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Second quarter of 2013

Hydro's underlying earnings before financial items and taxes were NOK 518 million in the second quarter, compared to NOK 1,077 million in the first quarter of 2013. Lower aluminum and alumina prices and seasonally low energy production influenced negatively the results. The production of bauxite and alumina was affected by power outages.

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  • NOK 518 million underlying LAJIR
  • Lower alumina and aluminum prices
  • Weaker results in Energy, especially due to low seasonal production
  • Production of Bauxite & amp; Alumina affected by power outages
  • Better results with increased volumes at Laminated Products
  • Expectation of 2 to 4% growth in demand for aluminum outside China

"Although the global macroeconomic situation remains a challenge, aluminum demand is expected to remain significant this year. Hydro maintains the expectation of a balanced supply and demand market in 2013”, says the president of Hydro , Svein Richard Brandtzæg.

Compared to the first quarter, there was a decrease in EBITDA in the Bauxite & amp; Alumina, basically because of lower alumina prices, which are linked to the London Stock Exchange (LME), and the reduction in bauxite production. Alumina production saw an even greater decline from the already weak levels of the previous quarter due to external power outages at the Alunorte refinery.

"Hydro's main focus is the improvement program in all parts of our company, and one of the most important priorities is to implement actions that stabilize and increase production, after the power outages that caused the interruption of production at Alunorte "Says Brandtzæg. Initially, the interruption of production will affect the improvement program of Bauxite & Alumina," From A to B ", but Hydro nevertheless expects to achieve savings of NOK 1 billion by the end of 2015, as the original plan.

The Primary Metal business area posted lower results in the second quarter, mainly as a result of lower realized aluminum prices. The underlying LAJIR of Mercados de Metal was stable compared to the previous quarter.

Compared to the first quarter, the underlying LAJIR of the Rolled Products business area improved, influenced by the higher seasonal volumes, which were partially affected by lower margins. Operating costs per metric ton have declined.

The underlying LAJIR of the Energy business area declined compared to the first quarter, especially as a result of lower seasonal production, after high levels of production in the first quarter.

Operating cash flow was NOK 1 billion in the second quarter. The net cash flow used for investments amounted to NOK 0.5 billion. Dividends paid in the quarter amounted to NOK 1.7 billion. Hydro's net debt was around NOK 1.3 billion at the end of the second quarter.

Profits declared before financial items and taxes totaled NOK 375 million in the second quarter. In addition to the factors mentioned above, the declared LAJIR included net losses from unrealized derivatives and positive effects from the metal, which totaled NOK 74 million, rationalization and closing costs of NOK 86 million and divestment gains of NOK 16 million. In the previous quarter, reported LAJIR amounted to NOK 705 million, including net losses from unrealized derivatives and positive effects of NOK 294 million in total and rationalization and closing costs of NOK 78 million.

The losses incurred with the continuation of operations reached NOK 713 million in the second quarter and included net foreign exchange losses of NOK 1.291 million. In the previous quarter, income from continuing operations amounted to NOK 254 million, including net foreign exchange losses of NOK 115 million.

Income from discontinuing operations totaled NOK 48 million in the second quarter, including rationalization and closing costs of NOK 77 million. In the previous quarter, income from discontinuing operations totaled NOK 9 million, with rationalization and closing costs of NOK 40 million.

Hydro sold in advance about 50 percent of its primary aluminum production estimate for the third quarter of 2013 for approximately USD 1,850 per metric ton, excluding volumes from the Qatalum plant.

In Brazil, the Alunorte alumina refinery and the Albras aluminum smelting plant entered into forward foreign exchange contracts for the second half of 2013 and for 2014 for USD 800 million. Term contracts reduce the net exposure between the US dollar and the real of organizations and, consequently, of Hydro. The average exchange rate reached for the contracts is 2.25 and 2.37 for 2013 and 2014 respectively. Hedge accounting was used for term contracts.

In English:

& nbsp; Key financial information
NOK million, except per share data Second quarter 2013 First
quarter
2013
% change prior quarter Second
quarter
2012
% change prior year quarter First half 2013 First
half
2012
Year
2012
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Revenue 16,053 16,111 - 16,829 (5)% 32,163 33,873 64,181
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Earnings before financial items and tax (EBIT) 375 705 (47)% (610) & gt; 100% 1,080 100 571
Items excluded from underlying EBIT 144 372 (61)% 1,141 (87)% 516 1,008 725
Underlying EBIT 518 1,077 (52)% 531 (2)% 1,596 1,109 1,297
& nbsp;
Underlying EBIT:
Bauxite & amp; Alumina (244) (63) & gt; (100)% (188) (30)% (308) (332) (791)
Primary Metal 237 364 (35)% 245 (3)% 602 281 335
Metal Markets 147 146 1% 45 & gt; 100% 292 132 210
Rolled Products 181 153 19% 203 (11)% 334 354 637
Energy 268 517 (48)% 362 (26)% 784 918 1,459
Other and eliminations (70) (38) (83)% (136) 48% (109) (244) (553)
Underlying EBIT 518 1,077 (52)% 531 (2)% 1,596 1,109 1,297
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Underlying EBITDA 1,624 2,165 (25)% 1,648 (1)% 3,789 3,428 5,827
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Underlying income (loss) from discontinued operations 112 49 & gt; 100% 36 & gt; 100% 163 33 (5)
Net income (loss) (665) 263 & gt; (100)% (1,737) 62% (402) (1,162) (1,331)
Underlying net income (loss) 427 648 (34)% 243 76% 1,076 476 408
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Earnings per share (0.31) 0.14 & gt; (100)% (0.80) 61% (0.17) (0.56) (0.65)
Underlying earnings per share 0.19 0.30 (36)% 0.11 73% 0.49 0.22 0.21
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Financial data:
Investments 612 1,056 (42)% 694 (12)% 1,668 1,469 3,382
Adjusted net interest-bearing debt (11,317) (9,290) (22)% (20,293) 44% (11,317) (20,293) (8.304)
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& nbsp; Key operational information
Alumina production (kmt) 1,248 1,361 (8)% 1,491 (16)% 2.609 2,955 5,792
Primary aluminum production (kmt) 483 478 1% 502 (4)% 961 1,016 1,985
Realized aluminum price LME (USD / mt) 1,926 2,043 (6)% 2,167 (11)% 1,986 2,161 2,080
Realized aluminum price LME (NOK / mt) 11,217 11,533 (3)% 12,637 (11)% 11,378 12,523 12,047
Realized NOK / USD exchange rate 5.82 5.64 3% 5.83 - 5.73 5.79 5.79
Metal products sales, total Hydro (kmt) 789 806 (2)% 857 (8)% 1,595 1,728 3,254
Rolled Products sales volumes to external market (kmt) 245 236 4% 228 8% 482 455 909
Power production (GWh) 2,090 2,904 (28)% 2,513 (17)% 4.993 5.703 10.307
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