- Adjusted EBIT of NOK 2.446 billion
- Negative effect of results due to the cost of raw materials and the depreciation of the US dollar
- Poor results at Produtos Laminados due to continuous operational challenges and negative exchange rate effect
- Acquisition of Sapa concluded on October 2 and integration progressing as planned
- “Better” improvement program up to date for NOK 2.9 billion target in 2019, despite delay in 2017
- Karmoy's pilot project advances according to schedule and budget, production expectation in the fourth quarter of 2017
- Positive market reaction on closings in China, forecast of a broadly balanced global market in 2017
“We raised our estimate of global demand for 2017 to 5-6%, which indicates the strong and continued demand for aluminum. There is a positive reaction in the aluminum market given, in particular, to the reduction of primary aluminum production in China, a reduction that contributed to the market balance in the quarter ”, said Hydro President and CEO, Svein Richard Brandtzæg.
"This quarter marks a new chapter in our history, with the addition of the Extruded Products business area as the fifth business area at Hydro. Today, we have the strength of 35,000 employees, we are present in 150 locations worldwide and we have 30,000 customers distributed across the aluminum value chain. Our presence is global, while we are close to our customers and all the communities in which we operate, "said Brandtzæg. < / p>
"Now, we have the best possible platform to take advantage of opportunities, make use of innovations, develop products and keep growing”, he continued.
Adjusted EBIT for the Bauxite & amp; Alumina was lower than in the second quarter. Higher prices for bauxite and caustic soda, negative exchange effects and higher depreciation, especially at Hydro Paragominas, were partially offset by an improvement linked to consumption. In addition, the start of filter operations for the new presses led to additional costs for the alumina refinery.
Adjusted EBIT in the Primary Metal business area also declined in the third quarter, due to negative exchange effects, with the strengthening of the Norwegian krone against the US dollar, seasonally lower sales volumes and higher carbon costs. This decline was, however, partially offset by lower fixed costs and lower alumina.
Adjusted EBIT for Metal Markets fell in the third quarter, largely due to the negative inventory valuation and less positive exchange rate effects. The result of the refusers also fell in the same quarter due to lower sales volumes in Europe.
Adjusted EBIT for the Rolled Products business area improved slightly in the third quarter, compared to the second quarter of 2017. The improvement was mainly caused by the allocation of resources for employee compensation in the second quarter. The improvement was, however, partially affected by the negative development of the exchange rate and seasonal issues, such as the closing of certain plants during the summer. The result of the Neuss refiner was, on the contrary, at the same level as the previous quarter.
Adjusted EBIT for the Energy business area showed a high, compared to the previous quarter, thanks in large part to the improvement in commercial results and higher production. However, it was partially affected by the higher equity taxes in the period.
SAPA's adjusted EBIT also declined compared to the second quarter of 2017, due to the typical seasonality of the extrusion businesses.
Due to the performance challenges that the Rolled Products area has been facing, the progress of the “Better” improvement program has been delayed. However, although the NOK 500 million target is not expected to be reached by the end of the year, the delay should not impact the company's ability to reach the NOK 2.9 billion target by the end of 2019.
The net cash position increased by NOK 1.7 billion, totaling NOK 7.7 billion at the end of the quarter. Net cash from operating activities totaled NOK 3.0 billion. Net cash used in investing activities, excluding short-term investments, amounted to NOK 1.3 billion.
Earnings reported before interest and taxes amounted to NOK 2.323 billion in this third quarter. In addition to the factors discussed above, reported EBIT included unrealized net derivative gains of NOK 23 million and negative metal effects of NOK 151 million.
Net income totaled NOK 2.184 billion in the third quarter, including a reduction in tax costs and corresponding interest income of NOK 125 million in total, as a result of a tax process concluded in September 2017. Net income also includes net foreign exchange gains of NOK 520 million, largely unrealized, reflecting a weakening of the US dollar against the real and affecting the dollar debt in Brazil, while the weakening of the euro against the crown in future rates resulted in an unrealized gain on derivatives embedded in euro energy contracts.
|NOK million, except per share data||Third quarter 2017||Second quarter 2017||Change prior quarter||Third quarter 2016< th class = "width-1"> Change prior year quarter||First 9 months 2017||First 9 months 2016||Year 2016|
|Key financial information|
|Earnings before financial items and tax (EBIT)||2,323||2,946||(21)%||1,376||69%||7,678||5,047||7,011|
|Items excluded from underlying EBIT||123||(16)||& gt; 100%||101||21%||(18)||(451)||(586)|
|Bauxite & amp; Alumina||413||662||(38)%||153||& gt; 100%||1,831||516||1,227|
|Primary Metal||1,298||1,486||(13)%||637||& gt; 100%||3,684||1,657||2,258|
|Other and eliminations||181||170||7%||75||& gt; 100%||426||380||380|
|Earnings before financial items, tax, depreciation and amortization (EBITDA)|
|Net income (loss)||2,184||1,562||40%||1,119||95%||5,585||5,578||6,586|
|Underlying net income (loss)||1,785||2,214||(19)%||958||86%||5,580||2,906||3,875|
|Earnings per share||1.00||0.73||37%||0.53||88%||2.59||2.61||3.13|
|Underlying earnings per share||0.82||1.04||(21)%||0.46||80%||2.61||1.37||1.83|
|Adjusted net cash (debt)||(2,976)||(5,146)||42%||(8,072)||63%||(2,976)||(8,072)||(5,598)|
|Key Operational information|
|Bauxite production (kmt)||3,043||2,943||3%||2,777||10%||8,386||8,069||11,132|
|Alumina production (kmt)||1,605||1,576||2%||1,635||(2)%||4,704||4,706||6,341|
|Primary aluminum production (kmt)||527||523||1%||526||0%||1,566||1,559||2,085|
|Realized aluminum price LME (USD / mt)||1,921||1,902||1%||1,612||19%||1,859||1,552||1,574|
|Realized aluminum price LME (NOK / mt)||15,496||16,265||(5)%||13,375||16%||15,510||13,049||13,193|
|Realized USD / NOK exchange rate||8.07||8.55||(6)%||8.3||(3)%||8.35||8.41||8.38|
|Rolled Products sales volumes to external market (kmt)||236||239||(1)%||231||3%||716||697||911|
|Sapa sales volumes (kmt)||170||180||(6)%||170||0%||527||527||682|
|Power production (GWh)||2,509||2,369||6%||2,946||(15)%||7,746||8,781||11,332|