Norsk Hydro: Sapa (joint venture) - Announcement of results for the second quarter 2016

Underlying EBIT for Sapa increased compared to the previous quarter, mainly due to seasonally higher market demand and stronger margins.

July 15, 2016

Underlying EBIT for Sapa increased significantly compared to the same quarter of the previous year. Earnings improved across all business areas, driven by positive effects from improvement programs, increased share of value-add products and positive market developments. The second quarter last year was negatively influenced by sharply falling metal premiums in North America.

Underlying EBIT for the first half of 2016 improved compared with the same period in 2015, influenced by the same factors discussed above.

Key Figures 
- Sapa (100%) 
Second quarter
2016
First quarter 2016 Second quarter 
2015
First 
half 2016
 
First 
half 2015
 
Year
2015
 
NOK million, except sales volumes            
Operating revenues  14 071  13 905  14 484  27 976  28 535  55 252
Underlying EBITDA  1 132  901  799  2 033  1 504  2 729
Underlying EBIT  804  571  483  1 375  875  1 407
Sales volumes (kmt)  366  349  358  715  711  1 363
Reported EBIT  920 655  65  1574  266  528


Demand for extruded products in Europe and North America increased compared to the previous quarter by 4.5 percent and 3 percent, respectively, driven by seasonality.

Compared to the same period last year, market demand increased by 2.5 percent in North America and 1.5 percent in Europe. In North America, building and construction activity and automotive demand contributed positively. In Europe there were positive developments in automotive and transportation and a mixed picture in building and construction.

Going forward, a continued moderate market growth is expected in Europe, while certain market segments in North America show indications of flattening out. In both North America and Europe, aluminium substitution in the automotive industry is contributing positively. The second quarter is a seasonally strong quarter, and demand traditionally decreases in the third quarter.

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.

No assurance can be given that such expectations will prove to have been correct.  Hydro disclaims any obligation to update or revise any forward-looking statements, whether because of new information, future events or otherwise.

This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.


Updated: October 11, 2016