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  • Adjusted EBIT of NOK 1 906 million
  • Seasonally strong markets
  • Better production performance with bauxite and clay
  • Higher prices for alumina and aluminum, raw material costs still under pressure
  • Strong contribution from the energy business
  • Midstream better due to higher sales
  • Stable results downstream
  • Qatalum should reach full production at the end of the 3rd quarter
  • The Primary Metal $ 300 improvement program per ton is on schedule

"I am pleased that the production output in the Bauxite & amp; Alumina rose after the takeover of Vale's aluminum business in February. At the same time, the costs along the value chain remain in focus. The consistent attention to the operational performance and the margin management supported the result in a seasonally strong quarter and strengthen us on the further way ", says CEO Svein Richard Brandtzæg
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" We are still optimistic, when it comes to the prospects for aluminum demand, but recent uncertainty due to unstable macroeconomic conditions and higher public debt may lead to greater volatility in the coming months, "said Brandtzæg.
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Adjusted EBIT for Bauxite & amp; Alumina increased in the quarter due to the effects of Vale's acquired bauxite and alumina activities and better production results.
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Adjusted EBIT for Primary Metal also improved compared to the first quarter, mainly due to the higher results Aluminum prices and higher sales, which was partially offset by higher raw material prices. & Nbsp; The commissioning of the production at Qatalum, the 50/50 joint venture between Qatar Petroleum and Hydro, continued in the second quarter. Full production should be achieved by the end of the third quarter.
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Adjusted EBIT for Metal Markets increased in the second quarter compared to the first, thanks to higher sales and positive inventory valuation effects.
& nbsp; < br /> The adjusted EBIT of Rolled Products corresponded to that of the first quarter. Lower production costs offset the effect of the slight decline in sales and lower margins. Operating costs per ton decreased due to lower electricity and logistics costs.
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Extruded Products' adjusted EBIT in the second quarter was lower than in the first quarter. Sales were higher in most business sectors for seasonal reasons, but lower margins and higher costs more than offset the effect of higher sales.
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Energy achieved solid adjusted results that were not as high as in the first quarter due to the seasonal decrease in electricity generation and & nbsp; lower prices.
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Cash flow from operating activities contributed to a reduction in net debt of CZK 1.4 billion in the quarter, including an increase in equity. & nbsp; The cash flow from investing activities was CZK 1.1 billion in the quarter. The dividend paid in the quarter amounted to 1.6 billion crowns. At the end of the quarter, Hydro's net debt was 2.9 billion crowns.

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Key financial information
NOK million, except per share data Second
quarter
2011
First
quarter
2011
% change prior quarter Second
quarter
2010
% change prior year quarter First
half
2011
First
half
2010
Year
2010
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Revenue 24,728 21,138 17% 19,779 25% 45,867 37,924 75,754
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Earnings before financial items and tax (EBIT) 2,111 5,855 (64)% 1,157 82% 7,967 2,142 3,184
Items excluded from underlying EBIT (206) (4,408) & nbsp; (47) & nbsp; (4,613) (344) 167
Underlying EBIT 1,906 1,448 32% 1,110 72% 3,354 1,798 3,351
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Underlying EBIT: & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
bauxite & amp; Alumina 272 155 75% 288 (5)% 427 450 633
Primary Metal 765 583 31% 382 & gt; 100% 1,348 212 617
Metal Markets 244 143 71% 31 & gt; 100% 387 96 321
Rolled Products 232 232 - 309 (25)% 463 532 864
Extruded Products 96 105 (9)% 201 (53)% 201 318 444
Energy 363 573 (37)% 177 & gt; 100% 936 766 1,416
Other and eliminations (65) (344) 81% (278) 77% (408) (575) (945)
Underlying EBIT 1,906 1,448 32% 1,110 72% 3,354 1,798 3,351
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Underlying EBITDA 3,229 2,415 34% 1,877 72% 5,643 3,317 6.420
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Net income (loss) 1,546 5,154 (70)% 598 & gt; 100% 6.701 1,523 2,118
Underlying net income (loss) 1,389 1,244 12% 530 & gt; 100% 2,633 931 1,852
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Earnings per share 0.69 2.89 (76)% 0.40 75% 3.41 1.08 1.33
Underlying earnings per share 0.61 0.65 (5)% 0.34 79% 1.26 0.61 1.14
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Financial data: & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Investments 1,085 41.625 (97)% 1,261 (14)% 42,710 3,028 6,231
Adjusted net interest-bearing debt (20,777) (20,490) (1)% (18,191) (14)% (20,777) (18,191) (6,427)
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Key operational information
Alumina production (kmt) 1,448 773 87% 518 & gt; 100% 2,221 992 1,976
Primary aluminum production (kmt) 505 415 22% 362 40% 921 701 1.415
Realized aluminum price LME (USD / mt) 2,509 2,358 6% 2,200 14% 2,441 2,099 2,113
Realized aluminum price LME (NOK / mt) 13,803 13.607 1% 13.302 4% 13,724 12.401 12,674
Realized NOK / USD exchange rate 5.50 5.77 (5)% 6.05 (9)% 5.62 5.91 6.00
Metal Markets sales volumes to external market (kmt) 533 467 14% 457 17% 1,000 871 1,717
Rolled Products sales volumes to external market (kmt) 242 245 (1)% 242 - 487 473 945
Extruded Products sales volumes to external market (kmt) 142 136 5% 141 1% 278 269 529
Power production (GWh) 1,830 2.308 (21)% 1,621 13% 4.138 4,402 8,144

