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Fourth quarter 2014: record result thanks to more favorable market conditions and good performance

Norsk Hydro ASA reported adjusted earnings before interest and taxes (EBIT) of NOK 2,886 million in the fourth quarter, compared to NOK 1,490 million in the third quarter of 2014. The Bauxite & amp; Alumina and Primary Metal had their best quarterly results since 2007.

  • Record high adjusted quarterly result of NOK 2,886 million
  • Proposed dividend for 2014: NOK 1.00 per share
  • Changed dividend policy: 40% of net profit over the business cycle
  • Higher all-in metal prices and aluminum oxide prices, supported by currency developments
  • Improved operational performance at Alunorte and Paragominas
  • Investment decision for technological pilot plant in Karmøy

An increase in aluminum prices, product premiums and prices for aluminum oxide had a very positive impact in the quarter, plus the strong appreciation of the US dollar against the Norwegian krone (NOK) and the Brazilian real (BRL). < / p>

Adjusted earnings for the Alumina & amp; Bauxite improved noticeably in the fourth quarter, reflecting the higher aluminum oxide prices achieved, higher sales and lower operating costs at Alunorte, and positive currency developments. Mining of bauxite increased in the quarter and reached 10.2 million tons annually.

"I am pleased with the best quarterly results that we have been able to present since we became a pure aluminum company in 2007. For the second quarter in a row, we are also seeing a solid improvement in operating costs for Alunorte and Paragominas, as well as an increase in production, which reflects robust operations, ”says CEO Svein Richard Brandtzæg. “In line with our commitment to distribute to our shareholders, the Board of Directors has proposed increasing the annual dividend from NOK 0.75 per share to NOK 1.00 per share, while also increasing the dividend policy from 30% to 40% of net profit over the business cycle changed ”, adds Brandtzæg.

Adjusted EBIT for Primary Metal rose significantly in the fourth quarter thanks to a further increase in aluminum prices and product premiums. In addition, the stronger US dollar had a positive impact on adjusted quarterly results compared to NOK and BRL.

"I am delighted that we have now decided to continue the project for the construction of a technological pilot plant in Karmøy after the EFTA Surveillance Authority gave its approval last week. The pilot plant will introduce the next generation of hydro technology that can produce aluminum with the world's lowest energy consumption and the lowest CO 2 emissions per ton of metal, ”says Brandtzæg.

“We will continue our improvement work in 2015, both in the commercial and in the operational area. Now that earnings expectations have improved, it is time to demonstrate the strength of our culture of improvement. ”

Metal Markets achieved a higher adjusted EBIT compared to the previous quarter, which had positive currency effects and better results from the remelting activities, but was partially offset by lower trading results.

Rolled Products' adjusted EBIT declined compared to the third quarter of 2014 due to seasonally lower sales. Margins continued to be under pressure, but were largely offset by currency gains on export sales. The Rheinwerk's positive contributions thanks to higher all-in metal prices 1) had a positive impact on the quarter's adjusted earnings.

Compared to the third quarter, the Energy division's adjusted earnings increased thanks to higher electricity generation.

Adjusted EBIT for Sapa decreased compared to the third quarter, largely due to the seasonally lower demand.

Cash flow from operations in the fourth quarter was NOK 4.4 billion. Net cash from investing activities was NOK 0.8 billion after sales. Hydro's net debt was NOK 0.1 billion at the end of the fourth quarter. It was also impacted by unrealized currency losses, dividend payments to third parties and a payment to Vale, which is the first of two tranches for the remaining shares in Paragominas.

The reported annual result of NOK 5,692 million was more than twice as high as in 2013 when it was NOK 2,725 million. It was impacted by the significant increase in all-in metal prices 1) and the strengthening of the US dollar against NOK and BRL. After a few years of difficult market conditions, the global aluminum market has recovered: All-in metal prices are currently much higher and there is a better balance between demand and supply for primary aluminum with a market deficit of around one million tons worldwide outside of China. Significant operational and commercial improvements across the value chain have strengthened Hydro's ability to create value in an environment of improving market conditions.

