First quarter April 29, 2009 (1)

Transcription

1 First quarter 2009 April 29, 2009 (1)

2 Highlights 20% drop in realized aluminium price vs Steep fall in demand Firm corrective measures taken Cut in primary aluminium production: tonnes Workforce reductions: Qatalum 73% complete, on schedule for 2009/2010 startup Hydro well positioned in demanding environment (2)

3 (3) Market review & outlook

4 Unprecedented fall in aluminium price USD per tonne Primary aluminium LME USD/tonne NOK/tonne average 2009 end average end Average Average Average LME (3month avg.) LME forward April 24, 2009 LME forward Dec 31, LME forward July 1, Source: Reuters Ecowin / Bloomberg April 24, 2009 (4)

5 Declining upstream sales volumes Hydro s sales 2009 vs Extrusion ingot Sheet ingot Foundry alloys Standard ingot Total 45% 0% 15% 14% 6% Hydro s sales 2009 vs Extrusion ingot Sheet ingot Foundry alloys Standard ingot Total 65% 36% 22% 45% 27% (5)

6 Declining downstream sales volumes Hydro s sales 2009 vs Rolled Products Extrusion Eurasia Building Systems Extrusion Americas Automotive Structures Precision Tubing Total 10% 10% 6% 10% 7% 9% 10% Hydro s sales 2009* vs Rolled Products Extrusion Eurasia Building Systems Extrusion Americas Automotive Structures Precision Tubing Total 24% 32% 17% 27% 26% 42% 45% *Excluding Alumafel and Expral (6)

7 Rapidly increasing inventories USD per tonne Days Aluminium inventories (days of consumption)* LME 3 month average *IAI and LME reported stocks. Annualized Western World consumption. CIS and China not included. (7)

8 China remains balanced tonnes Net import Net export (50) (100) (150) (200) (250) (300) (350) Primary / alloyed Semis Fabricated Scrap Total 2006 Swift response to drop in demand Production curtailments Strategic government purchases Shanghai price currently significantly higher than LME Encourages primary aluminium imports Exports of semis reduced China expected to be balanced in primary aluminium in the long term Source: Hydro / Antaike April 2, 2009 (8)

9 Significant curtailments announced Announced capacity curtailments in percent of production 35% 30% 29% 28% 25% 20% 22% 21% 15% 10% 11% 10% 5% 0% Hydro C entury Aluminium C halco Alcoa UC Rusal Rio Tinto Source: CRU / company reports / Hydro estimates (9)

10 Announced capacity curtailments 51% 12% 3% 7% 6% 7% Alcoa Century Hydro Rio Tinto UC Rusal Other China China ~3.5* million tonnes Rest of world ~3.4 million tonnes Total ~6.9 million tonnes 14% World production and consumption (excl. China), annualized Production Consumption ~11.5 million tonnes in process annualized Source: CRU / company reports / Hydro estimates. *Not adjusted for reports of restarts in China (10)

11 Commodity prices weakening Crude oil Brent (USD/bbl) Coal CIF ARA (USD/mt) Petroleum coke FOB USG (USD/tonne) Power EEX Germany (EUR/MWh) Freight Baltic Dry Index Caustic soda (USD/tonne) Source: Reuters Ecowin / PACE / CMAI (11)

12 Hydro improves cost position Business operating cash cost USD/tonne Dynamic cost curve Falling input costs Production curtailments and capacity closures Accumulated tonnage (1 000 tonnes) BOC 2009 BOC Average Average 2009 Qatalum Hydro adjusted for production curtailments, incl. Qatalum Neuss Karmøy Søderberg Hydro (CRU) * Source: CRU, Business Operating Cost, assumptions : LME USD/tonne, NOK/USD 5.16, 2009: LME USD/tonne, NOK/USD Qatalum estimated by Hydro (12)

13 2009 outlook Aluminium prices to remain low Limited forward visibility Indication of slowing LME inventory buildup No substantial pickup in demand Primary aluminium consumption excluding China could decline up to 1520% from Chinese consumption in line with Industry input costs will come further down (13)