Pro forma underlying financial and operating results

Key financial information
NOK million Second
quarter
2011
First
quarter
2011
% change prior quarter Second
quarter
2010
% change prior year quarter First
half
2011
First
half
2010
Year
2010
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Revenue 24,728 22,815 8% 22,761 9% 47,543 43,549 87,272
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Earnings before financial items and tax (EBIT) 2,111 1.604 32% 1,429 48% 3,715 2,447 3,696
Items excluded from underlying EBIT (206) (66) & nbsp; (60) & nbsp; (272) (380) 445
Underlying EBIT 1,906 1,538 24% 1,369 39% 3,444 2,067 4,141
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Underlying EBITDA 3,229 2,881 12% 2,702 19% 6.110 4,681 9,450
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Net income (loss) attributable to Hydro shareholders 1,405 782 80% 540 & gt; 100% 2,187 1,319 2,220
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Key operational information
Alumina production (kmt) 1,448 1,336 8% 1,521 (5)% 2,784 2,915 5,805
Primary aluminum production (kmt) 505 490 3% 475 6% 995 922 1,867


Hydro's underlying earnings before financial items and tax total to NOK 1.906 million in the second quarter, up from pro forma underlying EBIT of NOK 1.538 million in the first quarter.
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Underlying EBIT for Bauxite & amp; Alumina improved somewhat compared to pro forma first quarter underlying EBIT, mainly due to improved production performance, increased alumina prices and higher sales volumes. The improvement was partly offset by higher raw material costs and losses related to the Vale transaction hedge.
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Underlying EBIT for Primary Metal included about NOK 90 million related to Albras in the second quarter compared with around NOK 50 million in the pro forma underlying EBIT for the first quarter. The increase for Albras was mainly due to higher LME prices and higher casthouse sales volumes.

About Hydro's reporting

Underlying EBIT

To provide a better understanding of Hydro's underlying performance, the following discussion of operating performance excludes certain items from EBIT (earnings before financial items and tax) and net income. See "Items excluded from underlying EBIT and net income" later in this report for more information on these items.

