Hydro's underlying EBIT for the first quarter of 2020 was NOK 2,247 million, up
from NOK 559 million for the same quarter last year. Successful ramp-up of
production at the Alunorte refinery, reduced costs and positive currency effects
all contributed positively to first-quarter results. These positive elements
were partly offset by lower realized alumina and aluminium prices. The Covid-19
situation causes significant market uncertainty, however, the financial impact
from reduced operations due to Covid-19 was limited in the first quarter, mainly
affecting Extruded Solutions.
* Underlying EBIT of NOK 2,247 million
* Positive effect from lower costs, currency and volume
* Negative effect from lower realized aluminium and alumina prices
* Significant market uncertainty and sharp drop in demand expected in 2020
amid Covid-19
* Mitigating actions for safe operations, supporting communities and
safeguarding liquidity
* 2023 improvement target unchanged, 2020 estimated behind full year target
due to Covid-19 demand decline - cost initiatives and Alunorte ramp-up ahead
of plan
"The Covid-19 situation is challenging the global economy, causing significant
uncertainty for Hydro's operations and business areas. Our top priority is the
health and safety of our people and the communities where we operate," says
President and CEO Hilde Merete Aasheim.
"Amid significant market uncertainty, it is more important than ever to focus on
the elements that we control ourselves. Hydro's improvement efforts are moving
forward with full force, and I am pleased to see Alunorte ramp-up and cost
improvements ahead of plan," Aasheim says.
"We have implemented forceful mitigating actions to adapt to the Covid-19
situation and will continuously evaluate further measures as the situation
develops," Aasheim says.
Current mitigating actions include:
* Temporarily curtailments and temporary layoffs
* Postponed Husnes aluminium plant restart
* Cost cuts and cost discipline across the company
* Freeze of 25% of remaining 2020 capex
* Board resolution to amend dividend proposal of NOK 1.25 per share and
instead propose that Board is authorized to resolve distribution of dividend
at later stage if conditions allow for it
Underlying EBIT for Bauxite & Alumina increased compared to the first quarter of
last year, from NOK 153 million in Q1 2019 to NOK 535 million in Q1 2020.
The results were driven by positive effects from increased production following
the lifting of the production embargo on May 20, 2019, lower raw material costs
and positive currency effects, partly offset by lower alumina sales prices.
Underlying EBIT for Primary Metal improved from negative NOK 771 million in Q1
2019 to NOK 573 million in the Q1 2020, mainly due to lower raw material cost
and positive currency effects, partly offset by lower all-in metal prices.
Underlying EBIT for Metal Markets improved from NOK 190 million Q1 2019 to NOK
261 million in Q1 2020, due to positive currency effects, partly offset by lower
results from the remelters and the sourcing and trading activities.
Underlying EBIT increased for Rolled Products, from NOK 138 million in Q1 2019
to NOK 299 million in Q1 2020. The result from the rolling mills was stable as
reduced sales volumes, margins and higher deprecation were offset by reduced
costs. The Neuss smelter benefited from lower raw material costs.
Underlying EBIT for Extruded Solutions increased compared to the same quarter
last year, from NOK 593 million in Q1 2019 to NOK 702 million in Q1 2020. The
Covid-19 situation, which reduced sales volumes and caused temporarily plant
shut-downs towards the end of the quarter has had similar negative effects as
the Cyber-attack had on the first quarter of 2019. Results were positively
impacted by insurance compensation of NOK 113 million related to the cyber-
attack in 2019. The negative effects of declining markets have been offset by
reduced costs, increased margins and positive currency effects.
Underlying EBIT in Energy decreased compared to the same quarter in the previous
year, from NOK 517 million in Q1 2019 to NOK 437 million in Q1 2020. The
decrease was mainly due to significantly lower prices, partly offset mainly by
higher production and strong commercial results.
Hydro's net debt position increased from NOK 11.8 billion to NOK 15.2 billion at
the end of the quarter. Net cash provided by operating activities amounted to
NOK 1.4 billion. Net cash used in investment activities, excluding short term
investments, amounted to NOK 1.3 billion.
Hydro held NOK 12.2 billion in cash and cash equivalents, and NOK 0.8 billion
short-term deposits, classified as short-term investments, at the end of the
first quarter. The revolving credit facility of USD 1.6 billion was fully
available at the end of the quarter.
Hydro's reported EBIT amounted to NOK 2,301 million in Q1 2020, compared to NOK
20 million in Q1 2019.
In addition to the factors discussed above, reported earnings before financial
items and tax (EBIT) and net income include effects that are disclosed in the
attached quarterly report. Items excluded from underlying EBIT and underlying
net income (loss) are defined and described as part of the alternative
performance measures (APM) section in the quarterly report.
Investor contact
Stian Hasle
+47 97736022
Stian.Hasle@hydro.com
Press contact
Halvor Molland
+47 92979797
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 the Norwegian Securities Trading Act