TIDMNHY
Hydro's underlying earnings before financial items and tax rose to NOK
1,829 million in the fourth quarter from NOK 1,477 million in the third
quarter. Higher realized alumina and aluminium prices lifted results for
the quarter, partly offset by seasonally higher costs and lower
aluminium product sales. Hydro expects continued healthy demand for
aluminium and aluminium products, forecasting global primary demand
growth at 3-5 percent in 2017.
-- Underlying EBIT of NOK 1 829 million
-- Higher realized all-in aluminium and alumina prices
-- Record production at Alunorte and Paragominas
-- Weak Rolled Products results on lower sales and margins, increased costs
-- NOK 1.4 billion Better improvements in 2016 vs NOK 1.1 billion target
-- Karmøy Technology Pilot and new automotive line on time and budget
-- Proposed dividend for 2016 of NOK 1.25 per share
-- 2017 global primary demand growth outlook of 3-5%, global market largely
balanced
"Demand for aluminium remains firm and prices have increased,
contributing to a solid quarter for Hydro. I am particularly pleased to
see more and more car producers choosing aluminium for light-weighting
and climate purposes. I am eager to see our new Rolled Products
automotive line in Germany ramping up this year to meet the rapidly
growing automotive demand," says President and CEO, Svein Richard
Brandtzæg.
"We have made better-than-expected progress in our Better improvement
efforts, delivering 1.4 billion NOK in improvements in 2016. These
efforts will continue with full force in 2017, making Hydro's operations
more robust across the value chain and the company well positioned for a
better, bigger and greener future," says Brandtzæg.
Underlying EBIT for the Bauxite & Alumina business area increased
significantly compared to the third quarter, due to higher realized
alumina prices, driven by a higher alumina index and aluminium prices on
the London Metal Exchange. Both the Paragominas bauxite mine and the
Alunorte alumina refinery reached record yearly production in 2016 of
11.1 million mt and 6.3 million mt, respectively. There was also a
significant positive effect from the settlement of a compensation
arrangement related to the acquisition of Paragominas in 2011, which was
realized in combination with acquisition of the remaining shares in
Paragominas.
"I am very pleased to see the record safety results for Hydro in 2016.
Combined with record yearly production results at both the Paragominas
bauxite mine and the Alunorte alumina refinery in Brazil, these results
demonstrate our long-term commitment to operational excellence," says
Brandtzæg.
Underlying EBIT for the Primary Metal business area decreased slightly
in the fourth quarter. Lower volumes and seasonally higher fixed costs
were largely offset by higher realized aluminium prices.
"The Karmøy Technology Pilot, aiming to verify the world's most
energy and climate-efficient aluminium production, is well under way. We
expect the first metal to be produced at the new plant during the fourth
quarter 2017," says Brandtzæg.
Underlying EBIT for Metal Markets improved in the fourth quarter, mainly
due to improved results from sourcing and trading activities, partly
offset by somewhat lower results from remelters.
Underlying EBIT for the Rolled Products business area was significantly
lower compared to the third quarter of 2016, primarily due to seasonally
lower volumes, reduced margins, higher maintenance activities and higher
costs. In addition, depreciation increased somewhat due to the start-up
of the new automotive line in Grevenbroich, Germany, in the fourth
quarter. The USD strengthening against the Euro contributed positively
and the Neuss aluminium plant result improved due to an increase in the
all-in metal price.
Underlying EBIT for the Energy business area increased compared to the
previous quarter, mainly due to higher prices, lower area cost and
improved contribution from commercial activities, partly offset by lower
production. Production costs were lowered by seasonally lower property
taxes, but partly offset by higher transmission cost and higher
maintenance activity. Area cost declined later in the quarter in line
with better transmission capacity and improved hydrology in Mid-Norway.
Underlying EBIT for the Sapa joint venture decreased compared to the
previous quarter, mainly due to seasonally lower market demand.
