Norsk Hydro Third Quarter 2013: Lower Cost, Higher Power Production

OSLO, Norway, Oct. 23, 2013 (GLOBE NEWSWIRE) --
Hydro's underlying earnings before financial items and tax rose to NOK 659million in the third quarter from NOK 518 million in the second quarter of2013, lifted by higher hydropower production and lower operating costs. Lowproduction at the Alunorte alumina refinery weighed on results in the quarter. Amilestone reached in the quarter was the completion of the Sapa joint venturetransaction, creating a global leader in extruded products.·   Underlying EBIT NOK 659 million·   Lower cost offsets weaker alumina and aluminium prices·   Low production at Alunorte following power outages·   Higher power production in Energy·   New Sapa joint venture established·   2013 aluminium demand growth expected around 2% in world outside China"I am pleased to report that we are on track to deliver the USD 300 per mt costimprovements for our fully-owned smelters by the end of 2013, contributing to amore robust cost position and bottom line. This is a great achievement for Hydroand our organization. Stretching for excellence and always striving to becomebetter provide us with a solid platform for the future," said Hydro's Presidentand CEO, Svein Richard Brandtzæg.The positive developments in the third quarter were partly offset by a furtherweakening of underlying results for Bauxite & Alumina. Underlying EBIT forBauxite & Alumina declined compared to the second quarter due to lower LME-linked alumina prices and continued low production volumes at the Alunortealumina refinery, following power outages in first half of 2013."Following the power outages at Alunorte and disruption to production earlierthis year, we immediately mobilized resources to stabilize and increaseproduction at the refinery. After stabilizing the production we now seeproduction gradually increasing after the outages, although from a low level,"said Brandtzæg.Primary Metal delivered improved underlying EBIT despite lower realizedaluminium prices. Lower costs for alumina and power, higher premiums andseasonally lower fixed costs had a positive effect on underlying results for thequarter. Primary Metal has sold forward around 50 percent of its expectedprimary aluminium production for the fourth quarter of 2013 at a price level ofaround USD 1,800 per mt. This excludes volumes from Qatalum.Underlying EBIT for Metal Markets declined compared to the previous quarter,mainly affected by seasonally lower volumes and lower margins.Compared to the second quarter, underlying EBIT for Rolled Products was stable.Sales were seasonally lower, while operating costs declined.Underlying EBIT for Energy improved compared to the second quarter mainly due tohigher power production and spot prices supported by low precipitation levels.Operating cash flow was NOK 1.1 billion for the third quarter. Net cash used forinvestment activities amounted to NOK 0.7 billion. Hydro's net debt positionamounted to around NOK 0.5 billion at the end of the third quarter.Reported earnings before financial items and tax amounted to NOK 597 million inthe third quarter. Reported EBIT also included net unrealized derivative gainsand negative metal effects amounting to a loss of NOK 80 million in total,divestment gains of NOK 53 million and other items amounting to a net loss ofNOK 36 million.The Alunorte alumina refinery and the Albras aluminium smelter have entered intoadditional USD currency forward contracts in Brazil for the second half 2013 andfull year 2014. The total program value amounted to USD 1 220 million, includingsettled amounts, split 30 percent and 70 percent for 2013 and 2014,respectively. The achieved average exchange rates for the total program are2.30 and 2.41 for 2013 and 2014, respectively.                                                                   Key financial                                                                     information                                                           %change  First  First         NOK million,     Third   Second  %change    Third   prior      9      9  except per     quarter  quarter    prior  quarter    year months months   Year  share data        2013     2013  quarter     2012 quarter   2013   2012   2012 -------------------------------------------------------------------------------  Revenue         16 146   16 053      1 %   14 722    10 % 48 309 48 596 64 181                                                                        Earnings                                                                          before                                                                       financial                                                                   items and tax  (EBIT)             597      375     59 %    (232)  >100 %  1 677  (132)    571                                                                           Items                                                                   excluded from                                                                      underlying  EBIT                62      144   (57) %      249  (75) %    577  1 257    725 -------------------------------------------------------------------------------                                                                      Underlying  EBIT               659      518     27 %       16  >100 %  2 254  1 125  1 297 -------------------------------------------------------------------------------                                                                      Underlying  EBIT :                                                                       Bauxite &  Alumina          (370)    (244)   (51) %    (386)     4 %  (678)  (718)  (791)  Primary Metal      337      237     42 %      (4)  >100 %    938    277    335  Metal Markets      111      147   (24) %        8  >100 %    404    140    210                                                                          Rolled  Products           182      181      1 %      213  (15) %    516    567    637  Energy             485      268     81 %      220  >100 %  1 270  1 137  1 459                       Other and                                          >(100)  eliminations      (87)     (70)   (23) %     (35)       %  (195)  (278)  (553) -------------------------------------------------------------------------------                                                                      Underlying  EBIT               659      518     27 %       16  >100 %  2 254  1 125  1 297 -------------------------------------------------------------------------------                                                                      Underlying  EBITDA           1 753    