Hydro's Board of Directors proposes a dividend of NOK 1.00 per share in 2014, reflecting the company's goal of paying a dividend to its shareholders. The dividend reflects our 2014 operating results, the company's strong financial position and better earnings prospects for 2015.

Reported earnings before interest and taxes in the fourth quarter were NOK 2,295 million. In addition to the factors mentioned above, reported EBIT included unrealized losses from derivatives and positive metal effects totaling minus NOK 72 million. The reported result also includes NOK 145 million depreciation linked to the Slim mill in Italy. In addition, the reported EBIT includes NOK 337 million (Hydros share), which is linked to Sapa, mainly for valuation adjustments and restructuring costs, as well as other costs of NOK 36 million.

In the previous quarter, adjusted earnings before interest and taxes were NOK 1,937 million, including unrealized gains from derivatives and positive metal effects totaling NOK 476 million. The reported result also included other costs of NOK 30 million

Continuing operations reported a loss of NOK 168 million in the fourth quarter, including a net currency loss of NOK 2,252 million. In the previous quarter, the result from continuing operations was NOK 665 million, including a net currency loss of NOK 1,001 million.

1) The all-in metal price refers to the LME price for aluminum plus product awards.

More in English:

Key financial information
NOK million, except per share data Fourth
quarter
2014
Third
quarter
2014
% change prior quarter Fourth
quarter
2013
% change prior year quarter Year
2014
Year 2013
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Revenue 21,656 19,698 10% 16,570 31% 77.907 64,877
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Earnings before financial items and tax (EBIT) 2,295 1,937 19% (14) & gt; 100% 5,674 1,663
Items excluded from underlying EBIT 591 (447) & gt; 100% 485 22% 18 1,063
Underlying EBIT 2,886 1,490 94% 471 & gt; 100% 5,692 2.725
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Underlying EBIT: & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Bauxite & amp; Alumina 528 (26) & gt; 100 (379) & gt; 100% (55) (1,057)
Primary Metal 1,989 1,216 64% 484 & gt; 100% 3,937 1,422
Metal Markets 221 171 29% 190 17% 634 594
Rolled Products 96 243 (60)% 100 (3)% 698 615
Energy 360 234 54% 383 (6)% 1,197 1,653
Other and eliminations (308) (349) 12% (306) (1)% (717) (502)
Underlying EBIT 2,886 1,490 94% 471 & gt; 100% 5,692 2.725
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Underlying EBITDA 4.170 2,615 59% 1,619 & gt; 100% 10,299 7.306
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Underlying income (loss) from discontinued operations - - - - - - 220
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Net income (loss) (168) 665 & gt; (100)% (758) 78% 1,228 (839)
Underlying net income (loss) 1,979 1,043 90% 140 & gt; 100% 3,728 1,610
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;
Earnings per share (0.18) & nbsp; 0.29 & gt; (100)% & nbsp; (0.39) & nbsp; 53% & nbsp; & nbsp; 0.39 (0.45) & nbsp;
Underlying earnings per share 0.83 0.43 96% 0.02 & gt; 100% 1.55 0.65
& nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;   & nbsp;
Financial data: & nbsp; & nbsp; & nbsp; & nbsp; & nbsp;   & nbsp;
Investments 1,449 889 63% 1,057 37% 3,625 3,761
Adjusted net interest-bearing debt (13,587) (14,061) 3% (10,128) (34)% (13,587) (10,128)
Key operational information
Alumina production (kmt) 1,501 1,478 2% 1,452 3% 5,933 5,377
Primary aluminum production (kmt) 499 487 2% 492 1% 1,958 1,944
Realized aluminum price LME (USD / mt) 1,997 1.906 5% 1,802 11% 1,850 1.902
Realized aluminum price LME (NOK / mt) 13,355 11.909 12% 10,916 22% 11.624 11,160
Realized NOK / USD exchange rate 6.69 6.25 7% 6.06 10% 6.28 5.87
Metal products sales, total Hydro & nbsp; (kmt) 780 811 (4)% 777 - 3,305 3.164
Rolled Products sales volumes to external market (kmt) 213 244 (13)% 226 (5)% 946 941
Power production (GWh) 2,823 2,170 30% 2,411 17% 10.206 10,243

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