Norsk Hydro Q2 2016 results up on higher prices and sales volumes, slightly offset by currency developments

Norsk Hydro reports its Second quarter 2016 results. Hydro's underlying EBIT rose to NOK 1,618 million in Q2 from NOK 1,501 million in Q1 2016. The increase was due to higher realized alumina and aluminium prices and higher sales volumes, slightly offset by currency developments.

"We have lifted annual global aluminium demand growth forecast to 4-5 percent for 2016, up from previous forecast 3-4 percent. Higher-than-expected activity in China means that we now see primary aluminium demand in China alone to grow by 5-7 percent in 2016. Globally, we expect a largely balanced aluminium market for the full year, "says President and CEO Svein Richard Brandtzæg.



Highlights:

• NOK 1,618 million of underlying EBIT
• Higher realized alumina and all-in aluminium prices, slightly offset by currency developments
• Higher sales volume
• Improved results from Sapa joint venture
• 2019 target of NOK 2.9 billion to be realized, improvement program on track
• Full-year dividend payment and improved cash flow
• Projected aluminium demand growth at 4-5%


Underlying EBIT for Primary aluminium rose in the second quarter mainly due to the following factors:


• Higher realized all-in metal prices,
• Higher sales volumes,
• Seasonally lower fixed costs.
 
These positive factors were partially offset by negative currency effects. Underlying EBIT for Metal Markets declined in the second quarter caused mainly by negative currency and inventory valuation. The drop in income from the remelters also caused this.
 
Underlying EBIT for Rolled Products remained little changed compared to the previous quarter. Positive sales volume was offset by negative currency effects due to weakening USD versus Euro. This was also affected by dropping results in the Neuss primary aluminium plant caused by higher alumina prices.

Sapa (Norsk Hydro joint venture for extrusion products) reported a rise in Underlying EBIT in comparison to the first quarter of 2016 caused by higher demand for Sapa products and stronger margins.
 
Hydro's net cash flow increased to NOK 4.8 in the second quarter. In the second quarter earnings before financial items and tax amounted to NOK 1,978 million. In the previous quarter it was reported at NOK 1,693 million.

Q2 net income amounted to NOK 2,077 million including a net foreign exchange gain of NOK 904 million.

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