14 (14) Corrective actions

15 Upstream production curtailments tonnes ~ % % ~ ~ ~ ~ % ~ Alumina (metal equivalents) Primary aluminium Remelt End capacity Run rate Q (15)

16 Significant manning reductions Q Q2 2009E Total Reduction in number of permanent and temporary employees and contractors (16)

17 Hydro s cash cost to decline Cost* in USD per tonne indexed, =100 Production curtailments at highcost smelters ~(30)% Input costs decreasing into 2009 Alumina 23 months lag Carbon costs at high level into first half, decreasing in second half Fuel oil, caustic soda, coal, freight and alloys Second half 2009 run rate Alumina Power Anodes Other *Includes only 100% owned smelters, Second half 2009 run rate excludes Karmøy Søderberg, Neuss and Sunndal (SU3) LME basis for alumina cost: ~USD 2 750, 2009 run rate ~USD NOK/USD: ~5.6, Second half 2009 run rate ~6.5 (17)

18 Focus on preserving cash Capital expenditures*, NOK billion % E 2010E Capital expenditures reductions 2009: 40% : 15% CAP alumina project postponed, production startup in 2012 subject to market conditions Tonnes of metal in inventory being reduced 120% 100% 100% 89% 80% 73% 60% 27% 40% 20% 0% Dec 31, Mar 31, H 2009 Operating capital reductions Cash generation in : ~NOK 1.3 billion Further reductions targeted Proactive followup of counterparty risk *Excluding Qatalum (18)

19 (19) Financials & performance

20 Underlying EBIT per segment NOK million (493) (140) (239) (239) (476) (257) (176) 2009 Aluminium Metal Aluminium Products Energy Corporate and eliminations (20)

21 Key financials NOK million 2009 Year Revenue Underlying EBIT (493) Items excluded from underlying EBIT (1 105) (3 975) (853) (4 815) Reported EBIT (1 598) (3 106) Financial income / (expense) (4 487) 998 (5 026) Income from continuing operations before tax (126) (7 593) (3 832) Income tax expense (155) (734) 565 Reported income from continuing operations (280) (5 845) (3 267) Reported EPS from continuing operations, NOK (0.29) (4.99) 1.21 (3.04) Underlying EPS from continuing operations, NOK (0.45) (0.29) (21)

22 Items excluded from underlying EBIT NOK million 2009 Year Underlying EBIT (493) Unrealized effects power contracts Unrealized LME and other derivative effects Metal effect, Rolled Products Significant rationalization charges and closure costs Impairment charges Loss provisions (power contracts) Gains / (losses) on divestments and other 580 (708) (662) (305) (10) (2 249) (407) (109) (2 464) (257) (1291) (113) (768) (1 434) (235) (109) (2 464) (257) 453 Reported EBIT (1 598) (3 106) (22)

23 Bauxite & Alumina Key figures operating results Alumina production, kmt Alunorte, NOK million 1) Other, NOK million Underlying EBIT, NOK million 1) Underlying share of net income (68) (69) (137) (65) (20) 10 Significantly lower alumina price due to low LME 50% of Alpart production curtailed in January Lower energy cost High bauxite prices Underlying EBIT NOK million 334 (137) Outlook Full temporary shutdown of Alpart in May Low alumina price (137) 2009 (23)

24 Primary Aluminium Key figures operating results Primary production, kmt Total casthouse production, kmt Total sales volumes, kmt Realized LME price, USD/mt Lower realized LME price Curtailments starting to affect volumes Lower alumina and carbon costs Reduced fixed costs Further reduction in casthouse volumes Realized LME price, NOK/mt Underlying EBIT, NOK million Underlying EBIT NOK million Outlook Declining alumina and carbon costs ~15% lower primary production in Q2 vs. due to curtailments ~87% of primary production affecting Q2 results priced at USD mt per end 2009 (24)

25 Commercial Key figures operating results Remelted production, kmt Weak sales volumes and low production Significant negative currency effects Total metal products sales, kmt Underlying EBIT, NOK million (421) (79) 409 Underlying EBIT NOK million 435 (421) Outlook Continued weak markets Volatile trading and hedging results (147) (79) (421) 2009 (25)

