Risk review

Hydro faces many risks and uncertainties within its worldwide business operations and the global marketplace. We are exposed to changing economic and market conditions and price and currency volatility can have a significant impact on Hydro's reported and operating results. Our primary smelting operations are highly dependent on securing substantial amounts of energy at competitive prices. Our operations are exposed to competition from China and we may not realize the benefits expected from our investments in Brazil. We could be adversely effected by disruptions to our operations and we may not be able to maintain sufficient insurance to cover all risks related to our operations.

Risk management in Hydro is based on the principle that risk evaluation and mitigation is an integral part of all business activities. A core strategy to reduce the risks related to weak economic and unfavorable market developments is the continual improvement of our business in terms of operational efficiency, cost reductions and enhanced commercial strategies. Hydro's main strategy for mitigating risk related to volatility in cash flow is to maintain a solid financial position and strong credit worthiness.

Commodity price sensitivity +10%
NOK Million EBIT
Hydro Group  
Aluminium 3,200

 Excluding Sapa JV 

Currency sensitivities + 10%
NOK Million USD BRL EUR
Sustainable effect      
EBIT 3,230   (820)  (350)
One-off reevaluation effect      
Financial items (1,130) 770 (1,500)
  • Annual sensitivities based on normal annual business volumes, LME USD 2 000 per mt, Oil USD 500 per mt, petroleum coke USD 400 per mt, caustic soda USD 300 per mt, coal USD 60 per mt, NOK/USD 6.70, NOK/BRL 2.70, NOK/EUR 8.60
  • Aluminium price sensitivity is net of aluminium price indexed costs and excluding unrealized effects related to operational hedging
  • Excludes effects of priced contracts in currencies different from underlying currency exposure (transaction exposure)
  • Currency sensitivity on financial items includes effects from intercompany positions

Updated: October 11, 2016