Second quarter 2011: Results rise on higher volumes and prices

Tuesday, 26. July 2011 07:01
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 (14) % (20 777) (18 (6 427)
interest- 191) 191)
bearing debt
--------------------------------------------------------------------------------


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


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

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

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

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

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

Metal Markets       533         14 %         17 %    1 000
sales volumes    467    457           1 717
to external 871
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 financial Second First % change Second % change First First Year
information quarter quarter prior quarter prior half half 2010
2011 2011 quarter 2010 year 2011 2010
NOK million quarter
--------------------------------------------------------------------------------


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



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

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


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


Unrealized derivative effects on LME (35) 79 389 43 136 489
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 EBIT (206) (4 408) (47) (4 613) (344) 167
--------------------------------------------------------------------------------
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 business EBIT EBITDA EBIT EBITDA EBIT EBITDA EBIT EBITDA
area
--------------------------------------------------------------------------------


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

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

Metal Markets 244 269 143 168 31 59 321 428

Rolled Products 232 339 232 342 309 419 864 1 318

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 EBIT 1 906 3 229 1 538 2 881 1 369 2 702 4 141 9 450
/ 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.

Investor contact
Contact     Stefan Solberg
Cellular    +47 91727528
E-mail     Stefan.Solberg@hydro.com


Press contact
Contact     Halvor Molland
Cellular    +47 92979797
E-mail     Halvor.Molland@hydro.com

                             *********
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




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Source: Norsk Hydro via Thomson Reuters ONE

[HUG#1533311]
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Author:
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