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Q4 2010 durch niedrigere Preise und höhere Kosten beeinflusst, Vale-Vertrag nach Plan

Hydro weist im vierten Quartal ein bereinigtes Ergebnis vor Finanzposten und Steuern (EBIT) in Höhe von 588 Millionen NOK aus, das ist ein Rückgang gegenüber 965 Millionen NOK im dritten Quartal. Niedrigere erzielte Aluminiumpreise, höhere Betriebskosten sowie ein saisonal bedingter Absatzrückgang wirkten sich abschwächend auf das Ergebnis aus.

  • Bereinigtes EBIT in Höhe von 588 Millionen NOK

  • Rückläufiges Ergebnis bei der Aluminiumproduktion aufgrund niedrigerer erzielter Aluminiumpreise, die teilweise durch Versicherungsleistungen für Qatalum ausgeglichen wurden

  • Verarbeitungsgeschäft schwächer aufgrund höherer Kosten und saisonal bedingtem Absatzrückgang, Margen weiterhin stabil

  • Ergebnisverbesserung für Energy dank hoher Preise und hoher Produktion
    Siebenprozentiges Wachstum der Nachfrage nach Primäraluminium auf den Hauptmärkten von Hydro für 2011 erwartet

  • Qatalum dürfte ab Juni 2011 die volle Kapazität erreichen

  • Durchführung des Vertrags mit Vale wahrscheinlich im Laufe des ersten Quartals 2011

  • Vorgeschlagene Dividende für 2010: 0,75 NOK je Aktie

2010 war für Hydro ein Jahr der Wende und 2011 wird diesen Wandel markieren. „Ich erwarte, dass Qatalum ab Juni voll produziert und dass die geplante Übernahme des Aluminiumgeschäfts von Vale im ersten Quartal abgeschlossen wird“, sagt Konzernchef Svein Richard Brandtzæg.
 
„Der Aluminiumpreis liegt im Moment auf einem komfortablen Niveau. Wir haben im Laufe des Jahres 2010 eine steigende Nachfrage erlebt, die auch 2011 angehalten hat. Beträchtliche Teile unseres Downstream-Bereiches haben für das erste Halbjahr 2011 gut gefüllte Auftragsbücher. „Dennoch zeigt das Ergebnis des vierten Quartals, dass wir weiterhin auf Kostenverbesserungen fokussieren müssen,“ so Brandtzæg.

Niedrigere erzielte Aluminiumpreise

Das bereinigte Ergebnis für Primary Metal sank im vierten Quartal, hauptsächlich verursacht durch niedrigere erzielte Aluminiumpreise. Dies wurde nur teilweise durch die Versicherungsleistungen ausgeglichen, die an den Stromausfall im August 2010 bei Qatalum geknüpft sind. Qatalum ist ein Joint Venture von Qatar Petroleum und Hydro. Das bereinigte Ergebnis von Alumina & Raw Materails war stabil, es wurde durch die guten Erträge des Handels mit Aluminiumoxid begünstigt.
 
Der operative Verlust bei Qatalum erhöhte sich wie erwartet im vierten Quartal. Das Hochfahren der Anlage wurde Mitte September wieder aufgenommen. Am Ende des vierten Quartals waren 321 von 704 Zellen voll in Betrieb. Das endgültige Erreichen der vollen Produktionskapazität wird durch die verzögerte Inbetriebnahme der Dampfturbinen des Kraftwerks gehemmt. Qatalum dürfte ab Juni 2011 voll produzieren.
 
Der Midstream- und Downstream-Bereich von Hydro hatte ein niedrigeres bereinigtes EBIT als im dritten Quartal, hauptsächlich aufgrund höherer Betriebskosten, einschließlich der Kosten für geplante Instandhaltungsarbeiten und dem saisonal bedingten geringeren Absatz. Die Margen waren weiterhin stabil. Das bereinigte Ergebnis für Energy stieg beträchtlich gegenüber dem vorhergehenden Quartal, ausschlaggebend dafür waren vor allem höhere Spotpreise und eine wesentlich höhere Stromproduktion.
 