26 Rolled Products Key figures operating results External sales volumes, kmt Underlying EBIT, NOK million (53) Volumes significantly down Declining margins Positive contribution from cost savings Underlying EBIT NOK million 652 (53) Outlook Continued weak markets Ongoing margin pressure Further cost saving actions (53) 2009 (26)

27 Extrusion Key figures operating results External sales volumes, kmt Underlying EBIT, NOK million (88) 103 (88) Volumes further down Building Systems less affected by downturn Positive contribution from cost savings Underlying EBIT NOK million 668 (88) Outlook Continued weak demand, especially within automotive and transportation Continuing weak US markets Margin pressure Continued strong cost focus (88) (88) 2009 (27)

28 Automotive Key figures operating results External sales volumes, kmt Low volumes Considerable cost improvement Underlying EBIT, NOK million (115) (235) (2) Underlying EBIT NOK million (326) (115) 2 (2) (92) (115) Outlook No signs of market recovery Additional demanning and cost cuts Closure of precision tubing plant in Adrian, US (235) 2009 (28)

29 Energy Key figures operating results Power production, GWh Declining spot prices High seasonal production Net spot sales, GWh Southern Norway spot price (NO1), NOK/MWh Underlying EBIT, NOK million Underlying EBIT NOK million Outlook Reservoir levels considerably below normal Suldal 1 power plant out of production due to repairs Lower spot prices Weak Q (29)

30 (30) Capital allocation

31 Cash flow development NOK billion Operations Investments* Divestments Dividends and share buybacks Financing Net cash flow 2009 (1.1) (0.7) 1.7 (0.2) Year 2.9 (8.8) 5.8 (6.5) 0.5 (6.0) * Excluding investments debt financed directly in Qatalum (31)

32 Financial position Net cash / (debt) in NOK billion Dec 31, June 30, Dec 31, Mar 31, 2009 NOK billion Net cash / (debt) Dec 31, Jun 30, 8.7 Dec 31, Mar 31, Secured financing: ~NOK 20 billion New EUR 750 million in 3year bank facility New NOK 1 billion in commercial paper USD 1.7 billion in a multicurrency revolving facility maturing in 2014 NOK 1.3 billion shortterm Currently NOK 18.2 billion undrawn Qatalum financing: USD 5.6 billion (100%) USD 2.6 billion project financed USD 0.6 billion outstanding end USD 3.0 billion in equity from owners USD 1.6 billion remaining end Net int.bearing debt in equity accounted invest. (3.2) (3.0) (4.9) (6.8) Other adjustments * (8.4) (7.8) (14.0) (13.7) Adj. net interestbearing debt (0.8) (2.1) (15.4) (18.8) * Net pension liability, operating lease commitments and other (32)

33 Firm corrective measures Production curtailments and capacity adjustments Manning reductions Cost improvement programs Capital expenditures and operating capital reductions Additional measures will be implemented according to market development (33)

34 Flexible production system Primary aluminium Remelt tonnes tonnes * * 2011 Curtailed primary capacity available for restart Qatalum Primary under curtailment Primary production *Annualized Available remelt capacity Remelt production (34)

35 Qatalum on target 73% complete end workers on site end Main ongoing activities Construction of buildings Installation of equipment Development of operating organization Investment Estimate (100%) ~USD 5.6 billion On schedule for startup 2009/2010 Firstdecile position on cash cost curve (35)

36 Hydro A focused aluminium and energy company Energy Primary Metal Metal Markets Rolled Products Extruded Products Enhance value of energy competence Pursue more captive power production Developing solar Worldclass production system New technology Grow through attractive assets/projects Enhance value of market system Increase footprint in the US and Asia (Qatalum) Increase recycling Cost focus and market/margin management Customer focus and product differentiation Cost focus and market/margin management Customer focus and product differentiation Grow Extrusion Eurasia and Building Systems (36)

37 Priorities in 2009 Proactive corrective measures Cost reductions and margin management Working capital and counterparty risk Production curtailments Cash focus maintain financial flexibility Operational excellence Qatalum execution (37)

