Highlights:

• Adjusted EBIT of NOK 2.71 billion.
• Production of Alunorte, Paragominas and Albras reduced by half, negatively affecting results.
• Rising costs, largely offset by higher prices for all-in aluminum and alumina, which were higher.
• Better downstream results with higher volumes and margins.
• Higher prices and volumes increase Energy results.
• Better improvement program affected by the situation in Brazil and expectation of not reaching the target for 2018.
• Karmoy technology pilot project in full production.
• Expectation of deficit in the global primary aluminum market in 2018 - tariffs in the United States, penalties against Rusal and the situation in Brazil keep the market uncertain.
  
  

"We see that the global primary aluminum market is running a larger deficit in 2018, due to lower than expected production growth, and the growth in global primary aluminum demand remains at 4-5% for this The market remains uncertain because of tariffs in the United States, American sanctions against Rusal and the situation in Brazil, "said Hydro President and CEO Svein Richard Brandtzæg.

Adjusted EBIT in the Bauxite & Alumina business area decreased compared to the second quarter of 2017. The lower results were a consequence of the reduction in production at Alunorte and Paragominas and the increase in raw material prices, which were partially offset due to higher sales prices for alumina.

"We continue to talk to the Brazilian authorities in order to normalize operations at Alunorte as soon as possible. The process to resolve the situation in Brazil has proved to be challenging and taking more time than expected. We have implemented measures that we consider to be adequate to continue operating Alunorte safely, but the timing of returning to full-scale production remains uncertain, ”said Brandtzæg.

Adjusted EBIT in the Primary Metal business area it also declined in relation to the second quarter of last year, due to raw material and higher fixed costs and negative exchange effects, which were partially offset by higher prices for the all-in metal.

"All 60 cells of the Karmoy technology pilot project are in operation and we now produce aluminum with the most energy-efficient technology in the world. Several of the elements of the technology employed could be used in existing plants to decrease energy consumption and improve productivity, ”explained Brandtzæg.

At Metal Markets, adjusted EBIT remained stable compared to the second quarter of last year. However, the increase in sales volume and margins at the refineries and the good results of the supply and commercialization activities were affected by the lower inventory valuation and exchange effects.

Adjusted EBIT for the Rolled Products business, in turn, showed significant improvement, compared to the same quarter in 2017. Even so, better margins, higher sales volumes and increased production performance, in addition to a non-recurring periodization of remuneration of employees in 2017, ended up being partially affected by the negative exchange effects. The results of the Neuss refiner improved, mainly due to the positive effect of the evolution of the prices of all-in metal and new energy contracts, even though these were partially affected by the rising prices of raw materials.

In the Extruded Products Solutions business area, adjusted EBIT increased when compared to the proforma adjusted EBIT of the second quarter of last year, driven by higher margins and sales volumes. The result was also positively influenced by the increase in the value of premium products in the central Midwest region.

Adjusted EBIT for the Energy business area also increased, compared to the same quarter in 2017. The increase was generated by the significant increase in prices, higher production and better commercial results, although these were partially affected by the negative effect of the price revision of an internal energy contract with the Neuss refiner.

Due to the situation in Brazil, the forecast is that our Better improvement program will not reach its 2018 target of NOK 500 million.

Hydro's net debt position had gone from NOK 3.6 billion to NOK 7.5 billion at the end of the quarter. Net cash for operating activities totaled NOK 1.5 billion in the period, and net cash used in investment activities, excluding short-term investments, totaled NOK 1.6 billion. During the second quarter, dividends paid to Norsk Hydro ASA shareholders totaled NOK 3.6 billion.

In addition to the factors discussed above, earnings reported before financial items and taxes (EBIT) and revenue include the effects described in the table below. Items excluded from adjusted EBIT and adjusted net revenue (losses) are defined and described as part of the APM section of the quarterly report.