Norsk Hydro
oslo : NHY

July 26, 2011 02:03 ET

Second quarter 2011: Results rise on higher volumes and prices

OSLO, NORWAY--(Marketwire - Jul 26, 2011) - Hydro had underlying earnings before financial items and tax of NOK 1,906 million in the second quarter, up from NOK 1,448 million in the first quarter. Higher realized alumina and aluminum prices combined with higher volumes supported underlying results for the quarter.

  * Underlying EBIT NOK 1,906 million
  * Seasonally firm markets
  * Improved bauxite and alumina production performance
  * Higher realized alumina and aluminium prices, raw material cost
    pressures continue
  * Strong contribution from energy business
  * Midstream improve on higher volumes
  * Stable downstream results
  * Qatalum expected to reach full production by end-Q3
  * Primary Metal USD 300 cost improvement program on track

"I'm pleased to see improved production performance in Bauxite & Alumina, following the takeover of Vale's aluminium operations in February. At the same time we continue to focus on cost repositioning along our aluminium value chain. Consistent focus on operational performance and margin management have supported results in seasonally firm markets and will make us more robust going forward," Hydro's President and CEO Svein Richard Brandtzæg said.

"We remain optimistic about the prospects for aluminium demand, however, recent increased uncertainty due to a more volatile macro environment and sovereign debt issues may result in increased demand fluctuations in the coming months," Brandtzæg said.

Underlying EBIT for Bauxite & Alumina rose during the quarter due to the effect of the acquired bauxite and alumina activities from Vale and improved production performance.

Underlying results for Primary Metal also improved compared to the first quarter, mainly due to higher realized aluminium prices and sales volumes, partly offset by increased raw material costs. Ramp-up of production at Qatalum, the 50/50 joint venture between Qatar Petroleum and Hydro, continued during the quarter and is expected to reach full capacity by the end of the third quarter.

Underlying results for Hydro's midstream operations rose in the second quarter from the first, along with higher volumes and positive ingot inventory valuation effects.

Underlying EBIT for Rolled Products was unchanged compared to the first quarter. Lower operating costs offset the effects of somewhat lower sales volumes and operating margins. Operating cost per mt declined with lower energy and logistic costs.

Extruded Products' underlying EBIT decreased in the second quarter compared with the previous quarter. Sales volumes were seasonally higher in most business sectors, but lower margins and higher costs more than offset the effect of higher volumes.

Energy generated solid underlying results, but at a lower level compared to the first quarter due to seasonally lower power production and lower prices.

Operating cash flow contributed to a reduction of net debt of NOK 1.4 billion for the quarter including an increase in working capital. Net cash used in investment activities for the quarter amounted to NOK 1.1 billion. Dividends paid in the quarter amounted to NOK 1.6 billion. At the end of the quarter Hydro's net debt position was NOK 2.9 billion.



Key financial  Second    First    %     Second    %    First  First    Year
information   quarter  quarter  change quarter  change  half   half    2010
                2011     2011   prior    2010    prior  2011   2010
NOK million,                   quarter            year
except per                                      quarter
share data
---------------------------------------------------------------------------


Revenue       24 728   21 138   17 %  19 779    25 %  45 867 37 924  75 754



Earnings       2 111     5 855 (64) %  1 157    82 %   7 967  2 142   3 184
before
financial
items and tax
(EBIT)

Items           (206)   (4 408)          (47)         (4 613)  (344)    167
excluded from
underlying
EBIT
---------------------------------------------------------------------------
Underlying     1 906     1 448   32 %   1 110   72 %   3 354  1 798   3 351
EBIT
---------------------------------------------------------------------------


Underlying
EBIT :

Bauxite &        272      155    75 %     288   (5) %    427    450     633
Alumina

Primary Metal    765      583    31 %     382 > 100 %  1 348    212     617

Metal Markets    244      143    71 %      31 > 100 %    387     96     321

Rolled           232      232       -     309  (25) %    463    532     864
Products

Extruded          96      105    (9)%     201  (53) %    201    318     444
Products

Energy           363      573   (37)%     177 > 100 %    936    766   1 416

Other and        (65)    (344)    81 %   (278)   77 %   (408)  (575)  (945)
eliminations
---------------------------------------------------------------------------
Underlying      1 906    1 448    32 %  1 110    72 %  3 354   1 798  3 351
EBIT
---------------------------------------------------------------------------


