315)Metal Markets
(379)Rolled Products
(187)Extruded Products
709Other and eliminations*
(1 598)Total
Q12009NOK million
EBIT
875(168)4 7469749581149(81)160173(421)Bauxite & Alumina*
6 822
(389)
593
240
459
176
997
Q12011
2 432
(318)
1 501
253
1 977
523
(1 336)
Year 2009
6 343
(1 395)
1 561
997
1 668
266
2 372
Year2010
1 592
(414)
509
98
340
140
822
Q42010
1 029
55
200
254
372
44
56
Q32010
1 924
(536)
213
338
160
87
1 081
Q22010
1 798
(500)
639
307
796
(6)
413
Q12010
41
(445)
327
(258)
764
67
(334)
Q42009
1 836
(232)
355
260
894
237
162
Q32009
1 299
(361)
345
256
566
502
(182)
Q22009
475Energy
(982)Primary Metal*
(283)Metal Markets
(247)Rolled Products
(5)Extruded Products
719Other and eliminations*
(743)Total
Q12009NOK million
EBITDA
Operating segment information
* Bauxite & Alumina, Primary Metal and Other and eliminations reclassified in 2009 and 2010.
(113)
813622499(368)723(41)Primary Metal
1 604
(405)
566
108
349
151
213
Q12011
3 696
(1 514)
1 438
426
1 214
160
1 161
Year 2010
960
(433)
489
(68)
219
115
140
Q42010
289
42
167
120
261
18
47
Q32010
1 429
(549)
176
202
50
59
768
Q22010
1 018
(574)
605
172
684
(32)
205
Q12010
Energy
Bauxite & Alumina
Metal Markets
Rolled Products
Extruded Products
Other and eliminations
Total
NOK million
Pro forma reported EBIT
2 9977016105121 232643Bauxite & Alumina
2 947
(389)
593
240
459
176
1 167
Q12011
9 095
(1 395)
1 561
997
1 668
266
3 003
Year2010
2 360
(414)
509
98
340
140
1 077
Q42010
1 613
55
200
254
372
44
176
Q32010
2 762
(536)
213
338
160
87
1 268
Q22010
2 361
(500)
639
307
796
(6)
482
Q12010
Energy
Primary Metal
Metal Markets
Rolled Products
Extruded Products
Other and eliminations
Total
NOK million
Pro forma reported EBITDA
Operating segment information
(114)
7 8826 1342 1832 0901 7352 4261 6311 5881 5251 4951 526Bauxite & Alumina*
21 138
(14 168)
2 080
5 102
5 703
12 005
8 234
Q12011
67 409
(39 661)
5 286
20 065
18 411
34 197
22 976
Year 2009
75 754
(50 360)
7 055
19 405
21 180
43 001
27 592
Year2010
19 406
(13 131)
1 976
4 867
5 492
11 134
6 979
Q42010
18 424
(11 971)
1 255
4 901
5 447
10 498
6 558
Q32010
19 779
(13 468)
1 838
5 097
5 019
11 419
7 448
Q22010
18 145
(11 790)
1 985
4 540
5 222
9 950
6 607
Q12010
16 427
(10 461)
1 362
4 909
4 909
8 480
5 640
Q4 2009
16 795
(10 174)
1 079
4 967
4 610
8 851
5 938
Q32009
17 617
(9 397)
1 330
5 119
4 449
8 921
5 699
Q22009
1 515Energy
7 945Metal Markets
5 700Primary Metal*
16 569
( 9 630)
5 070
4 443
Q12009
Rolled Products
Extruded Products
Total
Other and eliminations*
NOK million
3 3642 5041 0148916591 186628720551750483Bauxite & Alumina*
21 138
73
1 226
5 068
5 585
7 520
651
Q12011
67 409
554
1 682
19 906
17 486
23 650
1 628
Year 2009
75 754
414
3 448
19 225
20 611
27 090
1 603
Year2010
19 406
50
1 025
4 804
5 275
7 003
358
Q42010
18 424
112
683
4 831
5 237
6 511
392
Q32010
19 779
128
697
5 066
5 206
7 040
456
Q22010
18 145
124
1 043
4 523
4 893
6 536
397
Q12010
16 427
94
467
4 821
4 308
5 638
380
Q42009
16 795
140
354
4 922
4 317
5 953
559
Q32009
17 617
155
361
5 055
4 232
6 730
334
Q22009
499Energy
16 569
165
5 107
4 629
5 329
355
Q12009
Total
Primary Metal*
Metal Markets
Rolled Products
Extruded Products
Other and eliminations*
NOK million
Total revenue
External revenue
Operating segment information
* Bauxite & Alumina, Primary Metal and Other and eliminations reclassified in 2009 and 2010.