Im Gesamtjahr 2010 belief sich das bereinigte Ergebnis von Hydro auf 3.351 Millionen NOK, 2009 war hingegen ein bereinigter Verlust in Höhe von 2.555 Millionen NOK zu verzeichnen gewesen. Die beachtliche Verbesserung wurde durch die Markterholung verursacht, die zu steigenden Preisen und höherer Nachfrage führte, hinzu kamen Kosteneinsparungen und Stellenabbau. Der Absatz auf dem Endmarkt stieg um 17 Prozent, während er im vorhergehenden Jahr um 18 Prozent gesunken war, was teilweise den Lageraufbau bei den Kunden reflektiert. Der Überschuss auf dem Gesamtmarkt wurde während des Jahres reduziert, aber die Lagerbestände sind noch immer sehr hoch.

Priorität für Kosteneinsparungen

Die bereinigten Ergebnisse des Upstream-Bereiches erhöhten sich 2010 wesentlich, vor allem aufgrund höherer erzielter Aluminiumpreise und besserer Ergebnisse im bestehenden Geschäft für Aluminiumoxid und Rohstoffe. Das Einsparen von Kosten in den Hütten von Hydro hat weiterhin höchste Priorität. Bis Ende 2010 wurde eine Kostenverbesserung um 50 US-Dollar je Tonne erreicht, das Verbesserungsprogramm sieht insgesamt eine Verbesserung um 300 US-Dollar je Tonne bis Ende 2013 vor.
 
Das bereinigte EBIT des Midstream-Bereichs wurde 2010 stark durch negative Währungseffekte beeinflusst. Der Downstream-Bereich verzeichnete beträchtlich höhere bereinigte Ergebnisse, da der Absatz fast das Niveau aus der Zeit vor der Krise erreichte. Weitere Maßnahmen zur Kostenreduktion und gute Betriebsmargen haben sich positiv ausgewirkt und Rolled Products erzielte in diesem Jahr ein Rekordergebnis. Das bereinigte EBIT für Energy stieg 2010 aufgrund der hohen Spotpreise und der hohen Produktion.
 
Der Netto-Cashflow aus dem operativen Geschäft belief sich im Quartal auf 3,6 Milliarden NOK. Die Investitionen lagen im Quartal bei 1,6 Milliarden NOK, einschließlich etwa 0,6 Milliarden, die an Qatalum geknüpft sind. Die Nettoliquidität von Hydro betrug am Ende des Quartals 11 Milliarden NOK.
 
Der Verwaltungsrat von Hydro schlägt für 2010 eine Dividende von 0,75 NOK je Aktie vor. Der Beschluss basiert auf verbesserten Erträgen und den Marktaussichten sowie auf der starken finanziellen Position von Hydro.

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Key financial information
NOK million, except per share data Fourth
quarter
2010
Third
quarter
2010
% change prior quarter Fourth
quarter
2009
% change prior year quarter Year
2010
Year
2009
               
Revenue 19,406 18,424 5 % 16,427 18 % 75,754 67,409
               
Earnings before financial items and tax (EBIT) 768 274 >100 % (938) >100 % 3,184 (1,407)
Items excluded from underlying EBIT 1) (180) 690   287   167 (1,148)
Underlying EBIT 588 965 (39) % (651) >100 % 3,351 (2,555)
 
Underlying EBIT:
Primary Metal 191 399 (52) % (717) >100 % 1,198 (2,556)
Metal Markets 62 163 (62) % (20) >100 % 321 (83)
Rolled Products 105 227 (54) % 57 84 % 864 26
Extruded Products 24 102 (77) % 68 (65) % 444 (67)
Energy 482 169 >100 % 295 63 % 1,416 1,240
Other and eliminations (277) (95) >(100) % (334) 17 % (893) (1,114)
Underlying EBIT 588 965 (39) % (651) >100 % 3,351 (2,555)
               
Net income (loss) 658 (63) >100 % (587) >100 % 2,118 416
               
Underlying net income (loss) 376 545 (31) % (791) >100 % 1,852 (3,066)
               
Earnings per share 0.39 (0.07) >100 % (0.45) >100 % 1.33 0.24
               
Underlying earnings per share 0.21 0.33 (35) % (0.61) >100 % 1.14 (2.5)
               
