Hydro Presentation Nordnet

Pål Kildemo

Head of Investor Relations

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01

A resource rich global

aluminium company

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A resource-rich, global aluminium company With robust positions across the value chain

• Global provider of alumina, aluminium and aluminium products

• Leading businesses along the value chain; raw materials, energy, primary metal production, aluminium products and recycling

• 13 000 employees involved in activities in more than 50 countries

• Market capitalization ~NOK 70 billion

• Annual revenues ~NOK 65 billion

• Included in Dow Jones Sustainability Indexes and FTSE4Good

Primary Metal

Rolled Products

Energy

Bauxite & Alumina

50% joint venture in extruded products

Attractively positioned, global reach

Continental Europe

• Leading upstream and midstream positions

• Europe’s largest rolled products producer

• Technology and R&D centers

• Recycling network

Extruded Products

• 50% ownership in Sapa - global leader in extruded products

Norway

• 900,000 tpy hydro-powered aluminium production

• Technology and R&D centers

• Hydropower developments

• Rolled products, recycling and remelting

North America

• Alouette aluminium smelter in Canada, expansion potential

• Remelting

Brazil

• World-class operations and resource base

• Bauxite and alumina growth projects

• Albras aluminium smelter

Middle East

• Qatalum 1 in production

• Qatalum expansion opportunity Australia

• Primary aluminium production

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Hydro - a first tier aluminium company

Source: CRU, Hydro

Equity production in 2013 in aluminium equivalents excl. China, thousand mt

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

Alcoa/AWAC Rio Tinto Alcan* UC Rusal BHP Billiton Norsk Hydro Glencore/Century Hindalco Vedanta Emirates GlobalAluminium

Aluminium Bahrain

Alumina Aluminium

(6)

Curtailing 26% of

primary metal capacity

USD 300

program

Climb From B to A

Starting up

Qatalum

Acquiring bauxite

and alumina assets

Establishing

Sapa JV

JV-program

Hydro’s path towards global leadership

2010 2012 2009 2011 2013

03

The Market

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0

100

200

300

400

500

600

700

800

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

95

115

135

155

175

195

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

Yearly consumption (Index 2000=100), global 3-month LME price (Index 2000=100)

The big dilemma of our industry A demand-side winner, yet a looser in the market place

Tin Zinc IP GDP Copper Lead Aluminium Nickel

Source: CRU/Global Insight.

Historical overproduction continues to weigh on prices

LME and BOC

(USD/t) Metal Balance

Source: CRU, Hydro Analysis

*BOC=Business Operating Costs

World ex. China

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(1 500)

(1 000)

( 500)

0

500

1 000

1 500

2 000

2 500

3 000

(1 500)

(1 000)

( 500)

0

500

1 000

1 500

2 000

2 500

3 000

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

LME 3m Metal balance 90 percentile BOC

Source: CRU/Hydro

• Seasonally stronger demand

• 2014 aluminium demand expected to

grow 2-4 % in world outside China

• New curtailments and delays partly

offsetting ramp-ups

Demand expected to exceed production in 2014

0

5 000

10 000

15 000

20 000

25 000

30 000

Jan-08 Nov-08 Sep-09 Jul-10 May-11 Mar-12 Jan-13 Nov-13

Demand Production

World outside China (quarterly annualized) 1 000 mt

World outside China

Standard ingot premiums rise to record highs

Source: Metal Bulletin, MW/MJP: Platts

Regional standard ingot premiums USD per mt

• Standard ingot premiums rose sharply

in Q1 2014

• US and EU premiums (duty-paid) ~415

USD/mt

• Proposed changes to LME warehousing

rules not implemented from April 1, due

to UK court ruling

0

50

100

150

200

250

300

350

400

450

500

Jan-08 Oct-08 Jul-09 Apr-10 Jan-11 Oct-11 Jul-12 Apr-13 Jan-14

US Mid West Japan Europe (duty-paid)

