Norsk Hydro AS Norsk Hydro: Results Down On -2-

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Hydro's underlying earnings before financial items and tax decreased to

NOK 2 446 million in the third quarter, down from NOK 2 930 million in

the second quarter. The decrease mainly reflects higher raw material

costs and negative currency effects.

-- Underlying EBIT of NOK 2 446 million

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-- Negative result effects from raw material costs and USD depreciation

-- Weak Rolled Products results on continued operational issues and negative

currency effect

-- Acquisition of Sapa completed on October 2, integration progressing

according to plan

-- Better improvement program on track for 2019 target of NOK 2.9 billion,

despite 2017 setback

-- Karmøy Technology Pilot on time and budget, expected start-up Q4

2017

-- Positive market sentiment on announced Chinese closures, global market

expected largely balanced in 2017

"We have lifted our global demand estimate for 2017 to 5-6%, indicating

a continued strong demand for aluminium. There is a positive market

sentiment for aluminium, mainly driven by curtailments of primary

production in China, which have supported the market balance in the

quarter," says President and CEO Svein Richard Brandtzæg.

"This quarter marks a new chapter in our history, adding Extruded

Solutions as a fifth business area in Hydro. We are now 35,000-people

strong, with 150 sites all over the world and 30,000 customers

throughout the entire value chain of aluminium. We have a global reach

as well as being very close to our customers and all the communities we

serve," says Brandtzæg.

"We now have the best-possible platform for further growth and

opportunities, innovation and product development," says Brandtzæg.

Underlying EBIT for Bauxite & Alumina decreased compared to the second

quarter. Higher bauxite and caustic prices, negative currency effects

and increased depreciation, primarily in Paragominas, were partly offset

by improved consumption factors. The ongoing ramp-up process of the new

press filter operation caused additional cost at the alumina refinery.

Underlying EBIT for Primary Metal declined in the third quarter due to

negative currency effects, as the NOK strengthened against the USD, in

addition to seasonally lower volumes and higher carbon costs. This was

partly offset by lower alumina and fixed costs.

Underlying EBIT for Metal Markets declined in the third quarter, mainly

due to negative inventory valuation and less positive currency effects.

Results from remelters declined in the third quarter driven by lower

sales volumes in Europe.

Underlying EBIT for Rolled Products in the third quarter improved

slightly compared to the second quarter of 2017. The increase was

primarily due to an accrual for employee compensation recognized in the

second quarter. This was partly offset by negative currency developments

and seasonal effects including summer shutdown in certain plants. The

Neuss smelter result was on same level compared to prior quarter.

Underlying EBIT for Energy increased compared to the previous quarter,

mainly due to improved commercial results and higher production, partly

offset by periodically higher property tax.

Underlying EBIT for Sapa decreased compared to the previous quarter, in

line with general seasonality in the extrusion business.

Due to the ongoing performance challenges in Rolled Products, progress

on Hydro's "Better" improvement program is behind plan. While Hydro does

not expect to reach the year end target of NOK 500 million, the delay is

not expected to impact the ability to reach the 2019 target of NOK 2.9

billion.

Hydro's net cash position increased by NOK 1.7 billion to NOK 7.7

billion at the end of the quarter. Net cash provided by operating

activities amounted to NOK 3.0 billion. Net cash used in investment

activities, excluding short term investments, amounted to NOK 1.3

billion.

Reported earnings before financial items and tax amounted to NOK 2,323

million for the third quarter. In addition to the factors discussed

above, reported EBIT included net unrealized derivative gains of NOK 23

million and negative metal effects of NOK 151 million.

Net income amounted to NOK 2,184 million in the third quarter including

a reduction in tax expense and related interest income of NOK 125

million in total following a closed tax case in September 2017. Net

income also includes net foreign exchange gains of NOK 520 million,

mainly unrealized, reflecting a weakening of USD against BRL affecting

US dollar debt in Brazil, while the weakening of EUR forward rates

against NOK resulted in an unrealized gain on the embedded derivatives

in power contracts denominated in EUR.

