Presentation of Presentation of Norsk Hydro ASA

1 Presentation of Norsk Hydro ASA President & CEO, Eivind Reiten at the Norwegian Society of Financial Analysts Oslo, March 7, 2002 33047_1 - 01.2002 - * 1 - Hydro Media 2 Hydro’s competitive position improved q q VAW acquisition - a transforming step for aluminium Attractive international upstream positions established for Oil and Energy Agri Turnaround successfully completed, Light Metals improvement program underway Strong improvement in financial capacity (debt/equity 0.27) Challenging to meet 2002 return target 33047_1 - 01.2002 - * 2 - Hydro Media q q q Creating a world class aluminium company q q 3 Establishing Europe's no. 1 aluminium company An excellent strategic fit — new company well positioned Accretive to EPS already in 2002 Successful integration the main short term priority Ambitious programme to realise synergies and improve Hydro's existing aluminium business s s q q q Improvement target NOK 1.6 billion by end 2003 Manning to be reduced by 1100 persons 33047_1 - 01.2002 - * 3 - Hydro Media 4 Creating a “top-tier” aluminium company Total production, thousand tonnes, 2000 Europe 1200 1000 800 600 400 200 0 4500 4000 3500 3000 2500 2000 1500 1000 500 0 Global: World Integrated Aluminium Companies oa an or us W ey ro Pe ro yd Primary Rolled products Extrusion Note: VAW’s Kurri Kurri-smelter in Australia and HAL’s Wells extrusion system in the US included full-year 33047_1 - 01.2002 - * 4 - Hydro Media H yd H P ec hi ne y + K ai se r A lc an A lc oa ch in V A A + V C A W A lc lc Agri — potential for significant value creation q 5 Successful turnaround exceeds original targets: s s Greatly improved market balance in Europe Annual costs and manning reduced by over 30%* Platform for sustainable competitive earnings s q q Strengthened positions outside of Europe Strong performance by Gas and Chemicals * Compared to 1998 level 33047_1 - 01.2002 - * 5 - Hydro Media Oil and Energy — positive growth outlook q 6 2001 production target of 415,000 boe/d. reached, average annual production growth to 2005 of 5 - 6% Growing natural gas sales and adding value through commercial activities Exciting exploration acreage secured Finding and development costs on track to reach $5 target by 2003 q q q 33047_1 - 01.2002 - * 6 - Hydro Media 7 Safety performance Total Recordable Injury Rate, Employees 12 month rolling average Total recordable injuries/million hours worked 25 20 15 10 5 0 1996 1997 1998 1999 2000 2001 MTC: Medical treatment cases RWC: Restricted work cases LTI: Lost time injuries MTC rate RWC rate LTI rate 33047_1 - 01.2002 - * 7 - Hydro Media 8 Share price performance — a major challenge NHY OSE 450 400 350 300 250 200 150 100 mar-90 mar-91 mar-92 mar-93 mar-94 mar-95 mar-96 mar-97 mar-98 mar-99 mar-00 mar-01 Annual Total Shareholder Return 1991 - 2001 13% 33047_1 - 01.2002 - * 8 - Hydro Media 9 Creating shareholder value Aluminium — NOK 1.6 billion programme Performance and People Oil & Energy — lower F&D costs Performance culture Shareholdervalue Non-core units Portfolio management Underperforming units Divestment target NOK 10 billion Major portfolio restructuring Transforming transactions 33047_1 - 01.2002 - * 9 - Hydro Media 10 CROGI – development Actual and normalized prices CROGI % 14 12,3 12 10 8,5 8,4 7,7 9 q 9,1 8 Normalized prices: s s s s 8 6 4 2 0 1997 NOK/USD: 8.00 Brent Blend (USD/bbl): 18 CAN27 (USD/t): 113 LME 3M (USD/t): 1 500 q Target: 10% over the cycle 1998 1999 2000 2001 Normalized CROGI 33047_1 - 01.2002 - * 10 - Hydro Media 11 Challenging to reach 2002 CROGI target q q Current plans imply an expected