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BusinessBusiness Business AreaArea Area SeminarSeminar Seminar HydroHydro Hydro AluminiumAluminium Aluminium
BusinessBusiness Business AreaArea Area SeminarSeminar Seminar
HydroHydro Hydro AluminiumAluminium Aluminium
DüsseldorfDüsseldorf Düsseldorf
MarchMarch March 18/1918/19 18/19 20032003 2003
MajorMajor acquisitionsacquisitions –– newnew strategicstrategic platformplatform ! Full range aluminium company
MajorMajor acquisitionsacquisitions ––
newnew strategicstrategic platformplatform
! Full range aluminium company
" No. 1 in Europe – top three integrated globally
" Complementary product portfolios

! Low cost smelter assets in Australia and Canada

! Successful integration

" Significant synergies and value creation

" Improved market positions

" Enhanced competence and capabilities

41569_1 - 03.2003 - * 2 - H ydro Media

TheThe InnovativeInnovative GlobalGlobal ForceForce DeliveryDelivery ! Outperform competitors in key market segments !
TheThe InnovativeInnovative GlobalGlobal ForceForce
DeliveryDelivery
! Outperform competitors in key market segments
! Operational performance excellence
" Benchmark in operation of key technologies

" Ambitious cost reduction and value capturing programs

" Continuous safety improvements

" Strong environmental focus

! Turnaround/exit under-performing assets

! Leading financial performance among peers

41569_1 - 03.2003 - * 3 - H ydro Media

TheThe InnovativeInnovative GlobalGlobal ForceForce DifferentiationDifferentiation ! Customer responsiveness ! Agile
TheThe InnovativeInnovative GlobalGlobal ForceForce
DifferentiationDifferentiation
! Customer responsiveness
! Agile and flexible organisation

! Unique portfolio composition

41569_1 - 03.2003 - * 4 - H ydro Media

TheThe InnovativeInnovative GlobalGlobal ForceForce StrategicStrategic directiondirection ! Short- and medium term
TheThe InnovativeInnovative GlobalGlobal ForceForce
StrategicStrategic directiondirection
!
Short- and medium term focus: Performance
improvements
!

Restructure upstream portfolio – improve relative cost position

! Leverage value of number one positions mid- and downstream in Europe – also globally

41569_1 - 03.2003 - * 5 - H ydro Media

OurOur valuevalue chainchain Bauxite/ alumina Electrolysis metal Casthouse products Rolling Extru- sion
OurOur valuevalue chainchain
Bauxite/
alumina
Electrolysis
metal
Casthouse
products
Rolling Extru-
sion
Fabrication
& Systems
Automotive
41569_1 - 03.2003 - * 6 - H ydro Media
HydroHydro AluminiumAluminium 20022002
HydroHydro AluminiumAluminium 20022002
Revenues NOK 65 bn EBITDA NOK 4.3 bn CROGI 7.1% Gross NOK 64 bn Investment
Revenues
NOK 65 bn
EBITDA
NOK 4.3 bn
CROGI
7.1%
Gross
NOK 64 bn
Investment *)
CAPEX
NOK 6.5 bn
Hydro
Aluminium
CEO
Employees *)
27 100
Metal Products (Oslo)
Metal Products
(Oslo)

Rolled Products (Cologne)

Extrusion (Lausanne)
Extrusion
(Lausanne)
Automotive (Cologne)
Automotive
(Cologne)
North America (Baltimore)
North America
(Baltimore)
Primary Metal (Oslo)
Primary Metal
(Oslo)
(Cologne) North America (Baltimore) Primary Metal (Oslo) Metals segment Rolled products segment All figures exclude

Metals segment

Rolled products segment

All figures exclude Flexible packaging. * Gross Investment and employees by 31.12.2002

Extrusion and Automotive segment

41569_1 - 03.2003 - * 7 - H ydro Media

GeographicalGeographical presencepresence 20022002 Revenues per Continent Total NOK 65 billion Employees per Continent
GeographicalGeographical presencepresence 20022002
Revenues per Continent
Total NOK 65 billion
Employees per Continent
Total 27 100 employees
6% 1%
6% 1%
16%
17%
Continent Total 27 100 employees 6% 1% 6% 1% 16% 17% 77% Europe 76% North America

77%

Total 27 100 employees 6% 1% 6% 1% 16% 17% 77% Europe 76% North America Asia/Oceania

Europe

Total 27 100 employees 6% 1% 6% 1% 16% 17% 77% Europe 76% North America Asia/Oceania

76%

North America27 100 employees 6% 1% 6% 1% 16% 17% 77% Europe 76% Asia/Oceania Rest of World

Asia/Oceania27 100 employees 6% 1% 6% 1% 16% 17% 77% Europe 76% North America Rest of

Rest of World27 100 employees 6% 1% 6% 1% 16% 17% 77% Europe 76% North America Asia/Oceania 41569_1

41569_1 - 03.2003 - * 8 - H ydro Media

SegmentSegment splitsplit 20022002 Revenues (NOK billion) *) EBITDA (NOK million) 289 24.2 1 084 39.6
SegmentSegment splitsplit 20022002
Revenues (NOK billion) *)
EBITDA (NOK million)
289
24.2
1 084
39.6
2 703
258
14.8
Gross Investment (NOK million)
(31.12.2002)
16.9
Metals
Rolled Products
Extrusions and Automotive
34.9
Eliminations
11.9
* Including internal sales
41569_1 - 03.2003 - * 9 - H ydro Media
No.No. 11 inin EuropeEurope –– toptop threethree integratedintegrated globallyglobally Europe Global Million
No.No. 11 inin EuropeEurope ––
toptop threethree integratedintegrated globallyglobally
Europe
Global
Million tonnes
Million tonnes
1 200
4
000
Primary
1 120
1 100
3 647
Rolled Products
3
500
1 000
Extrusion
893
3
000
2 550
800
2
500
2 373
2 290
683
574
600
2
000
510
490
1 400
404
1
500
365
400
350
328
950
900
1
000
827
707
192
200
515
117
500
90
71
130
72
0
0
Hydro
Alcan
Alcoa
Pechiney
Corus
Alcoa
Alcan
Hydro
Pechiney
Source: CRU. Hydro Aluminium full year (proforma). Production volumes 2002.
41569_1 - 03.2003 - * 10 - H ydro M edia
CROGICROGI –– ourour mainmain challengechallenge CROGICROGI 19981998 –– 2002:2002: ActualActual pricesprices
CROGICROGI –– ourour mainmain challengechallenge
CROGICROGI 19981998 –– 2002:2002: ActualActual pricesprices
Percent
12
10.8
10
10
9.3
*)
8.3
8
7.1
5.7
6
4
2
0
1998
1999
2000
2001
2002
2004 Target
normalised
* With normalised LME-price (1 500 USD/tonnes) and 8 NOK/USD
41569_1 - 03.2003 - * 11 - H ydro M edia
AluminiumAluminium industryindustry affectedaffected byby generalgeneral economiceconomic downturndownturn CROGI proxy
AluminiumAluminium industryindustry
affectedaffected byby generalgeneral economiceconomic downturndownturn
CROGI proxy *)
Percent
14
12
Alcoa
Alcan
Pechiney
Hydro Aluminium
10

8

6

4

2

0

12 Alcoa Alcan Pechiney Hydro Aluminium 10 8 6 4 2 0 1998 1999 2000 2001
12 Alcoa Alcan Pechiney Hydro Aluminium 10 8 6 4 2 0 1998 1999 2000 2001
12 Alcoa Alcan Pechiney Hydro Aluminium 10 8 6 4 2 0 1998 1999 2000 2001
12 Alcoa Alcan Pechiney Hydro Aluminium 10 8 6 4 2 0 1998 1999 2000 2001
12 Alcoa Alcan Pechiney Hydro Aluminium 10 8 6 4 2 0 1998 1999 2000 2001
12 Alcoa Alcan Pechiney Hydro Aluminium 10 8 6 4 2 0 1998 1999 2000 2001
12 Alcoa Alcan Pechiney Hydro Aluminium 10 8 6 4 2 0 1998 1999 2000 2001
12 Alcoa Alcan Pechiney Hydro Aluminium 10 8 6 4 2 0 1998 1999 2000 2001
12 Alcoa Alcan Pechiney Hydro Aluminium 10 8 6 4 2 0 1998 1999 2000 2001
12 Alcoa Alcan Pechiney Hydro Aluminium 10 8 6 4 2 0 1998 1999 2000 2001
12 Alcoa Alcan Pechiney Hydro Aluminium 10 8 6 4 2 0 1998 1999 2000 2001

1998

1999

2000

2001

2002

* EBITDA less actual tax/Average Gross investment. Calculated proxy where needed to get comparable figures. Calculated tax for Hydro Aluminium.

