Hydro's underlying earnings before financial items and tax decreased to NOK 2,713 million in the second quarter, down from NOK 2,930 million for the same quarter last year. The effects of the production curtailment at Alunorte and increased raw material costs were partly offset by higher all-in metal price and a higher realized alumina price as well as improved results from downstream and Energy.

• Underlying EBIT of NOK 2 713 million
• Alunorte, Paragominas and Albras producing at 50%, affecting results negatively
• Increased costs, mostly offset by higher realized all-in aluminium and alumina prices
• Downstream results up on volume and margin
• Higher prices and volume increases result from Energy
• Better improvement program hit by Brazil situation, not expected to reach 2018 target
• Karmøy Technology Pilot at full production
• 2018 global primary market expected in deficit – continued market uncertainty on US tariffs, Rusal sanctions and Brazil situation

"We see the global primary aluminium market in a stronger deficit in 2018, based on lower-than-expected production growth, and maintain a global primary aluminium demand growth of 4-5 percent in 2018. The market uncertainty continue on US tariffs, US sanctions on Rusal and the Brazil situation," says President and CEO Svein Richard Brandtzæg.

Underlying EBIT for Bauxite & Alumina decreased compared to the second quarter of last year. The results were driven by reduced production at both Alunorte and Paragominas and higher raw material prices partly offset by higher realized alumina sales prices.

"We are continuing our dialogue with Brazilian authorities, aiming to resume normal operation at Alunorte as soon as possible. The process to resolve the situation in Brazil is challenging and has taken longer than expected. We have implemented measures that enable Alunorte to operate safely also going forward, but the timing for resuming full production remains uncertain," says Brandtzæg.

Underlying EBIT for Primary Metal declined compared to the second quarter last year due to higher raw material and fixed costs and negative currency effects, partly offset by higher all-in metal prices.

"All 60 cells are now in operation at the Karmøy technology pilot and we are now producing aluminium with the world’s most energy-efficient technology. Several of the elements from the technology can be used in existing plants to lower energy consumption and improve productivity," says Brandtzæg.

Underlying EBIT for Metal Markets remained stable compared to the second quarter of last year. Increase in sales volumes and margins from the remelters, and higher results from sourcing and trading activities were offset by lower inventory valuation and currency effects.

Underlying EBIT for Rolled Products increased significantly compared to the second quarter of 2017. Increasing margins, higher sales volumes, improved production performance as well as an accrual for employee compensation in 2017 were partly offset by negative currency effects. Results from the Neuss smelter increased mainly due to positive effects from all-in metal price development and new power contracts, partly offset by increasing raw material prices.

Underlying EBIT for Extruded Solutions increased compared to the pro forma underlying EBIT in the second quarter 2017, driven by improved sales volumes and margins. The result was also positively influenced by the increase in the Midwest premium.

Underlying EBIT for Energy increased compared to the same quarter in the previous year. The increase was due to significantly higher prices, higher production and improved commercial results, partly offset by negative effects from the repricing of an internal power contract with the Neuss smelter. 

Due to the situation in Brazil, Hydro's "Better" improvement program is not expected to reach the 2018 target of NOK 500 million.

Hydro's net debt position increased from NOK 3.6 billion to NOK 7.5 billion at the end of the quarter. Net cash provided by operating activities amounted to NOK 1.5 billion. Net cash used in investment activities, excluding short term investments, amounted to NOK 1.6 billion. During the second quarter dividends paid to Norsk Hydro ASA shareholders amounted to NOK 3.6 billion.

In addition to the factors discussed above, reported earnings before financial items and tax (EBIT) and net income include effects that are disclosed in the below table. Items excluded from underlying EBIT and underlying net income (loss) are defined and described as part of the APM section in the quarterly report.

Cautionary note 

Certain statements included in this announcement contain forward-looking information, including, without limitation, information relating to (a) forecasts, projections and estimates, (b) statements of Hydro management concerning plans, objectives and strategies, such as planned expansions, investments, divestments, curtailments 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, and (i) qualified statements such as “expected”, “scheduled”, “targeted”, “planned”, “proposed”, “intended” or similar. 

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 businesses; 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.