Hydro's underlying earnings before financial items and
tax rose to NOK 1,829 million in
the fourth quarter from NOK 1,477 million in
the third quarter. Higher realized alumina
and aluminium prices lifted results for the
quarter, partly offset by seasonally higher costs and
lower aluminium product sales. Hydro expects continued
healthy demand for aluminium and aluminium
products, forecasting global primary demand growth at 3-5
percent in 2017.
- Underlying EBIT of NOK 1 829 million
- Higher realized all-in aluminium and alumina prices
- Record production at Alunorte and Paragominas
- Weak Rolled Products results on lower sales and margins,
increased costs
- NOK 1.4 billion Better improvements in 2016 vs NOK 1.1
billion target
- Karmøy Technology Pilot and new automotive line on time and
budget
- Proposed dividend for 2016 of NOK 1.25 per share
- 2017 global primary demand growth outlook of 3-5%, global
market largely balanced
"Demand for aluminium remains firm and prices have increased,
contributing to a solid quarter for Hydro. I am particularly
pleased to see more and more car producers choosing aluminium for
light-weighting and climate purposes. I am eager to see our
new Rolled Products automotive line in Germany ramping up this
year to meet the rapidly growing automotive demand," says President
and CEO, Svein Richard Brandtzæg.
"We have made better-than-expected progress in
our Better improvement efforts, delivering 1.4 billion
NOK in improvements in 2016. These efforts will continue with
full force in 2017, making Hydro's operations more robust
across the value chain and the company well positioned for a
better, bigger and greener future," says Brandtzæg.
Underlying EBIT for the Bauxite & Alumina business
area increased significantly compared to the third quarter,
due to higher realized alumina prices, driven by a
higher alumina index and aluminium prices on the London
Metal Exchange. Both the Paragominas bauxite mine and
the Alunorte alumina refinery reached record yearly
production in 2016 of 11.1 million mt and 6.3 million mt,
respectively. There was also a significant positive effect from the
settlement of a compensation arrangement related to the acquisition
of Paragominas in 2011, which was realized in combination with
acquisition of the remaining shares in Paragominas.
"I am very pleased to see the record safety results for Hydro in
2016. Combined with record yearly production results at both the
Paragominas bauxite mine and the Alunorte alumina refinery in
Brazil, these results demonstrate our long-term commitment to
operational excellence," says Brandtzæg.
Underlying EBIT for the Primary Metal business
area decreased slightly in the fourth quarter. Lower
volumes and seasonally higher fixed costs were largely
offset by higher realized aluminium prices.
"The Karmøy Technology Pilot, aiming to verify the world's most
energy and climate-efficient aluminium production, is well under
way. We expect the first metal to be produced at the new
plant during the fourth quarter 2017," says
Brandtzæg.
Underlying EBIT for Metal Markets improved in the
fourth quarter, mainly due to improved results from
sourcing and trading activities, partly offset by somewhat lower
results from remelters.
Underlying EBIT for the Rolled Products business area was
significantly lower compared to the third quarter of 2016,
primarily due to seasonally lower volumes, reduced margins,
higher maintenance activities and higher costs. In addition,
depreciation increased somewhat due to the start-up of
the new automotive line in Grevenbroich, Germany, in the
fourth quarter. The USD strengthening against the Euro contributed
positively and the Neuss aluminium plant result improved
due to an increase in the all-in metal price.
Underlying EBIT for the Energy business
area increased compared to the previous
quarter, mainly due to higher prices, lower area cost and
improved contribution from commercial activities, partly
offset by lower production. Production costs were
lowered by seasonally lower property taxes, but
partly offset by higher transmission cost and higher
maintenance activity. Area cost declined later in the quarter in
line with better transmission capacity and improved hydrology in
Mid-Norway.
Underlying EBIT for the Sapa joint venture decreased compared to
the previous quarter, mainly due to seasonally lower market
demand.
For the full year, underlying EBIT decreased to NOK
6,425 million compared with NOK 9,656 million in 2015,
mainly due to a decrease in realized alumina prices and
all-in metal prices, partly compensated by positive currency
effects, lower raw material costs and ongoing improvement
efforts. In 2016, Bauxite & Alumina achieved record production
at both Paragominas and Alunorte, Sapa performance continued to
improve, while Rolled Products delivered a weaker result, driven by
lower margins and higher costs.
Hydro made good progress on its "Better" improvement
ambition targeting NOK 2.9 billion of annual improvements by
2019. For 2016, NOK 1.4 billion of annual improvements was
delivered, exceeding the 1.1 billion target.
Hydro's net cash position increased during
the fourth quarter by NOK 0.6 billion to NOK 6.0 billion
at the end of the quarter. Net cash provided by operating
activities amounted to NOK 4.2 billion. Net cash used in
investment activities, excluding short term investments, amounted
to NOK 2.4 billion.