Source: Company reports. Hydro Aluminium

41569_1 - 03.2003 - * 12 - H ydro M edia

ImprovementImprovement programprogram onon tracktrack Workforce reduction Cost reductions FTEs Millions 1 800 3 000
ImprovementImprovement programprogram onon tracktrack
Workforce reduction
Cost reductions
FTEs
Millions
1 800
3
000
1 600
Magnesium
Aluminium
Magnesium
Aluminium
2
500
1 400
1 200
2
000
1 000
1
500
800
600
1
000
400
500
200
0
0
YTD Q2 YTD Q3 YTD Q4
Target
Target
YTD
YTD
YTD
Target Target
Target
2002
2003
Q2
Q3
Q4
2002
2003
2004
Restructuring and rationalization costs (NOK million)
Realized
Remaining
Total
2001
2002
Estimate
Magnesium
700
-10
24
714
Aluminium
-
300 *)
370
670
Workforce and cost reductions relative to 2001.
* Of which NOK 89 million charged to VAW opening balance.
41569_1 - 03.2003 - * 13 - H ydro M edia
EuropeEurope WeWe outperformedoutperformed thethe marketmarket inin 20022002 Rolled products shipments Extrusion
EuropeEurope
WeWe outperformedoutperformed thethe marketmarket inin 20022002
Rolled products shipments
Extrusion shipments
Annual change
in percent
Annual change
in percent
8
8
7.4
6
6
Hydro
6.0
Hydro
4
4
4.2
Hydro
3.9
3.0
2
2
2.2
2.3
0.5
0
0
-2
-3.2
-2
-4.4
-4
-4
Hydro
-6
-6
1995-1999
2000
2001
2002
2003E
1995-1999
2000
2001
2002
2003E
Source: EAA. Hydro Aluminium incl. VAW and Technal proforma 2001 and 2002
41569_1 - 03.2003 - * 14 - H ydro M edia
USUS TruckTruck marketmarket hithit ourour totaltotal positionposition inin 20022002 Rolled products shipments
USUS
TruckTruck marketmarket hithit ourour totaltotal positionposition inin 20022002
Rolled products shipments
Extrusion shipments
Annual change
in percent
Annual change
in percent
4
8
4.6
2
4
5.5
2.6
1.9
4.6
0
0
-0.8
-0.6
-2.4
-2
-4
Hydro
-4
-8
Hydro
-6
-12
-8.9
-8
-16
-21.1
-10
-20
-12
-24
1995-1999
2000
2001
2002
2003E
1995-1999
2000
2001
2002
2003E
Source: CRU. Hydro Aluminium incl. VAW proforma 2001 and 2002
41569_1 - 03.2003 - * 15 - H ydro M edia
ContinuousContinuous safetysafety improvementsimprovements Total recordable injuries per million worked hours 50 Hydro
ContinuousContinuous safetysafety improvementsimprovements
Total recordable injuries
per million worked hours
50
Hydro Aluminium excl. VAW
VAW only
45
40
35
30
25
20
15
10
5
0
1997
1998
1999
2000
2001
2002
41569_1 - 03.2003 - * 16 - H ydro M edia
DifferentiationDifferentiation ! Customer responsiveness " Tailored offering to customer needs " Innovative
DifferentiationDifferentiation
! Customer responsiveness
" Tailored offering to customer needs
" Innovative business solutions

!

Agile and flexible organisation

" Agile organisation with local accountability

" Mirror our customers:

Local business model in extrusion – in a global network

Local/regional model in Metal Products

Global business model in Automotive

" Efficient systems for best practice sharing and performance review

" Culture of openness and dialogue

! Unique portfolio composition

41569_1 - 03.2003 - * 17 - H ydro M edia

AA differentdifferent portfolioportfolio compositioncomposition 1 000 tonnes Alumina *) 700 700 Equity Long term
AA differentdifferent portfolioportfolio compositioncomposition
1 000 tonnes
Alumina *)
700
700
Equity
Long term contracts
Electrolysis metal
1400
Equity
Metal products
1400
290
820
650
Equity
3 rd party
primary
alliances
Remelt external
Remelt own
scrap
Downstream
830
75
515
67
Rolled **)
Wire rod
Extrusion &
Castings
Automotive
Proforma full year figures 2002
Aluminium equivalents (2 tonnes alumina per tonne aluminium)
** Flat rolled products only
*
41569_1 - 03.2003 - * 18 - H ydro M edia
AA differentdifferent portfolioportfolio compositioncomposition andand businessbusiness model:model: HigherHigher
AA differentdifferent portfolioportfolio compositioncomposition andand
businessbusiness model:model: HigherHigher capitalcapital turnoverturnover
Revenues / Gross Investments
EBITDA / Revenues
Factor
Percent
1.4
25
Pechiney
Hydro
1.2
Aluminium
20
1.0
Alcan
15
0.8
Alcoa
Alcoa
0.6
10
Alcan
Pechiney
0.4
5
Hydro
0.2
Aluminium
0.0
0
1997
1998
1999
2000
2001
2002
1997
1998
1999
2000
2001
2002
Excluding remelt/3 rd party
Source: Company reports. Proxy figures where needed to get
Including 100% equity
alumina and bauxite
comparative figures.
41569_1 - 03.2003 - * 19 - H ydro M edia
AA higherhigher capitalcapital turnoverturnover basedbased onon strategicstrategic choiceschoices andand businessbusiness
AA higherhigher capitalcapital turnoverturnover basedbased onon
strategicstrategic choiceschoices andand businessbusiness strengthsstrengths
!
Short in alumina
" Long term supply contracts
" Low cost equity production in Alunorte
!
Leadership in Metal Products
" Continue to have an active remelt/recycling strategy
" Source and sell major volumes to third parties on margin
basis
!
Superior business model in Extrusions
"
Continue to have a larger share in extrusion than
competitors
– Extrusion business less capital intensive
41569_1 - 03.2003 - * 20 - H ydro M edia
HistoricallyHistorically aluminiumaluminium andand magnesiummagnesium growthgrowth hashas outperformedoutperformed
HistoricallyHistorically aluminiumaluminium andand magnesiummagnesium
growthgrowth hashas outperformedoutperformed otherother materialsmaterials
Global consumption in 2002:
Aluminium
24.9 million tonnes
Magnesium
0.4 million tonnes
Copper
15.1 million
tonnes
Steel
799 million
tonnes
Factor
Zinc 8.7 million tonnes
Zinc
8.7
million tonnes

20

15

10

5

0

1950

1955

1960

1965

1970

1975

1980

1085

1990

1995

2000

2002

Source: CRU, World Metal Statistics, International Iron and Steel Institute, International Magnesium Association

41569_1 - 03.2003 - * 21 - H ydro M edia

AllAll segmentssegments growinggrowing steadilysteadily Aluminium demand development Million tonnes CAGRCAGR 45
AllAll segmentssegments growinggrowing steadilysteadily
Aluminium demand development
Million tonnes
CAGRCAGR
45
3.0%3.0%
40
1.7
3.5
1.5
35
1.4 3.1
3.8
Other
3
30
3.5
Cons.durables
3.4
4.6
4.2
Engineering
1.4
25
4
1.9
6
Electrical
2.6
6
20
5.4
3.2
Packaging
1
1.3
8.6
1.8
15
4.3
Construction
7.8
7.6
2.7
Transportation
10
2.9
6.2
4.8
11.8
5
10
10.6
6.7
4.1
0
1982
1990
2000
2002
2005E
Source: James F King; Brook Hunt
41569_1 - 03.2003 - * 22 - H ydro M edia
KeyKey elementselements inin HydroHydro Aluminium’sAluminium’s strategystrategy 1. Improve global cost position
KeyKey elementselements inin
HydroHydro Aluminium’sAluminium’s strategystrategy
1. Improve global cost position upstream
2. Strengthen leadership in European
mid- and downstream
3. Performance focus and selective growth
outside Europe mid- and downstream
4. Performance focus and selective growth in
global automotive
41569_1 - 03.2003 - * 23 - H ydro M edia
KeyKey elementselements inin HydroHydro Aluminium’sAluminium’s strategystrategy 1. ImproveImprove globalglobal
KeyKey elementselements inin
HydroHydro Aluminium’sAluminium’s strategystrategy
1.
ImproveImprove globalglobal costcost positionposition
2.2.
StrengthenStrengthen leadershipleadership inin EuropeanEuropean
upstreamupstream
midmid-- andand downstreamdownstream
! European leadership in Metal Products –
! Secure low cost alumina, optimise
assets in place
portfolio
! Enhance Extrusion’s leading position
! Restructure primary, focus low cost
brownfield to improve cost/ton
"
More fabrication. Quality/customer focus
! Expand leadership in Rolled Products’ key
segments
"
Cost improvement. Asset utilization
1.1. PerformancePerformance focusfocus andand selectiveselective
4.4. PerformancePerformance focusfocus andand selectiveselective
growthgrowth outsideoutside EuropeEurope midmid-- andand
growthgrowth inin globalglobal automotiveautomotive
downstreamdownstream
! Priority # 1: Improve performance
! Priority # 1: Leverage European know-
how to significantly improve performance
! Pursue growth in Precision Tubing
in North America
! Focus involvement in Structures
! South America - selectively grow
extrusion business
! Casting – performance improvements
! Asia - gradually expand current
operations
41569_1 - 03.2003 - * 24 - H ydro M edia
SummarySummary ! Short term – fragile market outlook ! Long term – attractive industry
SummarySummary
! Short term – fragile market outlook
! Long term – attractive industry