Acquisition of Vale's aluminum business

On February 28, 2011 Hydro completed the take-over of the majority of Vale's aluminum business in Brazil. Effective from the first quarter of 2011, we are including a new operating segment, Bauxite & amp; Alumina, in our reporting structure in addition to our other five operating segments. In addition to the assets acquired from Vale, Hydro's bauxite and alumina activities previously included in the Primary Metal segment have been transferred to the new Bauxite & amp; Alumina segment and prior periods have been restated. Primary Metal includes the Albras aluminum plant in addition to Hydro's pre-transaction primary aluminum production activities. Effective from the first quarter of 2011, elimination of internal gains and losses on alumina previously included in the Primary Metal segment is included in Other and Eliminations, and prior periods have been restated.
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The following discussion on reported and underlying operating results includes the acquired bauxite and alumina activities from Vale from March 1, 2011. Amounts relating to previous periods have not been restated to reflect the reported and underlying results of the acquired assets.

Pro forma information related to acquisition of Vale's aluminum business

To provide a presentation of Hydro's performance on comparable basis, certain pro forma financial and operating information is also presented in this report based on including the results of the acquired Vale assets for the full calendar quarter and for all previous periods presented in this report. See "Second quarter report 2011" for more information on the acquisition and the pro forma information included in our second quarter report.

Reported EBIT and net income

Reported EBIT for Hydro total to NOK 2,111 million in the second quarter including net unrealized derivative gains of NOK 266 million, positive metal effects of NOK 28 million and other net negative effects of NOK 87 million comprised of rationalization and closure costs, impairment charges and gains on divestments.
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In the previous quarter, reported EBIT for Hydro total to NOK 5,855 million including net unrealized derivative losses of NOK 96 million, positive metal effects of NOK 176 million and net transaction related gains attributable to the acquisition of Vale aluminum amounting to NOK 4,328 million. This amount included revaluation gains on Hydro's pre-existing interest in Alunorte and the CAP joint venture.
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Net income for the second quarter amounts to NOK 1,546 million including net foreign exchange gains of NOK 334 million. In the first quarter net income total to NOK 5,154 million including net foreign exchange losses of NOK 30 million.

Market developments and outlook

Alumina

Global demand for alumina outside China was slightly higher in the second quarter compared to the first quarter mainly due to ramp-up of new and restart of a limited amount of curtailed primary aluminum production capacity. Annualized alumina production outside China total to about 53 million mt.
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Alumina demand and production in China continued to increase in the second quarter compared to the previous quarter, mainly due to commissioning of new primary aluminum production and alumina projects.
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Platts alumina spot prices have been trading around USD 400 per mt during the quarter, representing a range of roughly 15-15.5 percent of LME.

Primary aluminum

LME prices averaged somewhat higher in the second quarter compared to the first quarter. Prices started the quarter at a level around USD 2,620 per mt and ended around USD 2,540 per mt influenced by global economic developments. Due to a weakening USD, LME prices measured in NOK and EUR were relatively stable compared to the first quarter.
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Demand and supply of primary aluminum in the world outside China increased slightly during the second quarter compared to the first quarter, amounting to an annualized consumption and production of 26.2 million mt and 26.5 million mt respectively. We maintain our estimate of demand growth of approximately 7 percent for 2011. A manageable market surplus is still expected due to the ramp up of additional production capacity.
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Consumption in China increased significantly in the first half of 2011. In the second quarter annualized consumption total to 20.2 million mt. The Chinese primary aluminum market is expected to be largely balanced for 2011.
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LME stocks were relatively stable in the second quarter compared to the first quarter amounting to around 4.5 million mt compared with 4.6 million mt in the first quarter. A large portion of the metal in warehouses continue to be owned by several large financial investors.
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Demand for metal products (extrusion ingot, sheet ingot, primary foundry alloys and wire rod) remained stable with no significant change from the previous quarter in most regions. However, demand for extrusion ingot in southern Europe has softened as a result of the weaker regional economic developments.

Rolled products

European demand for rolled products in the second quarter of 2011 maintained the healthy level achieved in the previous quarter. Demand in the automotive segment continued to be influenced by the ongoing substitution of steel materials and the strong demand for premium cars in China. Demand in the building and construction segment was seasonally higher compared to the first quarter of 2011 but remained weak in southern Europe. Robust demand continued for the beverage can segment. Consumption of thin gauge foil remained healthy but softened somewhat mainly due to reduced customer inventories. Demand in the general engineering segment was stable.
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Market demand in the third quarter of 2011 is expected to decline due to seasonality. End-use demand is expected to maintain a healthy level for all product segments with the exception of some softening in building and foil market segments. Chinese imports into Europe are expected to remain at a high level.