Financial data:
Investments 1,613 1,591 1 % 2,371 (32) % 6,231 5,947
Adjusted net interest-bearing debt (6,427) (8,280) 22 % (15,645) 59 % (6,427) (15, 645)
               
Key operational information
Primary aluminium production (kmt) 360 355 2 % 332 8 % 1,415 1,396
Realized aluminium price LME (USD/mt) 2,074 2,179 (5) % 1,804 15 % 2,113 1,698
Realized aluminium price LME (NOK/mt) 12,436 13,503 (8) % 10,452 19 % 12,674 10,764
Realized NOK/USD exchange rate 6.00 6.20 (3) % 5.80 3 % 6.00 6.34
Metal Markets sales volumes to external market (kmt) 417 429 (3) % 375 11 % 1,717 1,468
Rolled Products sales volumes to external market (kmt) 234 239 (2) % 211 11 % 945 794
Extruded Products sales volumes to external market (kmt) 127 134 (5) % 119 6 % 529 463
Power production (GWh) 2,263 1,479 53 % 1,929 17 % 8,144 7,897

 

See "Fourth quarter report 2010" for footnotes.

About Hydro's reporting

To provide a better understanding of Hydro's underlying performance, the following discussion of operating performance excludes certain items from EBIT (earnings before financial items and tax) and net income. See "Items excluded from underlying EBIT and net income" for more information on these items.

Reported EBIT and net income

Reported EBIT for Hydro amounted to NOK 768 million in the fourth quarter including net positive effects of NOK 180 million. These effects were comprised of net unrealized derivative gains of NOK 132 million, positive metal effects of NOK 92 million, insurance proceeds of NOK 90 million relating to the Qatalum power outage and other net negative effects of NOK 134 million including rationalization and closure costs.
 
In the previous quarter, reported EBIT for Hydro amounted to NOK 274 million including net negative effects of NOK 690 million. These effects were comprised of net unrealized derivative losses of NOK 524 million, negative metal effects of NOK 52 million and impairment charges relating to Qatalum amounting to NOK 114 million.
 
Net income for the fourth quarter amounted to NOK 658 million including net foreign exchange gains of NOK 232 million. In the third quarter Hydro incurred a net loss amounting to NOK 63 million including net foreign exchange losses of NOK 246 million.

Market developments and outlook

Upstream

LME prices continued to increase in the fourth quarter. Average three month prices started the quarter at a level of around USD 2,370 per mt and ended around USD 2,470 per mt. Market volatility continued with prices fluctuating within the range of USD 2,250 - 2,500 per mt in the quarter.
 
Global demand for primary aluminium excluding China increased 4 percent in the fourth quarter compared to the third quarter partly due to customer restocking. Annualized consumption and production amounted to 25.3 million mt and 25.7 million mt respectively. Primary aluminium consumption outside China grew 19 percent from 2009. We expect corresponding growth of about 7 percent in 2011 and somewhat slower growth in 2012. The market is expected to be within a manageable surplus in 2011.
 
Production in China declined in the fourth quarter by around 10 percent compared to the previous quarter, assumed to be due to the need to meet energy saving targets. Total production amounted to about 17 million mt for 2010. Demand increased by around 2 percent in the fourth quarter resulting in a decline in inventories.
 
LME stocks were relatively stable around 4.3 million mt during the quarter. Global inventories days have been falling as a result of improved demand.
 
Demand for metal products, in particular extrusion ingot and sheet ingot was strong and unchanged from the previous quarter. Demand for primary foundry alloys improved in Northern Europe, in particular in Germany and was also stronger in export markets in Asia.

Rolled products

Consumption in the European rolled products market was seasonally lower in the fourth quarter compared with the previous quarter. Demand increased around 17 percent in 2010 compared to 2009, but remained below the peak achieved in 2007. We expect a healthy demand to continue into the first half of 2011.

Extruded products

European demand for extruded aluminium products improved significantly compared to fourth quarter of the previous year, but remained weak within the building and construction sector. In North America demand was seasonally lower compared with the third quarter of 2010, and also lower than the fourth quarter of 2009. Developments in South America continued to be positive, especially in Brazil. Demand for precision tubing remains strong. Overall demand in the European and US extrusion markets is expected to continue to grow into the seasonally stronger first quarter of 2011. Recovery in the building and construction segment is expected to remain slow.