Underlying      3 229    2 415    34 %   1 877   72 %  5 643   3 317  6 420
EBITDA
---------------------------------------------------------------------------


Net income      1 546    5 154   (70)%     598 > 100 % 6 701   1 523  2 118
(loss)
---------------------------------------------------------------------------
Underlying      1 389    1 244    12 %     530 > 100 % 2 633     931  1 852
net income
(loss)
---------------------------------------------------------------------------


Earnings per     0.69     2.89   (76)%    0.40    75 %  3.41    1.08   1.33
share
---------------------------------------------------------------------------
Underlying       0.61     0.65    (5)%    0.34    79 %  1.26    0.61   1.14
earnings per
share
---------------------------------------------------------------------------


Financial
data:
---------------------------------------------------------------------------
Investments     1 085   41 625   (97)%   1 261  (14)% 42 710  3 028  6 231

Adjusted net (20 777)   (20 490)  (1)%(18 191)(14)% (20 777)(18 191)(6 427)
interest-
bearing debt
---------------------------------------------------------------------------


Key
Operational
information
---------------------------------------------------------------------------


Alumina         1 448      773    87 %     518 > 100 %    2 221  992  1 976
production
(kmt)

Primary           505      415    22 %     362    40 %      921   701 1 415
aluminium
production
(kmt)

Realized        2 509    2 358     6 %   2 200    14 %    2 441 2 099 2 113
aluminium
price LME
(USD/mt)

Realized       13 803   13 607     1 %  13 302    4 %  13 724 12 401 12 674
aluminium
price LME
(NOK/mt)

Realized         5.50     5.77   (5) %    6.05   (9) %     5.62  5.91  6.00
NOK/USD
exchange rate

Metal Markets     533      467    14 %     457    17 %    1 000   871 1 717
sales volumes
to external
market (kmt)

Rolled            242      245   (1) %     242       -     487    473   945
Products
sales volumes
to external
market (kmt)

Extruded          142      136     5 %     141     1 %     278    269   529
Products
sales volumes
to external
market (kmt)

Power           1 830    2 308  (21) %   1 621    13 %   4 138  4 402 8 144
production
(GWh)
---------------------------------------------------------------------------

Pro forma underlying financial and operating results

Key          Second   First  % change Second  % change First  First Year
financial   quarter quarter    prior  quarter  prior    half  half  2010
information    2011    2011   quarter   2010    year    2011  2010
                                               quarter
NOK million
---------------------------------------------------------------------------


Revenue      24 728   22 815   8 %    22 761     9 % 47 543  43 549  87 272


Earnings      2 111    1 604  32 %     1 429    48 %  3 715   2 447   3 696
before
financial items
and tax (EBIT)

Items         (206)     (66)            (60)          (272)    (380)    445
excluded
from underlying
EBIT
---------------------------------------------------------------------------
Underlying    1 906    1 538  24 %     1 369    39 %  3 444   2 067   4 141
EBIT
---------------------------------------------------------------------------


Underlying    3 229    2 881  12 %     2 702    19 %  6 110   4 681   9 450
EBITDA
---------------------------------------------------------------------------


Net income    1 405      782  80 %       540 > 100 %  2 187   1 319   2 220
(loss)
attributable to
Hydro
shareholders
---------------------------------------------------------------------------




Key operational
information
---------------------------------------------------------------------------
Alumina       1 448    1 336   8 %     1 521   (5) %  2 784   2 915   5 805
production
(kmt)

Primary         505      490   3 %       475     6 %    995     922   1 867
aluminium
production
(kmt)
---------------------------------------------------------------------------



Hydro's underlying earnings before financial items and tax amounted to NOK 1,906 million in the second quarter, up from pro forma underlying EBIT of NOK 1,538 million in the first quarter.

Underlying EBIT for Bauxite & Alumina improved somewhat compared to pro forma first quarter underlying EBIT, mainly due to improved production performance, increased alumina prices and higher sales volumes. The improvement was partly offset by higher raw material costs and losses related to the Vale transaction hedge.

Underlying EBIT for Primary Metal included about NOK 90 million related to Albras in the second quarter compared with around NOK 50 million in the pro forma underlying EBIT for the first quarter. The increase for Albras was mainly due to higher LME prices and higher casthouse sales volumes.