! Bottom line focus, self help measures

! Differentiation – customer responsiveness, organisation, portfolio composition

! Clear strategic direction – capital discipline

41569_1 - 03.2003 - * 25 - H ydro M edia

FinancialFinancialFinancial performanceperformanceperformance
FinancialFinancialFinancial performanceperformanceperformance
ValueValue driversdrivers alongalong thethe valuevalue chainchain PEOPLE & ORGANISATION CUSTOMER INNOVATION FOCUS
ValueValue driversdrivers alongalong thethe valuevalue chainchain
PEOPLE &
ORGANISATION
CUSTOMER
INNOVATION
FOCUS
LME and currency
LME and currency
Upstream
Volume
Volume
(primary)
Cost – fixed and variable
Cost – fixed and variable
Cost to market (metal,
logistics and operations)
Performance Performance
Mid-stream
Margin
Value Value drivers drivers
(metal products)
- Quality, service
Volume
Margin
Downstream
- Quality, service
(rolled, extruded,
automotive)
Volume
Productivity
41569_1 - 03.2003 - * 27 - H ydro M edia
41569_1 - 03.2003 - * 27 - H ydro M edia
EBITDAEBITDA recentrecent yearsyears byby quarterquarter NOK million 2 000 1 803 Other and Eliminations Extrusion
EBITDAEBITDA recentrecent yearsyears byby quarterquarter
NOK million
2
000
1 803
Other and Eliminations
Extrusion and Automotive
Rolled Products
Metals
1 430
1
800
1 659 1 566
1
600
1
400
1 316
1 292
1
200
1 073
1 065
1
000
849
889
899
827
773
526
800
600
473
400
200
0
-
200
-
400
(302)
1999
2000
2001
2002 *)
Accumulated
3 760
5 501
2 543
4 334
CROGI
8.3
10.8
5.7
7.1
* VAW included from 15.03.02
41569_1 - 03.2003 - * 28 - H ydro M edia
VVarianceariance analysisanalysis 20022002 Hydro Aluminium excluding new business NOK million 2002 2001 Change
VVarianceariance analysisanalysis 20022002
Hydro Aluminium excluding new business
NOK million
2002
2001
Change
EBITDA
4
334
2
543
1 791
New business
(VAW, Technal)
(2 485)
(2 485)
Restructuring &
rationalisation
90
760
(670)
Infrequent items *)
1 024
424
600
2001 losses on
aluminium options
-
545
(545)
Adjusted EBITDA,
ongoing operations
2 963
4 272
(1 309)
NOK million
Margin
(2 320)
Volume
250
Fixed costs
320
• 2002: Alunorte accounting loss on
currency (NOK 460 million), integration
(NOK 156 million), inventory valuation
(NOK 170 million)
Trading and hedging
450
Unrealized LME effects
110
Other
(119)
2001: Alunorte accounting loss on
currency (NOK 159 million), write down
Porsgrunn (NOK 261 million)
Total change in adjusted EBITDA
(1 309)
41569_1 - 03.2003 - * 29 - H ydro M edia
41569_1 - 03.2003 - * 29 - H ydro M edia
AdjustedAdjusted EBITDAEBITDA 20022002 *)*) Hydro Aluminium Metals Segment NOK million NOK million 7 000 4
AdjustedAdjusted EBITDAEBITDA 20022002 *)*)
Hydro Aluminium
Metals Segment
NOK million
NOK million
7
000
4
500
4
000
6
000
3
500
5
000
3
000
4
000
2
500
3
000
2
000
1
500
2
000
1
000
1
000
500
0
0
Reported
1.1. - 15.3
Infrequent
Adjusted
Reported
1.1. - 15.3
Infrequent
Adjusted
Rolled Products
Extrusion and Automotive
NOK million
NOK million
700
1 400
600
1 200
500
1 000
400
800
300
600
200
400
100
200
0
0
Reported
1.1. - 15.3
Infrequent
Adjusted
Reported
1.1. - 15.3
Infrequent
Adjusted
* Adjusted for restructuring, infrequent items and VAW full year. 01.01 – 15.03 calculated based on average for rest of the
year (divided by 9.5 months, multiplied with 2.5 months)
41569_1 - 03.2003 - * 30 - H ydro M edia
RolledRolled ProductsProducts adjustedadjusted EBITDAEBITDA 20022002 NOK million 1 000 Non-recurring Recurring 900
RolledRolled ProductsProducts adjustedadjusted EBITDAEBITDA 20022002
NOK million
1 000
Non-recurring
Recurring
900
800
700
600
500
400
300
200
100
0
Reported
1.1. - 15.3.
Infrequent
Adjusted for
non-recurring
items
LME effect
inventory
Adjusted also
for recurring
items
41569_1 - 03.2003 - * 31 - H ydro M edia
CROGICROGI 19981998 –– 20022002 Actual prices Percent 12 10 8 6 4 2 0 1999
CROGICROGI 19981998 –– 20022002
Actual prices
Percent
12
10
8
6
4
2
0
1999
2000
2001
2002
1999
2000
2001
2002
1999
2000
2001
2002
Metals
Rolled Products
Extrusion and
Automotive
Excluding infrequent items and annualised VAW
41569_1 - 03.2003 - * 32 - H ydro M edia
ImpactImpact ofof 2020--50%50% ownedowned venturesventures inin HydroHydro Aluminium’sAluminium’s accountaccount
ImpactImpact ofof 2020--50%50% ownedowned venturesventures
inin HydroHydro Aluminium’sAluminium’s accountaccount
General Rule: “One line”
consolidation *)
Exceptions: Pro-rata
consolidation
! Excluded from operating income
but included in EBITDA
! Hydro Aluminium’s share of revenues,
expenses, assets and liabilities
recorded to respective lines
Non-consolidated investees
! US GAAP only allows in special cases
! AluNorf
50.0%

! AOS

50.0%

! Søral

49.9%

! Meridian

49.0%

! Alunorte

34.0%

! Hamburg smelter

33.3%

Joint Ventures

! Alouette

20.0%

! Tomago

12.4%

Strongly impacted by

! Unrealized currency loss of NOK 460 million in 2002 on USD loan in Brazilian company, Alunorte (NOK 159 million in 2001)

* Hydro Aluminium’s share of net income is included on line “Equity in net income of non-consolidated investees” and its share in net assets is under “Other assets”.

41569_1 - 03.2003 - * 33 - H ydro M edia

41569_1 - 03.2003 - * 33 - H ydro M edia

RiskRisk managementmanagement ! Primary Metals revenues fully exposed to LME price volatility ! Primary Metals
RiskRisk managementmanagement
! Primary Metals revenues fully exposed to LME
price volatility
! Primary Metals costs fully exposed to currency
risks

" Mitigation of LME and currency risks related to Sunndal 4 project

! Mid-and downstream exposure to LME and currency on metal supply hedged back-to-back

41569_1 - 03.2003 - * 34 - H ydro M edia

ClosingClosing thethe gapgap toto 20042004 EBITDA NOK million ! In addition 8 000 " Cost
ClosingClosing thethe gapgap toto 20042004
EBITDA
NOK million
! In addition
8
000
" Cost improvement
programs
7
000
1
500
6
000
" Income from new
capacity
1
100
5
000
620
4
000
3
000
4
334
2
000
1
000
0
2002 Actual
VAW 1.1. -
Infrequent*)
Normalised**)
15.3.
*
S,G&A-demanning cost, VAW-integration cost, Alunorte currency accounting loss, inventory adjustments
** LME 1 500 USD/tonne and 8 NOK/USD
41569_1 - 03.2003 - * 35 - H ydro M edia
ImprovementImprovement programprogram onon tracktrack Workforce reduction Cost reductions FTEs Millions 1 800 3 000
ImprovementImprovement programprogram onon tracktrack
Workforce reduction
Cost reductions
FTEs
Millions
1 800
3
000
1 600
Magnesium
Aluminium
Magnesium
Aluminium
2
500
1 400
1 200
2
000
1 000
1
500
800
600
1
000
400
500
200
0
0
YTD Q2 YTD Q3 YTD Q4
Target
Target
YTD
YTD
YTD
Target Target
Target
2002
2003
Q2
Q3
Q4
2002
2003
2004
Restructuring and rationalization costs (NOK million)
Realized
Remaining
Total
2001
2002
Estimate
Magnesium
700
-10
24
714
Aluminium
-
300 *)
370
670
Workforce and cost reductions relative to 2001.
* Of which NOK 89 million charged to VAW opening balance.
41569_1 - 03.2003 - * 36 - H ydro M edia
ExamplesExamples valuevalue capturingcapturing 20022002 ! Successful best practice sharing - improved operational
ExamplesExamples valuevalue capturingcapturing 20022002
!
Successful best practice sharing -
improved operational performance
" EUR 5.7 million realized
!

Consolidation of procurement activities - spare parts and supplies

" EUR 10.5 million achieved

! Safety improvements in Rolled Products

" EUR 0.7 million achieved

! Reorganisation and consolidation of support functions in North America

" EUR 1.3 million realized

41569_1 - 03.2003 - * 37 - H ydro M edia

41569_1 - 03.2003 - * 37 - H ydro M edia

CapturingCapturing fullfull valuevalue ofof largerlarger scalescale ! Optimising production systems, including plant
CapturingCapturing fullfull valuevalue ofof largerlarger scalescale
! Optimising production systems, including plant
closures
" Porsgrunn Magnesium (N) *)
" Moultrie (US)
" Bromyard (UK)

" Ellay Enfield (US)

500 employees 121 employees 30 employees 11 employees

! Streamlining Sales, General and Administration processes

" So far - 700 employees (12 offices closed)

" Additional - 500 employees in 2003

" Integration of technology organization - 45 employees

* Primary magnesium production

41569_1 - 03.2003 - * 38 - H ydro M edia

41569_1 - 03.2003 - * 38 - H ydro M edia

UpstreamUpstream expansionexpansion toto improveimprove unitunit costscosts Planned CAPEX 2003 ! 2003 & 2004: NOK 6
UpstreamUpstream expansionexpansion toto improveimprove unitunit costscosts
Planned CAPEX 2003
! 2003 & 2004: NOK 6 billion
Extrusion
and
Automotive
" Increasing scale of primary
production (Sunndal,
Slovalco, Alunorte, Alouette)
primary production (Sunndal, Slovalco, Alunorte, Alouette) Rolled Products Metals Total NOK 6 billion ! CAPEX 2005

Rolled

Products

Metals

Total NOK 6 billion

! CAPEX 2005 forward:

" Will depend on market and performance

" NOK 2 - 3 billion needed to serve current capacity

! Active portfolio management

41569_1 - 03.2003 - * 39 - H ydro M edia

41569_1 - 03.2003 - * 39 - H ydro M edia

PerformancePerformance goinggoing forwardforward ! Improvement programs on schedule with further increased ambitions !
PerformancePerformance goinggoing forwardforward
! Improvement programs on schedule with further
increased ambitions
! Delivery on new capacity investment programs

! Organisation committed to value creation

41569_1 - 03.2003 - * 40 - H ydro M edia

41569_1 - 03.2003 - * 40 - H ydro M edia

SensitivitiesSensitivities HydroHydro AluminiumAluminium NOK million Price sensitivity Pre tax Post tax Change LME
SensitivitiesSensitivities HydroHydro AluminiumAluminium
NOK million
Price sensitivity
Pre tax
Post tax
Change
LME price sensitivity
830
580
$100 increase

USD sensitivity *)

USD sensitivity

1 650

1 160

1 NOK increase

EUR sensitivity

EUR sensitivity

420 300

All sensitivities are calculated using the normalized price assumptions as basis.

