- Underlying EBIT NOK 8 million
- Sharp decline in alumina and aluminium prices
- Record-high bauxite production
- Reduced downstream sales volume, partly offset by lower operating cost
- Lower power prices and production in Energy
"Realized alumina and aluminium prices for the quarter clearly reflect market and macro-economic uncertainty, hitting our weak quarterly results. Hydro's response is to focus our attention on operational performance, portfolio management and capital discipline," Hydro's President and CEO Svein Richard Brandtzæg said.
"The planned transaction with Orkla to form the world's leading aluminium solution provider is strengthening Hydro as a world-leading, resource-rich aluminium company as well as our extrusion business. Most of our extrusion markets continue to be demanding and the new company will be better positioned to meet these challenges and to capture the longer-term growth perspectives for aluminium products,"said Brandtzæg.
Underlying EBIT for Bauxite & Alumina declined further from a weak result in the previous quarter mainly due to lower realized alumina prices and lower sales volumes.
Underlying EBIT for Primary Metal fell compared to the second quarter also impacted by lower realized prices. Lower operating costs partly offset the negative market effects. Underlying results for Qatalum declined compared to the second quarter which included the final insurance settlement relating to the power outage in 2010.
Excluding inventory and currency effects, underlying results for Hydro's midstream operations were stable during the quarter.
Lower operating costs for Hydro's downstream businesses had a positive impact on underlying EBIT for the quarter. However, underlying results for Extruded Products declined, affected by seasonally lower volumes and a further weakening in market demand. Results for the quarter continued to be impacted by difficult economic conditions in Europe.
Energy delivered lower underlying EBIT in the third quarter compared to the previous quarter due to lower production and lower prices.
Operating cash flow was NOK 1.1 billion for the quarter. Net cash used for investment activities amounted to NOK 1 billion. Hydro's net debt position was around zero at the end of the third quarter.
Hydro incurred a reported loss before financial items and tax of NOK 414 million in the third quarter including net unrealized derivative losses and negative metal effects of NOK 108 million and other items amounting to NOK 314 million. Other items included a loss on the disposal of Portalex of NOK 144 million and impairments of other assets of NOK 163 million. Other also included rationalization charges and closure costs of NOK 75 million relating to Extruded Products and Kurri Kurri and a gain of NOK 68 million relating to pensions.
In the previous quarter, Hydro incurred a reported loss before financial items and tax of NOK 720 million including net unrealized derivative gains of NOK 300 million, rationalization and closure costs of NOK 408 million, impairment charges amounting to NOK 1,175 million and positive metal effects of NOK 9 million.
Hydro incurred a net loss of NOK 231 million in the third quarter including net foreign exchange gains of NOK 283 million. In the previous quarter, Hydro incurred a net loss of NOK 1,712 million including net foreign exchange losses of NOK 883 million.
| Key financial information | ||||||||
| NOK million, except per share data | Third quarter 2012 | Second quarter 2012 | % change prior quarter | Third quarter 2011 | % change prior year quarter | First 9 months 2012 | First 9 months 2011 | Year 2011 |
| Revenue | 19,004 | 21,604 | (12)% | 23,829 | (20)% | 62,355 | 69,695 | 91,444 |
| Earnings before financial items and tax (EBIT) | (414) | (720) | 42% | 2,222 | >(100%) | (469) | 10,189 | 9,827 |
| Items excluded from underlying EBIT | 422 | 1,269 | (67)% | (576) | >100% | 1,583 | (5,189) | (3,694) |
| Underlying EBIT | 8 | 549 | (98)% | 1,646 | (99)% | 1,115 | 5,000 | 6,133 |
| Underlying EBIT: | ||||||||
| Bauxite & Alumina | (386) | (188) | >(100)% | 302 | >(100)% | (718) | 729 | 887 |
| Primary Metal | (10) | 240 | >(100)% | 653 | >(100)% | 261 | 2,002 | 2,486 |
| Metal Markets | 7 | 44 | (83)% | 93 | (92)% | 139 | 480 | 441 |
| Rolled Products | 214 | 204 | 5% | 124 | 72% | 569 | 588 | 673 |
| Extruded Products | 27 | 53 | (49)% | 40 | (33)% | 95 | 241 | 151 |
| Energy | 220 | 362 | (39)% | 506 | (57)% | 1,137 | 1,442 | 1,883 |
| Other and eliminations | (64) | (166) | 61% | (73) | 12% | (368) | (482) | (389) |
| Underlying EBIT | 8 | 549 | (98)% | 1,646 | (99)% | 1,115 | 5,000 | 6,133 |
| Underlying EBITDA | 1,265 | 1,777 | (29)% | 2,985 | (58)% | 4,913 | 8,628 | 11,152 |
| Net income (loss) | (231) | (1,712) | 86% | 797 | >(100)% | (1,359) | 7,498 | 6,749 |
| Underlying net income (loss) | (20) | 268 | >(100)% | 1,071 | >(100)% | 505 | 3,071 | 3,947 |
| Earnings per share | (0.14) | (0.78) | 83% | 0.49 | >(100)% | (0.68) | 3.84 | 3.41 |
| Underlying earnings per share | 0.00 | 0.12 | (97)% | 0.50 | (99)% | 0.25 | 1.47 | 1.89 |
| Financial data: | ||||||||
| Investments | 965 | 777 | 24% | 1,125 | (14)% | 2,639 | 43,836 | 48,025 |
| Key operational information | ||||||||
| Alumina production (kmt) | 1,441 | 1,491 | (3)% | 1,553 | (7)% | 4,396 | 3,773 | 5,264 |
| Primary aluminium production (kmt) | 484 | 502 | (3)% | 522 | (7)% | 1,500 | 1,443 | 1,982 |
| Realized aluminium price LME (USD/mt) | 2,022 | 2,167 | (7)% | 2,592 | (22)% | 2,119 | 2,494 | 2,480 |
| Realized aluminium price LME (NOK/mt) | 11,856 | 12,637 | (6)% | 14,225 | (17)% | 12,321 | 13,906 | 13,884 |
| Realized NOK/USD exchange rate | 5.86 | 5.83 | 1% | 5.49 | 7% | 5.81 | 5.58 | 5.60 |
| Metal products sales, total Hydro (kmt) | 794 | 857 | (7)% | 850 | (7)% | 2,522 | 2,499 | 3,303 |
| Rolled Products sales volumes to external market (kmt) | 228 | 228 | - | 228 | - | 683 | 714 | 929 |
| Extruded Products sales volumes to external market (kmt) | 125 | 137 | (9)% | 137 | (9)% | 395 | 415 | 536 |
| Power production (GWh) | 2,157 | 2,513 | (14)% | 2,737 | (21)% | 7,860 | 6,875 | 9,582 |
Published: October 23, 2012