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Second quarter of 2015

Hydro's adjusted earnings before interest and taxes (EBIT) decreased to NOK 2,667 million in the second quarter, compared to NOK 3,208 million in the first quarter of 2015. The main reasons for the decline were lower aluminum prices and premiums. Higher sales volumes in processing have had the best results since Hydro became a pure aluminum company in 2007.

  • Adjusted EBIT of NOK 2,667 million
  • Record result in the finishing area after stronger seasonal sales
  • Lower prices for aluminum oxide and lower "all-in" aluminum prices
  • New framework conditions for ICMS taxes negotiated
  • Long-term power supply for the Rheinwerk guaranteed
  • Continued challenges in terms of global market balance
  • ~ 5% increase in global primary aluminum demand in 2015

"This quarter's results have been impacted by lower prices, but I am pleased with growing demand and the fact that aluminum is the preferred material in more and more applications, which has contributed to the record results for our processing activities," says CEO Svein Richard Brandtzæg.

Adjusted EBIT for Bauxite & amp; Alumina declined in the second quarter, reflecting the lower LME prices linked to the LME, a decline in indexed prices for aluminum oxide and lower sales volumes at indexed prices.

“We are pleased that we were able to agree on long-term ICMS framework conditions for Hydro's business in the state of Pará. This is fundamental to our goal of developing robust and sustainable activities in Pará and creating the conditions for sustainable growth in this region, ”says Brandtzæg.

In the Primary Metal business area, adjusted EBIT decreased in the second quarter, mainly due to the lower aluminum prices and premiums achieved.

Adjusted EBIT for Metal Markeds decreased in the second quarter, influenced by higher negative exchange rate and inventory valuation effects. Trading activity again recorded an adjusted loss, reflecting the continued decline in billet premiums. The result of the remelting plants increased mainly thanks to higher margins.

“Better results in the Rolled Products business area and at Sapa partially offset the effects of the difficult market for aluminum producers. The rapidly changing market conditions show how important our improvement programs are. The bottom line is that the importance of our joint efforts pays off, ”says Brandtzæg.

The Rolled Products business unit achieved an improved adjusted result, which is mainly due to seasonally higher deliveries and somewhat improved operating margins.

However, the result was negatively influenced by a decrease in the contribution from the Rheinwerk and a negative exchange rate development.

Adjusted EBIT for the Energy business segment declined compared to the first quarter, primarily due to the seasonal lower electricity generation, which was also influenced by the late spring thaw in the Norwegian mountains.

Adjusted EBIT for Sapa increased compared to the previous quarter, which was due to higher sales volumes and a strong development of the North American market, and the improvement programs in the entire organization are already further than planned. The second quarter result was negatively impacted by a sharp decline in metal premiums in North America.

Cash flow from operations in the second quarter was NOK 4.2 billion. Cash flow for investing activities was NOK 1.2 billion. A dividend of CZK 2.0 billion was paid out in the quarter. Hydro's net debt was approximately NOK 0.7 billion at the end of the second quarter.

Reported earnings before financial items and taxes for the second quarter were NOK 2,698 million. In addition to the factors mentioned above, the reported EBIT included unrealized gains from derivatives and positive metal effects totaling NOK 132 million and compensation of NOK 37 million related to insurance benefits. The reported result also included costs of NOK 139 million after tax (Hydro's share) for Sapa, including NOK 106 million for restructuring.

In the previous quarter, adjusted earnings before interest and taxes were NOK 3,206 million, including unrealized gains from derivatives and positive metal effects totaling NOK 72 million. The reported result also included costs of NOK 74 million (Hydro's stake) for Sapa, mostly related to unrealized losses from derivatives.

Earnings after taxes were 2 in the second quarter.064 million NOK, including a net currency gain of NOK 346 million, due to unrealized currency gains from debt in US dollars, primarily in Brazil. In the previous quarter, after-tax earnings were NOK 1,072 million, including a net currency loss of NOK 1,587 million, mainly due to the stronger US dollar.

More in English: & nbsp;

Key financial information
NOK million, except per share data Second quarter 2015 First & nbsp;
quarter
2015
% change prior quarter Second quarter 2014 % change prior year quarter First & nbsp; half 2015 First half 2014 Year 2014
& nbsp;
Revenue 22,436 23,290 (4)% 18,272 23% 45,726 36,553 77.907
& nbsp;
Earnings before financial items and tax (EBIT) 2,698 3.206 (16)% 620 & gt; 100% 5.904 1,442 5,674
Items excluded from underlying EBIT (31) 2 & gt; (100)% (75) 59% (29) (126) 18
Underlying EBIT 2,667 3.208 (17)% 544 & gt; 100% 5,875 1,316 5,692
& nbsp;
Underlying EBIT:
bauxite & amp; Alumina 482 780 (38)% (269) & gt; 100% 1,261 (557) (55)
Primary Metals 1,448 2,012 (28)% 420 & gt; 100% 3,459 732 3,937
Metal Markets (89) 24 & gt; (100)% 100 & gt; (100)% (65) 241 634
Rolled Products 315 292 8% 177 78% 607 358 698
Energy 179 382 (53)% 169 6% 560 603 1,197
Other and eliminations 333 (281) & gt; 100% (52) & gt; 100% 51 (61) (717)
Underlying & nbsp; EBIT 2,667 3.208 (17)% 544 & gt; 100% 5,875 1,316 5,692
& nbsp;
Underlying EBITDA 3,880 4,437 (13)% 1,653 & gt; 100% 8,317 3,514 10,299
& nbsp;
Net income (loss) 2,064 1,072 93% 269 & gt; 100% 3,136 730 1,228
Underlying net income (loss) 1,830 2.206 (17)% 318 & gt; 100% 4,036 705 3,728
& nbsp;
Earnings per share 0.94 0.46 & gt; 100% 0.09 & gt; 100% 1.40 0.28 0.39
Underlying earnings per share 0.83 0.95 (12)% 0.13 & gt; 100% 1.78 0.29 1.55
& nbsp;
Financial & nbsp; data:
Investments 1,192 802 49% 740 61% 1,993 1,286 3,625
Adjusted net interest-bearing debt (11,000) (13,478) 18% (13,551) 19% (11,000) (13,551) (13,587)
& nbsp;
& nbsp; Key Operational information
Alumina production (kmt) 1,437 1,451 (1)% 1,526 (6)% 2,888 2,954 5,933
Primary aluminum production (kmt) 509 497 2% 488 4% 1.005 972 1.958
Realized aluminum price LME (USD / mt) 1,803 1,897 (5)% 1,762 2% 1,851 1,755 1,850
Realized aliminium price LME (NOK / mt) 13,923 14.383 (3)% 10.660 31% 14,160 10.682 11.624
Realized NOK / USD exchange rate 7.72 7.58 2% 6.05 28% 7.65 6.09 6.28
Metal products sales, total Hydro (kmt) 830 767 8% 833 - 1,597 1.701 3,274
Rolled Products sales volumes to external market (kmt) 243 227 7% 245 (1)% 471 488 946
Power production (GWh) 2,103 3,071 (32)% 2,248 (6)% 5,173 5,212 10.206
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