* USD sensitivity estimates assuming USD/NOK changes, all other currencies fixed against NOK

1 NOK increase

41569_1 - 03.2003 - * 41 - H ydro M edia

PrimaryPrimary Primary metalmetal metal DemandDemand Demand andand and supplysupply supply outlookoutlook outlook
PrimaryPrimary Primary metalmetal metal
DemandDemand Demand andand and supplysupply supply outlookoutlook outlook
PerformancePerformance Performance andand and strategystrategy strategy
GlobalGlobal PrimaryPrimary metalmetal balancebalance 20002000 –– 20102010 Million tonnes 40 Consumption 35
GlobalGlobal PrimaryPrimary metalmetal balancebalance 20002000 –– 20102010
Million tonnes
40
Consumption
35
Capacity gap

30

25

20

Existing effective production capacity
Existing effective
production capacity
15 2000 2001 2002 2003E 2004E 2005E 2006E 2007E 2008E 2009E 2010E Average Average global
15
2000
2001
2002
2003E
2004E
2005E
2006E
2007E
2008E
2009E
2010E
Average
Average
global demand growth rate: 4% (2000-2005); 4.4% (2006-2010)
Western demand growth rate: 1.7% (2000-2005)*; 2.5% (2006-2010)

* Implies 4% annual growth 2002 – 2005 Sources: Brook Hunt. Hydro Aluminium estimates

41569_2 - 03.2003 - * 2 - H ydro Media

ChinaChina –– primaryprimary metalmetal balancebalance 1 000 tonnes Supply growth drivers: 7 000 ! High
ChinaChina –– primaryprimary metalmetal balancebalance
1 000 tonnes
Supply growth drivers:
7
000
! High growth in domestic
consumption
6
000
! Import duties protecting
domestic suppliers (primary and
downstream)
! Low labour cost
5
000
! Support to local industries
provided by regional authorities

4

3

2

1

000

000

000

000

0

Production Consumption
Production
Consumption

1998

1999

2000

2001

2002

2003E 2004E 2005E 2006E 2007E

Main challenges:

! Alumina deficit

! Energy deficit in some provinces – high prices

! Distance to market

! Small plants/Søderberg – environmental issues

! Financing

Decision made by central government to close down inefficient and polluting Søderberg capacity due to environmental legislation. This measure is expected to take away around 1 million tonnes between 2003-2007 (200 000 tonnes per year in 2003 and 2004, 300 000 tonnes per year in 2005 and 2006).

Source: CRU. Hydro Aluminium

41569_2 - 03.2003 - * 3 - H ydro Media

EstimatedEstimated changechange inin supplysupply toto WesternWestern WorldWorld 20022002 –– 20032003 1 000 tonnes
EstimatedEstimated changechange inin supplysupply
toto WesternWestern WorldWorld 20022002 –– 20032003
1 000 tonnes
1 200
800
Range only.
400
High
uncertainty
Est. WW
inventory
increase
excl. China/Russia
0
Underlying
"oversupply"-
Effect 2003 of
restarts last
year
Increased
current capacity
Increased
consumption
Change export
China
speed 2002
(primary
shipments)
41569_2 - 03.2003 - * 4 - H ydro Media
VolatileVolatile priceprice –– longlong termterm fallingfalling trendtrend AluminiumAluminium realreal termterm
VolatileVolatile priceprice –– longlong termterm fallingfalling trendtrend
AluminiumAluminium realreal termterm priceprice trendtrend
Prices 1970 – 2002 deflated by US PPI
Real price decline -0.8% per year
LME 3 months
2001 USD/tonne
3 000

2

2

1

1

500

000

500

000

500

0

Historic real prices
Historic real prices

Trend price

1972

1976

1980

1984

1988

1992

1996

2000

2004

41569_2 - 03.2003 - * 5 - H ydro Media

MarketMarket outlookoutlook ! Short-term – fragile " Economic situation " Temporary short-term
MarketMarket outlookoutlook
! Short-term – fragile
" Economic situation
" Temporary short-term “oversupply”
– E.g. China exports, brownfield projects
" Prices expected to remain under pressure

Idle capacity in the US expected to stay idle

! Long-term – improved attractiveness

" Solid growth in consumption

" Potential supply constraints

" Industry restructuring expected to improve

Aluminium competitiveness

Potential for higher earnings

41569_2 - 03.2003 - * 6 - H ydro Media

MetalsMetals Segment:Segment: CROGICROGI CROGICROGI 19981998 –– 2002:2002: ActualActual pricesprices NOKNOK
MetalsMetals Segment:Segment: CROGICROGI
CROGICROGI 19981998 –– 2002:2002: ActualActual pricesprices
NOKNOK millionmillion
Sales
39
650
Percent
EBITDA reported
EBITDA adjusted *)
2
703
12
11.2
3
857
Gross Investment **)
34
900
10
8.2
Adjusted *)
8
7.1
6
6
4
2
0
1999
2000
2001
2002
* Adjusted for VAW 1.1 – 15.3 (average last 9.5 months multiplied with 2.5 months) and infrequent items.
** Gross Investment by 31.12.2002
41569_2 - 03.2003 - * 7 - H ydro Media
PrimaryPrimary MetalMetal Main products Liquid metal, bauxite/alumina, carbon anodes Production - Proforma *) 1
PrimaryPrimary MetalMetal
Main products
Liquid metal,
bauxite/alumina,
carbon anodes
Production
- Proforma *)
1
253 200 tonnes
1
390 000 tonnes
Employees **)
3
800
* Includes VAW 1.1 - 15.3 2002.
** Employees by 31.12.02
41569_2 - 03.2003 - * 8 - H ydro Media
SmelterSmelter costcost curvecurve 20012001 2 000 Elbewerk 1 800 Sunndal 2004 1 600 Karmøy Kurri
SmelterSmelter costcost curvecurve 20012001
2 000
Elbewerk
1 800
Sunndal 2004
1 600
Karmøy
Kurri Kurri
Alouette
Hamburg
Høyanger
Rheinwerk
Årdal
Søral
Slovalco
2005: Total 0.7
1 400
Tomago
2005: Total 1.0
million tonnes
million tonnes
Hydro
Aluminium
2002
1 200
1 000
800
600
0
5 000
10 000
15 000
20 000
25 000
Cumulative production (1 000 tonnes)
Operating cost includes liquid metal cost, casthouse cost, casting losses, site overhead cost,
freight cost, interest on work in progress, margin cost and head office cost. VAW included in Hydro Aluminium’s figures
Source: CRU. Hydro Aluminium estimates 2002
41569_2 - 03.2003 - * 9 - H ydro Media
Cost USD/tonne
BreakdownBreakdown ofof PrimaryPrimary MetalMetal averageaverage sitesite operatingoperating costcost positionposition
BreakdownBreakdown ofof PrimaryPrimary MetalMetal
averageaverage sitesite operatingoperating costcost positionposition
HAL weighted average, percent
4 14 13 Economy of scale Efficient work 21 processes Local cost level 100 8
4
14
13 Economy of scale
Efficient work
21
processes
Local cost level
100
8
Regulatory
&
Tax frames
Technology
40
Contracts
Alumina Carbon *) Power Labor **) Other ***) Cast- Site house operating costs cost Global
Alumina
Carbon *)
Power
Labor **)
Other ***)
Cast-
Site
house
operating
costs
cost
Global
market prices
National/
regional
Input factors depending on
local/regional conditions,
efficiency, etc.
Factor cost
determinants
markets
48%
21%
31%

* Raw materials and bake furnace fuel costs ** Includes carbon plant, potroom and maintenance labor costs *** Relining cost, capital replacement cost, administrative cost Source: CRU

41569_2 - 03.2003 - * 10 - H ydro M edia

AluminaAlumina costcost curvecurve 20022002 Conversion cost *) USD/tonne 160 Hydro Aluminium’s equity alumina
AluminaAlumina costcost curvecurve 20022002
Conversion cost *)
USD/tonne
160
Hydro Aluminium’s equity alumina capacity in Alunorte
2002: 410 000 tonnes
140
2003: 850 000 tonnes (speed from 2Q)
Average Hydro
Aluminium equity 02
120
Alpart 02

100

80

60

40

20

0

Alunorte 02
Alunorte 02

0

5

10

15

20

25

30

35

40

45

Note: Cost curve covers approximately 90% of total world production in 2001. * Conversion cost excluding cost of bauxite. Source: Hydro Aluminium estimates

Cumulated production million tonnes

41569_2 - 03.2003 - * 11 - H ydro M edia

AlunorteAlunorte 20022002 ! Production: 1.64 million tonnes ! Lowest conversion cost worldwide: 62 USD/tonne
AlunorteAlunorte 20022002
! Production: 1.64 million
tonnes
! Lowest conversion cost
worldwide: 62 USD/tonne

!

Optimal alumina quality for our smelters

! Strong safety performance

! High environmental and Corporate Social Responsibility standards

performance ! High environmental and Corporate Social Responsibility standards 41569_2 - 03.2003 - * 12 -

41569_2 - 03.2003 - * 12 - H ydro M edia

AlunorteAlunorte expansionexpansion 20032003 HighestHighest assetasset productivityproductivity globallyglobally !
AlunorteAlunorte expansionexpansion 20032003
HighestHighest assetasset productivityproductivity globallyglobally
! Expansion by 800 000
tonnes, to 2.5 million
tonnes/year
" On schedule (time, cost)
" Full production from May
2003

! Hydro Aluminium’s total equity increased to 34% (from 25.3%)

! Hydro Aluminium’s investment: USD 130 million

" Alunorte: USD 310 /tonne

Typical brownfield:

USD 400 – 600 /tonne

Typical greenfield :

USD 800 – 1 000 /tonne

USD 400 – 600 /tonne – Typical greenfield : USD 800 – 1 000 /tonne 41569_2

41569_2 - 03.2003 - * 13 - H ydro M edia

EnergyEnergy costcost curvecurve 20022002 ! Marginal spot exposure in Norway Mills/kwh 40 " Long term
EnergyEnergy costcost curvecurve 20022002
! Marginal spot exposure
in Norway
Mills/kwh
40
" Long term contracts
35
" Mostly based on
Hydro’s captive
production
30

