First quarter 2013: Result up on higher volumes and prices

Hydro's underlying earnings before financial items and tax rose to NOK 1,077 million in the first quarter, from NOK 172 million in the fourth quarter 2012. Higher alumina, aluminium and power prices, increased sales volumes and improved margins contributed to underlying results.

April 24, 2013
  • Underlying EBIT NOK 1,077 million
  • Higher sales volumes driven by seasonality
  • Increased realized alumina and aluminium prices
  • Higher production and prices in Energy
  • Continued challenging markets

"We continue to see positive effects of our ambitious improvement efforts across the company, further strengthening our industry position. We will strengthen our efforts, particularly in the strategically important Bauxite & Alumina business area, where operational performance is a top priority," Hydro's President and CEO Svein Richard Brandtzæg said.

"Overall, we experience increased macro uncertainty. We expect a balanced primary aluminium market in 2013, based on expected demand growth outside China of 2-4 percent, announced curtailments and new production coming on stream," Brandtzæg said.

Bauxite & Alumina's underlying EBIT was stable compared to the previous quarter. Positive effects relating to higher LME-linked alumina prices were offset by higher energy costs.

Primary Metal delivered improved underlying EBIT compared to the fourth quarter due to higher realized aluminium prices, increased premiums and seasonally higher sales volumes. Hydro's share of underlying results from Qatalum also improved during the quarter.

Higher volumes and higher margins for remelt operations together with improved results from sourcing and trading activities had a positive impact on underlying EBIT for Metal Markets during the quarter.

Rolled Products' underlying EBIT increased compared to the fourth quarter, influenced by seasonally higher shipments and higher margins. Operating costs were stable.

Underlying EBIT for Energy increased in the quarter due to seasonally higher production and prices.

Other and eliminations underlying EBIT included positive effects relating to the elimination of unrealized gains and losses on internal inventories compared with significant negative charges in the previous quarter.

Operating cash flow was NOK 0.5 billion for the first quarter. Net cash used for investment activities amounted to NOK 0.5 billion. Hydro's net cash position amounted to around NOK 0.4 billion at the end of the first quarter, also influenced by cash used in discontinued operations and capitalized financial lease obligations.

Reported earnings before financial items and tax amounted to NOK 705 million in the first quarter. In addition to the factors discussed above, reported EBIT included net unrealized derivative losses and positive metal effects amounting to NOK 294 million in total, and rationalization and closure cost of NOK 78 million. In the previous quarter, reported EBIT amounted to NOK 704 million, including net unrealized derivative gains and positive metal effects of NOK 555 million, and other items amounting to negative NOK 23 million.

Income from continuing operations amounted to NOK 254 million in the first quarter including a net foreign exchange loss of NOK 115 million. In the previous quarter, income from continuing operations amounted to NOK 334 million including a net foreign exchange loss of NOK 102 million.

Income from discontinued operations amounted to NOK 9 million in the first quarter including rationalization and closure costs of NOK 40 million. In the fourth quarter, loss from discontinued operations amounted to NOK 247 million including rationalization and closure costs of NOK 174 million.

As of January 1, 2013 Hydro has implemented a new accounting standard for employee benefits (IAS19R) with retrospective application resulting in changes to the prior periods in this report.

Key financial information
NOK million, except per share data First
% change prior quarter First
% change prior year quarter Year
Revenue 16,111 15,585 3% 17,044 (5)% 64,181
Earnings before financial items and tax (EBIT) 705 704 - 710 (1)% 571
Items excluded from underlying EBIT 372 (532) >100% (132) >100% 725
Underlying EBIT 1,077 172 >100% 578 86% 1,297
Underlying EBIT:            
Bauxite & Alumina (63) (73) 13% (144) 56% (791)
Primary Metal 364 58 >100% 36 >100% 335
Metal Markets 146 70 >100% 88 66% 210
Rolled Products 153 70 >100% 150 2% 637
Energy 517 322 60% 556 (7)% 1,459
Other and eliminations (38) (275) 86% (108) 64% (553)
Underlying EBIT 1,077 172 >100% 578 86% 1,297
Underlying EBITDA 2,165 1,250 73% 1,780 22% 5,827
Underlying income (loss) from discontinued operations 49  (55) >100% (3) >100% (5)
Net income (loss) 263 87 >100% 575 (54)% (1,331)
Underlying net income (loss) 648 (24) >100% 233 >100% 408
Earnings per share 0.14 0.06 >100% 0.24 (43)% (0.65)
Underlying earnings per share 0.30 (0.01) >100% 0.12 >100% 0.21
Financial data:            
Investments 1,056 1,107 (5)% 776 36% 3,382
Adjusted net interest-bearing debt (9,290)  (8,304) (12)% (11,470) 19% (8,304)
Key operational information
Alumina production (kmt) 1,361 1,397 (3)% 1,464 (7)% 5,792
Primary aluminium production (kmt) 478 485 (1)% 514 (7)% 1,985
Realized aluminium price LME (USD/mt) 2,043 1,940 5% 2,155 (5)% 2,080
Realized aluminium price LME (NOK/mt) 11,533 11,069 4% 12,404 (7)% 12,047
Realized NOK/USD exchange rate 5.64 5.71 (1)% 5.75 (2)% 5.79
Metal products sales, total Hydro (kmt) 754 731 3% 872 (13)% 3,254
Rolled Products sales volumes to external market (kmt) 236 226 5% 227 4% 909
Power production (GWh) 2,904 2,448 19% 3,190 (9)% 10,307


Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management's plans, objectives and strategies for Hydro, such as planned expansions, investments 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, as well as (i) statements preceded by "expected", "scheduled", "targeted", "planned", "proposed", "intended" or similar statements.

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 aluminium business; 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.

Updated: October 11, 2016