normalised CROGI level of between 8 and 9% in 2002 Challenge being met by continued drive for better performance s s s s s Implementing an aggressive restructuring and improvement programme in Aluminium Developing an attractive exploration portfolio in Oil and Energy New measures to bring further improvements in Agri Active portfolio management and divestment of non-core assets More efficient shared services 33047_1 - 01.2002 - * 11 - Hydro Media 12 Strategic Priorities q Forceful Light Metals improvement program and VAW integration Continued Agri improvements from strong base Promising international E&P positions to be explored Fast return to solid financials after VAW acquisition Proactive approach towards industrial solutions, including alternatives which may require changes in the corporate structure 33047_1 - 01.2002 - * 12 - Hydro Media q q q q Performance and Financial Strength Executive Vice President and CFO John O. Ottestad Norsk Hydro ASA 14 Creating shareholder value Performance Return on Capital and asset productivity Shareholdervalue Portfolio management Capital discipline Financial capacity Major portfolio restructuring 33047_1 - 01.2002 - * 14 - Hydro Media 15 VAW Transaction q Total consideration is 2,645 mill Euro (21.2 Bn NOK* including net interest bearing debt of 757 mill Euro (NOK 6.1 bn) In addition Norsk Hydro takes over 450 mill. Euro (3.6 bn NOK) unfunded pension obligations Acquisition financed through cash and debt Subject to approval by regulatory authorities Expected closing by Q1 2002 q q q q * All figures are estimates as per 1.1.2002 except where noted. Assumed exchange rate of 8,00 NOK/Euro 33047_1 - 01.2002 - * 15 - Hydro Media 16 VAW Financial impact on Norsk Hydro q Pro forma 2001 EBITDA: EPS: + 8% + 1.30 NOK/share 0.7 q q Estimated* debt/equity: Hydro maintains emphasis on keeping A/A2 rating * Estimated after transaction 33047_1 - 01.2002 - * 16 - Hydro Media 17 Norsk Hydro and VAW combined Pro Forma Total assets 31 Dec. 2001 Total assets Norsk Hydro Norsk Hydro + VAW 21 % 15 % 12 % 40 % 45 % 16 % 18 % 33 % Oil and Energy Aluminium Agri Other 33047_1 - 01.2002 - * 17 - Hydro Media 18 Norsk Hydro and VAW combined Pro Forma EBITDA 2001 Norsk Hydro Norsk Hydro + VAW 8% 5% 12 % 13 % 16 % 7% 73 % 68 % Oil and Energy Aluminium Agri Other 33047_1 - 01.2002 - * 18 - Hydro Media 19 Speedy return to strong financial position Long-term debt/equity* illustrating expected effect of VAW acquisition 0,69 0.55 0.7 0,7 0,6 0,5 0,4 0,3 0,2 0,1 0 1997 1998 0,37 0,49 0.50 0.39** 0.27** 0.5 1999 2000 2001 After acq. Target 2003 * Long-term debt divided by shareholders' equity plus minority interest ** Adjusted ratio if current cash position had been reduced to NOK 10 billion 33047_1 - 01.2002 - * 19 - Hydro Media 20 Planned capital allocation 2002 Capital expenditures by business area Oil & Energy Other Agri Aluminium* Oil and Energy* Aluminium Agri Others Total 8.5 bn. NOK 8.0 bn. NOK 2.0 bn. NOK 0.5 bn. NOK 19.0 bn. NOK *Excl. exploration budget of 2.4 bn. NOK * 2002 VAW investments included. (VAW acquisition cost and potential SDFI acquisition not included ) 33047_1 - 01.2002 - * 20 - Hydro Media 21 Active divestment program q New divestment target of NOK 10 billion by end 2003 s Larger non-core candidates for divestment include: – Petrochemicals – KFK shareholding – VAW Flexible Packaging q Continued divestments within core areas s Recent examples: – Pelican, non-core NCS licenses, Oleochemicals business q Fix, sell or close underperforming units 33047_1 - 01.2002 - * 21 - Hydro Media 22 CROGI — our key measure of return q CROGI - Cash Return on Gross