For 2016, Hydro's Board of Directors proposes an increased
dividend of NOK 1.25 per share, demonstrating the company's
commitment to provide a predictable and competitive cash return to
shareholders, and taking into account the volatility in the
aluminium industry. The proposed payment represents a 40% percent
pay-out ratio of reported net income for the year reflecting
Hydro's operational performance for 2016 and strong financial
position.
Hydro's Board of Directors has revised the company's
dividend policy to reflect the ambition to pay a stable or
increasing dividend. Hydro's policy is in the long term to pay
out, on average, 40 percent of reported net income as dividend over
the cycle.
Reported earnings before financial items and tax amounted to NOK
1,964 million in the fourth quarter. In addition to the
factors discussed above, reported EBIT included net unrealized
derivative gains of NOK 106 million and positive metal
effects of NOK 68 million. Reported earnings also included a
charge of NOK 285 million reflecting partial write-down
of capitalized costs due to a design review of the
part-owned projected CAP alumina refinery and a
compensation of NOK 254 million relating to the
completion of outstanding contractual arrangements with Vale, both
in Brazil. In addition, reported earnings included a charge of
NOK 32 million relating to a change in interest rate used in
the calculation of environmental liabilities linked
to idled sites in Germany, and a net gain
of NOK 23 million in Sapa (Hydro's share net of
tax) relating to unrealized derivative
gains, rationalization charges and net foreign exchange
gains.
In the previous quarter reported earnings before financial items
and tax amounted to NOK 1,376 million including net unrealized
derivative gains of NOK 100 million and positive metal
effects of NOK 48 million. Reported EBIT also included a
charge of NOK 124 million relating to the demolition of
the Kurri Kurri site and an impairment charge of NOK 140
million relating to the decision to divest the Hannover
site. In addition, reported earnings included a net gain
of NOK 15 million in Sapa (Hydro's share net of
tax) relating to unrealized derivative
gains, rationalization charges and net foreign exchange
gains.
For the full year 2016, reported earnings before financial items
and tax amounted to NOK 7,011 million including net unrealized
derivative gains and positive metal effects of
NOK 553 million in total. Reported earnings also included
charges of NOK 192 million relating to the demolition of the Kurri
Kurri site, impairment charges of NOK 426 million
relating to the part-owned projected CAP alumina refinery
and the Hannover site, a net gain of NOK 314
million relating to the sale of certain assets in Grenland, in
addition to a negative adjustment relating to the sale of
the Slim rolling mill in the fourth quarter of
2015. Other positive effects of NOK 223 million
reflects the compensation relating to the completion of
outstanding contractual arrangements with Vale and the charge of
NOK 32 million relating to re-measurement of environmental
liabilities in Germany. In addition, reported
earnings included a net gain of NOK 113 million for
Sapa (Hydro's share net of tax), relating to unrealized
derivative gains, rationalization charges and net foreign
exchange gains.
In the previous year, reported earnings before financial items
and tax amounted to NOK 8,258 million including net unrealized
derivative gains and negative metal effects
of NOK 454 million in total. Reported earnings
also included charges of NOK 285 million relating to the
termination of the Vækerø Park lease contract and net losses
on divestments of NOK 365 million, including losses of NOK 434
million related to the sale of the Slim rolling mill and gains
of NOK 69 million in total related to sale of other assets. In
addition, reported earnings included
a net charge of NOK 331 million for Sapa (Hydro's
share net of tax) relating to unrealized derivative
losses, rationalization charges and net foreign exchange
losses, together with a compensation of NOK 37 million relating to
insurance proceeds in Qatalum.
Net income amounted to NOK 1,008 million in the fourth
quarter including a net foreign exchange loss of
NOK 26 million mainly reflecting the strengthening
Euro versus Norwegian kroner affecting liabilities in Euro in
Norway and embedded currency derivatives in power contracts.
In the previous quarter net income was NOK 1,119
million including a net foreign exchange gain of
NOK 358 million mainly reflecting the strengthening
Norwegian kroner versus Euro affecting liabilities
in Euro in Norway and embedded currency derivatives in power
contracts.
In 2016 net income amounted to NOK 6,586 million including a net
foreign exchange gain of NOK 2,266 million. The net
foreign exchange gain in 2016 was mainly comprised
of unrealized currency gains on US dollar debt in Brazil
and embedded derivatives in power contracts denominated in
Euro. The net foreign exchange gain also
included gains on internal debt denominated in
Euro.
In the previous year income amounted to NOK
2,333 million including a net foreign exchange loss of
NOK 4,397 million. The net
foreign 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. The net foreign
exchange loss also included losses on US dollar debt in
Norway.
