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Rolled Products:
Close to
the CustomerKjetil EbbesbergExecutive Vice President and
Head of Rolled Products
• Business overview
• Rolling in the value chain
• Market
• Financials and strategy
1
2
3
4
(2)
• Business overview
• Rolling in the value chain
• Market
• Financials and strategy
1
2
3
4
(3)
(4)
0
5
10
15
20
25
30
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Hydro TRI Rate• Focus on high risk incidents, awareness and
employee involvement
• Special attention to contractor management and
involvement
• Key tools: near-miss reporting, training, WOC*,
LOTO** and auditing
Mastering safety, means to master processes
*WOC = walk, observe, communicate.
**LOTO = Lockout, a system to make sure all energy has been disconnected from machines during maintenance or inspections
We continuously improve HSE
(5)
Hydro Aluminium Rolled Products Holmestrand
Before Today«ALways
Better»
Health, Safety, Security and Environment
A century of innovation and development
1917 1968 1986 2002 2008 20121973
Merger with ÅSV
Acquired German giant VAW
Hydro becomes largest aluminium company in Europe, forms leading
group for rolled products
Automotive Line 2 opens
Production of premium body sheet
applications
Courage, Respect, Cooperation, Determination – and Foresight
Alnor, Karmøy
Commissioning of Hydro’s first co-owned rolling mill. Aluminium
smelter in Norway
Foil Series 1 Grevenbroich revolutionizes foil rolling
World´s first fully integrated, highly automatized line.
Series 2 sets a next standard in 1986
We start rolling
Establishment of
Holmestrand plant
2014
Rheinwerk integrated into Rolled Products
Utilizing synergies of Aluminium cluster
Strengthening of recycling position
through UBC recycling line
Improving metal cost position
Decision to increase automotive capacity from 50kt to 200kt
Major step in strongly growing Body in White
Market
1965
Alunorf founded
Today world´s only site with 2 hot mills. Centerpiece of
our production cluster
1923
Grevenbroich foil mill opens
1990
Recycling initiated at
Holmestrand
End of life products
Recycling initiated at Rheinwerk
End of life products
2007 2009
Recycling initiated at
Alunorf
End of life products
(6)
Litho centreinstalled at
Grevenbroich
Centre 2: 1992
Centre 3: 2005
1985
(7)
Rolled Products – No 1 producer in Europe
• European production base with global reach
• 1 million tonnes of flat rolled products per year
• World class assets
− Casthouse network & integrated recycling capacity
− World’s largest rolling mill with dedicated conversion mill
• Industry leading R&D facility
• Turnover ~20 billion NOK
• ~4 200 employees
Karmøy
Holmestrand
Cisterna
Hamburg
Norf/Grevenbroich
Rolling Mill Sales Office Smelter R&D centre
Bonn
EVP
Rolled Products
Kjetil Ebbesberg
HR & OrganizationJoachim Deppe
FinanceBerit Askheim
Strategy & External AffairsKjetil Ebbesberg
BU Litho, Automotive &
Heat ExchangerPascal Wagner
Grevenbroich Plant
Stefan Kästner
Sourcing
Volker Backs
BUGeneral
EngineeringWolfgang Rempe
Performance ManagementTatjana Draese
Research & DevelopmentPascal Wagner
BU Packaging& Building
Manfred Mertens
Communications &Public Affairs
Peter Heimerzheim
(8)
Rolled Products
(9)
Automotive
Leading position
in Europe
Beverage can
Leading position
in Europe
Foil
World market leader
in aseptic foil
Lithography
World market leader
Rolled Products market positions*
