Norsk Hydro Second Quarter 2015 Results: upstream down on weaker prices but downstream up

Hydro's underlying earnings before financial items and tax declined to NOK 2,667 million in the second quarter from NOK 3,208 million in the first quarter of 2015, mainly reflecting lower aluminium prices and premiums.

Highlight:
• Underlying EBIT of NOK 2,667 million
• Record downstream results on seasonally stronger sales
• Lower realized alumina and all-in aluminium prices
• New ICMS tax-framework in place
• Long-term power sourcing secured for Rheinwerk
• Continued challenging global market balance
• 2015 global primary aluminium demand growth ~5%

"Results this quarter are affected by weaker prices, but I am pleased to see demand growing and aluminium taking over as the preferred metal in more and more applications, contributing to record results in our downstream operations," says President and CEO Svein Richard Brandtzæg.

Underlying EBIT for Bauxite and Alumina decreased in the second quarter reflecting lower LME-linked alumina prices, a decline in alumina index prices and lower index based sales volumes.

"We are pleased to have agreed on a long-term ICMS framework for Hydro's operations in Pará, which is fundamental to our ambition to develop robust and viable operations in Pará and to be an enabler for sustainable growth in the region," says Brandtzæg.

Primary Metal underlying EBIT declined in the second quarter, mainly due to lower realized aluminium prices and premiums.

Underlying EBIT for Metal Markets declined in the second quarter impacted by higher negative currency and inventory valuation effects. Sourcing and trading operations continued to incur underlying losses, reflecting the further fall in standard ingot premiums. Results from remelt operations improved mainly due to higher margins.

In the previous quarter reported earnings before financial items and tax amounted to NOK 3,206 million including net unrealized derivative gains and positive metal effects of NOK 72 million in total. Reported earnings also included a charge of NOK 74 million (Hydro's share) for Sapa mainly relating to unrealized derivative losses.

Net income amounted to NOK 2,064 million in the second quarter including a net foreign exchange gain of NOK 346 million due to unrealized currency gains on US dollar debt mainly in Brazil. In the previous quarter, net income was NOK 1,072 million including a net foreign exchange loss of NOK 1,587 million mainly due to the strengthening of the USD.