• Underlying EBIT NOK 544 million
• Higher all-in aluminium and realized alumina prices
• Alunorte production at record-high levels
• Seasonally lower power production and prices
• World outside China primary aluminium demand continues to exceed production
• Signed agreement to take over Søral primary plant

“Aluminium demand continues to exceed production resulting in a tight market, and we see the all-in metal prices at their highest levels since 2012. We are continuing our efforts to improve along the entire value chain, and Qatalum has now achieved a cost position among the 10 best aluminium plants in the world,” said President and CEO Svein Richard Brandtzæg.

Underlying EBIT for Bauxite & Alumina remained weak, but improved somewhat compared to first quarter of 2014 influenced by higher realized alumina prices and increased alumina sales volumes. Positive developments were mostly offset by negative currency developments and higher energy costs due to ICMS taxes for the full quarter.

“I am happy to see production at record-high levels above 6 million tons annualized at the Alunorte alumina refinery in Brazil, but regretfully results are still weak. However, our "From B to A" improvement program is on track, and the results should start impacting the bottom-line in the coming quarters,” said Brandtzæg.

Underlying EBIT for Primary Metal improved in the second quarter influenced by higher product premiums, partly offset by lower sales volumes and somewhat lower realized aluminium prices.

Metal Markets delivered a lower underlying EBIT compared to the previous quarter mainly due to decreased results from sourcing and trading activities partly offset by higher volumes at remelters.

“It has been an eventful quarter: We signed an agreement to take over the Søral primary plant and its products fit well with Hydro’s high premium casthouse strategy. We signed four power contracts, securing parts of our external power sourcing need after 2020. Also, Enova granted Hydro support to build the world’s most energy efficient aluminium pilot. This is an important step for Hydro's ambition to become carbon neutral by 2020 and a pillar in our strategy to develop the hydropower-based Norwegian aluminium portfolio,” said Brandtzæg.

Underlying EBIT for Rolled Products was stable compared to the first quarter.

Compared to the first quarter of 2014, underlying EBIT for Energy declined mainly due to seasonally lower power production and lower prices in our production areas.

Underlying results for Sapa improved during the quarter, partly influenced by seasonally stronger sales volumes.

Operating cash flow amounted to NOK 1.0 billion for the second quarter including roughly NOK 0.5 billion of dividends from Qatalum. Net cash used for investment activities amounted to NOK 0.7 billion. Dividends paid during the quarter amounted to NOK 1.6 billion. Hydro's net debt position amounted to around NOK 1.9 billion at the end of the second quarter.

Reported earnings before financial items and tax amounted to NOK 620 million in the second quarter. In addition to the factors discussed above, reported EBIT included net unrealized derivative gains and positive metal effects of NOK 154 million in total. Reported earnings also included charges of NOK 87 million (Hydro's share) in Sapa primarily related to rationalization activities.

In the previous quarter reported earnings before financial items and tax amounted to NOK 822 million including net unrealized derivative gains amounting to NOK 170 million in total. Reported earnings also included impairment charges of NOK 33 million related to the divestment of Hydro's casthouse in Hannover and charges of NOK 86 million (Hydro's share) in Sapa primarily related to rationalization activities.

Income from continuing operations amounted to NOK 269 million in the second quarter including a net foreign exchange loss of NOK 101 million. In the previous quarter, income from continuing operations amounted to NOK 462 million including a net foreign exchange gain of NOK 193 million.