Hydro Results First Quarter 2004
10 May 2004 - 7:26PM
PR Newswire (US)
Hydro Results First Quarter 2004 OSLO, Norway, May 10
/PRNewswire-FirstCall/ -- Consolidated Results (US GAAP)
(unaudited) First quarter Year 2004 2004 2003 2003 Million, except
per share data NOK EUR(1) NOK NOK Operating revenues 39,598 4,694
35,763 133,761 Operating income 9,276 1,100 5,982 21,625
Non-consolidated investees 131 16 187 620 Financial income
(expense), net (624) (74) (651) 154 Other income (loss), net 110 13
0 (1,253) Income from continuing operations before tax and minority
interest 8,893 1,055 5,518 21,146 Income tax expense (5,786) (686)
(3,976) (12,922) Minority interest 28 3 28 151 Income from
continuing operations before cumulative effect of change in
accounting principle 3,135 372 1,570 8,375 Income from discontinued
operations 1,083 128 631 2,312 Income before cumulative effect of
change in accounting principle 4,218 500 2,201 10,687 Cumulative
effect of change in accounting principle 0 0 281 281 Net income
4,218 500 2,482 10,968 Earnings per share from continuing
operations (in NOK and Euro) 12.30 1.46 6.10 32.50 Earnings per
share before change in accounting principle (in NOK and Euro) 16.50
1.96 8.50 41.50 Financial data EBITDA (2) - million 13,546 1,606
9,935 38,628 Investments - million 4,776 566 4,669 17,712 Net
interest bearing debt/equity (3) 0.18 0.18 0.51 0.38 (1)
Presentation in Euro is a convenience translation based on the
exchange rate at 31 March 2004, which was 8.4365. (2) Earnings
Before Interest, Tax, Depreciation and Amortization. (3) Net
interest-bearing debt divided by shareholders' equity plus minority
interest, adjusted for unfunded pension obligation (after tax) and
present value of future obligations on operating leases. All
comparative figures are for the corresponding period in 2003 unless
otherwise stated. Certain amounts in previously issued consolidated
financial statements were reclassified to conform with the 2004
presentation. Hydro's income from continuing operations in the
first quarter of 2004 was NOK 3,135 million (NOK 12.30 per share),
compared with NOK 1,570 million (NOK 6.10 per share) in the first
quarter of 2003. Hydro's income before cumulative effect of change
in accounting principle including Yara's activities up to the
demerger was NOK 4,218 million (NOK 16.50 per share) compared with
NOK 2,201 million (NOK 8.50 per share) in 2003. Net income,
excluding the demerged operation, reflected a considerable
improvement compared with the equivalent quarter last year. Both
principal business areas, Oil & Energy and Aluminium, delivered
stronger results. "Good operations and start-up of new fields
contribute to continued strong production growth, which combined
with high oil and gas prices gives excellent results in Oil &
Energy. The aluminium markets are improving. Production and sale of
aluminium and downstream products increase, and it is satisfactory
that the results in Aluminium also reflect the effects of the
completed improvement measures," says President and CEO Eivind
Reiten. "We have also carried out a strategic restructuring of the
company's operations, with complete focus on developing the main
activities Oil & Energy and Aluminium. The demerger of the Agri
operation, and its successful listing on the Oslo Stock Exchange
under the name of Yara International were realized, resulting in
added value creation for Hydro's shareholders and a stronger
financial platform for Hydro," says Reiten. Operating income for
the first quarter of 2004 amounted to NOK 9,276 million compared
with NOK 5,982 million in the first quarter of 2003. Results in
both Oil & Energy and Aluminium have improved significantly.
However, operating income in the first quarter of both years was
impacted by unrealized effects from changes in the market value of
electricity and aluminium futures and forward contracts, gains on
disposals and non-recurring effects. Operating income for the
quarter included a positive effect of NOK 154 million in connection
with changes to the market value of power supply contracts, and
unrealized gains on aluminium futures and forward contracts
amounting to NOK 350 million. The first quarter also included the
gain from the divestment of the Gjoea discovery on the Norwegian
Continental Shelf (NCS) of NOK 285 million. NOK 428 million was
charged in the first quarter of 2003 as a result of a lower market
value of the contract portfolio due to considerably lower forward
prices for electricity at the end of the quarter compared to the
unusually high electricity prices at the end of 2002. A
non-recurring effect in connection with pensions of around NOK 230
million was also charged to the operating income in the first
quarter of 2003. When adjusted for these effects, the improvement
in operating income was about NOK 1.9 billion, including NOK 1.2
billion relating to Oil & Energy and NOK 600 million relating
to Aluminium. Petrochemicals has also produced a significant
improvement in results. The higher results in Oil & Energy were
mainly due to increased production and higher gas prices. The
average price measured in US dollars was at the same level as the
year before. Oil and gas production was around 615,000 barrels of
oil equivalents (boe) per day in the first quarter, an increase of
63,000 boe per day, compared with the equivalent quarter the year
before. This was mainly due to the start up of production from the
Grane, Fram Vest and Mikkel fields in the second half of 2003, in
addition to a 15 percent increase in production from operations
outside of Norway. Production is targeted at an average of 560,000
boe per day for 2004. Exploration activities have been somewhat
lower than in the equivalent quarter of 2003. Electricity
production was significantly higher in the first quarter of 2004
than in the equivalent quarter of 2003, but this was partly offset
by considerably lower electricity prices. Market conditions for
Aluminium have improved, and the realized metal price in Norwegian
kroner increased by seven percent in relation to the first quarter
of 2003. Better markets for metal and downstream products together
with new production capacity have boosted volumes. Primary metal
production increased by 12 percent compared with the same period
last year. Higher metal prices in US dollars were somewhat offset
by a lower dollar exchange rate. Increased volumes in downstream
activities and internal improvement measures have also had a
positive effect. Hydro completed the demerger of its Agri operation
transferring the Agri business activities to Yara International ASA
on 24 March 2004. Immediately afterwards, Yara repaid its loan from
Hydro of NOK 7.1 billion following the establishment of Yara's
independent financing arrangements. Yara was listed on the Oslo
Stock Exchange on 25 March. On 15 January, Hydro's Extraordinary
General Meeting resolved to demerge Hydro Agri by issuing one Yara
share for each Hydro share held by shareholders on the effective
date of the demerger. As of 25 March, Hydro's shares traded without
rights to the demerged operation. As part of the demerger
transaction, Hydro retained 20 percent of the Yara shares. These
shares were sold in connection with the demerger transaction,
through a public offering, that was oversubscribed by around 20
times. The shares sold for NOK 41 per share resulting in a total
proceeds of NOK 2.6 billion and a net gain of around NOK 530
million. The gain, together with Agri's net income from operations
for the period ending 25 March are included in Income from
discontinued operations for the quarter. Previous periods have been
adjusted in order to present the results on a comparable basis.