Extruded products

European demand for extruded aluminum products increased seasonally in the second quarter of 2011. Demand remained weak within the building and construction sector, in particular in southern Europe. Demand in the engineering and transport segment continued to improve in most European markets. However, margins remained under pressure as European extruders have shifted capacity from the weak building and construction sector to serve other market segments.
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Extrusion shipments in North America improved slightly compared with the first quarter of 2011, and were also higher than the second quarter of 2010 primarily due to improved demand in the transport and automotive segments. Imports into the US have fallen significantly compared to the second quarter of 2010 as a result of duties on Chinese imports. Extrusion demand in South America continued on a level similar to the same quarter of last year.
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Demand within precision tubing continued to be strong in the quarter, driven by demand for premium cars. Developments were positive in the North American automotive segment.
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European extrusion markets are expected to be seasonally weaker in the third quarter. Recovery in the building and construction segment is expected to remain slow in southern Europe, where demand for building systems remains weak. However, building permit statistics indicate somewhat firmer markets in France and Germany. Demand is expected to increase in North America with firm transport and automotive segments. However, there are indications of slower pace in the market recovery. The outlook for South America remains positive, although at lower growth rates.

Energy

Nordic electricity spot prices decreased during the second quarter as the hydrological situation improved strongly. Spot prices fell sharply in April as unusually warm weather started the snow melt earlier than normal. Prices declined further as high precipitation resulted in increased production and normal reservoir levels.
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Water reservoir levels in Norway increased to about 67 percent at the end of the second quarter. This is close to normal and more than 13 percentage points higher than the same period in 2010. Increasing consumption expected after the summer period and uncertainty regarding the effect of the shutdown of nuclear capacity in Germany is expected to continue to provide some support to spot prices in the third quarter.

Additional factors impacting Hydro

Hydro remains optimistic regarding the future prospects for aluminum. However, a more volatile macroeconomic environment and issues relating to sovereign debt may result in increased demand fluctuations in the coming months.
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Hydro has sold forward around 85 percent of its expected primary aluminum production for the third quarter at a price level of around USD 2,575 per mt. This excludes expected volumes from Qatalum.
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Hydro has hedged the majority of the net aluminum price exposure in the business acquired from Vale until the end of 2011. For the second half 2011 the hedged volumes for Bauxite & amp; Alumina amount to about 180,000 mt of aluminum, priced at about USD 2,400 per mt.
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In June 2011, Hydro started up 15,000 mt of curtailed production capacity at its Sunndal smelter. Depending on continued satisfactory market conditions, Hydro's ambition is to start up the remaining curtailed production at the Sunndal smelter by the end of 2011 representing 85,000 mt of annual production capacity. The timing for a full restart will be decided later.
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Hydro's combined water and snow reservoirs were back to normal levels at the end of June and significantly higher than the end of the corresponding period last year. High precipitation in May and June strongly improved the reservoir balance. Production in third quarter 2011 is expected to be seasonally higher than in second quarter.

On July 25, 2011, Hydro entered into an agreement to divest its non-strategic 20.86 percent ownership in the Norwegian power production company SKS Produksjon AS located in northern Norway to Salten Kraftsamband AS for a cash consideration of NOK 1 billion for the shares. The transaction is expected to be completed on July 26, 2011, and Hydro expects to recognize a gain of about NOK 650 million in its third-quarter result, with no material tax expense implications.

bauxite & amp; Alumina

Underlying EBIT improved significantly compared to first quarter, mainly due to the inclusion of the acquired bauxite and alumina activities from Vale from March 1, 2011.