(115)
Internal revenue
4 5183 6311 1681 1991 0761 2411 0038699747461 042Bauxite & Alumina*
-
(14 241)
855
34
118
4 485
7 582
Q12011
-
(40 215)
3 605
159
925
10 548
21 348
Year2009
-
(50 774)
3 607
180
569
15 911
25 988
Year2010
-
(13 181)
951
63
217
4 131
6 620
Q4 2010
-
(12 082)
573
70
210
3 988
6 166
Q32010
-
(13 596)
1 141
31
(187)
4 379
6 992
Q22010
-
(11 915)
942
17
329
3 414
6 210
Q12010
-
(10 555)
895
88
601
2 843
5 260
Q42009
-
(10 313)
725
44
293
2 898
5 379
Q32009
-
(9 552)
969
64
217
2 191
5 365
Q22009
1 016Energy
5 344Primary Metal*
2 616Metal Markets
(186)Rolled Products
(37)Extruded Products
(9 795)Other and eliminations*
-Total
Q12009NOK million
177(5)132246941512128121(266)Bauxite & Alumina*
(19)
(15)
7
4
(22)
-
(6)
Q12011
(809)
(253)
24
12
(91)
(14)
(482)
Year2009
(606)
(182)
29
13
(64)
(4)
(574)
Year2010
17
(29)
9
4
(23)
1
33
Q42010
(303)
(9)
4
2
(10)
(1)
(335)
Q32010
(83)
(54)
1
2
(13)
-
(112)
Q22010
(236)
(91)
14
5
(17)
(4)
(159)
Q12010
(341)
(191)
20
3
(27)
(7)
(151)
Q42009
(14)
(23)
(1)
2
(12)
(6)
(102)
Q32009
(42)
(22)
(3)
3
(19)
(1)
(120)
Q22009
8Energy
(109)Primary Metal*
(1)Metal Markets
(33)Rolled Products
4Extruded Products
(16)Other and eliminations*
(413)Total
Q12009NOK million
Share of profit /(loss) in equity accounted investments
Operating segment information
* Bauxite & Alumina, Primary Metal and Other and eliminations reclassified in 2009 and 2010.
(116)
* Bauxite & Alumina, Primary Metal and Other and eliminations reclassified in 2009 and 2010.
Operating segment information
Metal Markets3%
Rolled Products9%
Extruded Products
6%
Energy4%
Bauxite & Alumina
37%
Primary Metal41%
21178111-----Bauxite & Alumina*
940
16
26
132
96
25
467
Q12011
3 494
50
109
666
730
118
1 819
Year 2009
2 985
52
118
571
398
106
1 737
Year2010
794
14
18
166
107
26
462
Q42010
730
13
31
133
97
26
428
Q32010
740
13
35
136
96
28
430
Q22010
721
13
33
135
98
26
416
Q12010
786
15
29
164
107
27
444
Q42009
1 077
15
35
151
395
29
451
Q32009
805
11
23
169
112
30
461
Q22009
23Energy
463Primary Metal*
32Metal Markets
116Rolled Products
182Extruded Products
10Other and eliminations*
827Total
Q12009NOK million
Depreciation, amortization and impairment
Graph excludes NOK 5.7 billion in negative capital employed in Other and eliminations
Capital employed – upstream focus
35 503 Bauxite & Alumina
8 903 Rolled Products
2 674 Metal Markets
6 022 Extruded Products
39 242 Primary Metal
3 345 Energy
(5 719)Other and eliminations
89 971
Mar 31, 2011
Total
NOK million
(117)
Income statements
2.89
1125 043
5 154
5 762(608)11%
(93)
5 855
94018 877
25 672
21 138(19)
4 553
Q12011
0.39
38620
658
1 060(401)38%
292
768
79417 973
19 535
19 40617
112
Q42010
1.33
2301 888
2 118
3 706(1 588)
43%
522
3 184
2 98569 548
75 717
75 754(606)
568
Year 2010
55869
Net income (loss) attributable to minority interestNet income (loss) attributable to Hydro shareholders
924Net income (loss)
0.68
1 530(605)40%
545
985
72116 385
18 091
18 145(236)
183
Q12010
Depreciation, amortization and impairmentOther expenses
Earnings before financial items and tax (EBIT)
Earnings per share attributable to Hydro shareholders
Income (loss) before taxIncome taxesTax rate
Financial income (expense), net
Total revenue and income
RevenueShare of the profit (loss) in equity accounted investmentsOther income, net
NOK million
(2.50)
0.24
(3 066)
416
(2 555)
(1 407)
Year2009
0.21
0.39
376
658
588
768
Q42010
0.33
(0.07)
545
(63)
965
274
Q32010
0.34
0.40
530
598
1 110
1 157
Q22010
0.65
2.89
1 244
5 154
1 448
5 855
Q12011
(0.61)
(0.45)
(791)
(587)
(651)
(938)
Q42009
(0.96)
0.79
(1 222)
1 001
(793)
719
Q32009
(0.51)
0.17
(572)
282
(618)
410
Q22009
0.27
0.68
401
924
688
985
Q12010
(0.43)
(0.27)
(480)
(280)
(493)
(1 598)
Q12009
1.14
1.33
1 852
2 118
3 351
3 184