For the full year, underlying EBIT decreased to NOK 6,425 million
compared with NOK 9,656 million in 2015, mainly due to a decrease in
realized alumina prices and all-in metal prices, partly compensated by
positive currency effects, lower raw material costs and ongoing
improvement efforts. In 2016, Bauxite & Alumina achieved record
production at both Paragominas and Alunorte, Sapa performance continued
to improve, while Rolled Products delivered a weaker result, driven by
lower margins and higher costs.
Hydro made good progress on its "Better" improvement ambition targeting
NOK 2.9 billion of annual improvements by 2019. For 2016, NOK 1.4
billion of annual improvements was delivered, exceeding the 1.1 billion
target.
Hydro's net cash position increased during the fourth quarter by NOK 0.6
billion to NOK 6.0 billion at the end of the quarter. Net cash provided
by operating activities amounted to NOK 4.2 billion. Net cash used in
investment activities, excluding short term investments, amounted to NOK
2.4 billion.
For 2016, Hydro's Board of Directors proposes an increased dividend of
NOK 1.25 per share, demonstrating the company's commitment to provide a
predictable and competitive cash return to shareholders, and taking into
account the volatility in the aluminium industry. The proposed payment
represents a 40% percent pay-out ratio of reported net income for the
year reflecting Hydro's operational performance for 2016 and strong
financial position.
Hydro's Board of Directors has revised the company's dividend policy to
reflect the ambition to pay a stable or increasing dividend. Hydro's
policy is in the long term to pay out, on average, 40 percent of
reported net income as dividend over the cycle.
Reported earnings before financial items and tax amounted to NOK 1,964
million in the fourth quarter. In addition to the factors discussed
above, reported EBIT included 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
in Brazil. 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.
In the previous quarter reported earnings before financial items and tax
amounted to NOK 1,376 million including net unrealized derivative gains
of NOK 100 million and positive metal effects of NOK 48 million.
Reported EBIT also included a charge of NOK 124 million relating to the
demolition of the Kurri Kurri site and an impairment charge of NOK 140
million relating to the decision to divest the Hannover site. In
addition, reported earnings included a net gain of NOK 15 million in
Sapa (Hydro's share net of tax) relating to unrealized derivative gains,
rationalization charges and net foreign exchange gains.
For the full year 2016, reported earnings before financial items and tax
amounted to NOK 7,011 million including net unrealized derivative gains
and positive metal effects of NOK 553 million in total. Reported
earnings also included charges of NOK 192 million relating to the
demolition of the Kurri Kurri site, impairment charges of NOK 426
million relating to the part-owned projected CAP alumina refinery and
the Hannover site, a net gain of NOK 314 million relating to the sale of
certain assets in Grenland, in addition to a negative adjustment
relating to the sale of the Slim rolling mill in the fourth quarter of
2015. Other positive effects of NOK 223 million reflects the
compensation relating to the completion of outstanding contractual
arrangements with Vale and the charge of NOK 32 million relating to
re-measurement of environmental liabilities in Germany. In addition,
reported earnings included a net gain of NOK 113 million for Sapa
(Hydro's share net of tax), relating to unrealized derivative gains,
rationalization charges and net foreign exchange gains.
In the previous year, reported earnings before financial items and tax
amounted to NOK 8,258 million including net unrealized derivative gains
and negative metal effects of NOK 454 million in total. Reported
earnings also included charges of NOK 285 million relating to the
termination of the Vækerø Park lease contract and net losses
on divestments of NOK 365 million, including losses of NOK 434 million
related to the sale of the Slim rolling mill and gains of NOK 69 million
in total related to sale of other assets. In addition, reported earnings
included a net charge of NOK 331 million for Sapa (Hydro's share net of
tax) relating to unrealized derivative losses, rationalization charges
and net foreign exchange losses, together with a compensation of NOK 37
million relating to insurance proceeds in Qatalum.
Net income amounted to NOK 1,008 million in the fourth quarter 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.
In the previous quarter net income was NOK 1,119 million including a net
foreign exchange gain of NOK 358 million mainly reflecting the
strengthening Norwegian kroner versus Euro affecting liabilities in Euro
in Norway and embedded currency derivatives in power contracts.
