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Norsk Hydro fourth quarter 2012: Improved result on lower input costs

OSLO, NORWAY -- (Marketwire) -- 02/12/13 -- Hydro's underlying earnings before financial items and tax improved to NOK 138 million in the fourth quarter 2012 from an underlying loss of NOK 19 million in the previous quarter. Lower energy costs in Bauxite & Alumina, lower variable costs in Primary Metal and improved results for the Qatalum aluminum plant contributed to underlying results.

* Underlying EBIT NOK 138 million

* Lower raw material costs

* Lower realized aluminium prices, higher alumina prices

* Higher power prices and production in Energy

* 2013 aluminium demand growth outlook 2-4 % in world outside China

* Proposed 2012 dividend NOK 0.75 per share

"On the back of continuing challenging markets, our focus remains on improving performance across our value chain. The ambitious USD 300 program is expected to be completed at the end of 2013, strengthening Hydro's industry position. Our improvement efforts will continue, including plans to optimize production and performance in our bauxite and alumina operations in Brazil," Hydro's President and CEO Svein Richard Brandtzæg said.

Bauxite & Alumina's underlying EBIT improved compared to the third quarter, due to higher alumina prices and lower energy costs for Alunorte, together with higher results from commercial operations.

Underlying EBIT for Primary Metal improved compared to the third quarter, mainly due to better results in Qatalum. Lower realized aluminium prices negatively affected underlying EBIT, partly offset by lower operating costs. Savings targeted for Hydro's cost improvement program were achieved for the year.

Excluding inventory and currency effects, underlying results for Hydro's Metal Markets operations declined, mainly due to lower volumes and margins together with lower results from sourcing and trading operations.

Underlying EBIT for Rolled Products declined compared with the third quarter, impacted by lower margins and seasonally higher maintenance costs.

Underlying EBIT for Energy increased in the quarter due to seasonally higher production and prices.

Other and eliminations includes a significant negative charge related to elimination of unrealized gains and losses on internal inventories.

Operating cash flow was NOK 2.8 billion for the quarter. Net cash used for investment activities amounted to NOK 1.0 billion. Hydro's net cash position was around NOK 1.7 billion at the end of the fourth quarter.

For the full year 2012, underlying EBIT declined substantially to NOK 1,158 million from NOK 5,982 million in 2011. Lower aluminium prices and alumina prices had a significant effect on underlying results for the year. Ongoing efforts to reduce costs and improve operations partly offset the negative market effects.

On October 15 Hydro announced an agreement with Orkla ASA to combine their respective extrusion profile, building systems and tubing businesses in a new joint venture company to be named Sapa. Completion of the transaction is expected to take place in the first half of 2013, following approval by the relevant competition authorities. Following the agreement, operating results for Hydro's Extruded Products are presented net of financial items and tax as Income (loss) from discontinued operations and excluded from reported EBIT and underlying EBIT.

Hydro's Board of Directors proposes to pay a dividend of NOK 0.75 per share for 2012, reflecting the company's strong commitment to provide a cash return to its shareholders. The dividend reflects our operational performance for 2012 and a strong financial position, also taking into consideration the uncertain market outlook.

Earnings before financial items and tax amounted to NOK 669 million in the fourth quarter, including net unrealized derivative gains and positive metal effects of NOK 555 million and other items amounting to negative NOK 23 million.

In the previous quarter, Hydro incurred a reported loss before financial items and tax of NOK 267 million, including net unrealized derivative losses and negative metal effects of NOK 137 million and other items amounting to negative NOK 112 million. Other items included impairments of non current assets of NOK 140 million and a gain of NOK 68 million relating to pensions.

Income from continuing operations amounted to NOK 364 million in the fourth quarter including net foreign exchange loss of NOK 102 million. In the previous quarter, Hydro incurred a net loss from continuing operations of NOK 64 million, including net foreign exchange gains of NOK 282 million.

Loss from discontinued operations amounted to NOK 251 million in the quarter, including rationalization and closure costs of NOK 174 million. In the third quarter, loss from discontinued operations amounted to NOK 167 million, including rationalization and closure costs of NOK 43 million and a loss on disposal of Portalex amounting to NOK 144 million.

