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Second quarter of 2014

Norsk Hydro ASA's adjusted operating profit was NOK 544 million in the second quarter, a decline from the NOK 772 million obtained in the previous quarter. Seasonally lower prices and electricity production affected the result, which was partially offset by the higher total aluminum price and better result in the Primary Metal area.

  • Adjusted Operating Profit of NOK 544 million
  • Higher realized alumina prices and total aluminum prices
  • Production of Alunorte at record levels
  • Seasonally lower electricity prices and production
  • Aluminum demand in the world, excluding China, continues to exceed production
  • Agreement signed to take over the primary aluminum plant in Soeral

“The demand for aluminum continues to exceed production, causing the market to be under pressure and the levels of total aluminum prices (price plus premium) to be higher since 2012. We continue our improvement efforts throughout the chain productive, and currently Qatalum is among the top ten aluminum factories in the world when it comes to cost positioning, ”said Hydro’s CEO, Svein Richard Brandtzæg.

The Bauxite & amp; Alumina, with all its assets in Brazil, showed a negative result, although it has improved compared to the first quarter of 2014, given the influence of higher prices and higher sales volume of alumina. This positive development was offset by the behavior of exchange rates and higher expenses with payment of ICMS on oil in the quarter.

“I am pleased to see that production at the Alunorte alumina refinery is at a record level of more than six million tonnes per year, but, unfortunately, the results are still poor. However, our “From B to A” improvement program has been developing well and results are expected to start impacting profit in the coming quarters, ”said Brandtzæg.

Influenced by higher premium products, adjusted operating profit in the Primary Metal area improved in the second quarter, but was negatively impacted by lower sales volumes and slightly lower aluminum prices.

The Metals Markets area had a weaker adjusted operating profit than in the first quarter, especially as a result of the drop in the results of purchases and trade, which were partially offset by the higher volumes of the remelting factories.

“It was a quarter full of important activities: we signed an acquisition contract for the primary metal factory in Soeral, whose products fit very well with Hydro's premium smelting product strategy; we signed four electricity supply contracts, ensuring part of our need to purchase external energy by 2020; we obtained financial support from the Enova institution to build the world's most energy-efficient pilot plant - which represents an important step towards becoming carbon neutral by 2020 and one of the pillars of our strategy to develop an aluminum portfolio based on the electricity of Norway, ”said the president.

The adjusted operating profit in the Rolled Products area remained stable compared to the previous quarter.

Due to the seasonally lower production of electricity and lower prices in our production areas, the adjusted operating profit in the Energy area declined compared to the first quarter.

Sapa's operating results improved during the quarter, influenced in part by seasonally stronger sales volumes.

Operating cash flow totaled one billion Norwegian crowns (NOK) in the second quarter, including approximately 0.5 billion from Qatalum dividends. The net cash used for investments totaled NOK 0.7 billion. Dividends paid during the quarter reached NOK 1.6 billion. Hydro's net debt position was around NOK 1.9 billion at the end of the second quarter.

EBIT amounted to NOK 620 million in the second quarter. In addition to the factors already mentioned above, EBIT includes net gains on unrealized derivatives and positive metal effects of NOK 154 million in all. Reported profits also included NOK 87 million, generated from rationalization activities at Sapa (Hydro's share).

In the previous quarter, EBIT reached NOK 822 million, including net gains on unrealized derivatives NOK 170 million in all. Reported profits include impairment of NOK 33 million linked to divestment in a foundry in Hannover and costs of NOK 86 million related especially to rationalization at Sapa (Hydro's share).

Revenue from continuing operations was NOK 269 million in the second quarter of 2014, including exchange losses of NOK 101 million. In the previous quarter, income from continuing operations represented NOK 462 million, including net foreign exchange gains of NOK 193 million.

In English:

& nbsp; Key financial information
NOK million, except per share data Second quarter 2014 First
quarter
2014
% change prior quarter Second
quarter
2013
% change prior year quarter First half 2014 First
half
2013
Year
2013
& nbsp;
Revenue 18,272 18,282 - 16,052 14 & nbsp;% 36,553 32,161 64,877
& nbsp;
Earnings before financial items and tax (EBIT) 620 822 (25)% 376 65% 1,442 1,081 1,663
Items excluded from underlying EBIT (75) (50) (49)% 144 & gt; (100)% (126) 516 1,063
Underlying EBIT 544 772 (29)% 520 5% 1,316 1,596 2,725
& nbsp;
Underlying EBIT:
Bauxite & amp; Alumina (269) (288) 7% (244) (10)% (557) (308) (1,057)
Primary Metal 420 312 35% 237 77% 732 602 1,422
Metal Markets 100 141 (30)% 147 (32)% 241 292 594
Rolled Products 177 181 (2)% 183 (3)% 358 334 615
Energy 169 435 (61)% 268 (37)% 603 784 1,653
Other and eliminations (52) (8) & gt; (100)% (70) 26% (61) (109) (502)
Underlying EBIT 544 772 (29)% 520 5% 1,316 1,596 2,725
& nbsp;
Underlying EBITDA 1,653 1,861 (11)% 1,674 (1)% 3,514 3,886 7.306
& nbsp;
Underlying income (loss) from discontinued operations - - - 112 (100)% - 163 220
Net income (loss) 269 462 (42)% (665) & gt; 100% 730 (402) (839)
Underlying net income (loss) 318 388 (18)% 427 (26)% 705 1,075 1,610
& nbsp;
Earnings per share 0.09 0.19 (53)% (0.31) & gt; 100% 0.28 (0.17) (0.45)
Underlying earnings per share 0.13 0.16 (21)% 0.19 (33)% 0.29 0.49 0.65
& nbsp;
Financial data:
Investments 740 546 36% 652 14% 1,286 1,729 3,761
Adjusted net interest-bearing debt (13,551) (11,230) (21)% (11,857) (14)% (13,551) (11,857) (10,128)
& nbsp;
& nbsp; Key operational information
Alumina production (kmt) 1,526 1,428 7% 1,248 22% 2,954 2.609 5,377
Primary aluminum production (kmt) 488 484 1% 483 1% 972 961 1,944
Realized aluminum price LME (USD / mt) 1,762 1,749 1% 1,926 (9)% 1,755 1,986 1,902
Realized aluminum price LME (NOK / mt) 10,660 10.702 - 11,217 (5)% 10,682 11,378 11,160
Realized NOK / USD exchange rate 6.05 6.12 (1)% 5.82 4% 6.09 5.73 5.87
Metal products sales, total Hydro (kmt) 843 871 (3)% 789 7% 1,714 1,595 3,164
Rolled Products sales volumes to external market (kmt) 245 243 1% 245 - 488 482 941
Power production (GWh) 2,248 2,964 (24)% 2,090 8% 5,212 4.993 10,243
This text is machine translated. To view the original Portuguese text, click on PT on the top right of this window

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