About Hydro's reporting

Underlying EBIT

To provide a better understanding of Hydro's underlying performance, the following discussion of operating performance excludes certain items from EBIT (earnings before financial items and tax) and net income. See "Items excluded from underlying EBIT and net income" later in this report for more information on these items.

Acquisition of Vale's aluminium business

On February 28, 2011 Hydro completed the take-over of the majority of Vale's aluminium business in Brazil. Effective from the first quarter of 2011, we are including a new operating segment, Bauxite & Alumina, in our reporting structure in addition to our other five operating segments. In addition to the assets acquired from Vale, Hydro's bauxite and alumina activities previously included in the Primary Metal segment have been transferred to the new Bauxite & Alumina segment and prior periods have been restated. Primary Metal includes the Albras aluminium plant in addition to Hydro's pre-transaction primary aluminium production activities. Effective from the first quarter of 2011, elimination of internal gains and losses on alumina previously included in the Primary Metal segment is included in Other and Eliminations, and prior periods have been restated.

The following discussion on reported and underlying operating results includes the acquired bauxite and alumina activities from Vale from March 1, 2011. Amounts relating to previous periods have not been restated to reflect the reported and underlying results of the acquired assets.

Pro forma information related to acquisition of Vale's aluminium business

To provide a presentation of Hydro's performance on comparable basis, certain pro forma financial and operating information is also presented in this report based on including the results of the acquired Vale assets for the full calendar quarter and for all previous periods presented in this report. See "Second quarter report 2011" for more information on the acquisition and the pro forma information included in our second quarter report.

Reported EBIT and net income

Reported EBIT for Hydro amounted to NOK 2,111 million in the second quarter including net unrealized derivative gains of NOK 266 million, positive metal effects of NOK 28 million and other net negative effects of NOK 87 million comprised of rationalization and closure costs, impairment charges and gains on divestments.

In the previous quarter, reported EBIT for Hydro amounted to NOK 5,855 million including net unrealized derivative losses of NOK 96 million, positive metal effects of NOK 176 million and net transaction related gains attributable to the acquisition of Vale aluminium amounting to NOK 4,328 million. This amount included revaluation gains on Hydro's pre-existing interest in Alunorte and the CAP joint venture.

Net income for the second quarter amounted to NOK 1,546 million including net foreign exchange gains of NOK 334 million. In the first quarter net income amounted to NOK 5,154 million including net foreign exchange losses of NOK 30 million.

Market developments and outlook

Alumina

Global demand for alumina outside China was slightly higher in the second quarter compared to the first quarter mainly due to ramp-up of new and restart of a limited amount of curtailed primary aluminium production capacity. Annualized alumina production outside China amounted to about 53 million mt.

Alumina demand and production in China continued to increase in the second quarter compared to the previous quarter, mainly due to commissioning of new primary aluminium production and alumina projects.

Platts alumina spot prices have been trading around USD 400 per mt during the quarter, representing a range of roughly 15-15.5 percent of LME.

Primary aluminium

LME prices averaged somewhat higher in the second quarter compared to the first quarter. Prices started the quarter at a level around USD 2,620 per mt and ended around USD 2,540 per mt influenced by global economic developments. Due to a weakening USD, LME prices measured in NOK and EUR were relatively stable compared to the first quarter.

Demand and supply of primary aluminium in the world outside China increased slightly during the second quarter compared to the first quarter, amounting to an annualized consumption and production of 26.2 million mt and 26.5 million mt respectively. We maintain our estimate of demand growth of approximately 7 percent for 2011. A manageable market surplus is still expected due to the ramp up of additional production capacity.

Consumption in China increased significantly in the first half of 2011. In the second quarter annualized consumption amounted to 20.2 million mt. The Chinese primary aluminium market is expected to be largely balanced for 2011.

LME stocks were relatively stable in the second quarter compared to the first quarter amounting to around 4.5 million mt compared with 4.6 million mt in the first quarter. A large portion of the metal in warehouses continue to be owned by several large financial investors.