Key financial
information
                                                   % change
NOK million,    Fourth     Third % change   Fourth    prior
except per     quarter   quarter    prior  quarter     year    Year    Year
share data        2012      2012  quarter     2011  quarter    2012    2011
---------------------------------------------------------------------------


Revenue          15585     14722      6 %    17157    (9) %   64181   71500



Earnings
before
financial
items and tax
(EBIT)             669     (267)  > 100 %       46  > 100 %    432    10068

Items excluded
from
underlying
EBIT             (532)      249 > (100) %    1176 > (100) %    725   (4086)
---------------------------------------------------------------------------
Underlying
EBIT               138      (19)  > 100 %    1223   (89) %    1158    5982
---------------------------------------------------------------------------


Underlying
EBIT :

Bauxite &
Alumina          (73)     (386)     81 %     159 > (100) %   (791)      887

Primary Metal      53      (10)  > 100 %     484    (89) %     314    2486

Metal Markets      69         7  > 100 %     (39)  > 100 %     208     441

Rolled
Products           71       214   (67) %       86   (17) %     640     673

Energy            322       220     47 %      441   (27) %    1459    1883

Other and
eliminations     (305)     (64) > (100) %      92 > (100) %   (672)   (389)
---------------------------------------------------------------------------
Underlying
EBIT               138     (19)  > 100 %     1223   (89) %    1158    5982
---------------------------------------------------------------------------


Underlying
EBITDA            1216      1114      9 %     2493   (51) %    5687   10497
---------------------------------------------------------------------------


Underlying
income (loss)
from
continuing
operations            58      (37)  > 100 %     1035   (94) %   509    3947

Underlying
income (loss)
from
discontinued
operations          (59)       17 > (100) %    (159)     63 %     (5)   (1)
---------------------------------------------------------------------------
Underlying net
income (loss)          0      (20)    100 %      876  (100) %     504  3947

Underlying
earnings per
share               0,00      0,00        -     0,42  (100) %    0,26  1,89
---------------------------------------------------------------------------


Net income
(loss)               113     (231)  > 100 %    (749)  > 100 %  (1246)  6749

Earnings per
share               0,07    (0,14)  > 100 %   (0,36)  > 100 %  (0,61)  3,41
---------------------------------------------------------------------------


Financial
data:
---------------------------------------------------------------------------
Investments      1107       806     37 %     3907   (72) %    3382    47510

Adjusted net
interest-
bearing debt   (8271)   (13678)     40 %  (19895)     58 %  (8271)  (19895)
---------------------------------------------------------------------------




Key
Operational
information


---------------------------------------------------------------------------
Alumina
production
(kmt)            1397      1441    (3) %     1490    (6) %    5792     5264

Primary
aluminium
production
(kmt)             485       484      -        539   (10) %    1985     1982

Realized
aluminium
price LME
(USD/mt)         1940      2022    (4) %     2439   (20) %    2080     2480

Realized
aluminium
price LME
(NOK/mt)        11069     11856    (7) %    13834   (20) %   12047    13884

Realized
NOK/USD
exchange rate    5,71      5,86    (3) %     5,67      1 %    5,79     5,60

Metal products
sales, total
Hydro (kmt)       731       794    (8) %      804    (9) %    3254     3303

Rolled
Products sales
volumes to
external
market (kmt)      226       228    (1) %      215      5 %     909      929

Power
production
(GWh)            2448      2157     13 %     2706   (10) %   10307     9582
---------------------------------------------------------------------------


*********

Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management's plans, objectives and strategies for Hydro, such as planned expansions, investments 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, as well as (i) statements preceded by "expected", "scheduled", "targeted", "planned", "proposed", "intended" or similar statements.

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 aluminium business; 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 of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Q4 report: http://hugin.info/106/R/1677211/546900.pdf

Q4 presentation: http://hugin.info/106/R/1677211/546907.pdf

This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that:

(i) the releases contained herein are protected by copyright and other applicable laws; and

(ii) they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: Norsk Hydro via Thomson Reuters ONE

[HUG#1677211]

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