38 Cautionary note in relation to certain forwardlooking statements Certain statements included within this announcement contain forwardlooking 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 forwardlooking statements are reasonable, these forwardlooking 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 forwardlooking 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 forwardlooking statements, whether as a result of new information, future events or otherwise. (38)

39 (39) Additional information

40 Underlying income 2009 NOK million Reported income Adjustments Underlying income Aluminium Metal Aluminium Products Energy Corporate and other Total EBIT Financial income (expense), net Income (loss) continuing operations before tax Income taxes 1) Income (loss) from continuing operations Income (loss) from discontinued operations Net income (loss) Net income (loss) attributable to minority interest Net income (loss) attributable to owners of the parent Earnings per share from continuing operations NOK 2) (2 198) (566) (1 598) (125) (155) (280) (280) 67 (347) (0.29) (4) (922) (1 478) (373) 174 (199) (199) (476) (257) 416 (176) (493) (5) (498) 19 (480) (480) (0.45) 1 To present underlying income from continuing operations we have calculated the income tax effect of currency gains/losses with 28% and of items excluded from underlying EBIT based on Hydro's effective tax rate excluding financial items. In previous quarters, this calculation has been based on Hydro's overall effective tax rate 2 Calculated using income from continuing operations less net income attributable to minority interests (40)

41 Underlying income NOK million Reported income Adjustments Underlying income Aluminium Metal Aluminium Products Energy Corporate and other Total EBIT Financial income (expense), net Income (loss) continuing operations before tax Income taxes 1) Income (loss) from continuing operations Income (loss) from discontinued operations Net income (loss) Net income (loss) attributable to minority interest Net income (loss) attributable to owners of the parent Earnings per share from continuing operations NOK 2) (1 725) (2 946) (3 106) (4 487) (7 593) (5 845) (1) (5 846) 170 (6 016) (4.99) (1 207) (2 943) (239) (1 195) (184) (1) (185) (0.29) 1 To present underlying income from continuing operations we have calculated the income tax effect of currency gains/losses with 28% and of items excluded from underlying EBIT based on Hydro's effective tax rate excluding financial items. In previous quarters, this calculation has been based on Hydro's overall effective tax rate 2 Calculated using income from continuing operations less net income attributable to minority interests (41)

42 Underlying income NOK million Reported income Adjustments Underlying income Aluminium Metal Aluminium Products Energy Corporate and other Total EBIT Financial income (expense), net Income continuing operations before tax Income taxes 1) Income from continuing operations Income from discontinued operations Net income Net income (loss) attributable to minority interest Net income (loss) attributable to owners of the parent (936) (734) (357) (17) (625) (5) (854) (1) 0 (1) (1) (734) (357) Earnings per share from continuing operations NOK 2) To present underlying income from continuing operations we have calculated the income tax effect of currency gains/losses with 28% and of items excluded from underlying EBIT based on Hydro's effective tax rate excluding financial items. In previous quarters, this calculation has been based on Hydro's overall effective tax rate 2 Calculated using income from continuing operations less net income attributable to minority interests (42)

43 Reported and underlying results Hydro NOK million Q2 Q3 Q2 Q Year Year Reported EBIT (3 106) (1 598) Underlying EBIT (493) Income (loss) from continuing operations (5 845) (280) (3 267) Underlying income (loss) from continuing operations (184) (480) Earnings per share from continuing operations 1) (4.99) (0.29) 7.16 (3.04) Underlying earnings per share from continuing operations 1) (0.29) (0.45) ) Calculated using income from continuing operations less net income attributable to minority interests (43)

