Hydro's main ambition is to increase the return of its shareholders, becoming:
• & nbsp; Better: operational and commercial improvements
• & nbsp; Greater: selective and qualitative growth to improve relative industrial position
• & nbsp; Greener: less energy consumption and less environmental footprint to strengthen climate differential future
The efforts that have been made throughout the value chain to achieve operational and commercial improvements are beginning to show real effects. The efforts made between the year 2011 * until the third quarter of 2014, amounted to NOK 3.7 billion, with NOK 1.5 billion still to be reached (not counting the joint company Sapa), resulting from the improvement programs carried out. These data include the 180 Dollars program in progress in joint companies in the Primary Metal business area, the De B through A program in the Bauxite & amp; Alumina, the Climb program of the Laminated Products business area, the aspirations of the Energy business area, as well as the improvement program in the corporate center. In addition, Sapa's restructuring and synergy program aims to have NOK 1 billion in improvements by 2016.
“Market conditions are significantly better than a year ago, but we cannot fail to focus on our improvement initiatives, which, in addition to being in good progress, represent an increase in the potential for generating value”, says the executive chairman of Hydro, Svein Richard Brandtzæg. “We are doing everything possible to find and define new initiatives in order to continue to be an industrial reference in operational improvements”.
The Bauxite & amp; Alumina improves every day and approaches its nominal capacity, while reducing its costs and increasing its efficiency. Despite the operational challenges faced in 2013, production has been reaching record levels and the effects of the program From B to A are paying off. The strategic pricing work for bauxite and alumina, according to the market itself, continues and represents a significant improvement for the current pricing structure.
Since 2009, Metal Primário has already reduced its costs by NOK 2.3 billion and continues to find new ways on how to get more out of its assets. Initiatives such as the goal of increasing the capacity of its integral smelting plants by 100 thousand tons and going further with the 300 Dollars program demonstrates that the culture of improvement permeates all of Metal Primário's operations. The strategy of focusing on premium products has also given good returns, since value-added products are priced at a historically high level compared to the standard ingot.
Due to the expectation of high demand in the automotive industry, Produtos Laminados continues its work of differentiation through innovation, quality, service and delivery time and advanced alloys and products are being developed in close cooperation with end customers. An investment of € 130 million in component production capacity for the automotive industry will square the production of bare bodies from 2016, when the new production is set in motion.
In addition, the construction of a processing line for used soft drink cans in 2015 will take care of supplying low-cost metal to the production chain of Produtos Laminados and contribute significantly to the reduction of post-scrap CO2. - recycled consumption, approaching the goal of being carbon neutral.
The aspirations of the Energy business area include operational and commercial improvements, as well as a more competitive supply of energy for the Hydro value chain. The business area was successful in hiring 2.7 TWh for smelting plants in Norway for the period between 2021 and 2030, allowing the production of aluminum at competitive prices in the country. Being both a producer and a consumer integrated in the value chain, Energia aims to make the best use of the potential of this unique industrial combination of operational and commercial competence.
Creating a viable society is Hydro's mission and its license to operate. Throughout the value chain, efforts are being made for Hydro to have climate neutrality by the year 2020, seeking to increase its energy efficiency, as the primary metal producer with the lowest average CO2 emissions in the entire industry , since a low CO2 environmental footprint proves to be an increasingly strong differential as the world has more and more climate challenges.
The demand for aluminum has been growing in recent years and it is expected to grow 3-4% outside China in 2014 and 2015, with a steady demand for aluminum in all regions and segments, increased by the replacement of other materials by aluminum, as in the case of the transport and electric sector.
“Greater market balance for primary metal has provided the possibility of having a roadmap towards sustainable profitability and, although aluminum stocks are still bulky, Europe demonstrates fragility and the export of semi-finished and finished products from China have increased, the situation is much better than it was last year ”, explains Brandtzæg. "In addition to the demand being greater than production in the primary metal market, the raw materials market in the bauxite and alumina area is more intense, creating interesting commercial opportunities and putting pressure on alumina and aluminum producers at low prices in China."
“After several years of reduced returns, current market conditions are giving certain reasons for optimism. We will be able to take advantage of these conditions and achieve our number one goal, which is to increase shareholder returns with our aspiration for Better, Greater, Greener, ”said Brandtzæg.
Due to the optimization of capital expenditures (capex), maintenance investments should be NOK 3.1 billion in 2014, below what was previously informed due to the extension of some projects at Bauxita & amp; Alumina for 2015. In addition, it is estimated that, with the construction of a new red mud deposit at Alunorte, a dam at Paragominas and an above average coating at Metal Primário, maintenance investment capital will reach NOK 5, 7 billion. Long-term maintenance expenses are expected to reach NOK 3.5 billion, while capital expenditures for new investments are estimated at NOK 0.8 billion for 2015, including the automotive line at Grevenvbroich, the soft drink can line. used in Neuss and other smaller projects, bringing total capex to NOK 6.5 billion, compared to NOK 3.5 billion for 2014.
* Including the $ 300 program starting in 2009.
Contact for investors
Contact: & nbsp; & nbsp; & nbsp; & nbsp; Pål Kildemo
Mobile: & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; +47 97 09 67 11
Email: & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; Pal.Kildemo@hydro.com
Contact: & nbsp; & nbsp; Halvor Molland
Mobile: & nbsp; & nbsp; & nbsp; +47 92 97 97 97
Email: & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; Halvor.Molland@hydro.com