Demand and supply trends in flat rolled products - Packaging Nick Madden Vice President and Chief Procurement Officer March 10, 2010
Novelis is a Global Industry Leader! The world s leading producer of aluminum rolled products! The world s leading recycler of used aluminum beverage cans Construction 4% Transportation 7% Lithography 3% Other 9% Industrial 11% Foil & Packaging 14% Beverage Cans 52% 2
Novelis Worldwide Footprint North America Employees: 3,000 Revenues: $3.9 Bn Shipments: 1,109 kt Europe Employees: 5,800 Revenues: $3.7 Bn Shipments: 1,009 kt Novelis Total Employees 12,300 Revenues $10.2 billion 1 Shipments 2,943 kt 2 Locations 31 Countries 11 1 Earnings based on FY 09 results; reported in US dollars 2 Shipments include rolled products and ingots South America Employees: 2,000 Revenues: $1.0 Bn Shipments: 365 kt Asia Employees: Revenues: 1,500 $1.5 Bn Shipments: 460 kt 3
Global Aluminum Use by Product Form Total 46.6 million tonnes (51) Forgings & Other 2.0 mt Wire & Cable 5.1 mt 11% 4% 33% Flat Rolled Products 15.6mt (17) Extrusions 13.3 mt 29% 23% Castings 10.7 mt Source: CRU estimate - 2009 data (2008) 4 4
FRP Consumption by Region 000 tonnes 5 Year CAGR = 5.9% Source: CRU Feb. 2010 5
FRP Consumption by Market Sector 000 tonnes Source: CRU Feb. 2010 6
Global Beverage Can Market North America 109 billion cans 5yr CAGRs 04-09: +0.0% 09-14: Al % cans 100% South America 19 billion cans 5yr CAGRs 04-09: +10.2% 09-14: Al % cans 95% North America Global 262 billion cans CAGR 04-09 +2.3% 09-14 Al Cans: 83% mkt share South America Africa/ MidEast Europe Asia Europe 49 billion cans 5yr CAGRs 04-09: +3.6% 09-14: Al % can 70% Africa/Middle East 15 billion cans 5yr CAGRs 03-08: +10.0% 09-14: Al % cans 73% Asia 70 billion cans 5yr CAGRs 04-09: +2.6% 09-14: Al % cans 66% Source: various. All growth rates are CAGR, CSD/Beer in billion liters. Small parts of the world may not be surveyed and therefore, estimates slightly smaller than other sources. Example.Cent 2010 Amer, Novelis Cent Inc. Asia, parts of Africa, Turkey, ME etc. 7
Benefits of the Aluminum Can! Chills best 8 8
Benefits of the Aluminum Can! Chills best! Tastes best 9 9
Benefits of the Aluminum Can! Chills best! Tastes best! Vends best 10 10
Benefits of the Aluminum Can! Chills best! Tastes best! Vends best! Stacks best 11 11
Benefits of the Aluminum Can! Chills best! Tastes best! Vends best! Stacks best! Trucks best 12 12
Benefits of the Aluminum Can! Chills best! Tastes best! Vends best! Stacks best! Trucks best! Keeps best (shelf life) 13 13
Benefits of the Aluminum Can! Chills best! Tastes best! Vends best! Stacks best! Trucks best! Keeps best (shelf life)! Recycles best 14 14
Package preference is only one component of the purchasing decision Source: Concept Catalysts / imoderate consumer research Cans are the most preferred package for CSD because of their convenience benefits but price/value is a major driver of packaging purchase decisions. Most consumers prefer glass beer bottles for the perceived taste and drinking experience but many of these consumers purchase cans for their greater occasion relevance, value, and convenience. 15
U.S. Beer Market Volume Growth 1988 2013F 5 YR CAGR 1.2% Source: Beverage Marketing Corporation, May 2009 16
US Non-Alcoholic Packaged Beverage Volume Growth 1998 2013F Source: Beverage Marketing Corporation, May 2009 17
Beer cans have gained share recently, CSD declining Sources: Can Manufacturers Institute, www.census.gov Source: Concept Catalysts Lower on-premise consumption Shifting shopping patterns Larger pack formats/better value Packaging innovations Switch from CSD to other categories Survey part healthrelated and part value 18
Appreciation for the Aluminum Can The Bud Light House Who knew you were so environmentally responsible your house made of empty Bud Light cans. -- Bud Light Super Bowl advertisement, Jan. 2010 Aluminum Can-Packed Dog Drinks The highly portable, recyclable aluminum cans keep the doggie drinks fresh... -- Packaging World Magazine, Jan. 2010 The Beer Can Revolution Our goal is to deliver beer as fresh as possible, and the can is the best. Bon Appetit Magazine, Jan. 2010 19
Global Beverage Can Market North America 109 billion cans 5yr CAGRs 04-09: +0.0% 09-14: Al % cans 100% South America 19 billion cans 5yr CAGRs 04-09: +10.2% 09-14: Al % cans 95% North America Global 262 billion cans CAGR 04-09 +2.3% 09-14 Al Cans: 83% mkt share South America Africa/ MidEast Europe Asia Europe 49 billion cans 5yr CAGRs 04-09: +3.6% 09-14: Al % can 70% Africa/Middle East 15 billion cans 5yr CAGRs 03-08: +10.0% 09-14: Al % cans 73% Asia 70 billion cans 5yr CAGRs 04-09: +2.6% 09-14: Al % cans 66% Source: various. All growth rates are CAGR, CSD/Beer in billion liters. Small parts of the world may not be surveyed and therefore, estimates slightly smaller than other sources. Example.Cent 2010 Amer, Novelis Cent Inc. Asia, parts of Africa, Turkey, ME etc. 20
China & India Rising GDP Growth Versus GDP/Capita (2007 2050) GDP Growth (2007 2050) Brazil (2007) India (2050) Brazil (2050) China (2050) EU (2007) United States (2007) EU (2050) United States (2050) 2007 2050 China (2007) GDP per Capita Note: (1) Size of bubble is proportional to GDP of the economy (2) EU countries include France, Germany, Italy and UK Source: EIU, Goldman Sachs BRIC Report 21
Aluminum Rolling Capacity and Demand Thousands of Tonnes NA + Europe Global Source : CRU 22
Global Canstock Rolling Capacity by Region, 2009 Global Capacity: 4,203 kt 2000 k Source: CRU, Novelis Research 23
Future Trends Evolving industry structure Economic recovery Greater focus on environmental issues Healthier eating and drinking Demographic changes 24
Growing Concern About the Environment 25
Growing Demand 26
These Trends Bode Well For Aluminum 27