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First quarter of 2012: Low aluminum prices, good results for Energy

Hydro's underlying earnings before financial items and taxes totaled NOK 557 million in the first quarter, compared to NOK 1.133 million in the previous quarter. Lower realized aluminum prices and continuously weak markets, in particular in extrusion operations in Europe, weakened the underlying results. The Energy business area, on the other hand, presented solid results together with record levels of energy production.

• Basic EBIT of NOK 557 million
• Lower aluminum and alumina prices
• Solid production performance
• Good results for Energy, record production level
• & nbsp; Increase in aluminum sales volumes due to seasonal effects, decrease in alumina sales volumes
• & nbsp; Outlook of 3% growth in aluminum demand for 2012 outside from China
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"Still weak demand and low aluminum prices have negatively influenced the results for the first quarter. We will continue our restructuring efforts, reduce costs and take vigorous measures to maintain the course is firm, "says President and Chief Executive Svein Richard Brandtzæg." Depending on the macroeconomic development in Europe, we expect global aluminum demand outside China to grow by approximately three percent in 2012, "he says.
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"I'm satisfied with our strong production performance, especially in strategically important assets at Qatalum and Alunorte, creating a solid basis for progress when the market improves. The efficient and powerful improvement programs implemented in the foundry units where we have full participation are evolving as planned, also contributing to a solid platform in the future, ”says Brandtzæg.
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Bauxita's basic EBIT & amp; Alumina fell compared to the fourth quarter, mainly due to lower realized alumina prices and lower sales volumes. However, the production of bauxite and alumina was stable.
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Lower realized aluminum prices and low premiums had a substantially negative impact on basic EBIT for Primary Metal in the quarter, partially offset by higher sales volumes and lower raw material costs. Production volumes fell, mainly due to the discontinuation of a production line at the foundry unit in Kurri Kurri in Australia.
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The underlying results of Hydro's midstream operations were higher compared to fourth quarter, which suffered hard from the negative exchange effects. Basic EBIT, excluding foreign exchange effects, increased in the first quarter, above all due to the higher volumes of the remelting operations.
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Basic EBIT for Hydro, Extruded Products and Downstream businesses Laminates, were better than in the fourth quarter, which was influenced by seasonal declines and the weak development of the European market. Demand remained weak for the extrusion businesses in Europe and, in particular, for Construction Systems.
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The Energy business area had solid underlying results for the quarter, in addition to record levels of energy production.
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Operating cash flow totaled NOK 0.6 billion for the quarter. Net cash used for investing activities totaled NOK 0.9 billion, while Hydro's net cash position was NOK 1.5 billion at the end of the first quarter.
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Profits declared before financial items and taxes totaled NOK 665 million in the first quarter, including net unrealized derivative profits of NOK 307 million, negative metal effects of NOK 60 million and rationalization and closing costs of NOK 132 million. Values referring to other items of a special or infrequent nature were not relevant for this first quarter.
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Hydro had a net revenue of NOK 585 million for the first quarter, including foreign exchange gains of NOK 410 million . In the fourth quarter, Hydro had a net loss of NOK 749 million, including currency losses of NOK 28 million.

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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
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Revenue 21,748 21,749 - 21,138 3% 91,444
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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
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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
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Underlying EBITDA 1,870 2,524 (26)% 2,415 (23)% 11,152
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Net income (loss) 585 (749) & gt; 100% 5,154 (89)% 6,749
Underlying net income (loss) 256 876 (71)% 834 (69)% 3,947
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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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