Demand for metal products (extrusion ingot, sheet ingot, primary foundry alloys and wire rod) remained stable with no significant change from the previous quarter in most regions. However, demand for extrusion ingot in southern Europe has softened as a result of the weaker regional economic developments. Rolled products European demand for rolled products in the second quarter of 2011 maintained the healthy level achieved in the previous quarter. Demand in the automotive segment continued to be influenced by the ongoing substitution of steel materials and the strong demand for premium cars in China. Demand in the building and construction segment was seasonally higher compared to the first quarter of 2011 but remained weak in southern Europe. Robust demand continued for the beverage can segment. Consumption of thin gauge foil remained healthy but softened somewhat mainly due to reduced customer inventories. Demand in the general engineering segment was stable.

Market demand in the third quarter of 2011 is expected to decline due to seasonality. End-use demand is expected to maintain a healthy level for all product segments with the exception of some softening in building and foil market segments. Chinese imports into Europe are expected to remain at a high level. Extruded products European demand for extruded aluminium products increased seasonally in the second quarter of 2011. Demand remained weak within the building and construction sector, in particular in southern Europe. Demand in the engineering and transport segment continued to improve in most European markets. However, margins remained under pressure as European extruders have shifted capacity from the weak building and construction sector to serve other market segments.

Extrusion shipments in North America improved slightly compared with the first quarter of 2011, and were also higher than the second quarter of 2010 primarily due to improved demand in the transport and automotive segments. Imports into the US have fallen significantly compared to the second quarter of 2010 as a result of duties on Chinese imports. Extrusion demand in South America continued on a level similar to the same quarter of last year.

Demand within precision tubing continued to be strong in the quarter, driven by demand for premium cars. Developments were positive in the North American automotive segment.

European extrusion markets are expected to be seasonally weaker in the third quarter. Recovery in the building and construction segment is expected to remain slow in southern Europe, where demand for building systems remains weak. However, building permit statistics indicate somewhat firmer markets in France and Germany. Demand is expected to increase in North America with firm transport and automotive segments. However, there are indications of slower pace in the market recovery. The outlook for South America remains positive, although at lower growth rates. Energy Nordic electricity spot prices decreased during the second quarter as the hydrological situation improved strongly. Spot prices fell sharply in April as unusually warm weather started the snow melt earlier than normal. Prices declined further as high precipitation resulted in increased production and normal reservoir levels.

Water reservoir levels in Norway increased to about 67 percent at the end of the second quarter. This is close to normal and more than 13 percentage points higher than the same period in 2010. Increasing consumption expected after the summer period and uncertainty regarding the effect of the shutdown of nuclear capacity in Germany is expected to continue to provide some support to spot prices in the third quarter. Additional factors impacting Hydro Hydro remains optimistic regarding the future prospects for aluminium. However, a more volatile macroeconomic environment and issues relating to sovereign debt may result in increased demand fluctuations in the coming months.

Hydro has sold forward around 85 percent of its expected primary aluminium production for the third quarter at a price level of around USD 2,575 per mt. This excludes expected volumes from Qatalum.

Hydro has hedged the majority of the net aluminium price exposure in the business acquired from Vale until the end of 2011. For the second half 2011 the hedged volumes for Bauxite & Alumina amount to about 180,000 mt of aluminium, priced at about USD 2,400 per mt.

In June 2011, Hydro started up 15,000 mt of curtailed production capacity at its Sunndal smelter. Depending on continued satisfactory market conditions, Hydro's ambition is to start up the remaining curtailed production at the Sunndal smelter by the end of 2011 representing 85,000 mt of annual production capacity. The timing for a full restart will be decided later.

Hydro's combined water and snow reservoirs were back to normal levels at the end of June and significantly higher than the end of the corresponding period last year. High precipitation in May and June strongly improved the reservoir balance. Production in third quarter 2011 is expected to be seasonally higher than in second quarter.

On July 25, 2011, Hydro entered into an agreement to divest its non- strategic 20.86 percent ownership in the Norwegian power production company SKS Produksjon AS located in northern Norway to Salten Kraftsamband AS for a cash consideration of NOK 1 billion for the shares. The transaction is expected to be completed on July 26, 2011, and Hydro expects to recognize a gain of about NOK 650 million in its third-quarter result, with no material tax expense implications.

Bauxite & Alumina Underlying EBIT improved significantly compared to first quarter, mainly due to the inclusion of the acquired bauxite and alumina activities from Vale from March 1, 2011.

Primary Metal Underlying EBIT for Primary Metal improved compared to the first quarter mainly due to higher realized aluminium prices and higher volumes, partly offset by increased raw material costs. Underlying results included the results of the Albras smelter for the full second quarter.

