- Adjusted EBIT of NOK 688 million in the first quarter
- Rising demand in a seasonally strong quarter, supported by restocking
- Better results in aluminum production thanks to higher aluminum prices and better results in the aluminum oxide business
- Progress in processing thanks to higher sales and good margins
- Energy result better due to high prices and high production
- Commissioning of Qatalum according to plan, full production in the fourth quarter, 20 percent of the cells already in operation
- Outlook for 2010: Demand for aluminum increases by twelve percent in the most important markets
"We have seen rising aluminum prices and a partial increase in demand compared to previous quarters, supported by restocking. But aluminum inventories are still high globally, which indicates continued overcapacity, ”said Hydro CEO Svein Richard Brandtzæg.
Higher aluminum prices contributed to an improvement in adjusted earnings for primary aluminum production. Adjusted earnings for the alumina and raw materials business were significantly higher, driven by better results at Alunorte and high margins on alumina trading activities. Significantly improved results and the partial offsetting of trading losses in the previous quarter increased Metal Markets' adjusted earnings. “The official inauguration of Qatalum in April was a milestone for an impressive project. At the end of the quarter, 20 percent of the electrolysis cells were in operation, and everything is going according to schedule in view of full capacity utilization in the fourth quarter of this year. Qatalum will make a significant contribution to Hydro's competitiveness and will be an important gateway for the growth markets in Asia, "said Brandtzæg.
Sales of processing activities recovered due to the build-up of inventories in the value chain and better market conditions. Higher sales combined with higher margins and lower costs have led to a significant improvement in the Rolled Products sector. Adjusted EBIT for Extruded Products was more or less unchanged in the quarter, considering adjustments due to the divestment of Automotive Structures in the fourth quarter. Sales increased in all units, except for a seasonal decline in construction systems. The margins were stable.
Overall, we expect demand in key manufacturing and processing markets to increase by approximately 12 percent in 2010, but we still face challenges and continue to pay attention to the costs in all of our units, to ensure safe and effective operation and continuous improvements in the entire value chain, ”says Brandtzæg.
Adjusted EBIT for Energy increased significantly compared to the fourth quarter of 2009, mainly due to high spot prices and high production.
Cash flow from operating activities was NOK 186 million in the quarter. Investments amounted to NOK 1.8 billion, of which 1.1 billion are linked to Qatalum. In the second quarter of 2010, investments in Qatalum are expected to be somewhat lower than in the first quarter. Hydro had a net cash position of 0.5 billion crowns at the end of the first quarter of 2010.