Key developments

Underlying EBIT improved to NOK 2,737 million from NOK 1,297 million in 2012, influenced by lower operating costs for Hydro's smelters, improved results for Qatalum and higher product premiums. Positive developments were partly offset by lower realized alumina and aluminium prices together with production disruptions relating to external power outages at Alunorte.

Dedicated improvement programs in all business areas have enabled Hydro to weather an environment of continued low aluminium prices. In 2013 Primary Metal successfully completed its USD 300 improvement program, and is targeting additional savings of USD 180 per metric ton (mt) for its global portfolio of part-owned smelters. Despite temporary setbacks, Bauxite & Alumina's From B to A program is expected to achieve its overall target by 2015. Rolled Products' Climb program has contributed to significant savings.

On September 1, 2013, Hydro and Orkla completed the Sapa joint venture transaction transforming their respective extrusion businesses. The transaction has improved the global reach of the combined operations and created a stronger foothold for Hydro in North America and several important emerging markets. It is also expected to generate substantial synergies amounting to roughly NOK 1 billion annually by the end of 2016.

Hydro did not meet its most important target in 2013 following one fatal contractor accident. Although Hydro's safety performance is among the best in the industry, the company did not meet its improvement target for total recordable injuries (TRI rate).

Strategic Direction

The financial crisis and subsequent weak global economic conditions have led to an industry-wide poor financial performance for the past several years. A robust financial position, focus on cash generation and ongoing improvements over and above cost inflation have enabled Hydro to view the industry challenge as an opportunity.

A resource-rich, global aluminium company, Hydro is aiming to continuously improve the performance and profitability of its business without compromising on safety and compliance. The ambition of no fatal accidents remains Hydro's top priority, and the company is targeting further improvement of its TRI rate for 2014.

Hydro intends to increase the momentum of Bauxite & Alumina's improvement program From B to A and make significant progress toward reaching the NOK 1 billion target by the end of 2015. Primary Metal is targeting savings of USD 180 per mt for its global portfolio of part-owned smelters by the end of 2016. Rolled Products is aiming for revenue and cost improvements of NOK 800 million by 2016.

Exploiting our favorable long alumina position continues to be an important goal together with optimizing metal product premiums which have become a relatively larger share of total aluminium prices. Capturing the full value potential from Hydro's Norwegian hydropower assets remains at the top of our agenda.

  • Annual report 2013

  • Annual report 2013

  • Annual report 2013

Updated: September 15, 2016