Higher realized aluminium prices and premiums had a net positive effect on underlying results amounting to about NOK 130 million for the quarter. Volume increases added roughly NOK 70 million. The positive developments were partly offset by higher raw material costs of roughly NOK 70 million. Our USD 300 per mt cost improvement program targeted to reach USD 175 per mt by the end of 2011 continued according to plan with strong cost discipline throughout the organization.

Production and sales volumes increased compared to the first quarter mainly due to the inclusion of Albras for the full quarter. Increased volumes from Qatalum also had a positive influence on volume developments.

Underlying results for Qatalum were positively impacted by higher realized aluminium prices in addition to higher volumes in the second quarter. Underlying results for the first quarter included NOK 145 million of insurance proceeds relating to the power outage at the plant in August 2010. No insurance proceeds were included in the second quarter. Ramp-up of the plant progressed further in the quarter. By the end of June, 502 out of 704 production cells were in operation and additional cells were started in July. The first power plant steam turbine was taken over for permanent operation in early July. Qatalum is expected to reach full capacity by the end of the third quarter 2011.

Metal Markets Underlying EBIT for Metal Markets increased in the second quarter compared to the first quarter of 2011 impacted by improved operational performance and positive ingot inventory valuation effects.

Underlying EBIT excluding currency and ingot inventory valuation effects improved for the quarter. About NOK 30 million of the increase related to higher volumes for our remelt operations and increased sales and improved margins on third-party products. Results from our sourcing and trading activities also increased compared with the previous quarter.

Total metal product sales excluding ingot trading increased mainly due to higher deliveries from Qatalum and Albras.

Rolled Products Underlying EBIT for Rolled Products was unchanged compared to the first quarter. Lower operating costs offset the effects of somewhat lower sales volumes and operating margins. Operating cost per mt declined due to lower energy costs and logistic costs.

Automotive shipments declined in the quarter. Lower thin gauge foil and lithography sales volumes resulted from customer destocking activities. General engineering and can beverage volumes were somewhat higher supported by firm demand.

Extruded Products Underlying EBIT for Extruded Products decreased in the second quarter compared with the previous quarter. Sales volumes were seasonally higher in most business sectors, but lower margins and higher costs more than offset the effect of higher volumes.

Lower margins and higher costs resulted in further deterioration of results for our building systems operations. Due to continued weak demand in southern Europe, additional rationalization measures have been initiated in the second quarter and will be further expanded in the third quarter. Costs relating to these measures excluded from underlying EBIT amounted to NOK 15 million in the second quarter.

Underlying EBIT improved slightly for our European extrusion operations due to seasonally higher volumes. Our Precision Tubing business delivered continued strong underlying results during the second quarter, although lower compared to the previous quarter. Underlying EBIT improved further for our North American extrusion business, and the South American extrusion operations continued to deliver solid underlying results.

Energy Energy delivered solid underlying results in the second quarter, although at a lower level than the previous quarter mainly due to seasonally lower power production.

Other and eliminations Underlying EBIT for Other and eliminations in the second quarter was positively impacted by improved underlying results for other business activities and somewhat lower costs. Eliminations comprises mainly unrealized gains and losses on inventories purchased from group companies which fluctuates with product flows and margin developments throughout Hydro's value chain.

Items excluded from underlying EBIT and net income To provide a better understanding of Hydro's underlying performance, the items in the table below have been excluded from EBIT and net income.

Items excluded from underlying EBIT are comprised mainly of unrealized gains and losses on certain derivatives, impairment and rationalization charges, effects of disposals of businesses and operating assets, as well as other items that are of a special nature or are not expected to be incurred on an ongoing basis.



Items excluded from              Second   First  Second   First First  Year
underlying net                  quarter quarter quarter    half  half  2010
income                             2011    2011    2010    2011  2010
NOK million
---------------------------------------------------------------------------


Unrealized derivative effects on    (35)     79     389      43   136   489
LME related contracts

Derivative effects on LME related   (89)     42    (320)   (47) (320) (166)
contracts (Vale Aluminium)

Unrealized derivative effects on   (162)   (40)      211  (202)   483   609
power contracts

Unrealized derivative effects on       -    (1)       12    (1)    35  (50)
currency contracts

Unrealized derivative effects on raw  20     16        -     36     - (156)
material contracts

