three green bullets

Hydro increases improvement ambition from USD 100 to USD 300 per tonne

Hydro’s ambition to improve earnings from its wholly owned smelters by USD 100 per tonne is now being increased to USD 300 per tonne. The measures aim to improve the aluminium smelters’ competitiveness and restore profitability to a sustainable level.

September 22, 2010

Hydro hever forbedringsambisjonen fra 100 til 300 US-dollar per tonn
IMPROVEMENTS: Measures will be taken to improve the competitive-ness and profitability of Hydro's aluminium smelters. (Photo: Helge Hansen)

In the autumn of 2009, Hydro launched a cost improvement program in order to reduce operating costs by USD 100 per tonne of primary aluminium produced by the end of 2011, compared to the 2009 level. The program is on schedule.

“We must make the smelters more robust. Competition is hard in the aluminium industry, and with a continued uncertain market situation, we need to take the necessary steps to improve our long-term competitiveness,” says Hilde Merete Aasheim, executive vice president and head of Hydro's Primary Metal business area.

“We will now increase our ambitions and implement measures which will help improve our cost position by a further USD 200, mainly by the end of 2014," Aasheim says.

The autumn 2009 program to reduce costs by USD 100 per tonne has been focusing on operational improvements, where a more stable operation of aluminium production means lower production costs.

The existing improvement program will now be extended, and Primary Metal will improve efficiency, implement improvements and reduce costs in areas such as purchasing, logistics, technology, manning and organization. In addition, the aim is to obtain a further improvement from margins on metal products from the smelter casthouses – in total, USD 300 per tonne in improvements when all measures are identified and implemented.

The improvement program will focus on costs we are able to influence, mainly so-called conversion costs, in Hydro’s wholly owned aluminium smelters. The improvements do not include the effect of somewhat higher energy costs in coming years, or fluctuations in raw material prices and other input factors. 

 

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Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management’s plans, objectives and strategies for Hydro, such as planned expansions, investments or other projects, (c) targeted production volumes and costs, capacities or rates, start-up costs, cost reductions and profit objectives, (d) various expectations about future developments in Hydro’s markets, particularly prices, supply and demand and competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, 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-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty.  Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized.  Factors that could cause these differences include, but are not limited to: our continued ability to reposition and restructure our upstream and downstream aluminium business; changes in availability and cost of energy and raw materials; global supply and demand for aluminium and aluminium products; world economic growth, including rates of inflation and industrial production; changes in the relative value of currencies and the value of commodity contracts; trends in Hydro’s key markets and competition; and legislative, regulatory and political factors.

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

 
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Updated: September 22, 2010
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