In 2016 net income amounted to NOK 6,586 million including a net foreign
exchange gain of NOK 2,266 million. The net foreign exchange gain in
2016 was mainly comprised of unrealized currency gains on US dollar debt
in Brazil and embedded derivatives in power contracts denominated in
Euro. The net foreign exchange gain also included gains on internal debt
denominated in Euro.
In the previous year income amounted to NOK 2,333 million including a
net foreign exchange loss of NOK 4,397 million. The net foreign exchange
loss in 2015 was mainly comprised of currency losses on US dollar debt
in Brazil and embedded derivatives in power contracts denominated in
Euro. The net foreign exchange loss also included losses on US dollar
debt in Norway.
% change
Fourth Third % change Fourth prior
Key financial information quarter quarter prior quarter year Year Year
NOK million, except per share data 2016 2016 quarter 2015 quarter 2016 2015
Revenue 21 250 20 174 5 % 20 374 4 % 81 953 87 694
Earnings before financial items and tax (EBIT) 1 964 1 376 43 % 725 >100 % 7 011 8 258
Items excluded from underlying EBIT (135) 101 >(100) % 841 >(100) % (586) 1 398
Underlying EBIT 1 829 1 477 24 % 1 566 17 % 6 425 9 656
Underlying EBIT :
Bauxite & Alumina 711 153 >100 % 532 34 % 1 227 2 421
Primary Metal 601 637 (6) % 407 48 % 2 258 4 628
Metal Markets 152 117 30 % 152 - 510 379
Rolled Products 6 211 (97) % 204 (97) % 708 1 142
Energy 359 285 26 % 353 2 % 1 343 1 105
Other and eliminations (1) 75 >(100) % (83) 99 % 380 (19)
Underlying EBIT 1 829 1 477 24 % 1 566 17 % 6 425 9 656
Earnings before financial items, tax, depreciation
and amortization (EBITDA) 3 563 2 792 28 % 2 128 67 % 12 485 13 282
Underlying EBITDA 3 143 2 753 14 % 2 969 6 % 11 474 14 680
Net income (loss) 1 008 1 119 (10) % 541 86 % 6 586 2 333
Underlying net income (loss) 968 958 1 % 1 296 (25) % 3 875 6 709
Earnings per share 0.52 0.53 (2) % 0.23 >100 % 3.13 0.99
Underlying earnings per share 0.47 0.46 2 % 0.59 (21) % 1.83 2.98
Financial data:
Investments 3 541 1 914 85 % 2 556 39 % 9 137 5 865
Adjusted net interest-bearing debt (5 598) (8 072) 31 % (8 173) 32 % (5 598) (8 173)
Underlying Return on average Capital Employed
(RoaCE) 5.1 % 9.2 %
Key Operational information
Bauxite production (kmt) 3 063 2 777 10 % 2 959 4 % 11 132 10 060
Alumina production (kmt) 1 635 1 635 - 1 577 4 % 6 341 5 962
Primary aluminium production (kmt) 526 526 - 521 1 % 2 085 2 046
Realized aluminium price LME (USD/mt) 1 647 1 612 2 % 1 555 6 % 1 574 1 737
Realized aluminium price LME (NOK/mt) 13 659 13 375 2 % 13 125 4 % 13 193 13 813
Realized USD/NOK exchange rate 8.29 8.30 - 8.44 (2) % 8.38 7.95
Rolled Products sales volumes to external market
(kmt) 213 231 (7) % 229 (7) % 911 948
Sapa sales volumes (kmt) 155 170 (9) % 156 - 682 682
Power production (GWh) 2 551 2 946 (13) % 2 882 (11) % 11 332 10 894
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.
Q4 2016 Presentation: http://hugin.info/106/R/2077029/781251.pdf
Q4 2016 Report: http://hugin.info/106/R/2077029/781247.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
February 09, 2017 00:59 ET (05:59 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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