Norsk Hydro
oslo : NHY

October 23, 2012 01:41 ET

Norsk Hydro third quarter 2012: Results hit by lower prices

OSLO, NORWAY--(Marketwire - Oct 23, 2012) - Hydro's underlying earnings before financial items and tax fell to NOK 8 million in the third quarter from NOK 549 million in the previous quarter. Low realized alumina and aluminium prices weighed heavily on underlying results for Hydro's upstream operations for the quarter while cost improvement programs proceeded with full force to meet the challenging market situation.

* 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 extusion 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
                                               % change          First
NOK million,  Third   Second % change    Third    prior  First 9  9
except per   quarter  quarter    prior  quarter    year  months months Year
share data    2012     2012   quarter    2011   quarter   2012   2011  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                                                        (5    (3
EBIT           422    1 269   (67) %    (576)    >100 %  1 583   189)  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)      2022    2 167    (7) %    2 592   (22) %   2119  2 494  2 480

Realized
aluminium
price LME
(NOK/mt)     11856   12 637    (6) %   14 225   (17) %  12321 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) %   2522   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
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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.Error: Reference source not found

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

Q3 report:

http://hugin.info/106/R/1651178/532619.pdf

Q3 presentation:

http://hugin.info/106/R/1651178/532620.pdf

This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that:

(i) the releases contained herein are protected by copyright and other applicable laws; and

(ii) they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: Norsk Hydro via Thomson Reuters ONE

[HUG#1651178]

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