! Exposure in Germany some years ahead

" Market liberalisation

" Eco-taxes. Emission trading

! No spot exposure in Canada and Australia

25

20

15

10

5

0

" Long term contracts

Sources: CRU. Hydro Aluminium estimates 2002

HAL
HAL

5

10

15

20

25

Cumulative production (million tonnes)

41569_2 - 03.2003 - * 14 - H ydro M edia

SunndalSunndal expansionexpansion (1)(1) ! Total investment: " USD 750 million (ex Carbon plant) ! Production
SunndalSunndal expansionexpansion (1)(1)
! Total investment:
"
USD 750 million
(ex Carbon plant)
! Production increase:
"
From 156 000 to 329 000 tpy
Incl. closing 66 000 tonnes
Søderberg
! Hydro HA 250 kA technology
! Environmental
benchmark
" Low emissions:
0.15 kgF/t Al
" Energy
efficiency:
13.0 kWh/kg Al
41569_2 - 03.2003 - * 15 - H ydro M edia
SunndalSunndal expansionexpansion (2)(2) ! Competitive investment: " USD 3 100 per tonne Aluminium " Stepwise
SunndalSunndal expansionexpansion (2)(2)
! Competitive investment:
" USD 3 100 per tonne
Aluminium
" Stepwise construction/
start-up

"

16 months from construction to first metal

" Productivity increase:

236 > 570 tonnes/man-year

! Forward sale 496 000 tonnes 2003 – 2007 evenly spread, at USD 1 500 per tonne and NOK 9.3 per US dollar

2003 – 2007 evenly spread, at USD 1 500 per tonne and NOK 9.3 per US

41569_2 - 03.2003 - * 16 - H ydro M edia

PrioritiesPriorities PrimaryPrimary MetalMetal ! Delivery (operational): " Cost reductions " Best practice
PrioritiesPriorities PrimaryPrimary MetalMetal
! Delivery (operational):
" Cost reductions
" Best practice sharing
" Low capital intensive capacity increases

! Direction:

" Improve relative cost position in production

" Portfolio improvements

" No greenfield projects

41569_2 - 03.2003 - * 17 - H ydro M edia

MetalMetal ProductsProducts
MetalMetal ProductsProducts
MetalMetal ProductsProducts –– 20022002 Main products Extrusion ingot, Sheet ingot, Foundry alloys, High Purity,
MetalMetal ProductsProducts –– 20022002
Main products
Extrusion ingot, Sheet
ingot, Foundry alloys,
High Purity, Magnesium
Production
- Aluminium
- proforma *)
2 350 000 tonnes
3 170 000 tonnes
- Magnesium
82 000 tonnes
Employees **)
2 000
* Includes VAW 1.1 - 15.3.
41569_3 032003
*2 H ydro Media
** Employees by 31.12.02
MetalMetal ProductsProducts Sourcing Customers 3rd party primary Extrusion ingot and Sheet ingot external
MetalMetal ProductsProducts
Sourcing
Customers
3rd party primary
Extrusion ingot and
Sheet ingot external
Hydro Aluminium primary production HAL downstream Metal Products casthouses Rolled Products Extrusion Automotive
Hydro Aluminium
primary
production
HAL downstream
Metal Products
casthouses
Rolled Products
Extrusion
Automotive
Ingot/Scrap
Foundry alloys/Ingot
external
Extrusion Automotive Ingot/Scrap Foundry alloys/Ingot external Scope of Metal Products 41569_3 032003 *3 H ydro Media

Scope of Metal Products

41569_3 032003

*3 H ydro Media

MetalMetal ProductsProducts physicalphysical volumesvolumes Full year figures 2002 in 1 000 tonnes 3 170 70
MetalMetal ProductsProducts physicalphysical volumesvolumes
Full year figures 2002 in 1 000 tonnes
3 170
70
500
External sources
Internal sources
260
130
650
160
1
400
2
210
Electrolysis*)
Produnction
Internal scrap
External
External scrap
Ingot
External
Total
above share**)
production***)
Conversion
*
At fully owned plants and minority equity stakes
** Slovalco and Hamburg
*** Non-equity strategic agreements (Talum, Goldendale, Aluar, Sayansk and others)
41569_3 032003
*4 H ydro Media
MetalMetal ProductsProducts differentiationdifferentiation –– BusinessBusiness modelmodel Separate casthouse sector
MetalMetal ProductsProducts differentiationdifferentiation ––
BusinessBusiness modelmodel
Separate casthouse sector creates values through:
! Better asset utilization than traditional aluminium plants
! Metal Supplier Concept:

Remelters and third party products supplement smelter-based casthouses giving full product coverage through a multi-sourcing system taking care of customer scrap

! Optimise and spread best practice across a larger casthouse system

" Operational improvements

" Lower cost

! Create tailored value-added solutions for the metal products market

41569_3 032003

*5 H ydro Media

BetterBetter overalloverall assetasset utilizationutilization Asset utilization in traditional aluminium company Target
BetterBetter overalloverall assetasset utilizationutilization
Asset utilization in traditional
aluminium company
Target asset utilization in
Hydro Aluminium
Purchased scrap
and ingot
Externally sold
metal products
Index
Index
160
160
140
Unused
140
capacity
120
120
100
100
80
80
60
60
40
40
20
20
0
0
Electro-
Cast-
Down-
Electro-
Cast-
Down-
lysis
houses
stream
lysis
houses
stream
41569_3 032003
*6 H ydro Media
OptimisingOptimising casthousescasthouses IncreasedIncreased volumevolume andand lowerlower costcost inin
OptimisingOptimising casthousescasthouses
IncreasedIncreased volumevolume andand lowerlower costcost inin operationsoperations
Karmøy ~196 000 tonnes per year
Index
100 = Cost and Production
volume in 1998
140
129
125
120
115
120
100
100
96
92
93
80
78
60
40
20
Production
Cost per tonne
0
1998
1999
2000
2001
2002
41569_3 032003
*7 H ydro Media
RemeltingRemelting capacitycapacity closeclose toto customerscustomers 1.5 million tonnes total remelting and recycling
RemeltingRemelting capacitycapacity closeclose toto customerscustomers
1.5 million tonnes total remelting and recycling capacity in 2002 *)
150 Kt
50 Kt
450 Kt
400 Kt
150 Kt
100 Kt
100 Kt
Small units close to customer in global network
Scale effect: Largest system in Europe
Lower metal cost (utilize more scrap)
* Not including capacity at smelters.
Full year capacity including VAW from
41569_3 032003
*8 H ydro Media
1.1.02
MetalMetal SupplierSupplier ConceptConcept example:example: LongLong termterm agreementagreement withwith RusAlRusAl
MetalMetal SupplierSupplier ConceptConcept example:example:
LongLong termterm agreementagreement withwith RusAlRusAl
Hydro Aluminium contributions
● Melt treatment & casting
technology
● Operational know-how
Hydro Aluminium benefit
Sayansk
● All extrusion ingot output
marketed
by Hydro
(80 000
Schedule
tonnes)
● Production start up 4Q 2003
● Phase 2 2004/2005
● Additional potential
(80 000 tonnes)
41569_3 032003
*9 H ydro Media
OptimisingOptimising casthousecasthouse systemsystem afterafter VAWVAW acquisitionacquisition Production swap EBITDA
OptimisingOptimising casthousecasthouse
systemsystem afterafter VAWVAW acquisitionacquisition
Production swap
EBITDA impact
NOK
Tonnes
million
9
000
18
17
8 300
8
000
16
!
14
7
000
14
Litho quality sheet
ingot in former VAW
reallocated to Årdal
6
000
12
5 300
5
000
10
!
4
000
8
3
000
6
Better suited for Årdal
than previous product
portfolio, reducing
need for maintenance
2
000
4
1
000
2
0
0
Actual 2002
Potential
Actual 2002
Potential
41569_3 032003
*10 H ydro Media
CreatingCreating tailoredtailored valuevalue addedadded solutionssolutions Sales development for Primary Foundry Alloys
CreatingCreating tailoredtailored valuevalue addedadded solutionssolutions
Sales development for Primary Foundry Alloys (PFA)
1 000 tonnes
300
2003: New PFA line at Sunndal
200
2000: Third party PFA sources
MARKET MARKET SHARE SHARE
(Europe (Europe 2003): 2003):
1996: Second PFA line in Årdal
and PFA line at Slovalco
“Almost “Almost 2 2 wheels wheels per per
car” car”
100
● Unique alloys
1992: New PFA line in Årdal
● Technical support
● Good margins
0
85
90
95
00
41569_3 032003
05
*11 H ydro Media
TheThe valuevalue ofof HydroHydro BilletBillet PlusPlus "Hydro Billets Plus with its service concept is a
TheThe valuevalue ofof HydroHydro BilletBillet PlusPlus
"Hydro Billets Plus with its service concept is a valuable tool to assist
Profilgruppen in optimising the production system and to better understand
the commercial risk in the market. Assistance to understand our LME
exposure, establish routines to minimize this exposure and to better utilize
opportunities when buying billets has been of great value to us."
Nils Arthur
Managing Director
Profilgruppen
QUALITY METAL & SERVIC ES
41569_3 032003
*12 H ydro Media
PrioritiesPriorities MetalMetal ProductsProducts ! Delivery (Operational): " Cost reductions and best practice
PrioritiesPriorities MetalMetal ProductsProducts
! Delivery (Operational):
" Cost reductions and best practice sharing
" Maximize throughput in Extrusion ingot, Foundry alloys and
Sheet ingot

"

Expand and maintain leadership in remelting/recycling

" Keep investments at a minimum

! Strategic:

