OSLO, NORWAY, Dec 02 (MARKET WIRE) --
Hydro is intensifying efforts to improve its competitive position by
launching new cost-reduction measures, following a year of demanding
markets and decisive corrective actions. Hydro's improvement efforts have
resulted in positive downstream earnings, while upstream activities
remain challenged by the weak aluminium market and a strong Norwegian
krone.
"Hydro has reacted swiftly to the ongoing crisis by implementing a string
of firm and efficient actions, which have improved our position
considerably. But the weak demand for aluminium and aluminium products,
combined with the strong Norwegian currency, call for even tougher
measures to cut costs throughout the company and improve the upstream
cost position," says Hydro CEO Svein Richard Brandtzaeg.
The Norwegian-based aluminium and energy company remains optimistic about
the long-term prospects for aluminium, as the light-weight and endlessly
recyclable metal is seen as a crucial part of the solution to the world's
climate challenges. In product application, aluminium makes cars lighter
and buildings more energy-efficient, paving the way for business
opportunities across Hydro's value chain.
"Our long-term view on aluminium is encouraging. Aluminium will play an
increasingly important role in an energy-constrained world. Hydro's
technological edge and leading metallurgical competence provide a solid
platform to take advantage of promising upstream and downstream growth
opportunities," Brandtzaeg says.
Hydro's Capital Markets Day includes the following highlights:
* Hydro is launching a new cost-improvement program to reduce cash
operating costs by USD 100 per tonne primary aluminium in 2012
compared to the 2009 level. 90 percent of the improvement is
expected to be realized by end-2011. The improvement excludes
Qatalum and impact of raw material prices.
* Qatalum remains on target for start-up at the turn of the year
09/10 and will reach full production during fourth quarter 2010.
The earnings contribution from Qatalum is expected to be somewhat
negative in 2010 at the current aluminium price and affected by
build-up costs and full depreciation.
* Hydro has entered into an agreement to divest its Spanish 30,000
tonnes rolling mill Inasa in a cash-neutral transaction.
* Total capital expenditures in 2010 are expected to be NOK 5.3
billion, down from NOK 10.2 billion in 2009. This includes
project-financed investments in Qatalum of NOK 4.2 billion in
2009. Sustaining capital expenditures are being further reduced
from about NOK 3.0 billion in 2009 to about NOK 2.5-3.0 billion
in 2010.
* Hydro prioritizes highly the maintenance of an investment grade
credit rating. At the end of third quarter, Hydro had a net cash
position of NOK 2.4 billion mainly supported by significant
operating capital reductions during the first nine months.
* The current market imbalance for primary aluminium in the world
outside China is expected to continue into 2010, but at a lower
level. Hydro is well prepared to capture business opportunities
should markets change significantly.
* Long-term prospects for aluminium remain encouraging, supported
by high aluminium consumption in urbanization and infrastructure
development, aluminium as part of the solution to the climate
challenge and aluminium recyclability qualities. Aluminium semis
consumption is expected to average 6.5 percent the next 10 years,
led by the transportation and construction sectors.
Hydro's Capital Markets Day presentation material is available
on
www.hydro.com.
Investor contact
Contact Stefan Solberg
Telephone +47 22539280
Cellular +47 91727528
E-mail Stefan.Solberg@hydro.com
Press contact
Contact Halvor Molland
Telephone +47 22532421
Cellular +47 92979797
E-mail Halvor.Molland@hydro.com
*********
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.
Market outlook: http://hugin.info/106/R/1358632/330874.pdf
Hydro: http://hugin.info/106/R/1358632/330871.pdf
Finance: http://hugin.info/106/R/1358632/330872.pdf
Metal Markets Extruded Products:
http://hugin.info/106/R/1358632/330873.pdf
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
Copyright
Copyright Hugin AS 2009. All rights reserved.
Copyright 2009, Market Wire, All rights reserved.
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