Change

Third Second Change Third prior First 9 First 9

Key financial information quarter quarter prior quarter year months months Year

NOK million, except per share data 2017 2017 quarter 2016 quarter 2017 2016 2016

Revenue 22,799 24,591 (7) % 20,174 13 % 70,416 60,703 81,953

Earnings before financial items and tax (EBIT) 2,323 2,946 (21) % 1,376 69 % 7,678 5,047 7,011

Items excluded from underlying EBIT 123 (16) >100 % 101 21 % (18) (451) (586)

Underlying EBIT 2,446 2,930 (17) % 1,477 66 % 7,660 4,596 6,425

Underlying EBIT :

Bauxite & Alumina 413 662 (38) % 153 >100 % 1,831 516 1,227

Primary Metal 1,298 1,486 (13) % 637 >100 % 3,684 1,657 2,258

Metal Markets 91 244 (63) % 117 (22) % 359 358 510

Rolled Products 95 84 12 % 211 (55) % 285 701 708

Energy 368 284 30 % 285 29 % 1,075 983 1,343

Other and eliminations 181 170 7 % 75 >100 % 426 380 380

Underlying EBIT 2,446 2,930 (17) % 1,477 66 % 7,660 4,596 6,425

Earnings before financial items, tax, depreciation

and

amortization (EBITDA) 3,766 4,335 (13) % 2,792 35 % 11,863 8,922 12,485

Underlying EBITDA 3,889 4,319 (10) % 2,753 41 % 11,845 8,331 11,474

Net income (loss) 2,184 1,562 40 % 1,119 95 % 5,585 5,578 6,586

Underlying net income (loss) 1,785 2,214 (19) % 958 86 % 5,580 2,906 3,875

Earnings per share 1.00 0.73 37 % 0.53 88 % 2.59 2.61 3.13

Underlying earnings per share 0.82 1.04 (21) % 0.46 80 % 2.61 1.37 1.83

Financial data:

Investments 1,424 1,420 0 % 1,914 (26) % 4,216 5,596 9,137

Adjusted net cash (debt) (2,976) (5,146) 42 % (8,072) 63 % (2,976) (8,072) (5,598)

Change

Third Second Change Third prior First 9 First 9

quarter quarter prior quarter year months months Year

Key Operational information 2017 2017 quarter 2016 quarter 2017 2016 2016

Bauxite production (kmt) 3,043 2,943 3 % 2,777 10 % 8,386 8,069 11,132

Alumina production (kmt) 1,605 1,576 2 % 1,635 (2) % 4,704 4,706 6,341

Primary aluminium production (kmt) 527 523 1 % 526 0 % 1,566 1,559 2,085

Realized aluminium price LME (USD/mt) 1,921 1,902 1 % 1,612 19 % 1,859 1,552 1,574

Realized aluminium price LME (NOK/mt) 15,496 16,265 (5) % 13,375 16 % 15,510 13,049 13,193

Realized USD/NOK exchange rate 8.07 8.55 (6) % 8.30 (3) % 8.35 8.41 8.38

Rolled Products sales volumes to external market

(kmt) 236 239 (1) % 231 3 % 716 697 911

Sapa sales volumes (kmt) 170 180 (6) % 170 0 % 527 527 682

Power production (GWh) 2,509 2,369 6 % 2,946 (15) % 7,746 8,781 11,332

Investor contact

Contact Stian Hasle

Cellular +47 97736022

E-mail Stian.Hasle@hydro.com

Press contact

Contact Halvor Molland

Cellular +47 92979797

E-mail 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 of the Norwegian Securities Trading Act.

Q3 2017 Presentation: http://hugin.info/106/R/2144192/821719.pdf

Q3 2017 Report: http://hugin.info/106/R/2144192/821711.pdf

This announcement is distributed by Nasdaq Corporate Solutions on behalf

of Nasdaq Corporate Solutions clients.

The issuer of this announcement warrants that they are solely

responsible for the content, accuracy and originality of the information

contained therein.

Source: Norsk Hydro via Globenewswire

http://www.hydro.com/en/?WT.mc_id=Pressrelease

(END) Dow Jones Newswires

October 25, 2017 01:15 ET (05:15 GMT)