Norsk Hydro : Fourth quarter 2013: Alunorte improvements, seasonality and lower power production
Hydro's underlying earnings before financial items and tax (EBIT) fell to NOK
483 million in the fourth quarter 2013 from NOK 659 million in the third
quarter, mainly due to seasonal effects and lower hydropower production. For the
full year, underlying EBIT rose to 2,737 million from 1,297 million in 2012,
helped by cost savings, strong performance at the Qatalum aluminium plant
combined with higher product premiums, and despite lower aluminium prices.
* Underlying EBIT NOK 483 million
* USD 300-program completed, yielding NOK 1.5 billion improvements
* Alunorte production rising, offset by ICMS tax charges
* Primary Metal lifted by Qatalum insurance proceeds
* Downstream seasonality, lower power production
* Proposed 2013 dividend NOK 0.75 per share
* Expect 2-4% aluminium demand growth outside China in 2014
"Extensive improvement programs backed our results for 2013, despite market
uncertainty and low aluminium prices. Although the uncertainty remains, we are
entering 2014 on a positive note, as we expect demand for aluminium to slightly
exceed production this year, in the world outside China," says Hydro President
and CEO Svein Richard Brandtzæg.
Fourth-quarter underlying EBIT for the Bauxite & Alumina business area was
lifted by improved production at the Alunorte alumina refinery in Brazil,
following several disruptions in 2013, offset by claims relating to ICMS taxes.
"I am pleased to report that production at Alunorte is back at production levels
seen in 2012, providing stable supplies of top-quality alumina. Stable and sound
operations at Alunorte remain a key priority in 2014," says Brandtzæg. "However,
stable and predictable framework conditions are absolutely critical to Hydro
wherever we operate and a prerequisite for making long-term commitments. We are
in dialog with Brazilian authorities, and doing our utmost to ensure that this
is also the case in Brazil."
The USD 300 cost improvement program, targeting Hydro's fully owned aluminium
plants, was concluded at the end of the year, yielding around NOK 1.5 billion in
annual improvements at the end of 2013 compared to 2009 cost levels.
"After four years of hard work, it is a milestone for Hydro to have delivered
the industry's most ambitious improvement program. We are pursuing opportunities
with unabated strength in all parts of our operations to further improve our
robustness," says Brandtzæg.
Underlying EBIT for the Primary Metal business area improved in the fourth
quarter compared to the third, mainly due to insurance proceeds relating to a
fire in a cooling tower at the Qatalum plant in Qatar in 2012. Qatalum showed
stable production above nameplate capacity throughout the year, ensuring a
first-decile aluminium smelter cost position.
Metal Markets delivered higher underlying EBIT during the quarter due to higher
margins and improved results from sourcing and trading activities.
Rolled Products' underlying EBIT declined in the fourth quarter, mainly due to
seasonal volume declines and higher maintenance activity.
Underlying EBIT for Energy declined in the fourth quarter compared to the third
quarter, mainly due to lower power production compared with unusually high
production in the previous quarter.
Underlying EBIT for Sapa, the 50-50 extruded products joint venture, declined in
the quarter, reflecting a seasonally weaker quarter and charges related to
impairment of inventories and accounts receivables.
Operating cash flow was NOK 2.5 billion for the fourth quarter. Net cash used
for investment activities amounted to NOK 0.9 billion. Hydro's net cash position
increased by NOK 1.2 billion, and amounted to around NOK 0.7 billion at the end
of the fourth quarter.
Reported earnings before financial items and tax amounted to negative NOK 3
million in the fourth quarter. Reported EBIT included net unrealized derivative
losses and negative metal effects amounting to NOK 151 million in total.
Reported earnings also included a loss of NOK 69 million from divestment of a
rolling mill in Malaysia, charges of NOK 392 million relating to Hydro's head
office lease arrangement, penalties of NOK 109 million relating to the
settlement of tax claims in Brazil and charges of NOK 172 million primarily
related to rationalization activities in Sapa. In addition, reported earnings
included pension curtailment gains of NOK 390 million relating to the transition
to defined contribution plans in Norway.
Hydro's Board of Directors proposes to pay a dividend of NOK 0.75 per share for
2013 reflecting the company's strong commitment to provide a cash return to its
shareholders. The dividend reflects our operational performance for 2013 and a
strong financial position, also taking into consideration the uncertain market
outlook.
Key financial
information
%change
NOK million, Fourth Third %change Fourth prior
except per quarter quarter prior quarter year Year Year
share data 2013 2013 quarter 2012 quarter 2013 2012
-------------------------------------------------------------------------------
Revenue 16 571 16 146 3 % 15 585 6 % 64 880 64 181
Earnings
before
financial
items and tax
(EBIT) (3) 597 >(100) % 704 >(100) % 1 674 571
Items excluded
from
underlying
EBIT 485 62 >100 % (532) >100 % 1 063 725
-------------------------------------------------------------------------------
Underlying
EBIT 483 659 (27) % 172 >100 % 2 737 1 297
-------------------------------------------------------------------------------
Underlying
EBIT :
Bauxite &
Alumina (379) (370) (2) % (73) >(100) % (1 057) (791)
Primary Metal 484 337 44 % 58 >100 % 1 422 335
Metal Markets 190 111 70 % 70 >100 % 594 210
Rolled
Products 111 182 (39) % 70 59 % 627 637
Energy 383 485 (21) % 322 19 % 1 653 1 459
Other and
eliminations (306) (87) >(100) % (275) (11) % (502) (553)
-------------------------------------------------------------------------------
Underlying
EBIT 483 659 (27) % 172 >100 % 2 737 1 297
-------------------------------------------------------------------------------
Underlying
EBITDA 1 578 1 753 (10) % 1 250 26 % 7 119 5 827
-------------------------------------------------------------------------------
Underlying
income (loss)
from
discontinued
operations - 57 (100) % (54) 100 % 220 (5)
-------------------------------------------------------------------------------
Net income
(loss) (758) 321 >(100) % 87 >(100) % (839) (1 331)
Underlying net
income (loss) 140 393 (64) % (24) >100 % 1 610 408
-------------------------------------------------------------------------------
Earnings per
share (0.39) 0.11 >(100) % 0.06 >(100) % (0.45) (0.65)
Underlying
earnings per
share 0.02 0.14 (83) % (0.01) >100 % 0.65 0.21
-------------------------------------------------------------------------------
Financial
data:
-------------------------------------------------------------------------------
Investments 971 948 2 % 1 107 (12) % 3 586 3 382
Adjusted net
interest-
bearing debt (9 503) (10 732) 11 % (8 304) (14) % (9 503) (8 304)
-------------------------------------------------------------------------------
Key
Operational
information
-------------------------------------------------------------------------------
Alumina
production
(kmt) 1 452 1 316 10 % 1 397 4 % 5 377 5 792
Primary
aluminium
production
(kmt) 492 491 - 485 2 % 1 944 1 985
Realized
aluminium
price LME
(USD/mt) 1 802 1 822 (1) % 1 940 (7) % 1 902 2 080
Realized
aluminium
price LME 12
(NOK/mt) 10 916 10 938 - 11 069 (1) % 11 160 047
Realized
NOK/USD
exchange rate 6.06 6.00 1 % 5.71 6 % 5.87 5.79
Metal products
sales, total
Hydro (kmt) 777 792 (2) % 731 6 % 3 164 3 254
Rolled
Products sales
volumes to
external
market (kmt) 226 234 (3) % 226 - 941 909
Power
production
(GWh) 2 411 2 838 (15) % 2 448 (1) % 10 243 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.
[HUG#1760966]