Norsk Hydro: Sapa (joint venture) - Announcement of results for the second quarter 2015

Underlying EBIT for Sapa increased compared to the previous quarter, due to seasonally higher sales volumes, strong North American market development, as well as improvement programs progressing ahead of plan across the organization. The second quarter results were also impacted negatively by sharply falling metal premiums in North America.

July 17, 2015

Underlying EBIT increased compared to the same quarter of the previous year driven by strong North American demand, positive currency effects, as well as positive contributions from improvement programs and restructuring efforts.

Underlying EBIT for the first half of 2015 improved by more than 70 percent compared with the same period in 2014, influenced by the same factors discussed above.

Reported EBIT for Sapa for the second quarter was negatively influenced by restructuring cost and unrealized derivative losses. The restructuring cost relates to Southern Europe and China.

Key Figures - Sapa (50%)  Second quarter 2015  First quarter 2015 Second quarter 2014 First half 2015  First half 2014  Year 2014 
NOK million, except sales volumes            
Revenue  7 247  7 067  5 772  14 314  11 445  23 192
Underlying EBITDA  399  353  321  752  541  958
Underlying EBIT  241  196  175  437  253  326
Underlying Net Income (loss)  145  119  131  264  166  199
Sales volumes (kmt)  179 177   184  355  364  699
Earnings before financial items and tax (EBIT)  32  101  84  133  82  (158)

 

Market

Demand for extruded products in North America increased by 4 percent compared to the previous quarter, due to seasonal variations in demand and strong markets. Compared to the same quarter of the previous year, demand grew 8 percent, due to strong automotive and truck demand and a ramp-up of residential building and construction activity.

In Europe, extruded products demand seasonally increased 5 percent compared with the previous quarter. Demand is showing signs of improvement compared to the same quarter of the previous year, but weaker building and construction market is, to a large degree, offsetting most other segments.

Demand for extruded products is expected to seasonally weaken in Europe going into the third quarter, compared to the second quarter, while in North America demand is expected to remain stable. When comparing to the same quarter last year, demand in Europe in the third quarter is expected to improve slightly, while the strong development is expected to continue in North America.

 


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.

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.


Updated: October 11, 2016