Investments: EBITDA less tax Gross invested capital q CROGI at "normalised" prices — good indicator for: s s Average over the cycle performance Effects of internal improvement efforts q CROGI at actual prices — good profitability indicator for investors Should reach 10% as an average over the cycle 33047_1 - 01.2002 - * 22 - Hydro Media 23 CROGI performance Actual prices Oil and Energy 16 14 12 10 8 6 4 1997 1998 1996 1999 2000 2001 2001 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000 2001 Aluminium Agri 2 0 33047_1 - 01.2002 - * 23 - Hydro Media 24 Medium term CROGI outlook (normalised) q Agri — well positioned to show levels above 10% in coming years Aluminium — programs initiated to bring normalised CROGI to 10% by 2004 Oil and Energy — currently around 9%. Build-up of international production takes time Asset productivity improvements s s q q q Implement divestment program Reduce operating capital 33047_1 - 01.2002 - * 24 - Hydro Media 25 Main financial targets q Cash Return on Gross Investment (CROGI*), nominal after tax Return on new investments, real rate after tax Dividend: Share of net income, average over the cycle Solidity: Long term interest-bearing debt/equity 10% 10% q q 30% q 0.5 * Based on "normalised" price set to reflect average over the cycle performance 33047_1 - 01.2002 - * 25 - Hydro Media 26 Consolidated income statements NOK million Operating revenues Operating income Equity in net income of non-consolidated investees Interest income and other financial income Other income Earnings before interest expense and tax (EBIT) Interest expense and foreign currency gain/loss Income before tax and minority interest Tax (payable and deferred) Minority interest Net income Earnings per share* - NOK 2001 152 835 21 083 566 2 847 578 25 074 (3 609) 21 465 (13 750) 177 7 892 30.50 2000 156 861 28 466 672 1 747 3 161 34 046 (3 905) 30 141 (16 178) 18 13 981 53.40 *) For calculation of EPS, 2001: 258,434,202 shares, 2000: 261,620,982 shares 33047_1 - 01.2002 - * 26 - Hydro Media Hydro Oil & Energy Senior Vice President David Nunn Norsk Hydro ASA 28 Hydro Oil and Energy Competitive edge: q Large operator Strong and innovative technology Commercial track record q q 33047_1 - 01.2002 - * 28 - Hydro Media 29 Oil and Energy 2001 delivery Objectives CMD December 2000 Production growth Actions taken q q q Snorre B, Girassol and Terra Nova 2001 production in line with revised forecast 5-6% CAGR* 2001 - 2005 30% awarded in Angolan block 34 Farm-in Gulf of Mexico and Angolan block 25 Implementation of company based sales from NCS Continued build up of commercial activities New projects confirm direction Application deadline 10. January International build up q q Positioning for liberalised European gas market Reduced F&D cost SDFI positioning q q q q * CAGR: Compound annual growth rate 33047_1 - 01.2002 - * 29 - Hydro Media 30 Improving performance in 2001 q q q q q q Maintain positive safety trend Maintain operating performance in first quartile Delivering projects on cost and schedule High-grading of global exploration portfolio Divestment of non-core licences Capital discipline 33047_1 - 01.2002 - * 30 - Hydro Media 31 Strong production growth 1,000 boe/day 700 600 500 400 300 200 100 0 1998 1999 2000 2001E 2002E 2003E Oil Int. 2004E Gas 33047_1 - 01.2002 - * 31 - Hydro Media -6% 05; 5 20 2001CAGR 2005E Oil; Norway and Int. NCS production cut first half 2002 included Oil Norway 32 New fields on stream 2002 - 2005 International activity Terra Nova Jasmin Dalia Rosa/Lirio Kharyaga 2 NHY share 20,000 boe/day 5,000 20,000 8,000 9,000 (phase 1-2) 2005 2005 Development PDO