OSLO, NORWAY--(Marketwire - Nov 29, 2012) - Hydro is focusing its Capital Markets Day 2012
on the improvement efforts being
made throughout the company, aiming to create a global leader in aluminium.
Hydro is expecting world aluminium demand outside China of 2-4% in 2013 and
solid global long-term growth of 4-6% annually over the next 10 years.
In its value proposition, Hydro's targets are to:
* Deliver on ambitious improvement efforts along the value chain to
relative industry position
* Capitalize on raw material positions through internal improvements and
commercialization of bauxite and alumina markets
* Maintain financial strength and flexibility to mitigate weak and
* Ensure competitive shareholder return with the ambition to maintain
dividend level for 2012
"Hydro has delivered significant improvements, portfolio restructuring and
transforming transactions in the five years since becoming a streamlined
aluminium company, shaping Hydro into a company rich in both resources and
opportunities and with strong positions throughout the value chain," says
President and CEO Svein Richard Brandtzæg.
In response to the uncertain economic environment, Hydro is presenting
significant improvement efforts in all business areas. The USD 300 per
improvement program in Primary Metal, launched in 2009, is developing in
with the 2013 completion target. Improvement efforts are also in place in
joint venture smelters to improve operations and cost positions
of Hydro's part-owned smelters, now accounting for more
than half of Hydro's primary aluminium production.
In Bauxite & Alumina, the recently launched "From B to A" improvement
aiming at annual improvements of NOK 1 billion, while the ambitious
program in Extruded Products is continuing with full force, even after the
announcement of the planned Sapa joint venture.
"It is encouraging to see the operational improvements now gaining momentum
Bauxite & Alumina, with Paragominas showing a production increase of around
percent since our takeover in March 2011. While LME-linked contracts and
costs on raw materials are putting pressure on earnings, the 'From B to A'
program will further improve operations and strengthen the relative
Bauxite & Alumina," says President and CEO Svein Richard Brandtzæg.
"The Sapa transaction will create value from day one for Hydro,
global champion and increasing the global reach of Hydro's extruded
business. While Extruded Products is facing challenging markets, we are
that the planned joint venture will have the capabilities necessary to
meet the current headwinds and then to capitalize on the brighter long-term
outlook for aluminium applications," says Brandtzæg.
Qatalum, the 50/50 joint venture between Qatar Petroleum and Hydro, is
above its annual nameplate capacity of 585,000 tonnes. Qatalum is
a state-of-the-art smelter located in a logistically advantageous region.
The smelter is in
a first-quartile position, with a cash cost of USD 1,450-1,500 with today's
The current high levels of macroeconomic uncertainty and a multi-speed
economy are weighing on consumer sentiment, which in turn has led to weaker
aluminium prices and softer end-user markets. Still, Hydro maintains its
that the long-term outlook for aluminium remains positive due to its strong
World aluminum demand outside China is estimated to grow 2% in
2012 and 2-4% in 2013. Aluminium fundamentals remain promising due to the
metal's many positive qualities, including its light weight and
recyclability, and the global
aluminium market is expected to show solid long-term growth of 4-6%
over the next 10 years.
"Although aluminium has seen the fastest-growing demand among base metals,
have also seen a strong growth in new capacity, resulting in low prices and
inadequate returns. Ensuring competitive shareholder return is important
Hydro, also in times of weak and uncertain markets. Based on what we see
our ambition is to maintain the absolute dividend level for 2012," says
Capital expenditures (capex) in 2013 are expected to be around NOK 3
down from an estimated NOK 4.2 billion in 2012. Sustaining capex are being
further reduced from about NOK 3.5 billion in 2012 to about NOK 3.0 billion
2013. The reduction in 2013 is partly due to Extruded Products being
reclassified as discontinued operations. Limited growth capex is expected
Hydro is also presenting three earnings potential scenarios. The scenarios
based on sensitivities for selected aluminium prices and NOK/USD exchange
using the last four quarters underlying EBITDA as baseline. All three
indicate EBITDA significantly above sustaining capital expenditures,
illustrating Hydro's cash generation ability.
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
strategies for Hydro, such as planned expansions, investments or other
(c) targeted production volumes and costs, capacities or rates, start-up
cost reductions and profit objectives, (d) various expectations about
developments in Hydro's markets, particularly prices, supply and demand and
competition, (e) results of operations, (f) margins, (g) growth rates, (h)
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
extent to which a particular projection is realized. Factors that could
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
demand for aluminium and aluminium products; world economic growth,
rates of inflation and industrial production; changes in the relative value
currencies and the value of commodity contracts; trends in Hydro's key
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 of the disclosure requirements pursuant to
5-12 of the Norwegian Securities Trading Act.
CMD Primary and Bauxite and Alumina:
CMD Finance and Market:
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originality of the information contained therein.
Source: Norsk Hydro via Thomson Reuters ONE