Norwegian aluminium giant Norsk Hydro has announced fourth quarter results of 2015. The underlying earnings before financial items and tax declined to NOK 1,566 million in the fourth quarter, down from NOK 2,215 million in the third quarter of 2015. The decline mainly reflected lower aluminium and alumina prices and a continued decline in realized premiums, partly offset by positive currency effects.
Underlying EBIT:
For the full year 2015, Hydro’s underlying EBIT climbed to NOK 9,656 million from NOK 5,692 million in 2014, lifted by positive currency effects and supported by successful industry-leading improvement programs across Hydro.
"The decision to build the Karmøy technology pilot marks an important milestone for aluminium, and our ambition to be the industry leader on technology and innovation. We are investing for the future, challenging the current boundaries of productivity and energy-efficiency," says President and CEO, Svein Richard Brandtzæg.
Underlying EBIT for the company’s Primary Metal division declined in the fourth quarter due to lower realized prices and premiums. This was partly offset by a stronger US dollar and a decline in raw material costs mainly due to lower alumina costs. Sales volumes were somewhat lower mainly due to seasonality. In the fourth quarter, underlying EBIT for Energy increased mainly due to higher prices from the low level in the previous quarter and lower property taxes.
Operating Cash Flow:
For the fourth quarter, Hydro’s operating cash flow amounted to NOK 4.3 billion, including a working capital reduction of NOK 1.7 billion. Cash used for investment activities amounted to NOK 2.1 billion. Hydro's net cash position increased during the fourth quarter by NOK 1.8 billion to NOK 5.1 billion at the end of the quarter. At the end of 2014, Hydro had a net debt position of NOK 0.1 billion, implying a positive net cash development of NOK 5.2 billion throughout the year.
By the end of 2015, Hydro's industry-leading improvement programs contributed roughly NOK 4.5 billion of annual improvements compared to 2011 including about NOK 800 million realized in 2015.
Reported Earnings:
Hydro’s reported earnings before financial items and tax amounted to NOK 725 million in the fourth quarter. In the previous quarter reported earnings before financial items and tax amounted to NOK 1,630 million.
For the full year 2015, Hydro’s reported earnings before financial items and tax amounted to NOK 8,258 million including net unrealized derivative gains and negative metal effects of negative NOK 454 million in total. In the previous year, reported earnings before financial items and tax amounted to NOK 5,674 million.
Net Income:
Hydro’s net income amounted to NOK 541 million in the fourth quarter including a net foreign exchange gain of NOK 48 million mainly reflecting marginal currency fluctuations and effects for the period, as well as significantly reduced US dollar intercompany debt. In the previous quarter, net income was negative NOK 1,345 million.
In 2015, Hydro’s net income amounted to NOK 2,333 million including a net foreign exchange loss of NOK 4,397 million. The net 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.