" Short-term improve and utilize European assets fully

" Strengthen leading positions in Foundry alloys

" Develop Asian markets and establish aluminium foothold in China

41569_3 032003

*13 H ydro Media

DownstreamDownstreamDownstream
DownstreamDownstreamDownstream
StrongerStronger downstreamdownstream platformplatform toto serveserve customerscustomers ● Expand leadership position
StrongerStronger downstreamdownstream
platformplatform toto serveserve customerscustomers
● Expand leadership position
in current and new segments
Rolled
● Performance improvement
Products
● Asset utilization
● Optimise product mix
● Strenghten leadership positions
Europe
Downstream
Extrusion
● Expand fabrication in Europe
● Fix and sustain
improvements in the US
● Fix performance. Focus
portfolio
Automotive
● Build on customer relationship
● Expand core products
41569_4 - 03.2003 - * 2 - H ydro Media
RolledRolled ProductsProducts 20022002 Main products Foil and strip for packaging, offset printing, transportation,
RolledRolled ProductsProducts 20022002
Main products
Foil and strip for
packaging, offset
printing, transportation,
building
Production
- proforma *)
728
000 tonnes
900
000 tonnes
Employees **)
4 300
Plus plant in Malaysia with
30 000 tpy capacity
* Includes VAW 1.1 - 15.3.
** Employees by 31.12.02
41569_4 - 03.2003 - * 3 - H ydro Media
RolledRolled products:products: CROGICROGI CROGI 1998 – 2002: Actual prices NOK million Sales 14 790 Percent
RolledRolled products:products: CROGICROGI
CROGI 1998 – 2002: Actual prices
NOK million
Sales
14
790
Percent
12
EBITDA reported
EBITDA adjusted *)
258
605
10.4
Gross Investment **)
11
900
10
8
5.8
6
Adjusted*
3.8
4
3.5
2
0
1999
2000
2001
2002
* Adjusted for VAW 1.1 – 15.3 (average last 9.5 months multiplied with 2.5 months) and infrequent items
** Gross investment by 31.12.02
41569_4 - 03.2003 - * 4 - H ydro Media
MarketMarket situationsituation –– RolledRolled Products`Products` positionposition Percent Estimated market shares
MarketMarket situationsituation ––
RolledRolled Products`Products` positionposition
Percent
Estimated market shares Europe 02
50
44
! Total market*:
3.3 mill. tonnes
25
! Expected growth 00 – 06:
24
21
20
19
17
2% annually
!
Global market outlook
0
Litho
Heat-
Auto-
Foil
Constr-
Can
Strip
Exch
motive
uction
" Moderate volume growth
Estimated market shares outside Europe 02
– Litho market showing
strong demand
Percent
65
Litho
Foil
– US business harmed by
strong Euro
50
" Margins under pressure
25
15
9
7
3
0
South
North
Asia
South
North
Asia
America
America
America
America
* ) Europe 2002
41569_4 - 03.2003 - * 5 - H ydro Media
RolledRolled ProductsProducts differentiationdifferentiation ! 80% of rolling mill capacity next to smelters (advantage
RolledRolled ProductsProducts differentiationdifferentiation
! 80% of rolling mill capacity next to smelters
(advantage compared to competitors):
" Norf-Neus-Grevenbroich triangle
" Karmøy- and Hamburg-mills
Reduces working capital
and logistic costs
! Well-balanced product portfolio

! Outstanding reputation and strong market presence in selected areas

! Customer focus

" Flexible production system with ability to run dedicated lines

" High utilization rate

! Strong technology base

" World leader in litho, can-end, and automotive chassis applications

" Foil

! 50% ownership in Alunorf, the world’s largest and lowest cost mill

41569_4 41569_4 - - 03.2003 03.2003 - - * * 6 6 - - H H ydro ydro Media Media

StrongStrong ProductionProduction SynergiesSynergies Rheinwerk Smelter ALUNORF
StrongStrong ProductionProduction SynergiesSynergies
Rheinwerk Smelter
ALUNORF
SynergiesSynergies Rheinwerk Smelter ALUNORF Annual Capacity: Hot Rolling : 1.4 million tonnes Cold

Annual Capacity:

Hot Rolling : 1.4 million tonnes Cold Rolling: 0.9 million tonnes

2 000 employees

tonnes Cold Rolling: 0.9 million tonnes 2 000 employees VAW Grevenbroich Plant 1 700 employees 41569_4
tonnes Cold Rolling: 0.9 million tonnes 2 000 employees VAW Grevenbroich Plant 1 700 employees 41569_4
tonnes Cold Rolling: 0.9 million tonnes 2 000 employees VAW Grevenbroich Plant 1 700 employees 41569_4
tonnes Cold Rolling: 0.9 million tonnes 2 000 employees VAW Grevenbroich Plant 1 700 employees 41569_4

VAW Grevenbroich Plant

Rolling: 0.9 million tonnes 2 000 employees VAW Grevenbroich Plant 1 700 employees 41569_4 - 03.2003

1 700 employees

41569_4 - 03.2003 - * 7 - H ydro Media

Alunorf:Alunorf: FromFrom RollingRolling IngotsIngots toto ReRe--RollRoll Saws Scalper Ingot-Preheating Rolling
Alunorf:Alunorf:
FromFrom RollingRolling IngotsIngots toto ReRe--RollRoll
Saws
Scalper
Ingot-Preheating
Rolling Ingots
from Casting Unit
Sawing of ingots
at bottom butt
Scalping of ingots
at wide side
Homogenization
and Heating
ca. 600 mm
ca. 4200 mm
ca. 500°C
Hot
Mill
Break-Down Mill
Finishing Mill
Ingot
ca. 30 mm
Coil
Cold
Mill
Slitter
Packing / Shipment
#
Grevenbroich
0,7 mm
Several passes with
intermediate and final Annealing
HYDRO
41569_4 - 03.2003 - * 8 - H ydro Media
600
mm
GrevenbroichGrevenbroich plant:plant: FromFrom ReRe--RollRoll toto FlatFlat RolledRolled ProductsProducts Example: Foil
GrevenbroichGrevenbroich plant:plant:
FromFrom ReRe--RollRoll toto FlatFlat RolledRolled ProductsProducts
Example: Foil
High-Rack Storage
Pre-Heating
Re-Roll from ALUNORF
Cold
Mill
Quality
Control
Slitting
Final
Annealing
S 1
0,7 mm
#
Several passes
gauge ca. 0,006 mm
Packing
Shipment
41569_4 - 03.2003 - * 9 - H ydro Media
ImprovedImproved industryindustry structurestructure inin EuropeEurope Estimated market shares Europe 2001 100% = 3.2
ImprovedImproved industryindustry structurestructure inin EuropeEurope
Estimated market shares Europe 2001
100% = 3.2 million tonnes per year
Other Alcoa 14% 14% Pechiney 17% Alcan 27% Corus 9% Hydro Aluminium 19%
Other
Alcoa
14%
14%
Pechiney
17%
Alcan
27%
Corus
9%
Hydro
Aluminium
19%

Four largest 2002: 77% market share Four largest 1998: 58% market share

Source: EAA. Annual Reports

41569_4 41569_4 - - 03.2003 03.2003 - - * * 10 10 - - H H ydro ydro M M edia edia

StrongStrong volumevolume growthgrowth RolledRolled ProductsProducts Volume 1 000 tonnes 1 000 800 Strip, other
StrongStrong volumevolume growthgrowth RolledRolled ProductsProducts
Volume
1 000 tonnes
1 000
800
Strip, other
Construction
Heat-Exchanger
600
Automotive
Printing
Can beverage
400
Packaging
200
0
1996
1997
1998
1999
2000
2001
2002
41569_4 - 03.2003 - * 11 - H ydro M edia
Case:Case: LithographicLithographic stripstrip –– globalglobal leaderleader GlobalGlobal MarketMarket SharesShares
Case:Case:
LithographicLithographic stripstrip –– globalglobal leaderleader
GlobalGlobal MarketMarket SharesShares 20022002
Others
17
Hydro
Aluminium
! Total world market:
29
Approx. 400 000 tonnes
Sumitomo
! Total world market: 29 Approx. 400 000 tonnes Sumitomo 23 8 Ormet 3 Alcoa 12

23

8

Ormet

3

Alcoa

12

Alcan

Star/Elval

8

! No. 1 position has been maintained over the past 2 decades

" High quality

" Customer service

" Dedicated lines

41569_4 - 03.2003 - * 12 - H ydro M edia

Case:Case: TetraTetra PakPak –– aa successsuccess storystory ! Hydro Aluminium has maintained a truly global
Case:Case:
TetraTetra PakPak –– aa successsuccess storystory
! Hydro Aluminium has maintained a truly
global long-term relationship with Tetra
Pak since the mid 70’s
" Delivering to plants in Europe and Asia
! Key success factors:
"

Continuous product and service improvements

" Contribution to increased productivity at Tetra Pak

Reduced set-up times through introduction of jumbo reels

Enhanced running length per crack through constant high product quality

! Tetra Pak regularly chooses Hydro Aluminium products as benchmark for other suppliers of liquid packaging foil

41569_4 41569_4 - - 03.2003 03.2003 - - * * 13 13 - - H
41569_4 41569_4 - - 03.2003 03.2003 - - * * 13 13 - - H H ydro ydro M M edia edia
Case:Case: LiquidLiquid packagingpackaging marketmarket 20022002 FoilFoil (<(< 6060 µ)µ) TotalTotal
Case:Case:
LiquidLiquid packagingpackaging marketmarket 20022002
FoilFoil (<(< 6060 µ)µ)
TotalTotal globalglobal marketmarket volumevolume
HydroHydro AluminiumAluminium marketmarket shareshare
9494 500500 tonnestonnes
36%36%
Western Europe
52 000 tonnes
East Europe
3 500 tonnes
North America
3 000 tonnes
14%
Asia / Pacific
18 500 tonnes
41%
78%
25%
Africa/
Near East
1 500 tonnes
0%
South America
16 000 tonnes
33%
41569_4 - 03.2003 - * 14 - H ydro M edia
ImprovementsImprovements inin productivityproductivity Tonnes/employeeTonnes/employee inin differentdifferent
ImprovementsImprovements inin productivityproductivity
Tonnes/employeeTonnes/employee inin differentdifferent plantsplants // productionproduction lines*lines*
Alunorf
Hamburg
577
357
600
400
+5,5%
+11,2%
300
! Several modernization
and revamping
programmes
358
400
170
200
200
100
0
0
1993
2002
1998
2005
! Significantly increased
productivity through
state-of-the-art
production facilities
Litho
822
800
+6,5%
600
505
400
200
0
1995
2003
* Annual improvements in percent
41569_4 - 03.2003 - * 15 - H ydro M edia
PrioritiesPriorities RolledRolled ProductsProducts ! Delivery (operational): " Reduce operating cost (continuous
PrioritiesPriorities RolledRolled ProductsProducts
! Delivery (operational):
" Reduce operating cost (continuous improvement)
" Optimise production system (move products between plants)
" Increase capacity utilization by growing sales

