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