Cash flow from operations in the first quarter of 2004 was NOK 8.5
billion (NOK 6.4 billion). Investments in the first quarter of 2004
amounted to NOK 4.8 billion. The amount included NOK 1.3 billion
relating to the effect of implementation of the FASB Interpretation
No. 46R requiring the consolidation of one of the Company's 20
percent owned investees. Excluding this amount, investments in the
first quarter amounted to NOK 3.5 billion. Around half of the
amount invested related to oil and gas operations. The provision
for current and deferred taxes in the first quarter was NOK 5,786
million, approximately 65 percent of pre-tax income. NOK million
Operating income (loss) Hydro Oil & Energy 7,818 Hydro
Aluminium 1,629 Other activities 93 Corporate and Eliminations
(264) Sum 9,276 In connection with the presentation of its
first-quarter results, Hydro also announced today that the company,
at its own initiative, has contacted the Securities and Exchange
Commission (SEC) to provide information explaining the
methodologies, and the technical data derived from such
methodologies, that serve as the basis for Hydro's estimate of the
"proved undeveloped reserves" (as that term is defined in SEC rules
and regulations) for the Ormen Lange gas field. Hydro is now in the
process of assembling additional information to be provided to the
SEC in order to further support the company's estimate of such
reserves for the field. Hydro initiated the dialogue with the SEC
after becoming aware of the substantial variation in the estimates
of the proved undeveloped reserves for this field among the
companies with interest in this field. Hydro expects to have
concluded the dialogue with the SEC on this subject in time for the
company to file its 2003 annual report on Form 20-F within the June
30 deadline for that filing. Hydro is the operator for Ormen Lange
in the development phase. The partners in the Ormen Lange field
are: Hydro (18.0728%), Shell (17.0375%), Petoro (36.475%), Statoil
(10.8441%), BP (10.342%) and ExxonMobil (7.2286%). The Plan for
Development and Operation (PDO) was submitted to the Norwegian
authorities in December 2003 and approved April 2, 2004. Further
information about Norsk Hydro ASA and the company's results are
available on the Internet: http://www.hydro.com/ Certain statements
in this press release are or may constitute "forward-looking"
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Statements that are not in the nature of
historical facts may be deemed to be forward-looking statements and
may contain identifying words such as "believes", "anticipates",
"plans", "expects" and similar expressions. These forward-looking
statements are based on Hydro's current expectations, assumptions,
estimates and projections about the company and the industries in
which it engages in business. All forward-looking statements
involve risks and uncertainties. For a detailed description of
factors that could cause Hydro's actual results to differ
materially from those expressed in or implied by such statements,
please refer to its annual report on Form 20-F for the year-ended
December 31, 2002 and subsequent filings on Form 6-K with the U.S.
Securities and Exchange Commission. With respect to each non-GAAP
financial measure Hydro uses in connection with its financial
reporting and other public communications, Hydro provides a
presentation of what Hydro believes to be the most directly
comparable GAAP financial measure and a reconciliation between the
non-GAAP and GAAP measures. This information can be found in
Hydro's earnings press releases, quarterly reports and other
written communications, all of which have been posted to Hydro's
website (http://www.hydro.com/). Contact Cecilie Ditlev-Simonsen
Idar Eikrem Telephone (+47) 22 53 20 97 (+47) 22 53 32 73 Cellular
(+47) 41 55 92 50 (+47) 95 02 83 63 E-mail DATASOURCE: Norsk Hydro
CONTACT: Cecilie Ditlev-Simonsen, +47-22-53-20-97, or cellular,
+47-41-55-92-50, , or Idar Eikrem, +47-22-53-32-73, or cellular,
+47-95-02-83-63, , both of Norsk Hydro Web site:
http://www.hydro.com/
Copyright