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  • Underlying EBIT of NOK 875 million
  • Ramp-up progressing successfully at Alunorte, Paragominas and Albras
  • Bauxite & Alumina up on increased production and currency, mostly offset by lower realized alumina prices
  • Primary Metal down on lower realized aluminium price
  • Financial impact of cyber-attack estimated to NOK 250-300 million in Q2 – main impact in Extruded Solutions
  • Downstream results down on margin and volume, reflecting softening demand
  • Energy down on lower volumes
  • 2019 global primary aluminium market expected in deficit, demand growth expectations for 2019 reduced to 1-2%

Underlying EBIT for Bauxite & Alumina increased compared to the second quarter of last year, from NOK 364 million in Q2 2018 to NOK 415 million in Q2 2019. The results were driven by positive effects from increased production following the lifting of the production embargo on May 20, and positive currency effects partly offset by a decrease in the realized alumina sales price.

“Alunorte reached 80-85 percent capacity utilization in June, within the targeted 75-85 percent capacity utilization for the state-of-art press filter technology. Paragominas and Albras are also ramping up successfully. This is a great achievement by the Brazilian organization,” says President and CEO Hilde Merete Aasheim.

Underlying EBIT for Primary Metal declined from positive NOK 755 million in Q2 2018 to negative NOK 604 million in Q2 2019, mainly due to lower all-in metal prices and lower margins on power sales in Brazil, somewhat offset by positive currency effects.

“We maintain our view of a global primary aluminium market in deficit for 2019 in the range 1-1,5 million tonnes. We take down expected global primary demand growth for 2019 to 1-2 percent, as we are seeing signs of weakening in some of our market segments,” says Aasheim.

Underlying EBIT for Metal Markets improved from NOK 237 million in Q2 2018 to NOK 299 million in Q2 2019 due to increased results from the remelters and higher results in the sourcing and trading activities, partly offset by negative currency effects.

Underlying EBIT for Rolled Products decreased significantly compared to the second quarter of 2018, from NOK 212 million in Q2 2018 to NOK 75 million in Q2 2019. The result from the rolling mills decreased, driven by lower volumes and personnel cost increases, partly offset by positive currency effects. The Neuss smelter result declined driven by lower all-in metal prices.

Underlying EBIT for Extruded Solutions decreased compared to the same quarter last year, from NOK 957 million in Q2 2018 to NOK 772 million in Q2 2019. Increased cost and reduced volumes mainly resulting from the cyberattack and a somewhat softening market, were partly offset by higher margins.

Underlying EBIT for Energy decreased from NOK 417 million in Q2 2018 to NOK 176 million in Q2 2019. The decrease was mainly due to lower production and lower commercial results.

The overall financial impact of the cyber-attack is estimated at NOK 250-300 million in the second quarter 2019, of which NOK 150-200 million relates to Extruded Solutions. At the end of the second quarter operations have largely returned to normal.

Hydro’s "Better" improvement program will not reach its original 2019 target. This is mainly due to the production embargo at Alunorte and subsequent production curtailments at Alunorte’s bauxite source Paragominas and Hydro’s part owned subsidiary Albras aluminium plant.

Hydro's net debt position increased from NOK 12.1 billion to NOK 15.1 billion at the end of the quarter, Net cash provided by operating activities amounted to NOK 2.6 billion. Net cash used in investment activities, excluding short term investments, amounted to NOK 2.7 billion. During the second quarter dividends paid to Norsk Hydro ASA shareholders amounted to NOK 2.6 billion.

Hydro's reported EBIT amounted to NOK 656 million for the second quarter 2019, compared to NOK 2,986 million in the second quarter 2018.

In addition to the factors discussed above, reported earnings before financial items and tax (EBIT) and net income include effects that are disclosed in the attached quarterly report. Items excluded from underlying EBIT and underlying net income (loss) are defined and described as part of the alternative performance measures (APM) section in the quarterly report.

When Hilde Merete Aasheim assumed her position as Hydro’s new President and CEO May 8, Hydro announced its aim to lift profitability and drive sustainability. Hydro will host an Investor Day on September 24 in Oslo to provide more insight into these ambitions.

Cautionary note 
Certain statements included in this announcement contain forward-looking information, including, without limitation, information relating to (a) forecasts, projections and estimates, (b) statements of Hydro management concerning plans, objectives and strategies, such as planned expansions, investments, divestments, curtailments or other projects, (c) targeted production volumes and costs, capacities or rates, start-up costs, cost reductions and profit objectives, (d) various expectations about future developments in Hydro's markets, particularly prices, supply and demand and  competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, and (i) qualified statements such as "expected", "scheduled", "targeted", "planned", "proposed", "intended" or similar.  

Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. Factors that could cause these differences include, but are not limited to: our continued ability to reposition and restructure our upstream and downstream businesses; changes in availability and cost of energy and raw materials; global supply and demand for aluminium and aluminium products; world economic growth, including rates of inflation and industrial production; changes in the relative value of currencies and the value of commodity contracts; trends in Hydro's key markets and competition; and legislative, regulatory and political factors.  

No assurance can be given that such expectations will prove to have been correct. Hydro disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  

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