Seasonal sales push Hydro's second quarter 2015 downstream earnings to record high

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. Stronger seasonal sales volumes lifted downstream results to the highest level since Hydro became a pure aluminium company in 2007.

"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.

Improved results in Rolled Products and Sapa partially offset the effect of a challenging upstream market. Rolled Products delivered improved underlying EBIT mainly driven by seasonally higher shipments and somewhat better operating margins. Results were negatively influenced by a decrease in the contribution from the Rheinwerk smelter and negative currency developments.

Underlying EBIT for Sapa increased compared to the previous quarter, due to seasonally higher sales volumes, strong North American market development, as well as improvement programs progressing ahead of plan across the organization. The second quarter results were also negatively affected by sharply falling metal premiums in North America.

Operating cash flow amounted to NOK 4.2 billion for the second quarter. Cash used for investment activities amounted to NOK 1.2 billion. Dividends paid during the quarter amounted to NOK 2.0 billion. Hydro's net cash position amounted to NOK 0.7 billion at the end of the second quarter.

Reported earnings before financial items and tax amounted to NOK 2,698 million in the second quarter. In addition to the factors discussed above, reported EBIT included net unrealized derivative gains and positive metal effects of NOK 132 million in total and a compensation of NOK 37 million relating to insurance proceeds. Reported earnings also included a charge of NOK 139 million (Hydro's share) for Sapa net of tax, including NOK 106 million relating to restructuring charges.

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.