Skip to content

Second quarter of 2012: Weak results and market, stronger improvement ambitions

Hydro's earnings before interest and taxes amounted to NOK 549 million in the second quarter, compared with 557 million in the previous quarter. The poor result for the quarter reflects low aluminum prices and the challenges of the macroeconomic situation, but ambitious improvement programs helped to reduce operating costs, contributing positively to the quarter.

  • LAJIR: NOK 549 million
  • Low aluminum prices
  • Corrective measures and operational improvements
  • Results positively influenced by lower operating costs
  • Closing the aluminum plant in Kurri Kurri resulted in NOK 1.5 billion in charges
  • Perspective of 2% growth in aluminum demand in 2012 outside China

"The unfavorable macroeconomic situation remains a challenge in our main markets, leading to low aluminum prices and a weak second quarter for Hydro," says Hydro President and Chief Executive Officer Svein Richard Brandtzæg.

>

"Weak markets and low aluminum prices require firm corrective measures, including capacity adjustment and operational improvement. We continue to strive in an extraordinary way and are currently finalizing programs across Hydro, which will result in improved yields in the order of two to three billion Norwegian kroner over the next two, three years. These programs are crucial for Hydro's future development, consolidating our competitive position in a complex industrial scenario ", adds Brandtzæg.

The Bauxite & amp; Alumina once again had a low operating result (LAJIR) for the quarter, due to the low prices on the London Stock Exchange, the price calculation for long-term contracts and the increase in energy costs.

Metal Primary's earnings before interest and taxes increased compared to the first quarter, especially because of the slightly higher aluminum price and lower operating costs. Qatalum's operating results were higher, in particular due to the final insurance payment related to the electric blackout in 2010.

Hydro's midstream operations had weaker operating results compared to the previous quarter, as a result of the negative exchange effects. Aside from exchange rate effects, LAJIR was stable between quarters.

Hydro's downstream earnings before interest and taxes improved compared to the previous quarter, due to higher seasonal volumes at Extruded Products and lower operating costs in general. However, the quarter's results continued to be affected by the fragile macroeconomic situation in Europe.

Compared to the previous quarter, the Energy business area had lower earnings before interest and taxes in the second quarter, due to lower production and prices.

Operating cash flow totaled NOK 0.8 billion in the quarter and the net cash flow used for investments also totaled NOK 0.8 billion. Dividends paid in the quarter amounted to NOK 1.7 billion and Hydro's net debt was NOK 0.4 billion at the end of the second quarter.

Hydro had reported losses before financial items and taxes of NOK 720 million in the second quarter, including net unrealized gains from NOK 300 million derivatives, rationalization and discontinuation of NOK 408 million costs, impairment losses of NOK 1,175 million and positive metal effects of NOK 9 million.

In June, Hydro decided to discontinue the remaining production from its aluminum plant in Kurri Kurri in Australia, following the closure of a production line in January. The LAJIR declared for the second quarter included NOK 1.154 million impairment losses and NOK 322 million from rationalization and discontinuation of costs related to closing. The rationalization and restructuring initiatives at Extruded Products, involving Construction Systems and Eurasian Extrusion, resulted in impairment charges and cost rationalization of NOK 106 million.

Hydro had a reported net loss of NOK 1.712 million in the second quarter, including net exchange losses of NOK 883 million. In the previous quarter, Hydro reported net income of NOK 585 million, including net foreign exchange gains of NOK 410 million.

More in English: & nbsp;

Key financial information
NOK million, except per share data Second
quarter
2012
First
quarter
2012
% change prior quarter Second
quarter
2011
% change prior year quarter First
half
2012
First
half
2011
Year
2011
& nbsp;
Revenue 21,604 21,748 (1)% 24,728 (13)% 43,351 45,867 91,444
& nbsp;
Earnings before financial items and tax (EBIT) (720) 665 & gt; (100)% 2,111 & gt; (100)% (54) 7,967 9,827
Items excluded from underlying EBIT 1,269 (108) & gt; 100% (206) & gt; 100% 1,161 (4,613) (3,694)
Underlying EBIT 549 557 (1)% 1,906 (71)% 1.106 3,354 6,133
& nbsp;
Underlying EBIT: & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Bauxite & amp; Alumina (188) (144) (31)% 272 & gt; (100)% (332) 427 887
Primary Metal 240 30 & gt; 100% 765 (69)% 271 1,348 2,486
Metal Markets 44 87 (50)% 244 (82)% 131 387 441
Rolled Products 204 151 35% 232 (12)% 355 463 673
Extruded Products 53 14 & gt; 100% 96 (44)% 68 201 151
Energy 362 556 (35)% 363 - 918 936 1,883
Other and eliminations (166) (137) (21)% (65) & gt; (100)% (303) (408) (389)
Underlying EBIT 549 557 (1)% 1,906 (71)% 1.106 3,354 6,133
& nbsp;
Underlying EBITDA 1,777 1,870 (5)% 3,229 (45)% 3,648 5,643 11,152
& nbsp;
Net income (loss) (1,712) 585 & gt; (100)% 1,546 & gt; (100)% (1,127) 6.701 6,749
Underlying net income (loss) 268 256 5% 1,166 (77)% 524 2,000 3,947
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Earnings per share (0.78) 0.25 & gt; (100)% 0.69 & gt; (100)% (0.54) 3.41 3.41
Underlying earnings per share 0.12 0.13 (5)% 0.52 (77)% 0.25 0.97 1.89
& nbsp;
Financial data
Investments 777 898 (13)% 1,085 (28)% 1,674 42,710 48,025
Adjusted net interest-bearing debt (21,125) (19,231) (10)% (20,777) (2)% (21,125) (20,777) (19,895)
& nbsp;
Key operational information
Alumina production (kmt) 1,491 1,464 2% 1,448 3% 2,955 2,220 5,264
Primary aluminum production (kmt) 502 514 (2)% 505 (1)% 1,016 921 1,982
Realized aluminum price LME (USD / mt) 2,167 2,155 1% 2,509 (14)% 2,161 2,441 2,480
Realized aluminum price LME (NOK / mt) 12,637 12.404 2% 13.803 (8)% 12,523 13,724 13,884
Realized NOK / USD exchange rate 5.83 5.75 1% 5.50 6% 5.79 5.62 5.60
Metal products sales, total Hydro (kmt) 857 872 (2)% 877 (2)% 1,728 1,649 3.303
Rolled Products sales volumes to external market (kmt) 228 227 - 242 (6)% 455 487 929
Extruded Products sales volumes to external market (kmt) 137 133 3% 142 (4)% 270 278 536
Power production (GWh) 2,513 3,190 (21)% 1,830 37% 5.703 4,138 9,582
This text is machine translated. To view the original Portuguese text, click on PT on the top right of this window

Recommended for you