Fourth quarter 2012: Improved result on lower input costs

Hydro's underlying earnings before financial items and tax improved to NOK 138 million in the fourth quarter 2012 from an underlying loss of NOK 19 million in the previous quarter. Lower energy costs in Bauxite & Alumina, lower variable costs in Primary Metal and improved results for the Qatalum aluminum plant contributed to underlying results.

February 12, 2013
  • Underlying EBIT NOK 138 million
  • Lower raw material costs
  • Lower realized aluminium prices, higher alumina prices
  • Higher power prices and production in Energy
  • 2013 aluminium demand growth outlook 2-4 % in world outside China
  • Proposed 2012 dividend NOK 0.75 per share

"On the back of continuing challenging markets, our focus remains on improving performance across our value chain. The ambitious USD 300 program is expected to be completed at the end of 2013, strengthening Hydro's industry position. Our improvement efforts will continue, including plans to optimize production and performance in our bauxite and alumina operations in Brazil," Hydro's President and CEO Svein Richard Brandtzæg said.

Bauxite & Alumina's underlying EBIT improved compared to the third quarter, due to higher alumina prices and lower energy costs for Alunorte, together with higher results from commercial operations.

Underlying EBIT for Primary Metal improved compared to the third quarter, mainly due to better results in Qatalum. Lower realized aluminium prices negatively affected underlying EBIT, partly offset by lower operating costs. Savings targeted for Hydro's cost improvement program were achieved for the year.

Excluding inventory and currency effects, underlying results for Hydro's Metal Markets operations declined, mainly due to lower volumes and margins together with lower results from sourcing and trading operations.

Underlying EBIT for Rolled Products declined compared with the third quarter, impacted by lower margins and seasonally higher maintenance costs.

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

Other and eliminations includes a significant negative charge related to elimination of unrealized gains and losses on internal inventories.

Operating cash flow was NOK 2.8 billion for the quarter. Net cash used for investment activities amounted to NOK 1.0 billion. Hydro's net cash position was around NOK 1.7 billion at the end of the fourth quarter.

For the full year 2012, underlying EBIT declined substantially to NOK 1,158 million from NOK 5,982 million in 2011. Lower aluminium prices and alumina prices had a significant effect on underlying results for the year. Ongoing efforts to reduce costs and improve operations partly offset the negative market effects.

On October 15 Hydro announced an agreement with Orkla ASA to combine their respective extrusion profile, building systems and tubing businesses in a new joint venture company to be named Sapa. Completion of the transaction is expected to take place in the first half of 2013, following approval by the relevant competition authorities. Following the agreement, operating results for Hydro's Extruded Products are presented net of financial items and tax as Income (loss) from discontinued operations and excluded from reported EBIT and underlying EBIT.

Hydro's Board of Directors proposes to pay a dividend of NOK 0.75 per share for 2012, reflecting the company's strong commitment to provide a cash return to its shareholders. The dividend reflects our operational performance for 2012 and a strong financial position, also taking into consideration the uncertain market outlook.

Earnings before financial items and tax amounted to NOK 669 million in the fourth quarter, including net unrealized derivative gains and positive metal effects of NOK 555 million and other items amounting to negative NOK 23 million.

In the previous quarter, Hydro incurred a reported loss before financial items and tax of NOK 267 million, including net unrealized derivative losses and negative metal effects of NOK 137 million and other items amounting to negative NOK 112 million. Other items included impairments of non current assets of NOK 140 million and a gain of NOK 68 million relating to pensions.

Income from continuing operations amounted to NOK 364 million in the fourth quarter including net foreign exchange loss of NOK 102 million. In the previous quarter, Hydro incurred a net loss from continuing operations of NOK 64 million, including net foreign exchange gains of NOK 282 million.

Loss from discontinued operations amounted to NOK 251 million in the quarter, including rationalization and closure costs of NOK 174 million. In the third quarter, loss from discontinued operations amounted to NOK 167 million, including rationalization and closure costs of NOK 43 million and a loss on disposal of Portalex amounting to NOK 144 million.

Key financial information
NOK million, except per share data Fourth
quarter
2012
Third
quarter
2012
% change prior quarter Fourth
quarter
2011
% change prior year quarter Year
2012
Year 2011
 
               
Revenue 15,585 14,722 6% 17,157 (9)% 64,181 71,500
               
Earnings before financial items and tax (EBIT) 669 (267) >100% 46 >100% 432 10,068
Items excluded from underlying EBIT (532) 249 >(100)% 1,176 >(100)% 725 (4,086)
Underlying EBIT 138 (19) >100% 1,223 (89)% 1,158 5,982
               
Underlying EBIT:              
Bauxite & Alumina (73) (386) 81% 159 >(100)% (791) 887
Primary Metal 53 (10) >100% 484 (89)% 314 2,486
Metal Markets 69 7 >100% (39) >100% 208 441
Rolled Products 71 214 (67)% 86 (17)% 640 673
Energy 322 220 47% 441 (27)% 1,459 1,883
Other and eliminations (305) (64) >(100)% 92 >(100)% (672) (389)
Underlying EBIT 138 (19) >100% 1,223 (89)% 1,158 5,982
               
Underlying EBITDA 1,216 1,114 9% 2,493 (51)% 5,687 10,497
             
Underlying income (loss) from continuing operations 58 (37) >100% 1,035 (94)% 509 3,947
Underlying income (loss) from discontinued operations (59) 17 >(100)% (159) 63% (5) (1)
Underlying net income (loss) 0 (20) 100% 876 (100)% 504 3,947
Underlying earnings per share 0.00 0.00 - 0.42 (100)% 0.26 1.89
               
Net income (loss) 113  (231)  >100%  (749)  >100%  (1,246)  6,749 
Earnings per share 0.07 (0.14) >100% (0.36) >100% (0.61) 3.41
               
Financial data:              
Investments 1,107 806 37% 3,907 (72)% 3,382 47,510
Adjusted net interest-bearing debt (8,271) (13,678) 40% (19,895) 58% (8,271) (19,895)
Key operational information
Alumina production (kmt) 1,397 1,441 (3)% 1,490 (6)% 5,792 5,264
Primary aluminium production (kmt) 485 484 - 539 (10)% 1,985 1,982
Realized aluminium price LME (USD/mt) 1,940 2,022 (4)% 2,439 (20)% 2,080 2,480
Realized aluminium price LME (NOK/mt) 11,069 11,856 (7)% 13,834 (20)% 12,047 13,884
Realized NOK/USD exchange rate 5.71 5.86 (3)% 5.67 1% 5.79 5.60
Metal products sales, total Hydro (kmt) 731 794 (8)% 804 (9)% 3,254 3,303
Rolled Products sales volumes to external market (kmt) 226 228 (1)% 215 5% 909 929
Power production (GWh) 2,448 2,157 13% 2,706 (10)% 10,307 9,582

 


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