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

Tue Feb 12, 2013 1:01am EST

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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

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

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

Investor contact
Contact     Rikard Lindqvist
Cellular    +47 41751199

Press contact
Contact     Halvor Molland
Cellular    +47 92979797

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.

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