TIDMNHY
Hydro's underlying earnings before financial items and tax rose to NOK
2,284 million in the first quarter, from NOK 1,829 million in the fourth
quarter. The increase mainly reflected higher realized all-in metal and
alumina prices, somewhat offset by higher raw material costs.
-- Underlying EBIT of NOK 2 284 million
-- Higher realized all-in aluminium and alumina prices
-- Raw material cost pressure
-- Rolled Products result affected by operational issues
-- Better program on schedule for 2017 target of NOK 500 million
-- Karmøy Technology Pilot on time and budget for Q4 2017
start-up
-- Product qualification at Automotive Line 3 in progress - ramp-up
during 2017
-- 2017 global primary demand growth outlook of 4-6%, global market
largely balanced
"We are raising our expected 2017 global primary demand growth outlook
from 3-5 percent to 4-6 percent, and we expect a largely balanced global
market. Hydro is well positioned in this marketplace," says President
and CEO, Svein Richard Brandtzæg.
"Demand for aluminium in lightweighting and sustainable solutions
continues to grow, confirming our confidence in Hydro's integrated value
chain, based on low-carbon aluminium production," Brandtzæg says.
"Good financial and operational performance do not stand alone. It has
to go hand in hand with safety performance. In April, we experienced the
most tragic kind of accident - a fatality. We must never lose focus on
our most important task: to ensure that everyone comes home safely every
day."
Underlying EBIT for Bauxite & Alumina increased compared to the fourth
quarter. Higher realized alumina prices, driven by a higher alumina
index and LME were partly offset by lower sales volumes, an increase in
fuel oil and caustic prices, and negative currency effects as the BRL
strengthened against the USD. Planned maintenance programs at
Paragominas and Alunorte reduced the bauxite and alumina production
volume for the quarter. The fourth quarter was positively influenced by
NOK 151 million relating to outstanding contractual arrangements with
Vale.
Underlying EBIT for Primary Metal increased in the first quarter due to
higher realized all-in metal prices and higher volumes. This was partly
offset by significantly higher alumina costs.
Underlying EBIT for Metal Markets declined significantly in the first
quarter due to lower results from sourcing and trading activities in
addition to negative inventory valuation effects and currency effects.
Underlying EBIT for Rolled Products increased compared with the fourth
quarter 2016. Seasonally higher sales volumes were partly offset by
various operational issues primarily related to the start-up of
production after year end maintenance and implementation of new
equipment.
"We are opening our new 150,000 tonnes per year, state-of-the-art
production line for automotive products in Germany on May 4, raising
Hydro's total automotive capacity to 200,000 tonnes per year. Aluminium
parts for the automotive industry will lightweight millions of new cars,
helping the manufacturers to meet the lower emission targets and
reducing global climate emissions," says Brandtzæg.
Underlying EBIT for Energy increased compared to the previous quarter.
Higher production and lower area cost were somewhat offset by lower
prices and higher production cost. Production costs increased mainly due
to seasonally higher property taxes, these costs were partly offset by
lower transmission cost.
Underlying EBIT for Sapa increased compared to the previous quarter, in
line with general seasonality in the industry.
Hydro made progress on its "Better" improvement program, while slightly
behind plan, Hydro still expects to reach both the year-end target of
NOK 500 million and the 2019 target NOK 2.9 billion.
Hydro's net cash position decreased during the first quarter by NOK 0.1
billion to NOK 5.9 billion at the end of the quarter. Net cash provided
by operating activities amounted to NOK 0.7 billion, impacted by
operating capital build-up due to seasonality and higher prices. Net
cash used in investment activities, excluding short term investments,
amounted to NOK 1.2 billion.
Reported earnings before financial items and tax amounted to NOK 2,410
million in the first quarter. In addition to the factors discussed above,
reported EBIT included net unrealized derivative losses of NOK 192
million and positive metal effects of NOK 286 million. Reported earnings
also included a net gain of NOK 32 million in Sapa (Hydro's share net of
tax) relating to unrealized derivative gains, and net foreign exchange
gains.
In the previous quarter reported earnings before financial items and tax
amounted to NOK 1,964 million including net unrealized derivative gains
of NOK 106 million and positive metal effects of NOK 68 million.
Reported earnings also included a charge of NOK 285 million reflecting
partial write-down of capitalized costs due to a design review of the
part-owned projected CAP alumina refinery and a compensation of NOK 254
million relating to the completion of outstanding contractual
arrangements with Vale, both within Bauxite & Alumina. In addition,
reported earnings included a charge of NOK 32 million relating to a
change in interest rate used in the calculation of environmental
liabilities linked to idled sites in Germany, and a net gain of NOK 23
million in Sapa (Hydro's share net of tax) relating to unrealized
derivative gains, rationalization charges and net foreign exchange
gains.