Metal effect, Rolled Products       (28)  (176)    (206)  (204) (520) (560)

Significant rationalization charges   75      -       18     75   (1)   130
and closure costs

Impairment charges (PP&E and equity   56      -        -     56    61   187
accounted investments)

Pension                                -      -    (151)      - (151) (151)

Insurance compensation                 -      -        -      -     -  (91)

(Gains)/losses on divestments       (44)      -        -   (44)  (67)  (74)

Transaction related effects (Vale      - (4 328)       - (4 328)    -     -
Aluminium)
---------------------------------------------------------------------------
Items excluded from underlying     (206) (4 408)    (47) (4 613) (344)  167
EBIT
---------------------------------------------------------------------------
Net foreign exchange (gain)/loss   (334)     30     (59)   (305) (527)(513)

Calculated income tax effect         383    467       38     850   279   80
---------------------------------------------------------------------------
Items excluded from underlying net (157) (3 911)    (68) (4 068) (592)(266)
income
---------------------------------------------------------------------------
See "Second quarter report - 2011" for footnotes.



Finance

Net financial income (expense) amounted to positive NOK 194 million in the second quarter compared to negative 93 million in the previous quarter.

Interest expense increased in the second quarter compared to the first quarter due to debt assumed relating to the Vale transaction.

Net currency gains of NOK 334 million in the second quarter mainly related to gains on financial positions denominated in USD. Of the total, approximately NOK 90 million related to intercompany balances.

Other financial expense included accretion expenses amounting to about NOK 45 million for the second quarter on liabilities recognized at net present value including the Paragominas put/call arrangement.

Tax

Income tax expense amounted to a charge of NOK 759 million in the second quarter compared to a charge of NOK 608 million in the previous quarter and a charge of NOK 462 million in the second quarter of 2010.

For first half of 2011 income tax expense was 17 percent of pre-tax income. The low tax rate results from a tax-free gain on the revaluation of Hydro's previous ownership interests in Alunorte and the CAP joint-venture recognized in the first quarter.



Pro forma information

               Second quarter   First quarter    Second quarter   Year 2010
                    2011             2011             2010
Underlying EBIT  Underlying       Underlying       Underlying
Underlying
and EBITDA

per        EBIT    EBITDA   EBIT    EBITDA   EBIT    EBITDA   EBIT   EBITDA
business
area
---------------------------------------------------------------------------


Bauxite &   272      756    237       725   448        912   1 225    3 061
Alumina

Primary     765    1 313    592     1 137   481      1 026     816    3 006
Metal

Metal       244      269    143       168    31         59     321      428
Markets

Rolled      232      339    232       342   309        419     864    1 318
Products

Extruded     96      222    105       237   201        337     444      987
Products

Energy      363      392    573       600   177        214   1 416    1 540

Other and   (65)     (62)  (344)     (328) (278)      (265)   (945)   (889)
eliminations
---------------------------------------------------------------------------
Underlying  1 906   3 229  1 538    2 881  1 369      2 702   4 141   9 450
EBIT / EBITDA
---------------------------------------------------------------------------



Bauxite & Alumina

Underlying EBIT for Bauxite & Alumina increased compared to pro forma underlying results in the first quarter mainly due to higher alumina prices together with production improvements and higher sales volumes. The positive developments were partly offset by higher raw material costs and losses related to the Vale transaction hedge.

Higher realized alumina prices driven by increased LME prices together with higher sales volumes had a positive influence on underlying EBIT. Alumina and bauxite production improved compared to the first quarter due to improved operational stability during the period. Production increased 12 percent and 8 percent for our bauxite and alumina operations respectively. Raw material costs including oil, coal and caustic were somewhat higher reflecting increasing raw material prices compared to the previous period. Bauxite costs remained relatively flat compared to first quarter. Operating costs per mt at Paragominas improved slightly, partly as a result of higher production.

Underlying results from our commercial operations improved compared to the first quarter influenced by higher volumes and improved alumina prices.

Primary Metal

Underlying EBIT for Primary Metal improved compared to pro forma first quarter underlying operating results mainly due to higher realized aluminium prices and higher casthouse sales volumes partly offset by increased raw material costs.


********* 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.

Q2 Presentation: http://hugin.info/106/R/1533311/467069.pdf

Q2 Report: http://hugin.info/106/R/1533311/467068.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#1533311]

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