! Direction:

" Strengthen leading market positions in Europe

" Optimise large asset base

" Continue to build product positions in high growth markets (China and South America)

" Continue to develop opportunities in automotive body sheet

41569_4 - 03.2003 - * 16 - H ydro M edia

ExtrusionExtrusion andand AutomotiveAutomotive segment:segment: CROGICROGI CROGICROGI 19981998 –– 2002:2002:
ExtrusionExtrusion andand AutomotiveAutomotive segment:segment: CROGICROGI
CROGICROGI 19981998 –– 2002:2002: ActualActual pricesprices
NOK million
Sales
24
250
Percent
EBITDA reported
EBITDA adjusted *)
1
084
1
319
12
11.2
Gross Investment **)
16
850
10
8.9
8
Adjusted*
7
6
4.5
4
2

0

1999

2000

2001

2002

* Adjusted for VAW 1.1 – 15.3 (average last 9.5 months multiplied with 2.5 months) and infrequent items

** Gross investment by 31.12.2002

41569_4 - 03.2003 - * 17 - H ydro M edia

GeneralGeneral extrusionsextrusions andand BuildingBuilding SystemsSystems 20022002 Main products General extrusions,
GeneralGeneral extrusionsextrusions
andand BuildingBuilding SystemsSystems 20022002
Main products
General extrusions,
extruded and drawn
tubing, Building
Systems
Production
416 800 tonnes
Employees *)
10 000
* Employees by 31.12.02
41569_4 - 03.2003 - * 18 - H ydro M edia
MarketMarket situationsituation –– ExtrusionExtrusion positionposition ! Europe: Estimated market shares 2002 "
MarketMarket situationsituation –– ExtrusionExtrusion positionposition
! Europe:
Estimated market shares 2002
" Total market*: 2.2 million tonnes
" Market outlook Europe
Percent
– Expected growth 00 – 06: 2-3%
– Margins stable
16
" Hydro Aluminium Europe: Strong in
most countries. Focus general
11
11
extrusions to local markets and
building systems
8
! US:
" Total market*: 1.5 million tonnes
" Market outlook US

0

Extrusion

Extrusion

Extrusion

Building

Europe

North

South

Systems

Amercia

America

Europe

# 1

# 3

* Soft alloys 2002

# 3

# 1

Volume flat/slow growth

Margins stable

Transport growth resumes with pick-up in trailer, truck

" Hydro Aluminium US: Strong position in specialty segments – e.g. copier tube, office furniture, heavy truck. Growth opportunities in building and construction, industrial components

41569_4 - 03.2003 - * 19 - H ydro M edia

ExtrusionsExtrusions differentiationdifferentiation ! Global system – best practice deployment ! Customer focus, high
ExtrusionsExtrusions differentiationdifferentiation
! Global system – best practice deployment
! Customer focus, high recognition in market
! Innovation
" Acknowledged development competence for
new extrusion applications and new alloys

! Performance Excellence

" Business Model

Local accountability

Location of plants and sales force

! Industry benchmark productivity

" Manufacturing excellence concept

! Separate business model for Building Systems

Manufacturing excellence concept ! Separate business model for Building Systems 41569_4 - 03.2003 - * 20

41569_4 - 03.2003 - * 20 - H ydro M edia

Extrusions:Extrusions: IncreasedIncreased presspress productivityproductivity -- mainmain leverlever toto reducereduce
Extrusions:Extrusions: IncreasedIncreased presspress productivityproductivity
-- mainmain leverlever toto reducereduce costcost prpr kgkg
Extrusion Europe & South America
Kg/hour (index,1986=100)
Extrusion North-America
Kg/hour (index, European 1986=100)
180
180
Productivity in acquired
Productivity in acquired
companies at acquisition point
160
160
companies at acquisition point
HAEX average
HALNA average
140
140
Industry average
120
120
100
100
80
80
60
60
40
40
20
20
0
0
1986
1990
1994
1998
2002
2000
2001
2002
41569_4 - 03.2003 - * 21 - H ydro M edia
StrongStrong volumevolume developmentdevelopment extrusionsextrusions *)*) 1 000 tonnes 600 General Extrusion
StrongStrong volumevolume developmentdevelopment extrusionsextrusions *)*)
1 000 tonnes
600
General Extrusion
Building Systems
Precision Tubing
Automotive Structures
500
400
300
200
100
0
1994
1998
2000
2002
* Hydro Aluminium total: Includes also extrusions used in automotive sector
41569_4 - 03.2003 - * 22 - H ydro M edia
BuildingBuilding SystemsSystems –– leadingleading inin “brand“brand business”business” ● Hydro Building
BuildingBuilding SystemsSystems ––
leadingleading inin “brand“brand business”business”
● Hydro Building System is a
market leader
● Strong brands
● Product innovation
leadership
● High productivity production
Targets projects and non-
residential segments in
Northern & Central
Europe
More than 20 distribution
centers in Italy, sales
to Greece, Portugal and
Spain
Market leader in France,
presence in Portugal,
Spain & the UK
● Good distribution system
● Strong accountability to
results
Systems volume development
1 000 tonnes
80
● Active position in Building
Systems allows Hydro
Aluminium to
70
60
50
40
● operate a profitable
downstream business
30
20
● strategically shape the
largest market segment for
extrusions
10
0
1996
1998
2000
2002
41569_4 - 03.2003 - * 23 - H ydro M edia
Case:Case: NordNord--LBLB HannoverHannover –– aa successsuccess storystory Hydro Aluminium ● Sole supplier of
Case:Case:
NordNord--LBLB HannoverHannover –– aa successsuccess storystory
Hydro Aluminium
● Sole supplier of aluminium
profíles (200 tonnes)
● Technical support through
dedicated project service
to the metal builder
● Profil constructions
● Object-specific and specially
adapted products.
● Project duration: 1,5 years –
from mid 2000 until end
of 2001
41569_4 - 03.2003 - * 24 - H ydro M edia
Case:Case: BuildingBuilding SystemsSystems customercustomer relationshiprelationship exampleexample –– metalmetal
Case:Case:
BuildingBuilding SystemsSystems customercustomer relationshiprelationship
exampleexample –– metalmetal builderbuilder inin ItalyItaly
● We develop and distribute complete
building systems
● Our customers, metal builders,
assemble and then install finished
windows and doors

In addition to selling systems we also provide support to our customers (calculations, marketing, forecasts etc) - we help our customers to develop their business

In the Italian market of 155 000 tonnes Hydro Aluminium has 22 distribution centers around the country

Example: Metallegno

One of 15 000 metal builders in Italy

Family business - started with 4-5 people and have grown to 35 employees over 15 years working with Hydro

Range of products expanded from residential to industrial and commercial buildings projects

41569_4 - 03.2003 - * 25 - H ydro M edia

PrioritiesPriorities ExtrusionExtrusion EuropeEurope andand SouthSouth AmericaAmerica ! Delivery (operational): "
PrioritiesPriorities ExtrusionExtrusion EuropeEurope
andand SouthSouth AmericaAmerica
! Delivery (operational):
" Customer focus
" Continue improvement programs on key value drivers,
productivity, material yield
" Optimise low cost capacity utilization

! Direction:

" Strengthen position through selective acquisitions

" Increase added value activities

" Improve sourcing positions in low cost countries

" Leverage competences from Building Systems in other market segments

41569_4 - 03.2003 - * 26 - H ydro M edia

PrioritiesPriorities ExtrusionExtrusion USUS ! Delivery (operational): " Drive productivity toward European levels
PrioritiesPriorities ExtrusionExtrusion USUS
! Delivery (operational):
" Drive productivity toward European levels
" Reduce cost
" Leading service and quality

! Direction:

" Performance improvement

" Better asset utilization - grow business volume, with existing and new customers

" Enhance differentiation by developing added value offering

41569_4 - 03.2003 - * 27 - H ydro M edia

AutomotiveAutomotive productsproducts 20022002 Main products Bumpers, frames, tubing (heat transfer), engine blocks,
AutomotiveAutomotive productsproducts 20022002
Main
products
Bumpers, frames,
tubing (heat transfer),
engine blocks,
cylinder heads
Production *)
165 200 tonnes
Employees **)
6 000
* Includes VAW 01.01. – 15.03. 2002.
** Employees by 31.12.02
41569_4 - 03.2003 - * 28 - H ydro M edia
MarketMarket positionspositions –– AutomotiveAutomotive Market shares Europe **) Percent 75 ! Total market *): 6
MarketMarket positionspositions –– AutomotiveAutomotive
Market shares Europe **)
Percent
75
! Total market *): 6 million
tonnes
60
50
! Expected growth
00 – 06: 5%
21
20
14
14
! Market outlook
0
"
Bumpers Precision
tubing
Engine
Cylinder
Sheet
Finstock
Light weighting trend to
continue
blocks
heads
Market shares outside Europe **)
Percent
" Western markets maturing,
growth potential shifting
towards emerging markets
US
Precision tubing
50
50
" Relentless price pressure
from OEMs
50
" Key levers to earn money
– Differentiation
10
10
– Lean manufacturing
5
0
Bumpers
Precision
Cylinder
South
China
tubing
heads
America
– Shift to lower cost
countries unless highly
automated production
– Economies of scale
* US, Europe, Japan. 2/3 is castings
** 2002 estimates. Hydro Aluminium’s market share of total aluminium use
Market shares for engine blocks and cylinder heads excluding OEMs inhouse production higher
41569_4 - 03.2003 - * 29 - H ydro M edia
PresencePresence inin automotiveautomotive Material Material Material Material Material Material (1) (1) Complex
PresencePresence inin automotiveautomotive
Material
Material
Material
Material
Material Material
(1) (1)
Complex Complex
Components Components
ModulesModules
Metal
Metal
Metal
Metal
Semis Semis
components components
(1) (1)
Products
Al alloys
Extruded tubes
Bumper beams
Windshield
frame
Mg alloys
Welded tubes
Crash boxes
to market
Engine cradle