44 Items excluded from underlying results 2009 NOK million Unrealized derivative effects on currency contracts (Alunorte) Rationalization charges and closure costs Rationalization charges and closure costs Unrealized derivative effects on power contracts Unrealized derivative effects on power contracts (Søral) Unrealized derivative effects on currency contracts (Qatalum) Unrealized derivative effects on LME related contracts Total impact Metal effect Impairment charges (PP&E) Unrealized derivative effects on LME related contracts Total impact Unrealized derivative effects on power contracts Unrealized derivative effects on power contracts Unrealized derivative effects on power contracts Unrealized derivative effects on LME related contracts Total impact Total EBIT Net foreign exchange (gain)/loss Income from continuing operations before tax Calculated income tax effect Income from continuing operations Bauxite and Alumina Bauxite and Alumina Primary Aluminium Primary Aluminium Primary Aluminium Primary Aluminium Other and eliminations Aluminium Metal Rolled Products Automotive Other and Elim. Aluminium Products Energy Energy Corporate, other & elim. Corporate, other & elim. Corporate, other & elim. Hydro Hydro Hydro Hydro Hydro 2009 (11) (8) 1,097 1, (364) 309 (4) (4) (915) (7) (922) 1,105 (1,478) (373) 174 (199) 1 Not included in EBITDA (44)

45 Items excluded from underlying results NOK million Unrealized derivative effects on currency contracts (Alunorte) Unrealized derivative effects on LME related contracts (Alunorte) Impairment charges (PP&E) 1) Rationalization charges and closure costs Unrealized derivative effects on power contracts Unrealized derivative effects on power contracts (Søral) Unrealized derivative effects on currency contracts (Qatalum) Bauxite and Alumina Bauxite and Alumina Bauxite and Alumina Primary Aluminium Primary Aluminium Primary Aluminium Primary Aluminium Impairment charges (PP&E) 1) Primary Aluminium Loss provision (power contracts) Primary Aluminium Impairment charges (PP&E) 1) Commercial Unrealized derivative effects on LME related contracts Other and eliminations 79 (317) (485) 497 (225) Total impact Aluminium Metal 539 (515) (760) Metal effect Rolled Products 113 (247) (38) Impairment charges (PP&E) 1) Rolled Products Impairment charges (PP&E) 1) Extrusion Impairment charges (PP&E) 1) Automotive Rationalization charges and closure costs Automotive Unrealized derivative effects on LME related contracts Other and Elim. (738) (7) Total impact Aluminium Products (625) (253) Unrealized derivative effects on power contracts Energy (5) (6) (6) (5) (22) Impairment charges (PP&E) 1) Energy (Gains)/losses on divestments Energy (34) (34) Unrealized derivative effects on power contracts Energy (5) (6) (39) Unrealized derivative effects on power contracts Corporate, other & elim (740) (1 183) Unrealized derivative effects on LME related contracts Corporate, other & elim. 16 (8) (Gains)/losses on divestments Corporate, other & elim. (389) (29) (419) Total impact Corporate, other & elim (734) (1 207) 688 Total EBIT Hydro (924) Net foreign exchange (gain)/loss Hydro (854) (298) Income (loss) from continuing operations before tax Hydro (1) Calculated income tax effect Hydro (66) (204) (248) (2 943) (3 460) Income (loss) from continuing operations Hydro (67) (16) Q2 (106) (8) 10 (91) (4) Q3 203 (134) (342) 50 (53) 271 (37) (442) 150 (6) Year 352 (96) (426) 129 (37) 1 Not included in EBITDA (45)

46 Items excluded from underlying results NOK million Q2 Q3 Year Equity accounted units Monetary adjustments Alunorte Equity accounted units unrealized (gains)/losses on LME contracts Alunorte Closure costs Unrealized (gains)/losses on power contracts Equity accounted units unrealized (gains)/losses power contracts Søral Embedded currency derivatives Qatar Impairment Ellenville 1) Unrealized (gains)/losses on LME contracts Correction of elimination of gain on inventory Total impact Metal effect Rationalization costs Equity accounted units Change in tax rate Germany Rationalization costs US and UK (Gains)/losses on divestments (Gains)/losses on divestments Rationalization costs Unrealized (gains)/losses on LME contracts Total impact Unrealized (gains)/losses on power contracts Unrealized (gains)/losses on power contracts Correction of elimination of gain on inventory Total EBIT Net foreign exchange (gain)/loss Income (loss) from continuing operations before tax Estimated income tax effect Germany, change in tax rate Income (loss) from continuing operations Bauxite & Alumina Bauxite & Alumina Primary Aluminium Primary Aluminium Primary Aluminium Primary Aluminium Commercial Other and eliminations Other and eliminations Aluminium Metal Rolled Products Rolled Products Rolled Products Extrusion Extrusion Automotive Automotive Other and Elim. Aluminium Products Energy Corporate and other Corporate and other Hydro Hydro Hydro Hydro Hydro Hydro (33) (13) (303) (158) (149) (691) 23 (817) (22) 207 (790) (464) (1 254) 359 (859) (64) (175) (25) 144 (80) (91) (27) (135) (116) (517) (633) 204 (429) (35) (108) (1) (35) 221 (58) 673 (1 199) (526) 115 (250) (661) (35) (82) 8 76 (2) (47) (17) (35) (74) (353) (50) 884 (167) (163) (303) 118 (100) (47) 63 (17) (624) (119) (2 254) (1 126) 325 (300) (1 101) 1 Not included in EBITDA (46)