Key
financial information NOK million, except per share data |
Fourth quarter 2016 |
Third quarter 2016 |
% change prior quarter |
Fourth quarter 2015 |
% change prior year quarter |
Year 2016 |
Year 2015 |
|
|
|
|
|
|
|
|
Revenue |
21 250 |
20 174 |
5 % |
20 374 |
4 % |
81 953 |
87 694 |
Earnings before
financial items and tax (EBIT) |
1
964 |
1
376 |
43
% |
725 |
>100
% |
7
011 |
8
258 |
Items excluded from
underlying EBIT |
(135) |
101 |
>(100) % |
841 |
>(100) % |
(586) |
1
398 |
Underlying EBIT |
1 829 |
1 477 |
24 % |
1 566 |
17 % |
6 425 |
9 656 |
|
|
|
|
|
|
|
|
Underlying EBIT : |
|
|
|
|
|
|
|
Bauxite &
Alumina |
711 |
153 |
>100
% |
532 |
34
% |
1
227 |
2
421 |
Primary Metal |
601 |
637 |
(6)
% |
407 |
48
% |
2
258 |
4
628 |
Metal Markets |
152 |
117 |
30
% |
152 |
- |
510 |
379 |
Rolled Products |
6 |
211 |
(97)
% |
204 |
(97)
% |
708 |
1
142 |
Energy |
359 |
285 |
26
% |
353 |
2
% |
1
343 |
1
105 |
Other and
eliminations |
(1) |
75 |
>(100) % |
(83) |
99
% |
380 |
(19) |
Underlying EBIT |
1 829 |
1 477 |
24 % |
1 566 |
17 % |
6 425 |
9 656 |
|
|
|
|
|
|
|
|
Earnings before
financial items, tax, depreciation and amortization (EBITDA) |
3
563 |
2
792 |
28
% |
2
128 |
67
% |
12
485 |
13
282 |
Underlying EBITDA |
3 143 |
2 753 |
14 % |
2 969 |
6 % |
11 474 |
14 680 |
|
|
|
|
|
|
|
|
Net
income (loss) |
1
008 |
1
119 |
(10)
% |
541 |
86
% |
6
586 |
2
333 |
Underlying net income (loss) |
968 |
958 |
1 % |
1 296 |
(25) % |
3 875 |
6 709 |
|
|
|
|
|
|
|
|
Earnings
per share |
0.52 |
0.53 |
(2) % |
0.23 |
>100 % |
3.13 |
0.99 |
Underlying earnings per share |
0.47 |
0.46 |
2 % |
0.59 |
(21) % |
1.83 |
2.98 |
|
|
|
|
|
|
|
|
Financial
data: |
|
|
|
|
|
|
|
Investments |
3
541 |
1
914 |
85 % |
2 556 |
39 % |
9
137 |
5
865 |
Adjusted net
interest-bearing debt |
(5
598) |
(8
072) |
31
% |
(8
173) |
32
% |
(5
598) |
(8
173) |
Underlying Return on average Capital Employed (RoaCE) |
|
|
|
|
|
5.1 % |
9.2 % |
|
|
|
|
|
|
|
|
Key Operational
information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bauxite production (kmt) |
3
063 |
2
777 |
10
% |
2 959 |
4
% |
11
132 |
10
060 |
Alumina production
(kmt) |
1
635 |
1
635 |
- |
1
577 |
4
% |
6
341 |
5
962 |
Primary aluminium
production (kmt) |
526 |
526 |
- |
521 |
1
% |
2
085 |
2
046 |
Realized aluminium
price LME (USD/mt) |
1 647 |
1 612 |
2
% |
1 555 |
6
% |
1 574 |
1 737 |
Realized aluminium
price LME (NOK/mt) |
13 659 |
13 375 |
2
% |
13 125 |
4
% |
13 193 |
13 813 |
Realized USD/NOK
exchange rate |
8.29 |
8.30 |
- |
8.44 |
(2)
% |
8.38 |
7.95 |
Rolled Products sales
volumes to external market (kmt) |
213 |
231 |
(7)
% |
229 |
(7)
% |
911 |
948 |
Sapa sales volumes
(kmt) |
155 |
170 |
(9)
% |
156 |
- |
682 |
682 |
Power
production (GWh) |
2 551 |
2 946 |
(13) % |
2 882 |
(11) % |
11 332 |
10 894 |
Investor contactContact Stian HasleCellular +47 97736022E-mail
Stian.Hasle@hydro.com
Press contactContact Halvor MollandCellular +47 92979797E-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.
Attachments:
http://www.globenewswire.com/NewsRoom/AttachmentNg/e2dda9ad-5d01-4261-8f13-785fbaa5ac30
Attachments:
http://www.globenewswire.com/NewsRoom/AttachmentNg/9c35b29a-7ead-4ede-b480-a1c15c99b480
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