Year2010
Net income (loss)
Underlying net income (loss)
Reported EBIT
Underlying earnings per share
Earnings per share
Underlying EBIT
NOK million
(118)
Balance sheets
135 060
79 7198 250
4 53916 3216 692
2 48217 058
135 060
69 04226 732
3 6981 319
20 44013 827
March 31;2011
88 788
56 4181 025
32813 9251 183
94014 970
88 788
24 84927 122
10 9291 321
13 59710 971
December 30, 2010
87 222
55 973991
12314 280
804
97414 077
87 222
24 84226 036
8 6581 316
15 93910 431
September 30, 2010
83 439
48 6241 053
2 14214 429
803
1 48014 909
83 439
25 75826 566
2 1921 311
17 33810 273
June 30, 2010
79 919
46 4581 118
2 57414 430
816
97213 551
79 919
25 49925 109
2 5021 554
15 5769 678
March 31, 2010
Long-term debtOther long-term liabilitiesDeferred tax liabilities
Total liabilities and equity
Bank-loans and other interest-bearing short-term debtOther current liabilities
Cash and cash equivalentsShort-term investmentsReceivables and other current assetsInventories
Equity attributable to Hydro shareholdersMinority interest
Total assets
Property, plant and equipmentOther non-current assets
NOK million
(119)
Operational data
1 711
1 720
266
329
1 762
453
1 336
Q12011
2 143
2 017
251
311
2 018
556
1 448
Q42010
238247223231Apparent alumina cash cost (USD) 4)
295277299293Realized alumina price (USD) 3)
7 5241 9181 8451 745Bauxite production (kmt) 5)
885Bauxite sales (kmt) 7)
7 9412 0232 0561 843Total alumina sales (kmt) 2)
2 081
557
1 521
Q22010
7 832
2 141
5 805
Year 2010
1 544
539
1 394
Q12010
2 064
488
1 442
Q32010
Sourced alumina (kmt)
Sourced bauxite (kmt) 6)
Alumina production (kmt) 1)
Pro forma Bauxite & Alumina
2 091
Year 2009
504
Q42009
514
Q32009
494
Q22009
578
Q12009
773
Q12011
1 976
Year2010
493
Q42010
491
Q32010
518
Q22010
474
Q12010
Alumina production (1 000 mt)
Bauxite & Alumina
1) Including Alunorte on a 100 percent basis.2) Including own production and third party contracts.3) Weighted average of own production and third party contracts.4) Apparent integrated alumina cash production cost based on cost of produced alumina and cost of alumina sourced on contracts. Paragominas bauxite included at cost and MRN bauxite included at contract price.5) Paragominas on wet basis(100 percent).6) 40 percent MRN offtake from Vale and 5 percent Hydro share on wet basis.7) Dry basis.
(120)
Operational data
13 568
5.77
2 351
13 607
5.77
2 358
568
560
415
2 169
376
Q12011
10 717
6.34
1 691
10 764
6.34
1 698
1 822
1 782
1 396
1 559
246
Year2009
12 623
6.00
2 104
12 674
6.00
2 113
2008
2 022
1 415
1 906
317
Year 2010
12 381
6.00
2 065
12 436
6.00
2 074
494
512
360
2 040
340
Q42010
13 453
6.20
2 171
13 503
6.20
2 179
499
513
355
2 041
329
Q32010
13 265
6.05
2 194
13 302
6.05
2 200
521
512
362
1 856
307
Q22010
9 405
6.22
1 511
9 480
6.22
1 523
476
466
330
1 618
260
Q32009
10 411
5.80
1 797
10 452
5.80
1 804
450
473
332
1 576
272
Q42009
11 483
5.78
1 986
11 542
5.78
1 997
495
484
339
1 699
294
Q12010
9 526
6.54
1 457
9 598
6.54
1 468
461
411
338
1 505
230
Q22009
1 545 Realized premium above LME (NOK/mt) 1)
230 Realized premium above LME (USD/mt) 1)
440 Casthouse sales (1 000 mt)
433 Casthouse production (1 000 mt)
13 393
6.71
1 996
13 393
6.71
1 996
397
Q12009
LME realized (NOK/mt) excluding hedges
LME realized (NOK/mt) including hedges
NOK/USD realized including hedges 2)
LME realized (USD/mt) excluding hedges
NOK/USD realized excluding hedges 2)
LME realized (USD/mt) including hedges
Primary aluminium production (1 000 mt)
Primary Metal
1) Average realized premium above LME for total metal products sold from Primary Metal.2) Difference between realized exchange rate and spot rate at the transaction date is reported as currency gain/loss and not included in EBITDA
(except currency hedges where hedge accounting is applied).