Finstock

Sheet for

components

(1)

Dependent on number of

(2)

assembling operations 49% of Meridian

(3)

Low volume body structure (Lotus Elise, Rolls Royce, BMW)

* Includes VAW 1.1. – 15.3

Engine castings

Cylinder heads

Mg castings (2)

Processed tubes

Body

structures (3)

Shipments by business sector (1 000 tonnes; 2002)*

85
85

173

Metal productsRolled products

Rolled productsMetal products

Extrusions000 tonnes; 2002)* 85 173 Metal products Rolled products Automotive products 51 250 41569_4 - 03.2003

Automotive products(1 000 tonnes; 2002)* 85 173 Metal products Rolled products Extrusions 51 250 41569_4 - 03.2003

51

250

41569_4 - 03.2003 - * 30 - H ydro M edia

AluminiumAluminium componentscomponents suppliedsupplied byby HydroHydro AluminiumAluminium
AluminiumAluminium componentscomponents
suppliedsupplied byby HydroHydro AluminiumAluminium

Engine

blocks +

cylinder

heads

Radiator

frames

Roll-over Fuel filler pipe Wind Shield protection Frame Dashboard / FP-Beam Manifold Bumper Air suspension
Roll-over
Fuel filler pipe
Wind Shield
protection
Frame
Dashboard
/ FP-Beam
Manifold
Bumper
Air suspension
piston
Subframe
Bumper
Side Doorbeam Seat rail & structural
Reinforcement
A-Piller
seat componets
Radiator
Sill
Head shields
Propshafts
Crashbox
Engine Cradle
Strip Wheels

41569_4 - 03.2003 - * 31 - H ydro M edia

AutomotiveAutomotive differentiationdifferentiation ● Global leading market positions ● Solution focused product
AutomotiveAutomotive differentiationdifferentiation
● Global leading market
positions
● Solution focused product
and process development
■ Extrusion-based
structural components
■ Integrated in customers
processes
■ Precision tubing
■ Highly reputed and
appreciated
■ Magnesium alloys

Magnesium parts (Meridian 49%)

European leading market positions

Complex engine blocks and cylinder heads

Primary foundry alloys

Automotive sheet for chassis applications

Leading technology

Extrusion technology

Stretch-bending technology

Drawn tubes technology

Aluminium and magnesium casting

New body sheet line under construction Rolled Products

41569_4 - 03.2003 - * 32 - H ydro M edia

TrendsTrends promotingpromoting growthgrowth forfor aluminiumaluminium ! Safety " Crash-behavior NCAP "
TrendsTrends promotingpromoting growthgrowth forfor aluminiumaluminium
! Safety
" Crash-behavior NCAP
" Pedestrian protection
! Increasing Individualisation
" Niche models SUV / minivans/ Sport cars
! Comfort

"

Air condition

! Driving dynamics, fun driving

" Agility

! Environment/sustainability

" Fuel consumption regulations (140 g/km CO 2 in 2008/2009 declaration of European car industry)

100kg weight reduction saves 0.6 litre /100 km

" Recycling

! Vehicle retraction - Wrecking

41569_4 - 03.2003 - * 33 - H ydro M edia

GrowthGrowth inin aluminiumaluminium inin cars:cars: PriorityPriority ofof massmass reductionreduction areasareas
GrowthGrowth inin aluminiumaluminium inin cars:cars:
PriorityPriority ofof massmass reductionreduction areasareas
Instrument
panels
Engine blocks
Cylinder heads
Tubes for radiators
and air condition.
6
4
3
2
Bumpers,
Crashboxes,
1
Longitudals
Body sheet
5
Axle parts
Axle tubes
Unsprung (incl. rotating masses)
1
In front of the front axle
2
Between front axle and cockpit
3
Above the vehicle center of gravity
4
Focus products where
customer priorities, our
technology and
competence match
Between the cockpit and the rear axle
5
Behind the rear axle
6
41569_4 - 03.2003 - * 34 - H ydro M edia
AluminiumAluminium penetrationpenetration ratesrates growinggrowing Percent 120 100 Europe US 80 60 40 20 0
AluminiumAluminium penetrationpenetration ratesrates growinggrowing
Percent
120
100
Europe
US
80
60
40
20
0
Heat
Heat
Chassis
Body
Bumper
Cr ash
Engine
Gasoline
Diesel
Cylinder
Wheels
tr ansfer
transfer
beam s
boxes
cr adle
engines
engines
heads
tubes
finstock
Source: Hydro Aluminium estimates for 2002
41569_4 - 03.2003 - * 35 - H ydro M edia
OurOur automotiveautomotive productproduct groupsgroups -- stillstill tootoo heavyheavy onon
OurOur automotiveautomotive productproduct groupsgroups --
stillstill tootoo heavyheavy onon “introduction”“introduction”
Introduction
Growth
Maturity
Decline
Cylinder
X
heads
Precision
tubing
Bumper
X
beams
Gasoline
engine blocks
Chassis,
X
suspension
Diesel
Engine
Precision tubing
blocks
X
Body
structures
Engine
Structures
X
cradles
Castings
41569_4 - 03.2003 - * 36 - H ydro M edia
OurOur mostmost visiblevisible BMWBMW productproduct … the Z8 spaceframe 41569_4 - 03.2003 - * 37
OurOur mostmost visiblevisible BMWBMW productproduct
… the Z8 spaceframe
41569_4 - 03.2003 - * 37 - H ydro M edia
Case:Case: BMWBMW andand HydroHydro AluminiumAluminium –– aa partnershippartnership evolvingevolving forfor moremore
Case:Case:
BMWBMW andand HydroHydro AluminiumAluminium ––
aa partnershippartnership evolvingevolving forfor moremore thanthan 2525 yearsyears
" 1975: First bumper beam contract
" 1995: First supply of cylinder heads to BMW-cars
" 1996: Rollover protection system
– First full system responsibility for Hydro
" 2000: Delivery of 1.3 million bumper beams

All models have Hydro bumpers, excluding X5

New “small” BMW cars use Hydro bumpers

" 2000: Hydro Wackersdorf opens at BMW Innovations Park

JIT assembly and delivery centre

" 2002: Development partner and supplier for new Rolls Royce Phantom

More than 300 profiles and sub-assemblies, weighting close to 300 kilos in total

More than 300 profiles and sub-assemblies, weighting close to 300 kilos in total 41569_4 - 03.2003
More than 300 profiles and sub-assemblies, weighting close to 300 kilos in total 41569_4 - 03.2003

41569_4 - 03.2003 - * 38 - H ydro M edia

StatusStatus andand directiondirection SegmentSegment byby segmentsegment Precision Precision tubing tubing ! ! Good
StatusStatus andand directiondirection
SegmentSegment byby segmentsegment
Precision Precision tubing tubing
! !
Good Good profit profit
! !
Continue Continue to to grow grow – – small small niche niche with with strong strong
positions positions
! !
China/South China/South America America footholds footholds to to be be utilized utilized
Structures Structures
! !
Low Low profit. profit. Still Still in in build build up, up, therefore therefore
high high cost cost
! !
High quality asset base and leading
High quality asset base and leading
competence competence
Casting Casting
! !
Fix Fix performance performance – – focus focus portfolio portfolio to to
niches/ niches/ slivers slivers with with strong strong positions positions
! !
Profits Profits close close to to acceptable acceptable
! !
Execution Execution of of major major new new expansion expansion in in
Dillingen Dillingen (G) (G) for for diesel diesel engine engine
! !
Growth Growth directed directed to to low-cost low-cost facilities facilities
41569_4 - 03.2003 - * 39 - H ydro M edia
PrioritiesPriorities AutomotiveAutomotive ! Delivery (operational): " Accelerate lean manufacturing roll-out "
PrioritiesPriorities AutomotiveAutomotive
! Delivery (operational):
" Accelerate lean manufacturing roll-out
" Successfully launch new product programs
" Fully utilize existing capacities

! Direction:

" Differentiated value added products – leading edge

" More of our business to low cost facilities in China, Mexico and Central Europe

" Focus portfolio

41569_4 - 03.2003 - * 40 - H ydro M edia

SummarySummarySummary
SummarySummarySummary
ConcludingConcluding remarksremarks PurposePurpose ofof thethe seminarseminar SummarySummary !! DeliveryDelivery !!
ConcludingConcluding remarksremarks
PurposePurpose ofof thethe seminarseminar
SummarySummary
!!
DeliveryDelivery
!!
ShortShort termterm –– fragilefragile marketmarket
outlookoutlook
!!
LongLong termterm –– attractiveattractive
industryindustry
!!
DifferentiationDifferentiation
!!
BottomBottom lineline focusfocus,, selfself helphelp
measuresmeasures
!!
DifferentiationDifferentiation –– customercustomer
!!
StrategicStrategic directiondirection
responsivenessresponsiveness,,
organisationorganisation,, portfolioportfolio
compositioncomposition
!!
ClearClear strategicstrategic directiondirection ––
capitalcapital disciplinediscipline
41569_5 - 03.2003 - * 2 - H ydro Media
SafeSafe harbourharbour statementstatement
SafeSafe harbourharbour statementstatement

In order to utilize the "Safe Harbour" provisions of the United States Private Securities Litigation Reform Act of 1995, Hydro is providing the following cautionary statement: This presentation contains certain forward-looking statements with respect to the financial condition, results of operations and business of the Company and certain of the plans and objectives of the Company with respect to these items. By the nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. The actual results and developments may differ materially from those expressed or implied in the forward-looking statements due to any number of different factors. These factors include, but are not limited to, changes in costs and prices, changes in economic conditions, and changes in demand for the Company's products. Additional information, including information on factors which may affect Hydro's business, is contained in the Company's 2002 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission.

41569_5 - 03.2003 - * 3 - H ydro Media