First quarter 2012: Lower aluminium prices, strong Energy result

• Underlying EBIT NOK 557 million
• Lower alumina and aluminium prices
• Solid production performance
• Strong Energy result, record production level
• Aluminium sales volumes up on seasonal effects, alumina sales down
• 2012 aluminium demand growth outlook around 3 percent outside China

"Continued weak demand and low aluminium prices weigh down first-quarter results. We will continue our restructuring efforts, reduce costs and take firm actions required to keep a steady course," Hydro's President and CEO Svein Richard Brandtzæg said.

"Dependent on the further macro-economic development in Europe, we expect global aluminium demand growth outside China at around 3 percent in 2012," he said.

"I am pleased to see strong production performance, particularly in the strategically important assets Qatalum, Paragominas and Alunorte, providing a firm foundation for progress when markets pick up. Effective and forceful improvement programs in our fully owned smelters are proceeding according to plan, also contributing to a solid platform for the future," Brandtzæg said.

Underlying EBIT for Bauxite & Alumina fell from the fourth quarter, mainly due to lower realized alumina prices and lower sales volumes. Bauxite and alumina production was stable.

Lower realized aluminium prices and lower premiums had a substantial negative effect on underlying EBIT for Primary Metal in the quarter, partly offset by higher sales volumes and lower raw material costs. Production volumes declined mainly due to the curtailment of one production line at the Kurri Kurri smelter in Australia.

Underlying results for Hydro's midstream operations rose from the fourth quarter which included significant negative currency effects. Underlying EBIT excluding currency effects increased in the first quarter, mainly due to higher volumes in the remelt operations.

Underlying EBIT for Hydro's downstream business, Rolled Products and Extruded Products, improved from the fourth quarter result which was hit by seasonal declines and poor market developments in Europe. Demand remained weak for Hydro's European extrusion business and Building Systems in particular.

The Energy business area continued to deliver solid underlying results for the quarter along with power production at record levels.

Operating cash flow amounted to NOK 0.6 billion for the quarter. Net cash used for investment activities amounted to NOK 0.9 billion. Hydro's net cash position was NOK 1.5 billion at the end of the first quarter.

Reported earnings before financial items and tax amounted to NOK 665 million in the first quarter including net unrealized derivative gains of NOK 307 million, negative metal effects of NOK 60 million and rationalization and closure costs of NOK 132 million. Amounts relating to other items of a special or infrequent nature were not significant for the first quarter.

Hydro had net income of NOK 585 million for the first quarter including net foreign exchange gains of NOK 410 million. In the fourth quarter, Hydro incurred a net loss amounting to NOK 749 million including net foreign exchange losses of NOK 28 million.