Net income amounted to NOK 1,838 million in the first quarter. This
includes a net foreign exchange gain of NOK 218 million mainly
reflecting the strengthening of BRL against USD affecting USD debt in
Brazil, while the weakening of EUR forward rates against NOK gives an
unrealized gain on the embedded derivatives in power contracts
denominated in EUR.
In the previous quarter net income was NOK 1,008 million including a net
foreign exchange loss of NOK 26 million mainly reflecting the
strengthening Euro versus Norwegian kroner affecting liabilities in Euro
in Norway and embedded currency derivatives in power contracts.
Change
First Fourth Change First prior
Key financial information quarter quarter prior quarter year Year
NOK million, except per share data 2017 2016 quarter 2016 quarter 2016
Revenue 23,026 21,250 8 % 20,138 14 % 81,953
Earnings before financial items and tax (EBIT) 2,410 1,964 23 % 1,693 42 % 7,011
Items excluded from underlying EBIT (126) (135) 7 % (192) 35 % (586)
Underlying EBIT 2,284 1,829 25 % 1,501 52 % 6,425
Underlying EBIT :
Bauxite & Alumina 756 711 6 % 189 >100 % 1,227
Primary Metal 900 601 50 % 318 >100 % 2,258
Metal Markets 24 152 (84) % 167 (85) % 510
Rolled Products 106 6 >100 % 248 (57) % 708
Energy 423 359 18 % 398 6 % 1,343
Other and eliminations 74 (1) >100 % 181 (59) % 380
Underlying EBIT 2,284 1,829 25 % 1,501 52 % 6,425
Earnings before financial items, tax, depreciation
and amortization (EBITDA) 3,762 3,563 6 % 2,908 29 % 12,485
Underlying EBITDA 3,637 3,143 16 % 2,716 34 % 11,474
Net income (loss) 1,838 1,008 82 % 2,382 (23) % 6,586
Underlying net income (loss) 1,580 968 63 % 822 92 % 3,875
Earnings per share 0.86 0.52 66 % 1.12 (23) % 3.13
Underlying earnings per share 0.75 0.47 60 % 0.39 92 % 1.83
Financial data:
Investments 1,372 3,541 (61) % 1,970 (30) % 9,137
Adjusted net cash (debt) (5,358) (5,598) 4 % (9,206) 42 % (5,598)
Underlying Return on average Capital Employed (RoaCE) 5.3 %
Key Operational information
Bauxite production (kmt) 2,400 3,063 (22) % 2,682 (11) % 11,132
Alumina production (kmt) 1,523 1,635 (7) % 1,517 0 % 6,341
Primary aluminium production (kmt) 516 526 (2) % 514 0 % 2,085
Realized aluminium price LME (USD/mt) 1,757 1,647 7 % 1,497 17 % 1,574
Realized aluminium price LME (NOK/mt) 14,798 13,659 8 % 12,950 14 % 13,193
Realized USD/NOK exchange rate 8.42 8.29 2 % 8.65 (3) % 8.38
Rolled Products sales volumes to external market
(kmt) 241 213 13 % 229 5 % 911
Sapa sales volumes (kmt) 178 155 15 % 174 2 % 682
Power production (GWh) 2,869 2,551 12 % 3,160 (9) % 11,332
Investor contact
Contact Stian Hasle
Cellular +47 97736022
E-mail Stian.Hasle@hydro.com
Press contact
Contact Halvor Molland
Cellular +47 92979797
E-mail Halvor.Molland@hydro.com
Cautionary note
Certain statements included in this announcement contain forward-looking
information, including, without limitation, information relating to (a)
forecasts, projections and estimates, (b) statements of Hydro management
concerning plans, objectives and strategies, such as planned expansions,
investments, divestments, curtailments 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, and (i) qualified statements such as
"expected", "scheduled", "targeted", "planned", "proposed", "intended"
or similar.
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 businesses; 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 to the disclosure requirements pursuant to
section 5-12 of the Norwegian Securities Trading Act.
Q1 2017 Presentation: http://hugin.info/106/R/2099881/795851.pdf
Q1 2017 Report : http://hugin.info/106/R/2099881/795823.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Norsk Hydro via Globenewswire
http://www.hydro.com/en/?WT.mc_id=Pressrelease
(END) Dow Jones Newswires
April 28, 2017 01:15 ET (05:15 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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