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Fourth quarter 2012: Better result thanks to lower factor costs

Hydro reported adjusted earnings before interest and taxes (EBIT) of NOK 138 million in the fourth quarter of 2012, an increase compared to the previous quarter when a loss of NOK 19 million was recorded. Lower energy costs in the Bauxite & amp; Alumina, lower variable costs in the Primary Metal business area and better results from the Quatalum aluminum smelter all contributed to the adjusted result.

  • Adjusted EBIT of NOK 138 million
  • Lower raw material costs & nbsp;
  • Lower aluminum prices achieved, higher alumina prices
  • Higher electricity prices and production in the Energy business area
  • Forecast for aluminum demand 2013: 2-4 percent growth outside of China
  • Proposed dividend for 2012: NOK 0.75 per share

& nbsp; “Given the ongoing difficult markets, we continue to focus on improving results across our value chain. We expect to complete the ambitious $ 300 program by the end of 2013, strengthening Hydro's position in the industry. Our improvement measures are ongoing, including the optimization of production and results in our bauxite and clay business in Brazil, ”says Hydros CEO Svein Richard Brandtzæg.
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Adjusted EBIT in the Bauxite & amp; Alumina improved compared to the third quarter, driven by higher alumina prices and lower energy costs at Alunorte, as well as better results from trading.
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Adjusted EBIT for the Primary Metal business increased compared to the third Quarter, mainly due to better results at Quatalum. Lower aluminum prices achieved had a negative impact on the adjusted result, lower operating costs could only partially compensate for this. The savings set in Hydro's cost improvement program for the year have been achieved.
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Excluding inventory and currency effects, underlying earnings from Metal Markets' operations decreased, mainly due to: lower volumes and weaker margins, plus lower trading results.
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Rolled Products' adjusted EBIT declined compared to the third quarter due to lower margins and higher seasonal maintenance costs.
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Adjusted earnings ( EBIT in the Energy business area rose in the quarter, which was mainly due to higher production and higher prices.
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The Other and Eliminations item contains significant negative effects, which are linked to unrealized gains and losses from internal inventory are.
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Cash flow from operations was NOK 2.8 billion in the quarter. Cash flow for investing activities was NOK 1.0 billion. Hydro's net liquidity at the end of the fourth quarter was approximately NOK 1.7 billion.
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For the full year, adjusted EBIT decreased significantly, from 5,982 million in 2011 to 1,158 million in 2012. Lower aluminum and alumina prices have had a significant impact on adjusted results for the year . Ongoing efforts to reduce costs and improve operations have partially offset the negative market effects.
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On October 15th, Hydro announced an agreement with Orkla ASA to provide for that Combine areas of profiles, construction systems and pipes of both companies in a new joint venture called Sapa. The transaction is expected to close in the first half of 2013 as soon as the relevant competition authorities approve it. As a result of the agreement, Hydro’s Extruded Products business after financial items and taxes is reported as a result of discontinued operations, and is therefore not included in Reported EBIT and Adjusted EBIT.
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Hydro's Board of Directors proposes for 2012 a dividend of NOK 0.75 per share, reflecting the company's goal of paying a dividend to its shareholders. & nbsp; The dividend reflects our operating results and the company's strong financial position, even under the current market conditions.
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Reported earnings before financial items and taxes for the fourth quarter were NOK 669 million, which included Unrealized gains from derivatives and positive metal effects of NOK 555 million and other items with a total negative effect of NOK 23 million.
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Hydro reported a pre-quarter loss on financial items and taxes in NOK 267 million, which included unrealized losses from derivatives and negative metal effects of NOK 137 million and other items with a negative effect of NOK 112 million. Other items include depreciation of long-term assets of NOK 140 million and a profit of NOK 68 million that is linked to pensions.
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The result from continuing operations was 364 million in the fourth quarter NOK, including a net currency loss of NOK 102 million. In the previous quarter Hydro had reported a net loss from continuing operations of NOK 64 million, which included a currency gain of NOK 282 million.
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Losses from discontinued operations were in the fourth quarter to NOK 251 million, which includes NOK 174 million in rationalization and closure costs. In the third quarter, the loss from discontinued operations was NOK 167 million, which included NOK 43 million in rationalization and closures and a NOK 144 million loss on the sale of Portalex.

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Key financial information
NOK million, except per share data Fourth
quarter
2012
Third
quarter
2012
% change prior quarter Fourth
quarter
2011
% change prior year quarter Year
2012
Year 2011
& nbsp;
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Revenue 15,585 14,722 6% 17,157 (9)% 64,181 71,500
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Earnings before financial items and tax (EBIT) 669 (267) & gt; 100% 46 & gt; 100% 432 10,068
Items excluded from underlying EBIT (532) 249 & gt; (100)% 1,176 & gt; (100)% 725 (4,086)
Underlying EBIT 138 (19) & gt; 100% 1,223 (89)% 1,158 5,982
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Underlying EBIT: & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Bauxite & amp; Alumina (73) (386) 81% 159 & gt; (100)% (791) 887
Primary Metal 53 (10) & gt; 100% 484 (89)% 314 2,486
Metal Markets 69 7 & gt; 100% (39) & gt; 100% 208 441
Rolled Products 71 214 (67)% 86 (17)% 640 673
Energy 322 220 47% 441 (27)% 1,459 1,883
Other and eliminations (305) (64) & gt; (100)% 92 & gt; (100)% (672) (389)
Underlying EBIT 138 (19) & gt; 100% 1,223 (89)% 1,158 5,982
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Underlying EBITDA 1,216 1,114 9% 2,493 (51)% 5,687 10,497
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Underlying income (loss) from continuing operations 58 (37) & gt; 100% 1,035 (94)% 509 3,947
Underlying income (loss) from discontinued operations (59) 17 & gt; (100)% (159) 63% (5) (1)
Underlying net incomme (loss) 0 (20) 100% 876 (100)% 504 3,947
Underlying earnings per share 0.00 0.00 - 0.42 (100)% 0.26 1.89
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Net income (loss) 113 & nbsp; (231) & nbsp; & gt; 100% & nbsp; (749) & nbsp; & gt; 100% & nbsp; (1,246) & nbsp; 6,749 & nbsp;
Earnings per share 0.07 (0.14) & gt; 100% (0.36) & gt; 100% (0.61) 3.41
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;   & nbsp;
Financial data: & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;   & nbsp;
Investments 1,107 806 37% 3.907 (72)% 3,382 47,510
Adjusted net interest-bearing debt (8,271) (13,678) 40% (19,895) 58% (8,271) (19,895)
Key operational information
Alumina production (kmt) 1,397 1,441 (3)% 1,490 (6)% 5,792 5,264
Primary aluminum production (kmt) 485 484 - 539 (10)% 1,985 1,982
Realized aluminum price LME (USD / mt) 1,940 2,022 (4)% 2,439 (20)% 2,080 2,480
Realized aluminum price LME (NOK / mt) 11,069 11,856 (7)% 13,834 (20)% 12,047 13,884
Realized NOK / USD exchange rate 5.71 5.86 (3)% 5.67 1% 5.79 5.60
Metal products sales, total Hydro & nbsp; (kmt) 731 794 (8)% 804 (9)% 3,254 3.303
Rolled Products sales volumes to external market (kmt) 226 228 (1)% 215 5% 909 929
Power production (GWh) 2,448 2,157 13% 2,706 (10)% 10,307 9,582
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