Submittal PDO Approval/ Sanctioning Start Production NCS Operator Tune Grane Vale Fram Vest 22,000 50,000 6,000 15,000 NCS non operator Kvitebjørn Mikkel Kristin 25,000 5,000 27,000 2004 2005 1998 1999 2000 2001 2002 2003 33047_1 - 01.2002 - * 32 - Hydro Media 33 Reserve replacement E&P mill boe proven reserves Reserves 2000 Reserve upgrades New reserves Sales, purchase and swaps Production Reserves 31.12.2001 Reserve replacement** Reserve life oil Reserve life gas * Of which 19 is new conversion factor for NGL ** Excl. sales, purch. and swaps 33324E - 02.2002 - *33 - Hydro Media 2 040 99* 89 (1) (153) 2 073 122% 8 years 30 years 34 F&D costs F&D costs excl. sale & purchase 200 Reserve Replacement (%) 20 18 15 100 13 10 50 8 5 0 3 -50 1995 1996 1997 1998 1999 2000 2001 2002 2003 0 2003* F&D costs (USD/boe) 150 Year Fields booked Kristin, Mikkel, Sigyn, Rosa Lirio, Jasmin Snøhvit, Murzuk A, Mabruk East Ormen Lange, Tyrihans, Kharyaga ph. 3 2001 2002* * Planned Res. replacement F&D (3-year roll) F&D Target 33047_1 - 01.2002 - * 34 - Hydro Media International activities — 2001 main events Russia Kharyaga Shtokman East Coast Canada Libya: 4 finds Iran 35 Gulf of Mexico T&T Block 27 Angola 33047_1 - 01.2002 - * 35 - Hydro Media 36 2002 — shift in exploration focus Exploration - 2002E MNOK Norway 2000 1500 1000 500 0 1999 2000 International GoM Canada Angola Iran 2001E 2002E Libya, Russia, Trinidad & Tobago Norway 33047_1 - 01.2002 - * 36 - Hydro Media 37 Exploration 2002 — significant wells Location NCS Solsikke Canada - Anapolis Canada - Flemish pass Trinidad Tobago - Catfish Angola Block 34 GoM - 3 wells Iran - Anaran Norsk Hydro share 50% 25% 30% 19% 30% 25% 100% Well expec. finalised 3Q 2002 1Q 2002 3Q 2002 1Q 2002 3Q 2002 2002 3Q 2002 33047_1 - 01.2002 - * 37 - Hydro Media 38 Third largest gas producer on the NCS Norsk Hydro expected natural gas production BCM 15 q Total Norwegian gas export 2010 approx. 110 BCM Company based sales introduced Market development s q 10 q 5 Continental market driven by gas to power needs UK - need for imports New markets; Scandinavia and Poland s 0 1998 s 2000 2002 2004 2006 2008 2010 33047_1 - 01.2002 - * 38 - Hydro Media Ormen Lange — the most important gas discovery since Troll q 39 Reserves: 400 bcm Hydro operator for the most challenging development on NCS Market gas at competitive costs; Target; 2 USD/mill. BTU Plan for development 4Q 2003 Production start 2007 q q q q 33047_1 - 01.2002 - * 39 - Hydro Media 40 Flexibility gives value creation q Equity sales from NCS: 6 bcm 2002 q Marketing (mainly based on third Ormen Lange party sourcing): 9 bcm 2002 Snorre Statfjord Gullfaks Oseberg Troll Heimdal Sleipner Mongstad Sture Kollsnes Bergen Kårstø Stavanger Oslo St. Fergus Cruden Bay Ekofisk Teesside Bacton Dornum Emden Etzel Salzwedel Dunkerque Sluiskil (Europe's largest gas consumer) Zeebrugge 33047_1 - 01.2002 - * 40 - Hydro Media Norsk Hydro has the ability to commercialise gas in a liberalising market Emden Noordbroek 41 Targeted Dutch end user sales in 2002: s s Balgzand 300 end-users 4.7 bill. sm3 (incl. portfolio management) Approx. 