• Underlying EBIT of NOK 1 477 million
• Higher realized aluminium prices, offset by currency developments
• Record-high alumina production of 6.5 million mt
• Seasonally lower metal sales
• Trial production started at new automotive line in Germany
• Better improvement program on track for 2019 target of NOK 2.9 billion
• Global primary aluminium demand growth expected at 4-5% in 2016

 "Demand growth for aluminium remains healthy. We are sticking to our forecast for global aluminium demand growth of 4-5 percent for 2016 and expect to land in the higher range of this estimate for the full year," says President and CEO Svein Richard Brandtzæg. "This comes on the back of higher-than-expected demand in China and slower restarts of curtailed capacity", says Brandtzæg.

"I'm pleased to see the positive operational development in our bauxite and alumina production. Both Paragominas and Alunorte produced above nameplate capacity in the third quarter, with Hydro Alunorte alumina production reaching a record-high production level. This is a demonstration of long-term dedication by a highly competent and committed organization in Brazil. We have succeeded in lifting the bar and will continue these efforts to stabilize production at or above nameplate capacity," says Brandtzæg.

Underlying EBIT for Bauxite & Alumina decreased compared to second quarter. While the realized alumina price remained stable, alumina sourcing costs increased somewhat. Further reduction in raw material consumption and reduced bauxite costs were offset by negative currency effects, as the Brazilian Real continued to strengthen against the USD. Annualized production volume at Hydro Alunorte reached a record 6.5 million mt per year, exceeding name-plate capacity of 6.3 million mt per year. Hydro Paragominas also increased the production after lower production last quarter due to ball mill maintenance.

Underlying EBIT for Primary Metal declined in the third quarter. Lower premiums and volumes, in addition to slightly higher raw material costs and negative currency effects, were largely offset by higher realized aluminium prices and lower fixed costs. The second quarter was positively influenced by an insurance refund of NOK 50 million related to a power outage in Årdal in January 2016, in addition to a positive effect of NOK 75 million related to a reversal of ICMS tax accrual on sales of surplus power in Brazil in previous periods.

Underlying EBIT for Metal Markets improved in the third quarter mainly due to less negative currency and inventory evaluation effects, in addition to improved results from sourcing and trading activities. Results from remelters declined mainly due to seasonally lower volumes.

Underlying EBIT for Rolled Products was lower compared to the second quarter of 2016, mainly due to seasonally lower volumes and changes in the product mix. The Neuss smelter result was higher due to an increase in the all-in metal price.

Underlying EBIT for Energy declined compared to the previous quarter due to higher production cost and higher area cost, partly offset by higher production. The higher production cost was driven by seasonally higher property taxes, while area cost increased mainly due to export restrictions out of Southern Norway during the quarter.
Underlying EBIT for Sapa decreased compared to the previous quarter, mainly due to seasonally lower market demand.

During the third quarter Hydro made progress in accordance with plan on its "Better" improvement ambition targeting NOK 2.9 billion of annual improvements by 2019.

Hydro's net cash position increased during the third quarter by NOK 0.6 billion to NOK 5.4 billion at the end of the quarter. Net cash provided by operating activities amounted to NOK 2.3 billion. Net cash used in investment activities, excluding short term investments, amounted to NOK 1.5 billion.

Reported earnings before financial items and tax amounted to NOK 1,376 million in the third quarter. In addition to the factors discussed above, reported EBIT included net unrealized derivative gains of NOK 100 million and positive metal effects of NOK 48 million. Reported earnings also included a charge of NOK 124 million related to the demolition of the Kurri Kurri site and an impairment charge of NOK 140 million related to the decision to divest the Hannover site. In addition, reported earnings included a net gain of NOK 15 million in Sapa (Hydro's share net of tax), relating to unrealized derivative gains, rationalization charges and net foreign exchange gains.

In the previous quarter reported earnings before financial items and tax amounted to NOK 1,978 million including net unrealized derivative gains of NOK 32 million and positive metal effects of NOK 17 million. Reported EBIT also included a charge of NOK 67 million related to environmental commitments in Kurri Kurri, a gain of NOK 342 million for the sale of certain assets in Grenland, including Herøya Industrial Park, and a negative adjustment of NOK 13 million related to the sale of the Slim rolling mill in the fourth quarter of 2015. In addition, reported EBIT included a net gain of NOK 49 million in Sapa (Hydro's share net of tax), relating to unrealized derivative gains and net foreign exchange gains.

Net income amounted to NOK 1,119 million in the third quarter including a net foreign exchange gain of NOK 358 million mainly reflecting the strengthening Norwegian kroner versus Euro affecting liabilities in Euro in Norway and embedded currency derivatives in power contracts.

In the previous quarter net income was NOK 2,077 million including a net foreign exchange gain of NOK 904 million mainly reflecting the strengthening BRL versus US dollars affecting US dollar liabilities in Brazil, as well as the strengthening Norwegian kroner versus Euro affecting liabilities in Euro in Norway and embedded currency derivatives in power contracts.