SOURCE: Norsk Hydro

December 02, 2009 06:08 ET

Capital Markets Day 2009: Hydro steps up upstream repositioning efforts

OSLO, NORWAY--(Marketwire - December 2, 2009) -

Hydro is intensifying efforts to improve its competitive position by launching new cost-reduction measures, following a year of demanding markets and decisive corrective actions. Hydro's improvement efforts have resulted in positive downstream earnings, while upstream activities remain challenged by the weak aluminium market and a strong Norwegian krone.

"Hydro has reacted swiftly to the ongoing crisis by implementing a string of firm and efficient actions, which have improved our position considerably. But the weak demand for aluminium and aluminium products, combined with the strong Norwegian currency, call for even tougher measures to cut costs throughout the company and improve the upstream cost position," says Hydro CEO Svein Richard Brandtzaeg.

The Norwegian-based aluminium and energy company remains optimistic about the long-term prospects for aluminium, as the light-weight and endlessly recyclable metal is seen as a crucial part of the solution to the world's climate challenges. In product application, aluminium makes cars lighter and buildings more energy-efficient, paving the way for business opportunities across Hydro's value chain.

"Our long-term view on aluminium is encouraging. Aluminium will play an increasingly important role in an energy-constrained world. Hydro's technological edge and leading metallurgical competence provide a solid platform to take advantage of promising upstream and downstream growth opportunities," Brandtzaeg says.

Hydro's Capital Markets Day includes the following highlights:

  * Hydro is launching a new cost-improvement program to reduce cash
    operating costs by USD 100 per tonne primary aluminium in 2012
    compared to the 2009 level. 90 percent of the improvement is
    expected to be realized by end-2011. The improvement excludes
    Qatalum and impact of raw material prices.
  * Qatalum remains on target for start-up at the turn of the year
    09/10 and will reach full production during fourth quarter 2010.
    The earnings contribution from Qatalum is expected to be somewhat
    negative in 2010 at the current aluminium price and affected by
    build-up costs and full depreciation.
  * Hydro has entered into an agreement to divest its Spanish 30,000
    tonnes rolling mill Inasa in a cash-neutral transaction.
  * Total capital expenditures in 2010 are expected to be NOK 5.3
    billion, down from NOK 10.2 billion in 2009. This includes
    project-financed investments in Qatalum of NOK 4.2 billion in
    2009. Sustaining capital expenditures are being further reduced
    from about NOK 3.0 billion in 2009 to about NOK 2.5-3.0 billion
    in 2010.
  * Hydro prioritizes highly the maintenance of an investment grade
    credit rating. At the end of third quarter, Hydro had a net cash
    position of NOK 2.4 billion mainly supported by significant
    operating capital reductions during the first nine months.
  * The current market imbalance for primary aluminium in the world
    outside China is expected to continue into 2010, but at a lower
    level. Hydro is well prepared to capture business opportunities
    should markets change significantly.
  * Long-term prospects for aluminium remain encouraging, supported
    by high aluminium consumption in urbanization and infrastructure
    development, aluminium as part of the solution to the climate
    challenge and aluminium recyclability qualities. Aluminium semis
    consumption is expected to average 6.5 percent the next 10 years,
    led by the transportation and construction sectors.

Hydro's Capital Markets Day presentation material is available on

Investor contact
Contact     Stefan Solberg
Telephone   +47 22539280
Cellular    +47 91727528

Press contact
Contact     Halvor Molland
Telephone   +47 22532421
Cellular    +47 92979797


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.

Market outlook:



Metal Markets Extruded Products:

This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.

Copyright © Hugin AS 2009. All rights reserved.

Contact Information