Bli medlem
Bli medlem

Du är här

2015-12-03

Norsk Hydro: Hydro Capital Markets Day 2015: Well positioned in challenging markets

Norwegian aluminium company Norsk Hydro ASA is focusing its Capital Markets
Day 2015 on the efforts to become better, bigger and greener as a means to
create value for shareholders. Industry-leading improvement programs,
technological leadership, capital discipline and financial strength
contribute to strengthen Hydro's relative position in challenging markets.

As part of the "Better" ambition, Hydro is raising its improvement ambition
with an additional 2.9 billion NOK by end-2019, it is realizing the "Bigger"
ambition with selective growth projects such as the Karmøy Technology Pilot,
and it is on track to become carbon-neutral from a life-cycle perspective as
part of the "Greener" ambition. A complete status update on the Better,
Bigger, Greener aspiration will be presented at the Capital Markets Day.

A fully-integrated and technology-driven aluminium company, Hydro launched the
"Better, Bigger, Greener" aspiration and a set of strategic goals at Capital
Markets Day 2014. The aspiration defines strategic priorities for each
business area with the overall aim to deliver sustainable shareholder value:

* Better: Operational and commercial improvement drive and technology lead
* Bigger: High-grading and selective growth to improve relative industry
position
* Greener: Reducing carbon footprint and turning leading sustainability
agenda into competitive advantage

-------------------------------------------------------------------------------------------------
| Ambitions from CMD 2014 Timeframe Progress* |
| Improve safety performance, reduce TRI<2 2020 3.1 |
| Realize BNOK 1.5 from ongoing improvement efforts 2016 0.8 BNOK |
| Replace expiring power contracts for Norwegian smelters 2020 4.1 TWh |
| Lift Paragominas production to 9,9 mill mt/yr 2015 9.9 mill mt/yr |
| Lift Alunorte production to 6,2 mill mt/yr 2015 5.9 mill mt/yr |
| Convert>85% of alumina sales to PAX-based pricing 2020 35 % PAX |
| Extend technology lead with Karmøy technology pilot 2016 Investment decision |
| |
| Expand automotive BiW capacity to 200,000 mt/yr 2017 On track |
| Start production of>40,000 mt/yr UBC recycling line 2015 Completed |
| Realize 100,000 mt/yr capacity creep in fully-owned smelters 2025 ~10 000 mt/yr |
| Secure and develop bauxite resources for future decades Long-term MRN LoI |
| |
| Become carbon-neutral from a life-cycle perspective 2020 On track |
| Increase recycling of post-consumed scrap above 250,000 mt/yr 2020 135,000 mt/yr |
| Deliver on re-forestation ambition 1:1 2017 On track |
-------------------------------------------------------------------------------------------------
* Based on 2015 estimate or status YTD

By the end of 2015, operational and commercial improvement efforts have
contributed with NOK 4.5 billion since 2011, whereof NOK 0.8 billion is to be
delivered in 2015. Building on a strong track record of delivering on
improvement goals, Hydro has now introduced a new improvement ambition,Better
, which aims to deliver NOK 2.9 billion of added value throughout the value
chain in the period from 2016 to 2019, with NOK 1.1 billion of these expected
in 2016. The ambition builds on the previous programs, and includes lifting
production capacity in the Primary Metal plants through technological
developments, high-grading Rolled Products portfolio towards higher margins,
and further lifting production backed by robust operations in
Bauxite&Alumina.

"Market conditions have deteriorated compared to a year ago, underlining the
importance of Hydro's continuous improvement culture," says Hydro President
and CEO Svein Richard Brandtzæg. "Hydro views weak markets as an opportunity
to become stronger. As we are about to deliver on the ongoing improvement
efforts, which have made our operations much leaner, identifying new
potential becomes more challenging. Still, through technological advances,
debottlenecking efforts and best practice sharing between the business areas,
we were able to identify more measures."

The 1 BNOK "From B to A program" has been successfully completed in
Bauxite&Alumina, and the newBetter Bauxite and Alumina
ambition was launched, targeting another NOK 1 billion. Paragominas is running
well above its nameplate capacity, and at Alunorte, production has been
stabilized and prepared to be lifted to 6.6 million tonnes. In addition to
the improvement ambition, increased value will be created in 2016 from
selling more alumina volumes on index-based pricing. The ICMS framework
established for the next 15 years as well as a potential acquisition of
Vale's 40% stake in the MRN bauxite mine are important milestones towards
long-term value generation in Brazil.