1 624      8 %    1 149    53 %  5 541  4 577  5 827 -------------------------------------------------------------------------------                                                                      Underlying                                                                   income (loss)                                                                            from                                                                    discontinued  operations          57      112   (49) %       16  >100 %    220     49    (5) -------------------------------------------------------------------------------  Net income                                                           (1     (1  (loss)             321    (665)   >100 %    (256)  >100 %   (81)   418)   331)                                                                      Underlying                                                                      net income  (loss)             393      427    (8) %     (44)  >100 %  1 470    432    408 -------------------------------------------------------------------------------                                                                    Earnings per  share             0.11   (0.31)   >100 %   (0.15)  >100 % (0.06) (0.70) (0.65)                                                                      Underlying                                                                    earnings per  share             0.14     0.19   (26) %   (0.01)  >100 %   0.63   0.22   0.21 -------------------------------------------------------------------------------                                                                       Financial  data: -------------------------------------------------------------------------------  Investments        948      612     55 %      806    18 %  2 615  2 275  3 382                                                                    Adjusted net  interest-                                                           (12     (8  bearing debt    10 732 (11 317)   >100 % (12 918)  >100 % 10 732   918)   304) -------------------------------------------------------------------------------                                                                             Key                                                                     Operational     information -------------------------------------------------------------------------------                                                                         Alumina                                                                      production  (kmt)            1 316    1 248      5 %    1 441   (9) %  3 925  4 396  5 792                                                                         Primary                                                                       aluminium                                                                      production  (kmt)              491      483      2 %      484     1 %  1 452  1 500  1 985                                                                        Realized         aluminium  price LME                     1  (USD/mt)         1 822      926    (5) %    2 022  (10) %  1 932  2 119  2 080                                                                        Realized         aluminium  price LME                                      11                    12  (NOK/mt)        10 938   11 217    (2) %      856   (8) % 11 233    321 12 047                                                                        Realized                                                                         NOK/USD  exchange rate     6.00     5.82      3 %     5.86     2 %   5.81   5.81   5.79                                                                           Metal                                                                        products  sales, total  Hydro (kmt)        792      789      -        794      -   2 387  2 522  3 254                                                                          Rolled                                                                        Products                                                                   sales volumes                                                                     to external  market (kmt)       234      245    (5) %      228     3 %    715    683    909                                                                           Power                                                                      production  (GWh)            2 838    2 090     36 %    2 157    32 %  7 831  7 860 10 307 -------------------------------------------------------------------------------Investor contactContact Rikard LindqvistCellular +47 41751199E-mail Rikard.Lindqvist@hydro.comPress contactContact Halvor MollandCellular +47 92979797E-mail Halvor.Molland@hydro.comCertain statements included within this announcement contain forward-lookinginformation, including, without limitation, those relating to (a) forecasts,projections and estimates, (b) statements of management's plans, objectives andstrategies 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 futuredevelopments in Hydro's markets, particularly prices, supply and demand andcompetition, (e) results of operations, (f) margins, (g) growth rates, (h) riskmanagement, 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-lookingstatements are reasonable, these forward-looking statements are based on anumber of assumptions and forecasts that, by their nature, involve risk anduncertainty. Various factors could cause our actual results to differ materiallyfrom those projected in a forward-looking statement or affect the extent towhich a particular projection is realized. Factors that could cause thesedifferences include, but are not limited to: our continued ability to repositionand restructure our upstream and downstream aluminium business; changes inavailability and cost of energy and raw materials; global supply and demand foraluminium and aluminium products; world economic growth, including rates ofinflation and industrial production; changes in the relative value of currenciesand the value of commodity contracts; trends in Hydro's key markets andcompetition; and legislative, regulatory and political factors.No assurance can be given that such expectations will prove to have beencorrect. Hydro disclaims any obligation to update or revise any forward lookingstatements, whether as a result of new information, future events or otherwise.This information is subject of the disclosure requirements pursuant to section5-12 of the Norwegian Securities Trading Act.Q3 report: http://hugin.info/106/R/1737420/582493.pdfQ3 presentation: http://hugin.info/106/R/1737420/582492.pdf[HUG#1737420]