We are pioneers in the industry when it comes to reacting quickly and decisively to the economic downturn. For the time being, we do not expect the market to recover and we will continue to take the necessary measures to adapt our activities and costs to the difficult market situation, ”said CEO Svein Richard Brandtzæg.

"We want to ensure that the measures that we are now implementing in all business areas and staff functions strengthen our competitive situation," adds Brandtzæg.

Production cuts

Hydro decided in the course of the first quarter to shut down the oldest production line of its smelter in Sunndal, Norway, with an annual capacity of 100,000 tons until further notice. This leads to a reduction of the production capacity by a total of 500,000 tons per year, which corresponds to almost 30 percent of the production in the financial year 2008.

The previously cut production cuts include the smelter in Neuss, 50 percent in the Søral smelter involved, 10 percent of production at Slovalco and the permanent closure of the Söderberg line in Karmøy. At the end of the first quarter, 60 percent of the announced cuts had been implemented, while the rest are scheduled to occur in the second quarter.
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Hydro has also announced the temporary shutdown of the Alpart alumina refinery in Jamaica. Hydro holds a 35 percent stake there. The refinery has a total alumina production capacity of 1,650,000 tons per year and is likely to cease production in mid-May. The program for cost savings and job cuts in the company's processing area is running according to plan and made a significant contribution in the first quarter.
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"Qatalum was 73 percent completed at the end of the quarter and is due to be operational by the end of the year Year in target. When production starts there, Hydro has a good starting point to be a competitive metal supplier, ”says Brandtzæg.

Aluminum Metals
The Aluminum Metals business area reported an adjusted loss of NOK 476 million in the quarter. The result was strongly influenced by the sharp drop in aluminum prices worldwide. Both the fixed and the variable production costs for primary aluminum decreased in time with the fact that the capacity reductions had an impact and the prices for important raw materials fell.

The result for the bauxite and alumina division fell sharply as the prices for aluminum oxide fell. Commercial products continued to be impacted by weak sales and low production at Hydro's remelting facilities.

Aluminum Products
Adjusted loss for the Aluminum Products business area was NOK 257 million in the first quarter as the already extremely weak market continued to weaken. As a result, sales fell compared to the previous quarter and margins came under greater pressure. Considerable cost reductions only partially offset the market impact.

Energy
Adjusted EBIT for the Energy business area was NOK 416 million, a decrease compared to the record result in the previous quarter. Spot prices fell from the extremely high level in the fourth quarter of 2008 and electricity production also decreased, but was high given the season.

Cash flow and liquidity
The net cash flow from operating activities was NOK 1.1 billion in the quarter, compared to 2.9 billion in the previous quarter NOK total. Hydro had a net liquidity position of NOK 1.7 billion at the end of the quarter.