Although Primary Metal has delivered significant improvements since 2009, our
technological leadership has created the basis for another 1 billion of value
creation. The Karmøy technology pilot, pending a build decision in 2016, will
verify the world's most energy-efficient smelting technology. Spin-off
effects of this technology will improve productivity of the current portfolio
beyond lean operations, and contribute to the increased capacity creep of 200
kmt by 2025. In addition, building on product quality and commercial
competence, Primary Metal aims to further increase sales of advanced
products, demanding higher margins.

The Rolled Products Climb improvement program has been delivered one year
ahead of plan, and is now replaced by a new ambition of NOK 0,9 billion. The
main contributors include operational improvements and continuous product
innovation, shifting product mix towards higher-margin segments, such as a
fast-growing automotive body-in-white market, as well as reducing metal cost
by increasing recycling capacity with the newly completed used beverage can
facility.

Terms of long-term energy supply determine cost competitiveness in all
business areas. As an energy provider, Energy has contributed to reducing
metal production costs by sourcing 4.1 TWh over the last years in Norway, and
another 2.6 TWh globally in a moderate price environment. As an energy
operator, Energy continues to raise income potential from operational and
commercial optimization. On the framework side, the Norwegian Government made
a proposal potentially making the preferred long-term solution, maintaining
industrial ownership of the RSK assets, possible within the current reversion
regime.

Hydro sees our sustainability agenda as a competitive advantage and a license
to operate. Hydro is on track towards becoming the first carbon-neutral
aluminium company from a life-cycle perspective by 2020. This involves
increasing energy efficiency and reducing emissions in production processes
and improving Hydro's energy mix. It also involves strengthening the
recycling position by utilizing advanced sorting technology, development of
recycle-friendly alloys and increased post-consumed scrap recycling, as well
as development of new products and applications for aluminium to help our
customers lower their carbon footprint.

Global aluminum demand is estimated to grow around 4% in 2015 and 4-5% in
2016. Aluminium fundamentals remain attractive due to the metal's many
positive properties, such as lightweight, formability and recyclability, and
the global primary aluminium market is expected to show long-term growth of
3-4% annually over the next 10 years, also driven by environmental
regulations worldwide.

"Although the demand picture is promising, the supply side looks somewhat more
challenging in the near term. While the world outside China is expected to
run a deficit of 1.5 - 2 million tonnes, China is expected to produce 2 - 2.5
million tonnes in excess of their consumption in 2016, adding up to a global
oversupply of 0 - 1 million tonnes," Brandtzæg says. "On the back of the
oversupply in China, there have been exports of semi-fabricated products,
assumed for remelt purposes, taking advantage of downstream export
incentives. This, together with a cost curve shifting down due to weaker fuel
prices and currencies, has resulted in a steep fall in aluminium prices and
premiums during 2015. LME is now priced below the 90thpercentile, and at
today's prices, around 50% of global smelter capacity is expected to be
incurring cash losses, making curtailments, which are needed to balance the
market in the medium term, more likely."

"Effective risk management and a prudent financial framework are crucial in
the cyclical industry Hydro operates in, which has once again been
highlighted by the recent industry developments. A strong balance sheet is
the best tool we have to respond to market volatility, in addition to
continuously improving our relative industry position. Today, Hydro is a
first quartile aluminium and alumina producer with a strong balance sheet.
This allows us to offer a safe and reliable dividend to shareholders, as well
as enables us to strategically utilize lower parts of the cycle to increase
our value creation potential," says Brandtzæg.

Hydro is committed to disciplined capital allocation at all times. Our
long-term sustaining capex guidance remains below depreciation at 3.5 - 4.0
BNOK per year, adjusted somewhat up from the previous level of 3.5 BNOK and
reflecting long-term inflationary pressures and a portfolio update.

Investor contact
Contact Pål Kildemo
Cellular +47 97096711
E-mail Pal.Kildemo@hydro.com

Press contact
Contact Halvor Molland
Cellular +47 92979797
E-mail Halvor.Molland@hydro.com

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.
startup 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.

This information is subject to the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.

Hydro Capital Markets Day 2015
http://hugin.info/106/R/1970821/720701.pdf

---------------------------------------

This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Norsk Hydro via Globenewswire

HUG#1970821

Författare SIX news

Tala om vad ni tycker

Tala om vad ni tycker

Ni är just nu inne på en betaversion av nya aktiespararna. Lämna gärna feedback på vad ni tycker i formuläret nedan.