Energy

Nordic electricity spot prices increased during the fourth quarter in parallel with deteriorating hydrological conditions. Water reservoir levels in Norway declined to about 45 percent of full capacity by the end of 2010. Snow accumulation levels were 50 percent below normal. Colder weather beginning in the middle of November lifted spot prices further due to very high demand. Prices declined in January due to milder weather and more stable nuclear output, but reservoir levels remain at historically low levels. Prices are expected to remain fairly high throughout the first quarter of 2011.

Additional factors impacting Hydro

Hydro has sold forward substantially all of its primary aluminium production for the first quarter at a price level of around USD 2,325 per mt, excluding expected Qatalum production.
 
Qatalum is expected to produce roughly 500,000 mt of primary metal in 2011
 
Hydro's water and snow reservoirs were lower than normal at the end of January and also lower than the corresponding period in 2009. Due to the high spot price levels, Hydro's power production during the first quarter of 2011 is expected to be at same level as for fourth quarter 2010.

Primary Metal

Underlying results for Primary Metal declined during the quarter compared to the third quarter mainly due to lower realized aluminium prices partly offset by insurance proceeds relating to the power outage at Qatalum in the previous quarter.
 
Alumina and raw materials underlying results improved slightly in the quarter compared with the third quarter. For Alunorte, positive effects of higher realized alumina prices were partly offset by lower sales, higher bauxite, caustic costs and other operating costs. Underlying earnings for our alumina commercial activities were somewhat higher than the previous quarter driven by higher volumes and good margins on third party sales contracts.
 
Lower realized aluminium prices had a negative effect on underlying results for Primary aluminium amounting to about NOK 350 million in the quarter. Our cost improvement program continued according to plan, however, fourth quarter operating costs were somewhat higher than in the third quarter due to seasonal effects.
 
Operating losses for Qatalum increased in the fourth quarter due to higher depreciation charges and higher fixed costs including costs relating to restart of the ramp up at the plant. Insurance proceeds amounting to NOK 300 million were recorded in the fourth quarter of which NOK 210 million was included in underlying EBIT. Ramp-up of the plant restarted in the middle of September and at the end of the fourth quarter 321 out of 704 cells were fully operational. Final ramp-up to full production capacity will be hampered by delayed commissioning of the power plant steam turbines. It is expected that the plant will reach full output from June 2011.

Metal Markets

Underlying EBIT for Metal Markets declined in the fourth quarter. Currency and ingot inventory valuation effects were relatively neutral in the fourth quarter compared with substantial net positive effects in the previous quarter.
 
Excluding currency and ingot inventory valuation effects, underlying EBIT for Metal Markets also declined in the quarter. Our remelt operations delivered lower underlying results during the quarter mainly due to planned maintenance activities. Lower sales volumes for resale of third party products also had a negative impact on underlying results for the quarter. Underlying results for our metal sourcing and trading activities continued to be firm.
 
Total metal product sales excluding ingot trading was slightly lower mainly due to seasonally lower shipments of extrusion ingots in all markets.

Rolled Products

Underlying EBIT for Rolled Products declined compared to the third quarter of 2010 due to higher operating costs, including costs for planned maintenance activities, and somewhat lower sales volume.
 
Volume developments varied between our different business sectors. Lithography shipments increased together with a good production performance. General engineering sales were stable while automotive, heat exchanger sales were slightly higher supported by continued firm demand. Volumes for our thin gauge foil, beverage can and other packaging and building products declined mainly due to seasonal maintenance and other capacity constraints. Margins remained firm.

Extruded Products

Underlying EBIT for Extruded Products declined compared with the third quarter of 2010 mainly due to higher operating costs and seasonally lower volumes. The cost increases were due to planned maintenance activities and charges for ongoing improvement programs mainly related to rationalization initiatives, the implementation of a new IT system and increased marketing efforts. In the previous quarter, operating costs were positively impacted by seasonally lower employee related costs. Margins were firm for most business sectors in the fourth quarter.
 
