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Norsk Hydro Capital Markets Day 2012: Creating a global leader

November 29, 2012 - Oslo, Norway

Hydro is focusing its Capital Markets Day 2012on the improvement efforts beingmade throughout the company, aiming to create a global leader in aluminium.Hydro is expecting world aluminium demand outside China of 2-4% in 2013 andsolid global long-term growth of 4-6% annually over the next 10 years.

In its value proposition, Hydro's targets are to:

* Deliver on ambitious improvement efforts along the value chain toimproverelative industry position

* Capitalize on raw material positions through internal improvements andcommercialization of bauxite and alumina markets

* Maintain financial strength and flexibility to mitigate weak andvolatileMarkets

* Ensure competitive shareholder return with the ambition to maintainabsolutedividend level for 2012

"Hydro has delivered significant improvements, portfolio restructuring andtransforming transactions in the five years since becoming a streamlinedaluminium company, shaping Hydro into a company rich in both resources andopportunities and with strong positions throughout the value chain," saysPresident and CEO Svein Richard Brandtzæg.

In response to the uncertain economic environment, Hydro is presentingsignificant improvement efforts in all business areas. The USD 300 pertonneimprovement program in Primary Metal, launched in 2009, is developing inlinewith the 2013 completion target. Improvement efforts are also in place inalljoint venture smelters to improve operations and cost positionsof Hydro's part-owned smelters, now accounting for morethan half of Hydro's primary aluminium production.

In Bauxite & Alumina, the recently launched "From B to A" improvementprogram isaiming at annual improvements of NOK 1 billion, while the ambitiousimprovementprogram in Extruded Products is continuing with full force, even after theannouncement of the planned Sapa joint venture.

"It is encouraging to see the operational improvements now gaining momentuminBauxite & Alumina, with Paragominas showing a production increase of around40percent since our takeover in March 2011. While LME-linked contracts andrisingcosts on raw materials are putting pressure on earnings, the 'From B to A'program will further improve operations and strengthen the relativeposition ofBauxite & Alumina," says President and CEO Svein Richard Brandtzæg.

"The Sapa transaction will create value from day one for Hydro,establishing aglobal champion and increasing the global reach of Hydro's extrudedproductsbusiness. While Extruded Products is facing challenging markets, we arecertainthat the planned joint venture will have the capabilities necessary tofirstmeet the current headwinds and then to capitalize on the brighter long-termoutlook for aluminium applications," says Brandtzæg.

Qatalum, the 50/50 joint venture between Qatar Petroleum and Hydro, isproducingabove its annual nameplate capacity of 585,000 tonnes. Qatalum is a state-of-the-art smelter located in a logistically advantageous region.The smelter is ina first-quartile position, with a cash cost of USD 1,450-1,500 with today'smarket conditions.

The current high levels of macroeconomic uncertainty and a multi-speedworldeconomy are weighing on consumer sentiment, which in turn has led to weakeraluminium prices and softer end-user markets. Still, Hydro maintains itsviewthat the long-term outlook for aluminium remains positive due to its strongcapabilities.

World aluminum demand outside China is estimated to grow 2% in2012 and 2-4% in 2013. Aluminium fundamentals remain promising due to themetal's many positive qualities, including its light weight andrecyclability, and the globalaluminium market is expected to show solid long-term growth of 4-6%annuallyover the next 10 years.

"Although aluminium has seen the fastest-growing demand among base metals,wehave also seen a strong growth in new capacity, resulting in low prices andinadequate returns. Ensuring competitive shareholder return is importantforHydro, also in times of weak and uncertain markets. Based on what we seetoday,our ambition is to maintain the absolute dividend level for 2012," saysBrandtzæg.

Capital expenditures (capex) in 2013 are expected to be around NOK 3billion,down from an estimated NOK 4.2 billion in 2012. Sustaining capex are beingfurther reduced from about NOK 3.5 billion in 2012 to about NOK 3.0 billionin2013. The reduction in 2013 is partly due to Extruded Products beingreclassified as discontinued operations. Limited growth capex is expectedin2013.

Hydro is also presenting three earnings potential scenarios. The scenariosarebased on sensitivities for selected aluminium prices and NOK/USD exchangerates,using the last four quarters underlying EBITDA as baseline. All threescenariosindicate EBITDA significantly above sustaining capital expenditures,illustrating Hydro's cash generation ability.

Certain statements included within this announcementcontain forward-looking information, including, withoutlimitation, those relating to (a) forecasts,projections and estimates, (b) statements of management's plans, objectivesandstrategies for Hydro, such as planned expansions, investments or otherprojects,(c) targeted production volumes and costs, capacities or rates, start-upcosts,cost reductions and profit objectives, (d) various expectations aboutfuturedevelopments in Hydro's markets, particularly prices, supply and demand andcompetition, (e) results of operations, (f) margins, (g) growth rates, (h)riskmanagement, as well as (i) statements preceded by "expected", "scheduled","targeted", "planned", "proposed", "intended" or similar statements.

Although we believe that the expectations reflected in such forward-lookingstatements are reasonable, these forward-looking statements are based on anumber of assumptions and forecasts that, by their nature, involve risk anduncertainty. Various factors could cause our actual results to differmaterially from those projected in a forward-looking statement or affecttheextent to which a particular projection is realized. Factors that couldcausethese differences include, but are not limited to: our continued ability toreposition and restructure our upstream and downstream aluminium business;changes in availability and cost of energy and raw materials; global supplyanddemand for aluminium and aluminium products; world economic growth,includingrates of inflation and industrial production; changes in the relative valueofcurrencies and the value of commodity contracts; trends in Hydro's keymarketsand competition; and legislative, regulatory and political factors.

No assurance can be given that such expectations will prove to have beencorrect. Hydro disclaims any obligation to updateor revise any forward-looking statements, whether asa result of new information, future events or otherwise.

This information is subject of the disclosure requirements pursuant tosection5-12 of the Norwegian Securities Trading Act.

CMD Primary and Bauxite and Alumina:

CMD Hydro:

CMD Finance and Market:

This announcement is distributed by Thomson Reuters on behalf ofThomson Reuters clients. The owner of this announcement warrants that:

(i) the releases contained herein are protected by copyright and other applicable laws; and

(ii) they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: Norsk Hydro via Thomson Reuters ONE


Investor contacts in Hydro
Contact Rikard Lindqvist
Cellular +47 41751199
E-mail Email Contact

Contact Stian Hasle
Cellular +47 97736022
E-mail Email Contact

Press contact in Hydro
Contact Halvor Molland
Cellular +47 92979797
E-mail Email Contact


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