Leading market positions – supported by leading R&D competence
General Engineering
Leading position
in Europe
12%
18%
8%
11%4%
28%
19%
Foil Can
Building and other Auto
Heat exchanger General engineering
Litho
* External sales in tonnages 2014
Norf/Grevenbroich,
Germany
Cisterna,
Italy
Hamburg,
Germany
Karmoy, Norway
Holmestrand,NorwayShipments from our plants
GrevenbroichHamburg
Holmestrand
Karmoy
Cisterna
(10)
Our mills and their share in output
Unique «Aluminium triangle» utilizing logistical, cost and process synergies
(11)
Other continental Europe: Hamburg and Slim
(12)
Hamburg
• Founded in 1972
• 650 employees
• Own casthouse
• Production 2014:
150,000 tonnes
Slim
• Founded in 1964
• 390 employees
• Own casthouse
• New cold mill and
major revamp in 2006
• Production 2014:
70,000 tonnes
Norway: Holmestrand and Karmøy
(13)
Holmestrand
• Founded in 1917
• 400 employees
• Own casthouse
• Production 2014:
80,000 tonnes
Karmøy
• Founded in 1968
• 220 employees
• Continuous
strip-casting
• Production 2014:
80,000 tonnes
(14)
• Industry leading R&D facility; major
innovation driver for Rolled Products
• Founded 1964
• Highly skilled personnel
• Well equipped laboratories, servicing
Hydro units and other customers
• Production and marketing of advanced
products by business center
• Simulation process know-how
R&D Bonn
• Business overview
• Rolling in the value chain
• Market
• Financials and strategy
1
2
3
4
(15)
(16)
Rolled Products: The final step of the value chain
Bauxite Alumina Energy Primary Casting Products
Rolling
Extrusion
Recycling
Recycling
Hot rolling
Continuous casting
(17)
Cold rolling
(18)
Coil coating
Lithography
(19)
• Business overview
• Rolling in the value chain
• Market
• Financials and strategy
1
2
3
4
(20)
(21)
Some signs of positive developments in Europe last 6 months
40
45
50
55
60
jan. 14 apr. 14 jul. 14 okt. 14 jan. 15 apr. 15
Germany France Eurozone Italy Spain
Manufacturing PMI, major Eurozone economies
PMI
Source: Ecowin
PMI – Purchasing manager index
Eurozone manufacturing PMI climbs from 50.1 to 52
Robust long-term growth outlook for flat rolled products worldwide
CAGR 2014-2019
Source: CRU FRP quarterly February 2015, Rolled Products analysis
FRP - Flat rolled products
CAGR – Compound annual growth rate
Global FRP consumption by end-use 2014
Transport is main driver for growth, in 23 million tonnes market
Global Body-in-White demand in kT
CAGR
20%
14%
4%
10%
9%
12%
51%
12%
5%
5%
5%
5%
4%
4%
Transport
Total consumption
Electrical
Consumer durables & other
Machinery and equipment
Construction
Packaging
500
1500
2100
2014 2018 2022
CAGR 2014-2019
Source: CRU FRP quarterly February 2015, Rolled Products analysis
FRP - Flat rolled products
CAGR – Compound annual growth rate
European FRP consumption by end-use 2014
Transport is also main contributor in Europe
10%
21%
3%
13%
11%
43%
9%
3%
3%
2%
2%
1%
1%
Transport
Total consumption
Electrical
Packaging
Consumer durables & other
Machinery
Construction
CAGR
11%
300
500
700
2014 2018 2022
European body-in-White demand in kT
(23)
Structural growth in Chinese exports
Chinese strip and foil exports in tons
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2009 2010 2011 2012 2013 2014
Other Asia
Middle East
Africa
Americas
Rest of world
EU28+EFTA
Source: Global Trade Atlas, Hydro analysis
Jan-0
7
Jan-0
8
Jan-0
9
Jan-1
0
Jan-1
1
Jan-1
2
Jan-1
3
Jan-1
4
Jan-1
5
-400
-200
0
200
400
600
800
1000
Comp. adv
(USD/t)
Imp
rove
d c
om
p. a
dv.