Volumes for our European, North American and South American extrusion operations were all seasonally lower in the fourth quarter. Recovery in the building systems markets continued to lag the general extrusion market, in particular in southern Europe, where demand fell in the fourth quarter due to reduced public spending and increased uncertainty concerning economic developments. As a result, we have initiated further rationalization programs to improve the results of this business.

Energy

Underlying EBIT for Energy increased substantially compared to the previous quarter due to higher spot prices and significantly higher production. Cold winter weather, marginal precipitation and outages of nuclear power in Sweden resulted in high spot prices during the period.

Other and eliminations

Underlying EBIT for Other and eliminations amounted to a charge of NOK 277 million for the fourth quarter compared with a charge of NOK 95 million in the previous quarter and a charge of NOK 334 million in the fourth quarter of 2009. Eliminations included in underlying EBIT amounted to a charge of NOK 12 million in the fourth quarter compared with a income of NOK 39 million in the previous quarter and a charge of NOK 108 million in the fourth quarter of 2009.
 
Underlying results for the fourth quarter included increased costs for integration planning and other transaction costs relating to the Vale aluminium acquisition, as well as year-end adjustments for employee and pension costs.

Items excluded from underlying EBIT and net income

To provide a better understanding of Hydro's underlying performance, the items in the table below have been excluded from EBIT and net income.
 
Items excluded from underlying EBIT are comprised mainly of unrealized gains and losses on certain derivatives, impairment and rationalization charges, effects of disposals of businesses and operating assets, as well as other items that are of a special nature or are not expected to be incurred on an ongoing basis.
 
Linked to the agreement to acquire the majority of Vale's aluminium businesses in Brazil (Vale Aluminium) it was decided to hedge the majority of the net aluminium price exposure in Vale Aluminium until the end of 2011. The hedges are aimed at mitigating the risk of a weaker aluminium price and will secure a robust cash flow from the acquired assets in the transition phase. The hedges are not conditional upon completion of the transaction. The significant part of the positions expiring after closing of the transaction are subject to hedge accounting and included in other comprehensive income. Recognized unrealized and realized effects of positions not subject to hedge accounting are classified as items excluded from underlying EBIT.

Items excluded from underlying net income
NOK million Fourth
quarter
2010
Third
quarter
2010
Fourth
quarter
2009
Year
2010
Year
2009
           
Unrealized derivative effects on LME related contracts (162) 515 (728) 489 (2,630)
Derivative effects on LME related contracts (Vale Aluminium) 55 99 - (166) -
Unrealized derivative effects on power contracts 151 (25) 318 609 (198)
Unrealized derivative effects on currency contracts (20) (65) (19) (50) (345)
Unrealized derivative effects on raw material contracts (156) - - (156) -
Metal effect, Rolled Products (92) 52 (157) (560) 588
Significant rationalization charges and closure costs 131 - 65 130 518
Impairment charges (PP&E and equity accounted investments) 12 114 138 187 438
Pension - - - (151) (52)
Insurance compensation (91) - (13) (91) (152)
(Gains)/losses on divestments (7) - 684 (74) 684
Items excluded from underlying EBIT (180) 690 287 167 (1,148)
Net foreign exchange (gain)/loss (232) 246 (216) (513) (2,774)
Calculated income tax effect 129 (328) (275) 80 441
Items excluded from underlying net income (282) 608 (204) (266) (3,481)

 

Finance

Financial income amounted to NOK 292 million in the fourth quarter compared with Financial expense of NOK 218 million in the previous quarter.
 
Financial income was relatively unchanged in the fourth quarter compared with the previous quarter. Interest expense in fourth quarter is lower than previous quarter due to lower interest on tax claims in Germany.
 
The net currency gain in the fourth quarter included gains amounting to NOK 274 million relating to intercompany balances denominated in Euro due to a weaker Euro against the Norwegian kroner.1) Other net currency losses amounted to NOK 42 million.

Tax

Income tax expense amounted to a charge of NOK 401 million in the fourth quarter compared with a charge of NOK 119 million in the previous quarter and a credit of NOK 183 million in the fourth quarter of 2009.
 
For 2010 income tax expense was roughly 43 percent of pre-tax income. The tax rate for the year was influenced by the effects of power sur-tax and results from equity accounted investments which are recognized net of tax.

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