20% of Dutch industrial market Maasvlakte s Hydro Agri Sluiskil Zelzate Hydro Sluiskil - Europe’s largest consumer of natural gas 's Gravenvoeren 33047_1 - 01.2002 - * 41 - Hydro Media 42 Commercial innovation q q Norsk Hydro natural gas sales mainly based on third party sourcing Low capital requirement s s BCM 10 9 8 7 6 5 4 3 2 1 0 1999 2000 2001E 2002 Trading Good margins: EBITDA of 100 MNOK 1- 3Q 2001 Industrial customers Internal consumption s Customers s s q Operations based in Brussels Internal consumpion External sales 33047_1 - 01.2002 - * 42 - Hydro Media 43 Key messages q Production growth 2001 - 2005 expected to average 5 - 6% s 2002 production target: 430,000 boed* q q Key exploration prospects to be tested in 2002 Using commercial innovation to add value to Norsk Hydro's upstream gas position F&D costs on track towards USD 5/bbl q *Including NCS cutbacks 33047_1 - 01.2002 - * 43 - Hydro Media Norske Finansanalytikeres Forening Hydro Agri Turnaround and Way Forward Senior Vice President Hallgeir Storvik Norsk Hydro ASA Oslo, 7 March 2002 45 Hydro Agri - highlights q q q q q Strong earnings improvement Annual costs and manning reduced by over 30%* Fertilizer volumes negatively affected by exceptionally wet spring in Europe Global marketing agreement for speciality fertilizers KFK: Turnaround in progress *compared to 1998 level 33047_1 - 01.2002 - * 45 - Hydro Media 46 Hydro Agri EBITDA NOK million 2 000 1 500 1 000 500 0 - 500 (309) 929 964 776 214 263 524 150 1 041 846 819 Plant Nutrition Gas and Chemicals KFK Eliminations 1 574 1 276 1 107 916 1 172 -1 000 1998 Accumulated 1999 11999 141 2000 3 982 2000 2001 4 769 2001 33324E - 02.2002 - *46 - Hydro Media 2 1998 370 47 Hydro Agri Turnaround improvements* Operating Income improvement MNOK Achieved 1999-2000 Achieved 2001 Annual cost Agri savings Turnaround compared to target by 2001 1998 level 2 662 218 - Plant Nutrition Gas and Chemicals 2 065 171 597 47 Hydro Agri total 2 236 644 2 880** 2 400 - 2 700 Manning reduction (incl. temps) 2 635 1 115 3 750 2 700 - 3 000 * Excl. KFK ** Of which fixed cost improvements are 2 388 MNOK 33324E - 02.2002 - *47 - Hydro Media Many closures and divestments of non-core businesses since 1999 q 48 Plants s s s s s s s s s s s q Fertilizer marketing organizations s s s s s s s s Immingham fertilizer production Landskrona fertilizer production Montoir nitrate production Hurel Arc Socadour Socofer La Pallice Oberhausen Barletta Porsgrunn potassium nitrate production Glomfjord REO production Vlaardingen (to JV) Hungary Ukraine Bulgaria Slovakia Rumania Slovenia Croatia Latvia (51%) q q q q q q q q q q q q q q Hydro Oleochemicals Hydelko Danish propane business Swedish non-CO2 gas business Hydroship Services Hydro Shipping Agency Group Czech non-fertilizer distributors Polish non-fertilizer distributors Agtec Chafer Machinery Noru Priroda mill Burlington River Terminal (to JV) Hydro Hagebruk (to JV) Various ships 33047_1 - 01.2002 - * 48 - Hydro Media 49 Large productivity improvements European plants Production per employee tonnes 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1994 1996 1998 2000 P2002 1995 1997 1999 E2001 150 1994 1995 1996 1997 1998 2000 P2002 1999 E2001 200 250 NOK 300 Fixed costs per tonne* * Excluding non-recurring items 33047_1 - 01.2002 - * 49 - Hydro Media Seizing business opportunities at the bottom of the business cycle Ownership share in parentheses q q q q q 50 Trevo, Brazil (91%) Kynoch, South Africa (100%) Philphos marketing agreement, Philippines (0%) SQM marketing agreement, Chile (0%) Qafco IV expansion and marketing agreement (25%) 33047_1 - 01.2002 - * 50 - Hydro Media Strong leadership and focus on main value drivers q 51 Productivity s Productivity improvements will be our trademark We own assets by design, not by default Asset light strategy with focus on supply/demand balance q Portfolio s q Growth s 33047_1 - 01.2002 - * 51 - Hydro Media Shareholder value - the best fertilizer performers have done well Average annual Total Shareholder Return* across the business cycle (1991-2000) PCS Agrium** Dow Chemicals DuPont Kali & Salz Kemira** 