Hydro Annual Report 2011b

Contribution margin to profit
EUR per ton indexed to 2006 baseline
112%
110%
108%
106%
104%
102%
100%
2007
2008
cost-effective procurement of materials and supplies. We plan to
enhance profitability by differentiation through innovation and
service, optimizing the flexibility inherent in our production
system and focusing on the core assets within our portfolio.
Build on our strong position in Europe
We intend to develop and improve our market share by leveraging
our preferred supplier position and optimizing our margins
through the mix of products that we deliver to the market.
With a focus on our strong position within packaging, general
engineering, lithographic sheet, construction and automotive,
we will continue to emphasize the quality of our products and
services to our customers in order to drive the performance of
our business.
Sustain our cost reductions through
continuous improvement
We will maintain our focus on efficiency throughout our operating
environment through the optimization of shift models,
continuous cost management and the ongoing implementation
of programs such as our Rolled Products Business System
Hot rolling process
2009
2010
Sheet ingot Preheating
2011
Claim rate
Indexed compared to 2006 baseline
100%
80%
60%
40%
20%
0%
2007
2008
BusIness DesCrIptIon
Rolled Products
2009
2010
2011
37
designed to enhance the operational excellence of our system.
We plan to exploit the strengths in our asset base and core
competencies by optimizing production runs and shifting volumes
between plants to obtain optimal product flow.
Operations
The rolling process consists of heating 600 millimeters (mm)
sheet ingot to about 500 degrees Celsius and gradually rolling
it into thicknesses of 3-13 mm for further processing. An alternative
process, continuous casting, converts molten metal
directly into coiled strip, typically 4-8 mm thick. Once cool,
the thinner metal is further processed in cold rolling mills,
producing various types of products including foil, lithographic
sheet, sheet and strip.
Cost and revenue drivers
Rolled products is a margin driven business based on a conversion
price where the LME cost element is passed on to the
customer. Contracts are generally medium term. The cost
structure includes a high proportion of fixed costs, so results
are volume sensitive.
Hot reversing mill Finishing mill
The slabs are preheated before entering the hot reversing mill. The sheets are rolled to the desired thickness in the finishing mill.