Chin
a(24)
*Est. metal cost China versus Europe
: LME cash + European duty-paid standard ingot premium
China: SHFE cash + avg. local premium + freight – export rebates (~13 %)
Source: CRU/Ecowin
Majority of growth bound for Asia and Americas
Chinese competitive advantage downstream*
• Business overview
• Rolling in the value chain
• Market
• Financials and strategy
1
2
3
4
(25)
Rolled Products is a margin business
(26)
• Margin business based on conversion price − LME and premium element (to a large extent) passed on to
customers
• Range from spot contracts to multi-year contracts
• High share of fixed costs - volume sensitive
Underlying EBIT Rolled Products and Hydro
4-quarters rolling*
Resulting in more stable earnings than rest of Hydro as a whole
0
100
200
300
400
500
600
700
800
900
1000
0
500
1000
1500
2000
2500
Q1 2
010
Q2 2
010
Q3 2
010
Q4 2
010
Q1 2
011
Q2 2
011
Q3 2
011
Q4 2
011
Q1 2
012
Q2 2
012
Q3 2
012
Q4 2
012
Q1 2
013
Q2 2
013
Q3 2
013
Q4 2
013
Q1 2
014
Q2 2
014
Q3 2
014
Q4 2
014
Q1 2
015
Total Hydro (left axis) Rolled Products (right axis)
* Rheinwerk part of Rolled Products from Q1-2012.
NOK bn NOK bn
(27)
Rolled Products aims to lift margins through clear aspiration
(28)
(29)
Extend technology and innovation leadClose to customer: creating value through innovation
* Micrometre
Introducing 5µm* high-performance aluminium foil
• Full protection at record-thin gauges
• Maintains absolute barrier protection against food spoilage
‒ Material savings of up to 16 percent
‒ Improved material properties
‒ Improved run ability on customers’ equipment
Forming optimized AA5182 variant in automotive applications
• High formability and high corrosion resistance due to optimized
specification
‒ Strategic supplier to major European OEM’s
‒ Based on leading R&D competence
(30)
Target
600 MNOK
200 MNOK
Time period
2012-2014
2014-2016
Climb: Continuous Improvements in Rolled Products
• Fixed cost reductions and lean operations
• Further operational improvements
• Investments and maintenance
• Procurement
• Organization and manning
• High grading product portfolio
• Recycling & metal cost position
Product Focus
Building & HEX
Revamp HM
Holmestrand
Revamp
Sexto GV
Exit
Inasa
Expansion
AL2
AluNorf
HM1 Steps 1+2
Exit
HAM
Lean admin
GV + HH
2009 2010 2011 2012 2013
Climb program
launched
AluNorf
HM1 Step3
Automotive
line 3
UBC
line
2014
(31)
Pursuing attractive growth opportunities
(32)
Major step in automotive Body-in-White (BiW) market
• Installation of automotive line 3 lifting capacity to 200
thousand tonnes per year
• Step change in BiW production process
• Production start second half 2016
0
5
10
15
20
25
30
35
0
50 000
100 000
150 000
200 000
250 000
2008 2014 2017 2020
Brandstonnes
Hydro BiW development
Hydro continuous annealing capacity
# of OEM brands Hydro is qualified for
(33)
Hot mill expansion and strengthening of recycling position
Establishing strong recycling position
• Installation of UBC* recycling line
• Fulfilling customer needs and strengthening beverage can market
position
• Improving metal cost position
• Start of production end 2015
Expanding AluNorf hot mill capacity
• Capacity increase by ~60 000 tonnes
• Debottlenecking core asset
• Start of production 2016
* UBC: Used beverage can
(34)
Greener
Process
• Continuous improvement and step changes
• Award-winning efficiency in annealing of aluminium coils
(35)
Extend technology and innovation leadFulfilling customer and environmental needs
Products
• 5µm high-performance aluminium foil saves up to 16% in material
• Light-weighting in automotive by replacing steel saves up to 20kg of CO2 per kg of aluminium used
Recycling
• Closing the loop
• Significant CO2 savings from recycling post-consumed scrap at new UBC recycling line
Weight
matters
Protection
matters
Quality
matters
Durability
matters
Recycling
matters
Rolled products brings Hydro closer to climate neutrality in 2020
(36)
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