“I am pleased that we for the second quarter in a row can present record quarterly results since Hydro became a pure aluminium company in 2007. We will continue to deliver on the improvement programs, while looking for additional measures to expand the efforts already in scope,” says President and CEO Svein Richard Brandtzæg.
Underlying EBIT for Bauxite and Alumina further improved in the first quarter reflecting higher alumina sales volumes and the strengthening USD. Results were also supported by cost and revenue improvements relating to the “From B to A” improvement program. Negative effects of lower LME-linked alumina prices were partly offset by an increase in alumina index based sales volumes. The extended maintenance at the Paragominas ball mill is completed and the bauxite mine is now back in full production.
Primary Metal underlying EBIT improved slightly in the first quarter influenced by a further increase in realized aluminium prices and premiums measured in Norwegian kroner. Positive developments were partly offset by higher costs for alumina and power, reflecting higher prices, and negative currency effects.
“We are operating in a highly competitive market, underlining the importance of our efforts to strengthen our position. We continue to high-grade our portfolio, including the acquisition of the world’s most advanced sorting technology, the construction of a used beverage can recycling facility and a new automotive line in Germany, taking a lead in growing European markets,” says Brandtzæg.
For Metal Markets, underlying EBIT declined substantially compared to the fourth quarter. Results were impacted by negative results from sourcing and trading activities as a result of a decline in standard ingot premiums. The negative results were partly offset by improved results from remelt operations due to higher product premiums and seasonally higher sales volumes in Europe.
Rolled Products delivered higher underlying EBIT compared with the fourth quarter of 2014, mainly due to seasonally higher sales volumes, higher operating margins and currency gains on export sales.
Underlying EBIT for Energy increased slightly compared to the fourth quarter due to higher production, partly offset by lower prices and increased production costs.
Underlying EBIT for Sapa increased compared to the previous quarter, due to higher seasonal demand, continued strong growth in North America and the positive effects of improvement programs.
Operating cash flow amounted to NOK 1.4 billion for the first quarter. Cash used for investment activities amounted to NOK 0.9 billion. Hydro’s net debt position amounted to NOK 0.3 billion at the end of the first quarter also affected by currency translation effects of around NOK 0.7 billion mainly due to the strengthening USD compared to NOK.
Reported earnings before financial items and tax amounted to NOK 3,206 million in the first quarter. In addition to the factors discussed above, reported EBIT included net unrealized derivative gains and positive metal effects of NOK 72 million in total. Reported earnings also included a charge of NOK 74 million (Hydro’s share) for Sapa mainly relating to unrealized derivative losses.
In the previous quarter reported earnings before financial items and tax amounted to NOK 2,295 million including net unrealized derivative losses and positive metal effects of negative NOK 72 million in total. Reported earnings also included impairment charges of NOK 145 million related to the rolling mill in Slim, Italy. In addition, reported EBIT included NOK 337 million (Hydro’s share) relating to Sapa mainly for impairment and restructuring charges, and net other charges of NOK 36 million.
Net income amounted to NOK 1,072 million in the first quarter including a net foreign exchange loss of NOK 1,587 million mainly due to the strengthening of the USD. In the previous quarter, Hydro incurred a net loss amounting to NOK 168 million including a net foreign exchange loss of NOK 2,252 million.