Norsk Hydro Q1 profit boosted by strong aluminum demand

Hydro had underlying earnings before financial items and tax of NOK 1,448 million in the Q1 up from NOK 588 million in the Q4. Higher realized aluminum prices and premiums higher volumes and lower operating costs lifted underlying results for the quarter.

1. Underlying EBIT NOK 1,448 million

2. Stronger sales supported by seasonally improved markets

3. Stable Bauxite & Alumina result, weak production performance

4. Primary Metal up on higher prices, partly offset by increased raw material costs

5. Down and midstream lifted by higher sales and lower costs

6. Energy up on increased prices and high production

7. Vale deal closed, organization in place and integration proceeding as planned

7. Qatalum ramp up on schedule for full production from June

8. Sunndal line 3 to restart 15,000 tonnes per year capacity in June preparing to resume full production

Mr Svein Richard Brandtz?g president & CEO of Hydro said that "Closing the deal to acquire Vale's aluminium assets was a milestone in Hydro's history as a global and truly integrated aluminum company. This transforming move secures access to bauxite and alumina for aluminum production for decades to come, providing us with a solid platform for the future."

He said that at the end of the first quarter, the large Qatalum aluminum plant was producing at more than 60% of full capacity and ramp up is continuing towards full production from June. Completion and full output at the Qatalum smelter will be another landmark event for Hydro.

After closing the Vale deal on February 28 this year, Hydro is reporting results for its new Bauxite & Alumina business area for the first time this quarter including the acquired assets from March 1. Underlying EBIT for Bauxite & Alumina improved due to higher LME linked alumina prices and the effect of including the acquired bauxite and alumina activities. Weak production performance had a negative impact.

Underlying results for Primary Metal rose significantly in the first quarter from the fourth, due to higher realized aluminum prices, higher realized premiums and lower fixed costs. Positive developments were partly offset by rising raw material costs. Operating results for Qatalum, the JV between Qatar Petroleum and Hydro improved in the quarter. Underlying EBIT for Primary Metal included NOK 145 million of insurance proceeds relating to the power outage at the plant in August last year.

In light of recent positive market developments, Hydro will restart 15,000 tonnes annual capacity at its Norwegian Sunndal aluminum plant line 3 in June, preparing to resume full production at the plant which has been running at reduced capacity since March 2009 due to a very weak market for aluminum.

Brandtz?g said that "We are preparing to restart Sunndal 3, as markets showed considerable recovery throughout 2010, stabilizing into the first quarter 2011. Conditional on continued satisfactory market conditions, Hydro's intention is to restart the complete 100,000 tonnes line in the second half 2011.”