47 Operating segment information Underlying EBIT NOK million Q2 Q3 Q2 Q Year Year Bauxite & Alumina (137) Primary Aluminium Commercial (147) (79) (421) Other and eliminations (37) (36) (41) Aluminium Metal (476) Rolled Products (31) (53) Extrusion (88) (88) Automotive 57 1 (49) (75) (2) 2 (92) (235) (115) (67) (326) Other and eliminations (0) (6) (1) 5 (6) Aluminium Products (239) (257) Energy Corporate and other (257) (349) 9 (50) 8 (140) (239) 81 (176) (647) (290) Total (493) (47)

48 Operating segment information Underlying EBITDA NOK million Q2 Q3 Q2 Q Year Year Bauxite & Alumina (131) Primary Aluminium Commercial (121) (47) (389) Other and eliminations (37) (36) (41) Aluminium Metal Rolled Products Extrusion Automotive (10) (38) (171) (76) 209 (97) Other and eliminations (6) (1) 5 (6) Aluminium Products Energy Corporate and other (241) (333) 24 (34) 21 (128) (228) 111 (166) (585) (224) Total (48)

49 Operating segment information EBIT NOK million Q2 Q3 Q2 Q Year Year Bauxite & Alumina (57) (585) (335) (433) Primary Aluminium (625) (304) Commercial (147) (114) (421) Other and eliminations (85) (115) (401) (1 138) Aluminium Metal (1 725) (2 198) Rolled Products (313) (446) (716) Extrusion (341) (88) Automotive 748 (15) (89) (105) (2) 2 (92) (635) (125) 539 (726) Other and eliminations (21) (28) (440) (104) (648) (1 524) 363 (592) (1 427) Aluminium Products (247) (326) (288) (2 946) (566) (1 450) Energy Corporate and other (465) (214) (154) (907) (936) (1 825) (1 741) (978) Total (3 106) (1 598) (49)

50 Operating segment information EBITDA NOK million Q2 Q3 Q2 Q Year Year Bauxite & Alumina (53) (68) (330) Primary Aluminium Commercial (121) (47) (389) Other and eliminations (85) (115) (401) (1 138) Aluminium Metal (1 692) Rolled Products (183) (163) (579) Extrusion Automotive (25) (38) (38) (201) (76) 818 (127) Other and eliminations (21) (28) (440) (104) (648) (1 524) 363 (592) (1 427) Aluminium Products (22) (1 859) (252) Energy Corporate and other (449) (198) (139) (892) (923) (1 813) (1 678) (912) Total (743) (50)

51 Operating segment information Total revenue NOK million Q2 Q3 Q2 Q Year Year Bauxite & Alumina Primary Aluminium Commercial Other and eliminations (12 433) (12 199) (10 550) (9 464) (10 264) (11 862) (11 029) (9 040) (5 956) (44 646) (42 195) Aluminium Metal Rolled Products Extrusion Automotive Other and eliminations (209) (226) (236) (184) (133) (191) (189) (280) (74) (855) (793) Aluminium Products Energy Corporate and other (7 294) (5 996) (5 667) (6 185) (6 226) (7 695) (4 690) (3 537) (4 314) (25 143) (22 149) Total (51)