Primary Metal

Underlying EBIT for Primary Metal improved compared to the first quarter mainly due to higher realized aluminum prices and higher volumes, partly offset by increased raw material costs. Underlying results included the results of the Albras smelter for the full second quarter.
& nbsp;
Higher realized aluminum prices and premiums had a net positive effect on underlying results amounting to about NOK 130 million for the quarter. Volume increases added roughly NOK 70 million. The positive developments were partly offset by higher raw material costs of roughly NOK 70 million. Our USD 300 per mt cost improvement program targeted to reach USD 175 per mt by the end of 2011 continued according to plan with strong cost discipline throughout the organization.
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Production and sales volumes increased compared to the first quarter mainly due to the inclusion of Albras for the full quarter. Increased volumes from Qatalum also had a positive influence on volume developments.
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Underlying results for Qatalum were positively impacted by higher realized aluminum prices in addition to higher volumes in the second quarter. Underlying results for the first quarter included NOK 145 million of insurance proceeds relating to the power outage at the plant in August 2010. No insurance proceeds were included in the second quarter. Ramp-up of the plant progressed further in the quarter. By the end of June, 502 out of 704 production cells were in operation and additional cells were started in July. The first power plant steam turbine was taken over for permanent operation in early July. Qatalum is expected to reach full capacity by the end of the third quarter 2011.

Metal Markets

Underlying EBIT for Metal Markets increased in the second quarter compared to the first quarter of 2011 impacted by improved operational performance and positive ingot inventory valuation effects.
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Underlying EBIT excluding currency and ingot inventory valuation effects improved for the quarter. About NOK 30 million of the increase related to higher volumes for our remelt operations and increased sales and improved margins on third-party products. Results from our sourcing and trading activities also increased compared with the previous quarter.

Total metal product sales excluding ingot trading increased mainly due to higher deliveries from Qatalum and Albras.

Rolled Products

Underlying EBIT for Rolled Products was unchanged compared to the first quarter. Lower operating costs offset the effects of somewhat lower sales volumes and operating margins. Operating cost per mt declined due to lower energy costs and logistic costs.
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Automotive shipments declined in the quarter. Lower thin gauge foil and lithography sales volumes resulted from customer destocking activities. General engineering and can beverage volumes were somewhat higher supported by firm demand.

Extruded Products

Underlying EBIT for Extruded Products decreased in the second quarter compared with the previous quarter. Sales volumes were seasonally higher in most business sectors, but lower margins and higher costs more than offset the effect of higher volumes.
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Lower margins and higher costs resulted in further deterioration of results for our building systems operations. Due to continued weak demand in southern Europe, additional rationalization measures have been initiated in the second quarter and will be further expanded in the third quarter. Costs relating to these measures excluded from underlying EBIT total to NOK 15 million in the second quarter.
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Underlying EBIT improved slightly for our European extrusion operations due to seasonally higher volumes. Our Precision Tubing business delivered continued strong underlying results during the second quarter, although lower compared to the previous quarter. Underlying EBIT improved further for our North American extrusion business, and the South American extrusion operations continued to deliver solid underlying results.

Energy

Energy delivered solid underlying results in the second quarter, although at a lower level than the previous quarter mainly due to seasonally lower power production.

Other and eliminations

Underlying EBIT for Other and eliminations in the second quarter was positively impacted by improved underlying results for other business activities and somewhat lower costs. Eliminations comprises mainly unrealized gains and losses on inventories purchased from group companies which fluctuates with product flows and margin developments throughout Hydro's value chain.

Items excluded from underlying EBIT and net income

To provide a better understanding of Hydro's underlying performance, the items in the table below have been excluded from EBIT and net income.
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Items excluded from underlying EBIT are comprised mainly of unrealized gains and losses on certain derivatives, impairment and rationalization charges, effects of disposals of businesses and operating assets, as well as other items that are of a special nature or are not expected to be incurred on an ongoing basis.