0 23,4 17,8 12,5 11,5 52 3,9 3,3 5 10 15 20 25 Annual TSR (%) * TSR = Share price appreciation + dividends to shareholders ** Agrium from merger in 1993 to 2000, Kemira from IPO in 1994 to 2000 Source: BCG database 33047_1 - 01.2002 - * 52 - Hydro Media 53 Top quartile Hydro Agri performance in 2001 Gross return on assets* Jan. - Sep. 2001 Kali & Salz Hydro Agri Kemira DuPont Agrium PCS IMC Dow Chemicals 0 2 2,9 4 6 8 10 12 14 6,9 9,2 8,8 8,7 10,8 10,6 12,2 Percent * Gross return on assets is similar to CROGI and defined as EBITDA divided by Total assets Source: Company quarterly reports 33047_1 - 01.2002 - * 53 - Hydro Media Our agri business is a unique combination of size and global presence All fertilizer products 25 54 Hydro Agri Non-European sales reduce seasonality 7 6 Mill. tonnes products sold 2000 Mill. tonnes fertilizer product sales 2000 20 15 10 5 0 gr iu m yd ro al i+ Sa lz PC S IM C 5 4 3 2 1 0 First quarter Second quarter Third quarter Fourth quarter H A Hydro Overseas Hydro Europe Overseas Home market K Europe Other Northern hemisphere Southern hemisphere Source: Annual reports 33047_1 - 01.2002 - * 54 - Hydro Media 55 Strong leverage based on purchasing power Hydro Agri's fertilizer purchasing is similar to the entire imports of large countries 9,7 9,2 6,5 4,0 Brazil China France India Hydro Agri 0,0 2,0 4,0 6,0 7,4 8,0 10,0 12,0 Mill. tonnes fertilizer * Products included are Urea, AN, CAN, AS, DAP, MAP, TSP, MOP, SOP Source: IFA 33047_1 - 01.2002 - * 55 - Hydro Media 56 Hydro Agri, the global leader in q q q Ammonia - the basis for all nitrogen fertilizer Nitrates - the most important fertilizer in Europe Balanced fertilization (NPK) - serving value-added segments Speciality fertilizers - serving high margin cash crop markets Industrial applications - mainly in Europe Global marketing network - local activities in more than 60 countries on all continents 33047_1 - 01.2002 - * 56 - Hydro Media q q q 57 Hydro is the leading ammonia player Production capacity Mill. tonnes 6 5,2 5 4 3 2 1 0 Hydro* Agrium PCS Kali+Salz IMC Trade Mill. tonnes 5 3,8 4 3 1,6 0,7 0 Hydro PCS Agrium IMC Trammo Mitsui 4,5 3,8 1,5 0,5 2 1 0 1,5 0,65 Shipping capacity ‘000 mts 175 150 125 100 75 50 25 0 H yd ro A gr iu m P C S IM C Maritime storage capacity ‘000 mts 458 500 400 159 140 95 51 54 35 0 N itr oc he m M it s ui m o 300 215 200 100 0 Hydro Agrium PCS IMC Kali+Salz 204 168 44 * Incl. Hydro share of JVs Tr am Source: Company info, Blue-Johnson, British Sulphur, Hydro, 33047_1 - 01.2002 - * 57 - Hydro Media Leading market position in speciality fertilizers Calcium Nitrate (CN) Market share (%) 100 88 80 60 40 20 0 Hydro Others 12 58 Potassium Nitrate (PN) Market share (%) 50 41 40 41 30 20 10 0 SQM/ Hydro Haifa Others 18 Calcium Nitrate and Potassium Nitrate constitute approximately 65% of total speciality fertilizer market 33047_1 - 01.2002 - * 58 - Hydro Media 59 Hydro Agri's global leadership strategies Ammonia s Grow business by playing on strengths Maintain market share in Europe Growth in cash crop market Develop alliance with SQM Nitrates Balanced fertilization (NPK) Speciality fertilizers Selected industrial applications Marketing network s s s s Develop new products and markets Reach critical size in all chosen markets 33047_1 - 01.2002 - * 59 - Hydro Media s 60 Hydro Agri: Key messages q q q q Agri Turnaround targets exceeded Unique business model based on global strengths Strong platform for future value creation Good industry performers deliver competitive shareholder returns 33047_1 - 01.2002 - * 60 - Hydro Media 61 Ambitious financial targets q Have an average