1960

2000

2040

2080

2120

2160

2200

2240

2012 2013 2014 2015

The mechanism of financial deals – driving forces

Warehouse

rents

Attractiveness of financial deals dependent on the following equation

Financing cost < LME contango +

0%

1%

2%

3%

4%

5%

6%

7%

8%

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

14

Jan-

15

OECD US Eurozone UK

Source: Global Insight/Reuters

USD/t

＄

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Aluminium prices decrease through the quarter

USD per mt

Source: Reuters Ecowin

Primary aluminium LME USD/mt NOK/mt

Q1 2014 average

Q1 2014 end

1 752

1 774

10 671

10 620

Q4 2013 average

Q4 2013 end

1 815

1 811

10 981

10 986

• Aluminium price declining to range of

USD 1 700 - 1 800 per mt in Q1

• Minor decrease in average USD/mt price,

partly offset by weaker NOK

1 000

1 400

1 800

2 200

2 600

3 000

3 400

2000 2002 2004 2006 2008 2010 2012 2014 2016

LME (3-month avg.) LME forward June 2014

All-in aluminium price rising

USD per mt

Source: Metal Bulletin, MW/MJP: Platts, Reuters Ecowin

1600

1800

2000

2200

2400

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14

LME cash LME cash + US Midwest LME cash + Europe duty paid LME cash + Japan

And the same is seen for product premiums

MB Billet

premium

MB Ingot

premium DDP

Billet

premium

over ingot

Source: Metal Bulletin, Hydro

Metal Bulletin ingot and billet premium USD per mt

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0

100

200

300

400

500

600

700

800

Jan-90 Jan-93 Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14

Slight reduction in reported inventories world ex-China

Source: CRU/Hydro

World outside China reported primary aluminium inventories 1 000 mt Days

0

20

40

60

80

100

120

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

Q1 00 Q1 01 Q1 02 Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1 14

IAI Other LME World ex. China inventory days

Range-bound alumina prices

Platts alumina index (PAX)

Percent USD per mt

− Q1 average price 328 USD/mt,

up 5 USD/mt from Q4

− Alumina as % of LME rose to

close to 20 % mid-quarter,

highest since PAX introduction

− PAX and alumina as % of LME

decreased through the quarter,

following smelter curtailments in

the world outside China and

increased LME price

10

12

14

16

18

20

250

300

350

400

450

Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14

Alumina price % of LME

Indonesia bauxite export ban taking effect

• Complete ban on bauxite exports from

mid-January 2014

• Closures by bauxite miners in Indonesia

• Uncertainty around possibility of getting

export license for those with plans to

build alumina capacity in Indonesia

Source: China customs

Chinese bauxite import by origin (monthly) Million mt

0

1

2

3

4

5

6

7

8

9

Jan-12 Jul-12 Jan-13 Jul-13 Jan-14

Australia Indonesia Other Monthly average

China bauxite imports decreasing through Q1

• Bauxite and alumina

− Significant drop in bauxite

imports during Q1 as

Indonesia export ban starts

− Q1 alumina imports at

highest level since Q1 2010

• Primary aluminium

− No significant import or

export expected in 2014

• Semis and fabricated

− Export of semis and

fabricated products slightly

down in Jan/Feb

Annualized aluminium equivalents*, million mt

Source: CRU/Antaike/Hydro

* Bauxite/alumina to aluminium conversion factor: 5.0/1.925

Indonesia export ban taking effect

Fabricated Semis

Scrap Bauxite Alumina Primary aluminium

Ch

ina

im

po

rt

Ch

ina

exp

ort

2011 2012 2013

Total aluminium imports

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0

5

10

15

20

25

YTD 2014

03

Ambitious improvement

drive

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Ambitious improvement efforts throughout the

value chain

Energy

Bauxite

Alumina

Primary metal

Casting

Remelting

Rolling

Extrusion ‘From B to A’

Sapa JV

‘Energy

Aspiration’

‘Climb’

‘USD 300

program’

‘CCIP’

‘JV program’

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World-class asset base, focus on operational

improvements

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NOK 1 billion by end-

2015

20% manning reduction

Platts alumina index (PAX)