52 Operating segment information External revenue NOK million Q2 Q3 Q2 Q Year Year Bauxite & Alumina 3 3 Primary Aluminium Commercial Other and eliminations (182) Aluminium Metal Rolled Products Extrusion Automotive Other and eliminations 17 2 (62) (14) 55 (55) (56) Aluminium Products Energy (83) Corporate and other Total (52)

53 Operating segment information Internal revenue NOK million Q2 Q3 Q2 Q Year Year Bauxite & Alumina Primary Aluminium Commercial Other and eliminations (12 470) (12 236) (10 658) (9 282) (10 264) (11 862) (11 029) (9 040) (5 956) (44 646) (42 195) Aluminium Metal Rolled Products Extrusion Automotive Other and eliminations (226) (228) (174) (170) (189) (136) (189) (280) (74) (798) (793) Aluminium Products (45) Energy Corporate and other (7 550) (6 250) (5 897) (6 822) (6 732) (7 820) (4 825) (3 709) (4 479) (26 519) (23 087) Total (53)

54 Operating segment information Share of profit /(loss) in equity accounted investments NOK million Q2 Q3 Q2 Q Year Year Bauxite & Alumina Primary Aluminium Commercial Aluminium Metal Rolled Products Extrusion Automotive Aluminium Products Energy Corporate and other Total 238 (3) (1) (7) (8) (6) 3 (3) (8) (28) (1) 43 (25) (37) (40) (77) (7) 1 (6) (13) 1 (94) (2) 5 (1) 3 (16) (3) (6) 3 (3) (12) (3) 77 (520) (261) (1) (782) (37) 9 (1) (29) (350) 6 (1 154) (266) (109) (1) (377) (33) 4 (28) (15) 7 (413) (24) (320) (170) (1) (491) (52) 19 (2) (35) (391) 2 (915) (54)

55 Operating segment information Depreciation, amortization and impairment NOK million Q2 Q3 Q2 Q Year Year Bauxite & Alumina Primary Aluminium Commercial Aluminium Metal Rolled Products Extrusion Automotive Aluminium Products Energy Corporate and other Total (55)

56 Income statement NOK million 2009 Year Revenue Share of the profit (loss) in equity accounted investments Other income, net Total revenue and income Depreciation, amortization and impairment Other expenses Earnings before financial items and tax (EBIT) Financial income (expense), net Income (loss) from continuing operations before tax Income taxes Tax rate Income (loss) from continuing operations Income (loss) from discontinued operations Net income (loss) (413) (1 598) (126) (155) (280) (280) (1 154) (3 106) (4 487) (7 593) % (5 845) (1) (5 846) (94) (734) 34% (357) (915) (5 026) (3 832) % (3 267) (247) (3 514) Net income (loss) attributable to minority interest Net income (loss) attributable to owners of the parent 67 (347) 170 (6 016) (17) (3 925) Earnings per share from continuing operations NOK 1) (0.29) (4.99) 1.21 (3.04) 1) Calculated using income from continuing operations less net income attributable to minority interests (56)

57 Balance sheets NOK million March 31, 2009 December 31, September 30, June 30, March 31, Cash and cash equivalents Shortterm investments Receivables and other current assets Inventories Assets held for sale / Discontinued operations Property, plant and equipment Other noncurrent assets Total assets Bankloans and other interestbearing shortterm debt Other current liabilities Longterm debt Other longterm liabilities Deferred tax liabilities Equity attr. to owners of the parent Minority interest Total liabilities and equity (57)

58 Financial policy Maintain investmentgrade rating Currently: BBB (S&P), Baa2 (Moody s), both with negative outlook Competitive access to capital and important for Hydro s business model NOK billion Cash and cash equivalents Shortterm investments Shortterm debt Longterm debt Net cash/(debt) March 31, (2.0) (1.1) 1.7 Dec 31, (1.2) (0.3) 3.5 Financial ratios over the business cycle Funds from operations to net adjusted debt > 40% Net adjusted debt to equity < 0.55 Dividend policy 30% of net income over time Share buyback and extraordinary dividends as supplement in periods with strong financials Cash and shortterm 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 interestbearing debt in equity accounted investments Other financial obligations, net of expected tax benefit Net adjusted cash/(debt) (1.7) (9.3) (1.9) (6.8) (0.9) (18.8) (1.7) (9.6) (1.9) (4.9) (0.9) (15.4) (58)

