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First quarter of 2012: Lower aluminum prices, strong earnings for Energy

Hydro reported adjusted earnings before financial items and taxes of NOK 557 million in the first quarter, a decrease from the fourth quarter when earnings were NOK 1,133 million. Lower aluminum prices and weak markets, especially for the press shop in Europe, had a negative impact on adjusted results. The Energy business unit posted a solid result and had record electricity generation.

  • Adjusted EBIT of NOK 557 million
  • Lower prices for alumina and aluminum
  • Solid production
  • Strong result for energy, production record
  • Increasing seasonal aluminum sales, falling sales of alumina
  • Expected three percent increase in aluminum demand outside of China in the 2012 financial year

“The persistently weak demand and low aluminum prices weigh on the results in the first quarter. We will continue our restructuring efforts, reduce costs and take the necessary measures to stay on track, ”said CEO Svein Richard Brandtzæg.

"Depending on the further overall economic development in Europe, we expect global aluminum demand growth of three percent outside of China in 2012," he says.

"I am pleased with the strong production output, especially in the strategically important plants Qatalum, Paragominas and Alunorte. This is a solid foundation for progress once the markets pick up again. "

"Effective and powerful improvement programs in our company's own huts are going according to plan and also contribute to a solid foundation for the future," says Brandtzæg.

Adjusted EBIT in the Bauxite & amp; Alumina declined compared to the fourth quarter, mainly due to the lower prices for alumina and lower sales. The production of bauxite and alumina was stable.

Lower aluminum prices and lower sales surcharges had an extremely negative impact on adjusted EBIT in the Primary Metal business area in the quarter, which was only partially offset by higher sales and lower raw material prices. The production volume declined, the main reason for this was the shutdown of one production line in the Kurri Kurri smelter in Australia.
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Adjusted earnings in the Metal Markets business increased compared to the fourth quarter, which was impacted by significant negative currency effects. If we ignore the currency effects, the EBIT nevertheless rose, thanks in particular to higher volumes from the remelting plants.

Adjusted EBIT for the Rolled Products and Extruded Products processing activities improved compared to the fourth quarter, which was characterized by a seasonal decline and weak market development in Europe. Demand for Hydro's European extrusion activities, particularly Building Systems products, remained weak.

The Energy business unit again delivered a solid, adjusted quarterly result together with record-high electricity generation.

Cash flow from operations in the quarter was NOK 0.6 billion. Cash flow for investing activities was NOK 0.9 billion. Hydro's net liquidity was NOK 1.5 billion at the end of the quarter.

Reported earnings before financial items and taxes were NOK 665 million in the first quarter, which include unrealized net gains from futures transactions of NOK 307 million, negative metal effects of NOK 60 million and closing costs of NOK 132 million. Amounts related to other items were negligible in the first quarter.

Earnings after taxes were NOK 585 million in the first quarter, including a currency loss of NOK 410 million. Hydro reported a net loss of NOK 749 million in the fourth quarter, including a currency loss of NOK 28 million.

Key financial information
NOK million, except per share data First quarter
2012
Fourth quarter 2011 % change prior quarter First
quarter
2011
% change prior year quarter Year
2011
& nbsp;
Revenue 21,748 21,749 - 21,138 3% 91,444
& nbsp;
Earnings before financial items and tax (EBIT) 665 (362) & gt; 100% 5,855 (89)% 9,827
Items excluded from underlying EBIT (108) 1,494 & gt; (100)% (4,408) 98% (3,694)
Underlying EBIT 557 1,133 (51)% 1,448 (62)% 6.133
& nbsp;
Underlying EBIT:
bauxite & amp; Alumina (144) 159 & gt; (100)% 155 & gt; (100)% 887
Primary Metal 30 484 (94)% 583 (95)% 2,486
Metal Markets 87 (39) & gt; (100)% 143 (39)% 441
Rolled Products 151 86 76% 232 (35)% 673
Extruded Products 14 (90) & gt; 100% 105 (86)% 151
Energy 556 441 26% 573 (3)% 1,883
Other and eliminations (137) 92 & gt; (100)% (344) 60% (389)
Underlying EBIT 557 1,133 (51)% 1,448 (62)% 6.133
& nbsp;
Underlying EBITDA 1,870 2,524 (26)% 2,415 (23)% 11,152
& nbsp;
Net income (loss) 585 (749) & gt; 100% 5,154 (89)% 6,749
Underlying net income (loss) 256 876 (71)% 834 (69)% 3,947
& nbsp;
Earnings per share 0.25 (0.36) & gt; 100% 2.89 (92)% 3.41
Underlying earnings per share 0.13 0.42 (70)% 0.45 (72)% 1.89
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Financial data: & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Investments 898 4,190 (79)% 41.625 (98)% 48,025
Adjusted net interest-bearing debt (19,231) (19,895) 3% (20,490) 6% (19,895)
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Key Operational information
Alumina production (kmt) 1,464 1,490 (2)% 773 89% 5,264
Primary aluminum production (kmt) 514 539 (5)% 415 24% 1,982
Realized aluminum price LME (USD / mt) 2,155 2,439 (12)% 2,358 (9)% 2,480
Realized aluminum price LME (NOK / mt) 12.404 13,834 (10)% 13.607 (9)% 13,884
Realized NOK / USD exchange rate 5.75 5.67 1% 5.77 - 5.60
Metal Markets sales volumes to external market (kmt) 591 564 5% 467 27% 2,091
Rolled Products sales volumes to external market (kmt) 227 215 6% 245 (7)% 929
Extruded Products sales volumes to external market (kmt) 133 121 10% 136 (2)% 536
Power production (GWh) 3,190 2,706 18% 2.308 38% 9,582
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