5.5

5.0

5.2

5.8 5.8

Q1 Q2 Q3 Q4 Q1-14

Alunorte production gradually increases “From B to A” improvement program Alumina trending higher

production, annualized mmt

10

12

14

16

18

20

250

300

350

400

450

Aug-10 Nov-11 Feb-13 May-14

Alumina price % of LME

13.9% 14.4% 15.3% LME%3)

286 275 269 Price2)

Strong improvement focus in Brazil

2012 2013 Q1 2014

Implied alumina cost and margin, USD/mt 1)

• Annualized alumina production stable

from Q4

• Higher hydrate production at Alunorte,

increased production at Paragominas

• “From B to A” improvement program

progressing according to plan

− Target NOK 1 billion by end-2015, of which

NOK 600 million by end-2014

• Continued and close dialogue on ICMS

taxes and framework conditions

1) Realized alumina price minus EBITDA for B&A, per mt alumina sales.

2) Realized alumina price

3) Realized alumina price as % of three month LME price with one month lag

Implied EBITDA cost per mt

475

263

425

EBITDA margin per mt

23

260

15

258

11

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Primary Metal: a strong culture of continuous

improvement

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USD 180

JV program

USD 300

program

USD 100

program

Financial

crisis Sovereign

debt crisis

USD 300

program

completion

2010 2013 2009 2011 2009 2013

Primary Metal operational improvements continue

2012 2013 Q1 2014

Implied primary cost and margin, USD/mt 1)

• Primary cost continues downward trend

− Improvement efforts with bottom-line effect

− Favorable exchange rate development

− Increasing premiums

• USD 180 JV program on track, to be

concluded by end-2016

− Positive contribution from continued

reduced cost at Qatalum

1) Realized aluminium price minus EBITDA margin per mt primary aluminium. Includes net earnings from primary casthouses.

2) Realized LME

Implied EBITDA cost per mt

475

1 775

425

EBITDA margin per mt

300

1 500

400

1 400

350

2 080 1 902 1 749 LME2)

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Primary Metal: A strong improvement track record

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Underlying EBITDA per mt in USD for respective primary aluminium divisions

All figures based on public accounting data, not verified by Hydro. Data not adjusted for different accounting principles and non-specified underlying items. Hydro makes no representation as to the

accuracy or completeness of such information. The analyses are based on assumptions subject to uncertainty and therefore intended only for general comparisons across companies and should not be

used to support any individual investment decision. All results are provided for informational purposes only. Hydro figures includes Primary Metal, Metal Markets and attributable share of EBITDA and

production in Qatalum.

1H 2011

-100

100

300

500

700

2H 2013

-100

100

300

500

700

Source: Company filings

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‘Climb’

Rolled Products: improvements and portfolio high-

grading

New, integrated UBC line at Neuss,

Germany

New automotive line at

Grevenbroich, Germany

1.7

7.1 (2.5)

(2.5)

(2.0)

1.8

0.6 (1.8)

0.7

Net cash Q42012

UnderlyingEBITDA

Otheradjustments

Investmentsdivestments

Dividends Net cash afterdividend

Operatingcapital

Currencytranslation &

other

Net cash Q42013

Cash neutral after dividend at LME ~1 900 USD/mt

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NOK billion

Dividend yield in percentage, based on year-end share-prices

Hydro compared to its aluminium peers

2010 2011

Source: Thomson ONE

2013

2.77%

1.10%

0.00% 0.00% 0.00% 0.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

Hydro Peers

2012

Competitive yield through tough times

2.49%

1.80%

0.78%

0.19%

0.00% 0.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

5.10%

2.70%

1.39%

0.00% 0.00% 0.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

2.70%

1.38%

0.00% 0.00% 0.00% 0.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

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03

Strategy

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Energy

Maximize asset potential,

strengthen global support function

Rolled Products

Continue to high-grade portfolio,

develop step-change innovations

Primary Metal

Continue improvement drive,

capitalize on technological edge

Bauxite & Alumina

Deliver on productivity goals,

realize improvement targets

Hydro’s main priorities

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Hydro’s value

proposition • Improve relative industry position

• Capitalize on raw material positions

• Strengthen innovative and commercial edge

• Maintain financial strength and flexibility

• Ensure competitive shareholder return

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