Items excluded from underlying net income
NOK million Second
quarter
2011
First
quarter
2011
Second
quarter
2010
First
half
2011
First
half
2010
Year
2010
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Unrealized derivative effects on LME related contracts & nbsp; (35) 79 389 43 136 489
Derivative effects on LME related contracts (Vale Aluminum) (89) 42 (320) (47) (320) (166)
Unrealized derivative effects on power contracts (162) (40) 211 (202) 483 609
Unrealized derivative effects on currency contracts - (1) 12 (1) 35 (50)
Unrealized derivative effects on raw material contracts 20 16 - 36 - (156)
Metal effect, Rolled Products (28) (176) (206) (204) (520) (560)
Significant rationalization charges and closure costs 75 - 18 75 (1) 130
Impairment charges (PP&E and equity accounted investments) 56 - - 56 61 187
Pension - - (151) - (151) (151)
Insurance compensation - - - - - (91)
(Gains) / losses on divestments (44) - - (44) (67) (74)
Transaction related effects (Vale Aluminum) - (4,328) - (4,328) - -
Items excluded from underlying EBIT (206) (4,408) (47) (4,613) (344) 167
Net foreign exchange (gain) / loss (334) 30 (59) (305) (527) (513)
Calculated income tax effect 383 467 38 850 279 80
Items excluded from underlying net income (157) (3,911) (68) (4,068) (592) (266)

See "Second quarter report - 2011" for footnotes.

Finance

Net financial income (expense) total to positive NOK 194 million in the second quarter compared to negative 93 million in the previous quarter.
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Interest expense increased in the second quarter compared to the first quarter due to debt assumed relating to the Vale transaction.
& nbsp;
Net currency gains of NOK 334 million in the second quarter mainly related to gains on financial positions denominated in USD. Of the total, approximately NOK 90 million related to intercompany balances.
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Other financial expense included accretion expenses amounting to about NOK 45 million for the second quarter on liabilities recognized at net present value including the Paragominas put / call arrangement.

Tax

Income tax expense total to a charge of NOK 759 million in the second quarter compared to a charge of NOK 608 million in the previous quarter and a charge of NOK 462 million in the second quarter of 2010.
& nbsp;
For first half of 2011 income tax expense was 17 percent of pre-tax income. The low tax rate results from a tax-free gain on the revaluation of Hydro's previous ownership interests in Alunorte and the CAP joint-venture recognized in the first quarter.

Pro forma information

Underlying EBIT and EBITDA
Per business area Second quarter 2011 First quarter 2011 Second quarter 2010 Year
2010
& nbsp; EBIT EBITDA EBIT EBITDA EBIT EBITDA EBIT EBITDA
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
bauxite & amp; Alumina 272 756 237 725 448 912 1,225 3,061
Primary Metal 765 1,313 592 1,137 481 1,026 816 3.006
Metal Markets 244 269 143 168 31 59 321 428
Rolled Products 232 339 232 342 309 419 864 1,318
Extruded Products 96 222 105 237 201 337 444 987
Energy 363 392 573 600 177 214 1,416 1,540
Other and eliminations (65) (62) (344) (328) (278) (265) (945) (889)
Underlying EBIT / EBITDA 1,906 3,229 1,538 2,881 1,369 2,702 4,141 9,450

bauxite & amp; Alumina

Underlying EBIT for Bauxite & amp; Alumina increased compared to pro forma underlying results in the first quarter mainly due to higher alumina prices7) together with production improvements and higher sales volumes. The positive developments were partly offset by higher raw material costs and losses related to the Vale transaction hedge.
& nbsp;
Higher realized alumina prices driven by increased LME prices together with higher sales volumes had a positive influence on underlying EBIT. Alumina and bauxite production improved compared to the first quarter due to improved operational stability during the period. Production increased 12 percent and 8 percent for our bauxite and alumina operations respectively. Raw material costs including oil, coal and caustic were somewhat higher reflecting increasing raw material prices compared to the previous period. Bauxite costs remained relatively flat compared to first quarter. Operating costs per mt at Paragominas improved slightly, partly as a result of higher production.
& nbsp;
Underlying results from our commercial operations improved compared to the first quarter influenced by higher volumes and improved alumina prices.

Primary Metal

Underlying EBIT for Primary Metal improved compared to pro forma first quarter underlying operating results mainly due to higher realized aluminum prices and higher casthouse sales volumes partly offset by increased raw material costs.

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