627
634
490
5.77
2 004
347
13 664
2 366
Q12011
2 128 2 131 2 137 2 200 2 039 Realized aluminium price LME, USD/mt
12 758 12 739 13 226 13 192 11 826 Realized aluminium price LME, NOK/mt
273 284287266255Realized premium above LME, USD/mt
1 641 1 705 1 781 1 605 1 474 Realized premium above LME, NOK/mt
5.965.986.195.855.80Realized NOK/USD exchange rate
2 453624596631601Casthouse sales, kmt
627
469
Q32010
2 470
1 867
Year 2010
625
475
Q22010
627
475
Q42010
591
447
Q12010
Casthouse production, kmt
Primary aluminium production, kmt
Pro forma Primary Metal
(121)
Operational data
772
136
Q12011
(138)
487
Year2009
839
529
Year 2010
188
127
Q42010
764
134
Q32010
1 430
141
Q22010
(217)
120
Q22009
742
128
Q32009
540
126
Q4 2009
914
128
Q12010
(1 805)
113
Q12009
Extruded external shipments (1 000 mt) 2)
Extruded – underlying EBIT per tonne, NOK
Extruded Products
946
245
Q12011
33
794
Year2009
914
945
Year 2010
450
234
Q4 2010
952
239
Q32010
1 275
242
Q22010
(152)
187
Q22009
248
205
Q32009
270
211
Q4 2009
966
231
Q12010
(279)
191
Q1 2009
Rolled Products – Underlying EBIT per tonne, NOK
Rolled Products external shipments (1 000 mt)
Rolled Products
520.0
518.0
955
2 308
Q12011
295.0
306.0
2 217
7 897
Year2009
407.0
426.0
2 380
8 144
Year 2010
469.0
498.0
827
2 263
Q42010
363.0
365.0
86
1 479
Q32010
368.0
355.0
144
1 621
Q22010
297.0
301.0
413
1 809
Q2 2009
249.0
274.0
480
1 682
Q32009
296.0
307.0
486
1 929
Q4 2009
430.0
485.0
1 323
2 781
Q12010
341.0
344.0
838
2 477
Q1 2009
Net spot sales, GWh
Nordic spot electricity price, NOK/MWh
Southern Norway spot electricity price (NO2) 3), NOK/MWh
Power production, GWh
Energy
7 520
467
772
38
734
150
Q12011
23 650
1 468
2 414
63
2 351
455
Year2009
27 090
1 717
2 787
121
2 666
586
Year 2010
7 003
417
688
32
657
147
Q42010
6 511
429
695
38
656
141
Q32010
7 040
457
733
31
702
156
Q22010
6 730
375
614
20
594
111
Q22009
5 953
395
618
10
608
123
Q32009
5 638
375
605
9
596
133
Q42009
6 536
414
670
19
651
143
Q12010
5 329
323
575
24
550
89
Q12009
External revenue (NOK million)
Third-party metal products sales (1 000 mt)
Total metal products sales excl. ingot trading (1 000 mt)
Metal products sales, own production (1 000 mt)
Hereof external sales excl. ingot trading (1 000 mt)
Remelt production (1 000 mt) 1)
Metal Markets
1) Production in Metal Markets' soft alloy remelt casthouses. Hannover casthouse production excluded from Q1 2011 (2010 production volumes are restated).2) Including Structures until divested end 20093) Southern Norway spot price NO2 for 2010 and 2011 figures and NO1 for 2009 figures due to the establishment of new price areas
(122)
Next investor event: Q2 results, July 26, 2011
For more information see: www.hydro.com/ir
t: +47 977 36 022
e: [email protected] Relations OfficerStian Hasle
Investor Relations Assistant
Head of Investor Relations
t: +47 414 02 174
t: +47 22 53 80 99
m: +47 917 27 528
Stefan Solberg
Irène A. Kristiansen
Investor Relations in Hydro
www.hydro.com
