Hydro had underlying earnings before financial items and tax of NOK 1,906 million in the second quarter, up from NOK 1,448 million in the first quarter. Higher realized alumina and aluminum prices combined with higher volumes supported underlying results for the quarter.
“I’m pleased to see improved production performance in Bauxite & Alumina, following the takeover of Vale’s aluminium operations in February. At the same time we continue to focus on cost repositioning along our aluminium value chain. Consistent focus on operational performance and margin management have supported results in seasonally firm markets and will make us more robust going forward,” Hydro’s President and CEO Svein Richard Brandtzæg said.
“We remain optimistic about the prospects for aluminium demand, however, recent increased uncertainty due to a more volatile macro environment and sovereign debt issues may result in increased demand fluctuations in the coming months,” Brandtzæg said.
Underlying EBIT for Bauxite & Alumina rose during the quarter due to the effect of the acquired bauxite and alumina activities from Vale and improved production performance.
Underlying results for Primary Metal also improved compared to the first quarter, mainly due to higher realized aluminium prices and sales volumes, partly offset by increased raw material costs. Ramp-up of production at Qatalum, the 50/50 joint venture between Qatar Petroleum and Hydro, continued during the quarter and is expected to reach full capacity by the end of the third quarter.
Underlying results for Hydro’s midstream operations rose in the second quarter from the first, along with higher volumes and positive ingot inventory valuation effects.
Underlying EBIT for Rolled Products was unchanged compared to the first quarter. Lower operating costs offset the effects of somewhat lower sales volumes and operating margins. Operating cost per mt declined with lower energy and logistic costs.
Extruded Products’ underlying EBIT decreased in the second quarter compared with the previous quarter. Sales volumes were seasonally higher in most business sectors, but lower margins and higher costs more than offset the effect of higher volumes.
Energy generated solid underlying results, but at a lower level compared to the first quarter due to seasonally lower power production and lower prices.
Operating cash flow contributed to a reduction of net debt of NOK 1.4 billion for the quarter including an increase in working capital. Net cash used in investment activities for the quarter amounted to NOK 1.1 billion. Dividends paid in the quarter amounted to NOK 1.6 billion. At the end of the quarter Hydro’s net debt position was NOK 2.9 billion.