Norsk Hydro third quarter 2013: Lower cost, higher power production
October 23 2013 - 1:04AM
Hydro's underlying earnings before financial items and tax rose to NOK 659
million in the third quarter from NOK 518 million in the second quarter of
2013, lifted by higher hydropower production and lower operating costs. Low
production at the Alunorte alumina refinery weighed on results in the quarter. A
milestone reached in the quarter was the completion of the Sapa joint venture
transaction, 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 cost
improvements for our fully-owned smelters by the end of 2013, contributing to a
more robust cost position and bottom line. This is a great achievement for Hydro
and our organization. Stretching for excellence and always striving to become
better provide us with a solid platform for the future," said Hydro's President
and CEO, Svein Richard Brandtzæg.
The positive developments in the third quarter were partly offset by a further
weakening of underlying results for Bauxite & Alumina. Underlying EBIT for
Bauxite & Alumina declined compared to the second quarter due to lower LME-
linked alumina prices and continued low production volumes at the Alunorte
alumina refinery, following power outages in first half of 2013.
"Following the power outages at Alunorte and disruption to production earlier
this year, we immediately mobilized resources to stabilize and increase
production at the refinery. After stabilizing the production we now see
production gradually increasing after the outages, although from a low level,"
said Brandtzæg.
Primary Metal delivered improved underlying EBIT despite lower realized
aluminium prices. Lower costs for alumina and power, higher premiums and
seasonally lower fixed costs had a positive effect on underlying results for the
quarter. Primary Metal has sold forward around 50 percent of its expected
primary aluminium production for the fourth quarter of 2013 at a price level of
around 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 to
higher 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 for
investment activities amounted to NOK 0.7 billion. Hydro's net debt position
amounted 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 in
the third quarter. Reported EBIT also included net unrealized derivative gains
and 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 of
NOK 36 million.
The Alunorte alumina refinery and the Albras aluminium smelter have entered into
additional USD currency forward contracts in Brazil for the second half 2013 and
full year 2014. The total program value amounted to USD 1 220 million, including
settled amounts, split 30 percent and 70 percent for 2013 and 2014,
respectively. The achieved average exchange rates for the total program are
2.30 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 contact
Contact Rikard Lindqvist
Cellular +47 41751199
E-mail Rikard.Lindqvist@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.
Q3 report: http://hugin.info/106/R/1737420/582493.pdf
Q3 presentation: http://hugin.info/106/R/1737420/582492.pdf
[HUG#1737420]
Norsk Hydro (NYSE:NHY)
Historical Stock Chart
From Jun 2024 to Jul 2024
Norsk Hydro (NYSE:NHY)
Historical Stock Chart
From Jul 2023 to Jul 2024
