- Adjusted EBIT of NOK 549 million
- Low aluminum prices
- Corrective actions and operational improvements
- Results positively influenced by lower ones
- Operating costs Closure of the Kurri Kurri aluminum smelter resulted in costs of NOK 1.5 billion
- Expected two percent increase in aluminum demand outside of China in fiscal year 2012
"The weak macroeconomic environment remains a challenge in our main markets, leading to low aluminum prices and a weak second quarter for Hydro," said CEO Svein Richard Brandtzæg.
“Weak markets and low aluminum prices require difficult corrective actions, including capacity adjustments and operational improvements. We are continuing our efforts unabated and are currently implementing programs across the Group that will result in total hydro-income increases of around NOK two to three billion for Hydro over the next two to three years. These programs are critical to Hydro's future development and strengthen the competitive position in a challenging time for the industry, "said Brandtzæg.
bauxite & amp; Alumina again posted a weak adjusted EBIT in the quarter, which is due to low LME prices, the pricing of long-term contracts and rising energy costs.
Adjusted EBIT for Primary Metal increased compared to the first quarter, mainly due to slightly higher aluminum prices and lower operating costs. Adjusted earnings for Qatalum were higher, primarily due to the final insurance benefit linked to the 2010 power outage.
Hydro’s midstream business posted lower adjusted results compared to the previous quarter, driven by negative currency effects. Apart from currency effects, adjusted EBIT was stable in the two quarters.
Hydro's adjusted EBIT improved compared to the first quarter, mainly due to seasonally higher sales in the Extruded Products business and generally lower operating costs. But the quarterly results are still affected by the difficult overall economic situation in Europe.
Energy posted lower adjusted EBIT in the second quarter than in the previous quarter due to lower production and lower prices.
Cash flow from operations in the quarter was NOK 0.8 billion. Cash flow for investing activities was NOK 0.8 billion. A dividend of CZK 1.7 billion was paid out in the quarter. Hydro's net debt was NOK 0.4 billion at the end of the second quarter.
Hydro had a reported loss before financial items and taxes of NOK 720 million in the second quarter, which includes unrealized gains from derivative financial instruments of NOK 300 million, cost of rationalization and closures of NOK 408 million, Depreciation of NOK 1,175 million and positive metal effects of NOK 9 million.
In June, Hydro decided to shut down the remaining production at the Kurri Kurri aluminum smelter in Australia after the first production line was shut down in January. The reported second quarter EBIT includes NOK 1,154 million depreciation and NOK 332 million cost of rationalization and closure related to this shutdown. Rationalization and restructuring measures in the Extruded Products business area that affected Building Systems and Extrusion Eurasia resulted in depreciation and rationalization costs of NOK 106 million.
Hydro reported a net loss of NOK 1,712 million in the second quarter, including a currency loss of NOK 883 million. Hydro had reported an after-tax profit of NOK 585 million in the previous quarter, which included a currency gain of NOK 410 million.
Key financial information | ||||||||
NOK million, except per share data | Second quarter 2012 |
First quarter 2012 |
% change prior quarter | Second quarter 2011 |
% change prior year quarter | First half 2012 |
First half 2011 |
Year 2011 |
& nbsp; | ||||||||
Revenue | 21,604 | 21,748 | (1)% | 24,728 | (13)% | 43,351 | 45,867 | 91,444 |
& nbsp; | ||||||||
Earnings before financial items and tax (EBIT) | (720) | 665 | & gt; (100)% | 2,111 | & gt; (100)% | (54) | 7,967 | 9,827 |
Items excluded from underlying EBIT | 1,269 | (108) | & gt; 100% | (206) | & gt; 100% | 1,161 | (4,613) | (3,694) |
Underlying EBIT | 549 | 557 | (1)% | 1.906 | (71)% | 1,106 | 3,354 | 6.133 |
& nbsp; | ||||||||
Underlying EBIT: & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; | ||||||||
bauxite & amp; Alumina | (188) | (144) | (31)% | 272 | & gt; (100)% | (332) | 427 | 887 |
Primary Metal | 240 | 30 | & gt; 100% | 765 | (69)% | 271 | 1,348 | 2,486 |
Metal Markets | 44 | 87 | (50)% | 244 | (82)% | 131 | 387 | 441 |
Rolled Products | 204 | 151 | 35% | 232 | (12)% | 355 | 463 | 673 |
Extruded Products | 53 | 14 | & gt; 100% | 96 | (44)% | 68 | 201 | 151 |
Energy | 362 | 556 | (35)% | 363 | - | 918 | 936 | 1,883 |
Other and eliminations | (166) | (137) | (21)% | (65) | & gt; (100)% | (303) | (408) | (389) |
Underlying EBIT | 549 | 557 | (1)% | 1.906 | (71)% | 1,106 | 3,354 | 6.133 |
& nbsp; | ||||||||
Underlying EBITDA | 1,777 | 1,870 | (5)% | 3,229 | (45)% | 3,648 | 5,643 | 11,152 |
& nbsp; | ||||||||
Net income (loss) | (1,712) | 585 | & gt; (100)% | 1,546 | & gt; (100)% | (1,127) | 6.701 | 6,749 |
Underlying net income (loss) | 268 | 256 | 5% | 1,166 | (77)% | 524 | 2,000 | 3,947 |
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; | ||||||||
Earnings per share | (0.78) | 0.25 | & gt; (100)% | 0.69 | & gt; (100)% | (0.54) | 3.41 | 3.41 |
Underlying earnings per share | 0.12 | 0.13 | (5)% | 0.52 | (77)% | 0.25 | 0.97 | 1.89 |
& nbsp; | ||||||||
Financial data | ||||||||
Investments | 777 | 898 | (13)% | 1,085 | (28)% | 1,674 | 42,710 | 48,025 |
Adjusted net interest-bearing debt | (21,125) | (19,231) | (10)% | (20,777) | (2)% | (21,125) | (20,777) | (19,895) |
& nbsp; | ||||||||
Key operational information | ||||||||
Alumina production (kmt) | 1,491 | 1,464 | 2% | 1,448 | 3% | 2,955 | 2,220 | 5,264 |
Primary aluminum production (kmt) | 502 | 514 | (2)% | 505 | (1)% | 1,016 | 921 | 1,982 |
Realized aluminum price LME (USD / mt) | 2,167 | 2,155 | 1% | 2,509 | (14)% | 2,161 | 2,441 | 2,480 |
Realized aluminum price LME (NOK / mt) | 12,637 | 12.404 | 2% | 13.803 | (8)% | 12,523 | 13,724 | 13,884 |
Realized NOK / USD exchange rate | 5.83 | 5.75 | 1% | 5.50 | 6% | 5.79 | 5.62 | 5.60 |
Metal products sales, total Hydro (kmt) | 857 | 872 | (2)% | 877 | (2)% | 1,728 | 1,649 | 3.303 |
Rolled Products sales volumes to external market (kmt) | 228 | 227 | - | 242 | (6)% | 455 | 487 | 929 |
Extruded Products sales volumes to external market (kmt) | 137 | 133 | 3% | 142 | (4)% | 270 | 278 | 536 |
Power production (GWh) | 2,513 | 3,190 | (21)% | 1,830 | 37% | 5.703 | 4.138 | 9,582 |
Published: 24 July 2012