59 Capital employed upstream focus Extrusion 11% Automotive 3% Energy 6% Bauxite & Alumina 10% NOK million Bauxite & Alumina Primary Aluminium Commercial Other and eliminations Aluminium Metal Rolled Products Extrusion Automotive Other and eliminations Aluminium Products Energy Corporate and other Total March 31, (1 105) (923) (4 210) Rolled Products 16% Primary Aluminium 42% Commercial 12% Graph excludes NOK 4.2 billion in negative capital employed in Corporate and Other, NOK 1.1 billion in negative capital employed in Aluminium Metal and NOK 0.9 billion in negative capital employed in Aluminium Products (59)

60 Price and currency sensitivities Aluminium price sensitivity +/ 100 USD per tonne NOK/USD sensitivity +/ 0.1 NOK EBIT Net income EBIT Net income 0 Financial items Net income Annual sensitivities Aluminium price sensitivity is net of aluminium price indexed costs NOK/USD sensitivity includes USD revenues and costs (100) (200) (100) (70) 200 Based on expected business volumes for 2009 and the following prices: Aluminium USD/tonne NOK/USD 7.00 LME sensitivity excludes unrealized effects related to operational hedging USD sensitivity on financial items is based on financial positions end Income before tax 30 Net income (60)

61 Primary aluminium production tonnes Slovalco consolidated from 2004 (61)

62 Nordic power market forward curves NOK/MWh Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 End End End Q2 End Q3 End End 2009 (62)

63 Power price and volume Nordic System Price NOK/MWh Hydropower production TWh (63)

64 Aluminium Metal operational data Volumes and prices Q2 Q3 Q2 Q Realized premium above LME (USD/mt) Realized premium above LME (NOK/mt) Bauxite & Alumina: Alumina production (1 000 mt) Primary Aluminium: Primary production (1 000 mt) Total casthouse production LME realized (USD/mt) including hedges 1) NOK/USD realized including hedges LME realized (NOK/mt) including hedges 1) LME realized (USD/mt) excluding hedges 1) NOK/USD realized excluding hedges LME realized (NOK/mt) excluding hedges 1) , , , , )In the fourth quarter of, Hydro changed its definition of realized prices to be determined when products are shipped and invoiced to customers. Previously, realized prices were determined as liquid metal is transferred from electrolysis to casthouses for further processing. This price mainly reflected the prevailing three month forward LME aluminium price three months prior to production. The casting process results in about an additional three week time lag before metal is finally shipped and invoiced to customers. Prior periods have been restated to reflect the change in definition. (64)

65 Aluminium Metal operational data Volumes and prices Q2 Q3 Q2 Q Commercial: Remelt production (1 000 mt) Sale of metal products from own production (1 000 mt) Sale of thirdparty metal products (1 000 mt) Total metal products sales excluding ingot trading (1 000 mt) Hereof external sales (1 000 mt) External sales revenue (NOK million) (65)

66 Aluminium Products operational data Q2 Q3 Q2 Q Rolled Products external shipments (1 000 tonnes) Extrusion external shipments (1 000 tonnes) Automotive external shipments (1 000 tonnes) Rolled Products EBIT per tonne, NOK 1) (122) (279) Extrusion EBIT per tonne, NOK 1) (851) (917) 1) Underlying EBIT Energy operational data Volumes and prices Q2 Q3 Q2 Q Power production, GWh Net spot sales, GWh Nordic spot electricity price, NOK/MWh South Norway spot electricity price (NO1), NOK/MWh (66)

67 Investor Relations in Hydro Stefan Solberg Head of Investor Relations t: m: e: Stian Hasle Investor Relations Officer t: m: e: Irene Raposo Investor Relations Assistant t: m: e: Next investor event: Second quarter results, July 22, 2009 For more information see: (67) 02/

68 (68)