Underlying EBIT for 2015 improved significantly to NOK 9,656 million from NOK 5,692 million in the previous year. Bauxite & Alumina and Rolled Products achieved the best underlying EBIT since Hydro became a pure aluminium company in 2007, while Sapa's underlying results more than doubled compared to the previous year. Negative effects from lower realized LME prices and premiums were more than offset by positive currency effects from the stronger USD and ongoing improvement efforts.
After several years of significant operational and commercial improvements implemented throughout the value chain as well as continuous technological advancements, Hydro has strengthened its ability to create value and lifted the company's relative industry position in an environment of challenging market conditions. By the end of 2015, Hydro's industry-leading improvement programs have contributed NOK 4.5 billion of annual improvements compared to 2011 including NOK 0.8 billion realized in 2015.
After a year of improved market conditions in 2014, the global aluminium market deteriorated again in 2015 due to over-supply in China and increased exports of primary metal in the form of semi-fabricated products from China. These developments, together with lower industry costs, resulted in a continual decline in all-in metal prices and alumina prices during 2015. At the same time, a considerable weakening of the Norwegian kroner and Brazilian real against the US dollar, both major cost currencies for Hydro's operations, strengthened the company's competitive position.
The number of high risk incidents within Hydro's operations continued to fall in 2015, and Hydro's safety performance remains among the best in the industry. The company reduced its TRI rate (total recordable injuries per million hours worked) by 6 percent to 3.0. Although this was one of the best results in the company's history, it was not sufficient to meet the target of 2.8 for the year.
A resource-rich, global aluminium company, Hydro intends to continue to drive the performance and profitability of its operations while securing safe, sustainable business practices. Building on the momentum achieved in earlier years, Hydro has introduced a new ambitious target of NOK 2.9 billion of additional annual improvements for the period 2016 through 2019 including NOK 1.1 billion which is expected to be delivered in 2016.
Bauxite & Alumina will focus on higher productivity, lower manning and further optimization of the company's sales portfolio. In addition to further improving productivity and reducing costs, Primary Metal aims to lift production capacity at existing plants through proven technological developments. Recycling is an important element supporting Hydro's ambition to become carbon-neutral by 2020 and Hydro aims to be a leading player in this growing market segment. Hydro intends to improve margins through high-grading its product portfolio and differentiation through innovation, quality and reliability. Capturing the full value potential from Hydro's Norwegian hydropower assets and using its competence to secure competitive energy sourcing for the company's global activities are key elements of Energy's improvement strategy.
Hydro is intensifying its efforts to further improve its TRI rate for 2016 based on leadership, employee involvement and defined risk mitigating activities. Continued strengthening of the company's compliance activities is also an important objective for 2016, including further awareness training and stronger emphasis on integrity risk management in the supply chain.
Annual report 2015
Annual report 2015
Annual report 2015