Hydro¡¯s underlying EBIT stands down in Q1 of FY2019-20 on lower production and higher raw materials costs

Norsk Hydro in the financial report of the first quarter of FY2019-20 reportedly posted that its underlying earnings before financial items and tax came in at NOK559 million, compared with NOK3147 million in the same quarter last year. This sharp decline in underlying earnings reflects lower realised aluminium prices, higher raw materials costs, and the effects of the production curtailment at the Alunorte alumina refinery.

Underlying EBIT for bauxite and alumina stood down from NOK741 million in Q1 2018 to NOK153 million in Q1 2019, while EBIT for primary aluminium declined from NOK823 million in Q1 2018 to NOK771 in Q1 2019.

Underlying EBIT for rolled products and extruded solutions decreased as well, from NOK232 million in Q1 2019 to NOK138 million in Q1 2019 and from NOK 734 million in Q1 2018 to NOK 593 million in Q1 2019, respectively.

Underlying EBIT for metal markets and energy, however, recorded an improvement from NOK 178 million in Q1 2018 to NOK 190 million in Q1 2019 due to increased results from the remelters, and from NOK 278 million in Q1 2018 to NOK 517 million in Q1 2019 due to higher prices and improved commercial results.

President and CEO Hilde Merete Aasheim said, “We remain optimistic about the long-term prospects for aluminium. However, due to current market uncertainty and industry-wide profitability challenge, we will lift our improvement ambitions, perform a strategic review of Rolled Products and ensure stricter financial discipline and higher earnings.”

Hydro on September 24 will host an Investor Day to present updated ambitions for the company, announced Aasheim.

He also mentioned that now since the production embargoes have been lifted, Hydro can focus on resuming normal operations at Alunorte, Paragominas, and Albras.

“Our Brazilian operations are a fundament for Hydro’s overall agenda and our ambition to lift profitability,” Aasheim said.

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