profitability across the cycle which is s s s higher than Hydro's general requirement of 10% CROGI in the best quartile of chemical industry peers leading among agri companies q q Pursue an asset light growth strategy Make good profits at bottom of business cycle ➨ Targeted annual EBITDA growth in 2002 and 2003: 10-15% ➨ Minimum EBITDA at bottom of business cycle: 3 BNOK 33047_1 - 01.2002 - * 61 - Hydro Media 62 Hydro Aluminium Senior Vice President Arvid Moss Hydro Aluminium Oslo, March 7, 2002 33047_1 - 01.2002 - * 62 - Hydro Media 63 Milestones 2001 VAW -acquisition Technal Building Systems Magnesium restructuring q q q q q q q Sunndal-expansion Expansion Søral, Slovalco, Alunorte Remelters in Spain & Texas Cost-reduction programmes initiated 33047_1 - 01.2002 - * 63 - Hydro Media 64 The industry structure Total consumption of aluminium, Western World Rolled Products 50% Cast products Other 5% 20 % Degree of Casting integration: 10% Extruded products 25% 1000 mt Degree of Rolling integration, 80% 7000 6000 5000 4000 3000 2000 1000 0 Western Europe Eastern NAFTA Lat. Japan America Europe 1000 mt Degree of Extrusion integration, 50% 7000 6000 5000 4000 3000 2000 1000 0 Western Eastern NAFTA Lat. Japan Europe Europe America 33047_1 - 01.2002 - * 64 - Hydro Media Independent Integrated 65 Hydro Light Metals and VAW (2000 - figures) Gross revenues EBITDA Hydro Light Metals 6,400 mill Euro 680 mill Euro VAW 3,700 mill Euro 450 mill Euro Other Rolled 10 % products 5% Flexible pack. 13 % Castings 7% Metal 34 % Extrusion 27 % Metal 58 % Rolled products 40 % Employees total - in Germany - in Norway Hydro Light Metals 17,000 1,000 6,300 VAW 16,000 7,600 0 Extrusion 6% Euro/NOK: 8.00 33047_1 - 01.2002 - * 65 - Hydro Media The new entity: Hydro Aluminium Pro Forma 2000 combined 66 Flexible pack. Other 4% 9% Other Europe 12 % Norway 2% Other 2% Asia/Pacific 7% North America 16 % Rolled products 18 % Metal 49 % EU(ex. Germany) 40 % Germany 21 % Extrusion 20 % Sum sector gross revenues Sum Business Area’s external sales 33047_1 - 01.2002 - * 66 - Hydro Media 67 Hydro – VAW: An attractive combination Attractive financials Innovative global force More value for customers Significant synergies and value creation Rapid integration 33047_1 - 01.2002 - * 67 - Hydro Media 68 Creating a “top-tier” company Total production, thousand tonnes, 2000 Europe 1200 1000 800 600 400 200 0 4500 4000 3500 3000 2500 2000 1500 1000 500 0 A lc an V A W ne y P ec hi Global: World Integrated Aluminium Companies Pe ch in ey yd ro +V C Primary Rolled products Extrusion Note: VAW’s Kurri Kurri-smelter in Australia and HAL’s Wells extrusion system in the US included full-year Alcoa includes Reynolds, Alcan includes Alusuisse 33047_1 - 01.2002 - * 68 - Hydro Media H yd ro H + K ai se r A lc oa W lc oa lc an A A or us A 69 A full range aluminium company Global Volumes 2000 Hydro VAW LT Contracts Alumina* Hydro remelt and 3rd party** Primary production Downstream 0 500 1000 1500 2000 2500 3000 Thousand tonnes * Aluminium equivalent. VAW metallurgical alumina only ** Remelt + Hydro non-equity primary: Contracts to sell metal from Slovalco, Talum, Pianmeca, Aluvale. Goldendale tolling agreement. Trading. 