Hydro's Capital Markets Day 2013 is focused on the improvement
efforts being implemented throughout the value chain, encompassing
all business areas, plants and units in an all-Hydro drive to
continuously lift the bar.
Hydro's main ambitions are to:
- Deliver on dedicated improvement programs in all business
areas
- Capitalize on attractive positions across the value
chain
- Maintain a strong financial position
- Lift unsatisfactory returns to a competitive level
Improvement programs are now being implemented in all business
areas, tailored to the specifics within each step of the value
chain from bauxite to rolled products and based on well-established
production systems for each area. In line with the company culture
of continuous improvements, Primary Metal has established a new
program for its joint-venture smelters and is concluding its USD
300 program, while Bauxite & Alumina has re-confirmed the
overall 2015 improvement targets for its "From B to A" program
following setbacks earlier this year.
"We are of course very pleased to deliver the USD 300 program as
planned, but even more importantly at this stage is our ability to
re-confirm the overall ambition to deliver NOK 1 billion in
improvements from the 'From B to A' program, just months after the
production setbacks we experienced earlier this year," says
President and CEO Svein Richard Brandtzæg. "We are already seeing
our efforts and actions paying off, lifting the average production
for the first two months of the fourth quarter at Alunorte to an
annualized level of 5.6 million metric tons."
Primary Metal has now delivered the USD 300 per mt improvement
program, significantly strengthening the competitive position and
the viability of Hydro's fully owned Norwegian smelters. The
company has also established a separate program for its
joint-venture smelters, targeting average improvements equivalent
to USD 180 per mt to be delivered by the end of 2016.
Based on a strong customer focus, Rolled Products is continuing
its drive to become the global leader within innovation. The
business area aims to increase value creation by high-grading its
product portfolio, further strengthen its position as a preferred
partner among its customers and raise competitiveness through
innovation. The market for rolled products is gaining momentum from
substitution, where the penetration in automotive is generating
solid demand growth.
Energy has successfully delivered several growth projects, which
together with the Vigeland acquisition, improved operational
performance, and increased precipitation has lifted normal
production in Energy from 9.5 TWh to 10.0 TWh per year. Energy
continues to support the other business areas in sourcing of
energy, as in the process leading up to the signing earlier this
year of a new power contract for the joint-venture smelter
Slovalco.
"In a cyclical business such as aluminium, it is highly
important to maintain a financial robustness to meet the low point
of the cycle from a position of strength and flexibility. The
current price level for many of our products remains challenging,
and does not generate sustainable returns," Brandtzæg says.
"The aluminium price is weighing on both Bauxite & Alumina and
Primary Metal, although strong premiums offset some of the effect
in Primary, showing how important our ability to maintain a solid
financial position has been over the last years."
World aluminum demand outside China is estimated to grow 2% in
2013 and 2-4% in 2014. 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% annually over the next 10
years.
While energy-intensive to produce the first time, aluminium's
strong user-phase qualities and ability to be infinitely recycled
without any quality degradation makes aluminium the material of
choice for a wide range of products and applications from a climate
perspective. Hydro aims to capture the full potential of
aluminium's climate qualities, and has an ambition to become
climate neutral from a life-cycle perspective by 2020, based on
production-phase energy-efficiency improvements, user-phase
benefits and increased recycling capacity to bring more metal back
to the loop.
Capital expenditures (capex) in 2014 are expected to be around
NOK 4.3 billion, up from an estimated NOK 3.1 billion in 2013.
Sustaining capex is estimated to increase from NOK 2.9 billion in
2013 to NOK 3.9 billion in 2014, partly driven by accounting
effects in Rolled Products and higher than average pot relining in
Primary Metal. Longer-term sustaining capex is estimated at NOK 3.5
billion. Growth capex for 2014 is expected to amount to NOK 0.4
billion.
Investor contact
Contact Rikard Lindqvist
Cellular +47 41751199
E-mail Rikard.Lindqvist@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,
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 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 of the disclosure requirements
pursuant to section 5-12 of the Norwegian Securities Trading
Act.
Norsk Hydro CMD 2013
http://hugin.info/106/R/1747858/588587.pdf
HUG#1747858
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