33047_1 - 01.2002 - * 69 - Hydro Media 70 Leadership in global market segments Foil Litho Building systems Magnesium alloys Structures Heat Transfer Engine castings 33047_1 - 01.2002 - * 70 - Hydro Media 71 Strong market positions Market shares, per cent Hydro VAW 5.5 Combined position #3 Hydro Primary metal production (Global) Rolled products Europe Extrusion Europe** Extrusion US 3* VAW 2.5 4 15 6 19 0 3 23 15 9 #2 #1 #3 * Not including 3rd party sourcing & remelting ** Soft alloys 33047_1 - 01.2002 - * 71 - Hydro Media Combining positions and competencies within Rolled Products 72 VAW: Efficient, high volume capacity - Positioned in high value and attractive markets - Has the world benchmark plants in thin foil and litho production, and good margins - Positioned in automotive sheet Hydro: Niche focus and differentiating technology - Recycling based products - Continuous casting - Efficient, small scale operations 33047_1 - 01.2002 - * 72 - Hydro Media 73 Synergy & cost improvement actions 2002 - 2003 Effect approx. 1.6 Bn NOK in 2004 EBITDA impact 2004 Million NOK Operating synergies 650 Key drivers Procurement & logistics Best practice sharing operations Utilization of recycling Capacity optimization Streamlining SG&A Hydro and VAW 950 Cost & manning reductions within support functions Total impact 1,600 33047_1 - 01.2002 - * 73 - Hydro Media 74 Going Forward 33047_1 - 01.2002 - * 74 - Hydro Media Recovery in downstream shipments in Europe is expected Est. European rolled products shipments Est. European extrusion shipments 75 annual change (%) 5 4 2,5 1 annual change (%) 5 4,5 3,8 3 1 -1 -1,5 -3 -5 3 1 1 -1 -3 -5 -4 1995-2000 2001 2002 2003-2005 1995-2000 2001 2002 2003-2005 Source: EAA, CRU 33047_1 - 01.2002 - * 75 - Hydro Media Effect of slowdown in the US has been extreme Extrusion shipments 2000 76 -21% 69 - 2000: 2.7% growth p.a. 000 tpa 1500 -20% -25% 1000 500 0 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2002E 33047_1 - 01.2002 - * 76 - Hydro Media Clearly weaker financial performance in 2001 "CROGI"- proxi" % = EBITDA less tax*/ Gross investment 10 % 9% 8% 7% 6% 5% 4% 3% 1997 Hydro Aluminium 1998 Pechiney 1999 Alcoa 2000 Alcan 2001 77 Source : Hydro *assumes standard taxrate of 30% for all companies 33047_1 - 01.2002 - * 77 - Hydro Media Substantial financial effects of main programmes 2002-2003 (full effect 2004) Mill.NOK 78 Cost reductions EBITDA - investment projects Income increase Fixed and variable Fixed cost 2500 2000 1500 1000 500 0 Magnesium Hydro/VAW Porsgrunn Optimize/SG&A Investment Projects* * Projects : Including approved projects like SU 4, Alunorte, Slovalco, Søral, Remelters & Aluchemie 33047_1 - 01.2002 - * 78 - Hydro Media 79 The way forward ✔ Forceful integration of VAW and Technal ✔ Realise significant short term improvement potentials ✔ Successful restructuring of magnesium ✔ Execution of large projects 33047_1 - 01.2002 - * 79 - Hydro Media Organisational structure and first level management identified (effective from after closing) 80 CO-CEO Integration Helmut Burmester Hydro Aluminium Integration Team CEO: Jon-Harald Nilsen Jon-Harald Oslo Support functions Primary Metal President: Truls Gautesen Oslo Metal Products President: Svein Richard Brandzæg Oslo Rolled Products President K.H.Dörner/ A.Schütte Germany Extrusions President Jean-Claude Raimondi Lausanne Automotive President Dieter Braun Germany North America President: Martin Carter Baltimore Flexible packaging President Jürgen Hermans Germany 33047_1 - 01.2002 - * 80 - Hydro Media 81 Substantial reduction in manning Manning 1800 1600 1400 1200 1000 800 600 400 200 0 Mid 2002 End 2002 End 2003 Hydro/VAW SG&A Magnesium Expected effect approx. 1.2 - 1.4 bn NOK Net financial effect in 2002 will be negative due to upfront restructuring costs 33047_1 - 01.2002 - * 81 - Hydro Media 82 Safe harbour statement In order to utilize the "Safe Harbor" 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 2000 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission. 33047_1 - 01.2002 - * 82 - Hydro Media