Q1 - 2019
05/06-2019 06:58:00: (NHY77, NHY, NHY78, NHY01) Norsk Hydro: Første kvartal 2019: Resultatnedgang grunnet volumer, priser og råvarekostnader
Hydros underliggende resultat før finansposter og skatt var 559 millioner kroner i første kvartal, sammenliknet med 3.147 millioner kroner i samme kvartal i fjor. Dette reflekterer hovedsakelig lavere realiserte priser på aluminium, høyere råvarekostnader og effekten av produksjonsbegrensningen ved aluminaraffineriet Alunorte.
Underliggende EBIT 559 millioner kroner
Produksjonsbegrensningen ved Alunorte er opphevet av den statlige domstolen - Alunorte, Paragominas og Albras gjenopptar normal produksjon
Den økonomiske effekten av cyber-angrepet var 300-350 millioner kroner i første kvartal . størst innvirkning på Extruded Solutions
Gode resultater i Extruded Solutions, spesielt i den nordamerikanske virksomheten
Resultatet i Primary Metal gikk ned grunnet lavere priser og høyere råvarekostnader
Solid resultat i Energy som følge av høye priser
Det globale markedet for primæraluminium ventes å gå i underskudd i 2019, fortsatt makroøkonomisk usikkerhet
. Jeg er glad for at produksjonsbegrensningen ved Alunorte er opphevet, slik at vi nå kan konsentrere oss om å gjenoppta trygg og normal drift ved Alunorte, Paragominas og Albras. Den brasilianske virksomheten danner grunnlaget for Hydros overordnede agenda og vår ambisjon om å øke lønnsomheten, sier konsernsjef Hilde Merete Aasheim.
. Vi er fortsatt optimistiske når det gjelder de langsiktige utsiktene for aluminium. Men grunnet usikkerheten i markedet og utfordringen med lønnsomhet i bransjen generelt, vil vi heve forbedringsambisjonene våre, foreta en strategisk gjennomgang av Rolled Products og sørge for strengere finansiell disiplin og høyere inntjening, sier Aasheim, og legger til at Hydro vil arrangere en investordag 24. september for å legge fram de oppdaterte ambisjonene for selskapet.
Underliggende EBIT for Bauxite & Alumina gikk vesentlig ned sammenliknet med første kvartal året før, fra 741 millioner kroner i 2018 til 153 millioner kroner i 2019. Resultatutviklingen skyldes effekten av redusert produksjon både ved Alunorte og Paragominas som følge av produksjonsbegrensningen, og høyere råvarepriser, som delvis ble utliknet av positive valutaeffekter.
Underliggende EBIT for Primary Metal gikk ned fra 823 millioner kroner i første kvartal 2018 til et tap på 771 millioner kroner i første kvartal 2019, hovedsakelig som følge av lavere all-in metallpriser og høyere råvarekostnader.
Underliggende EBIT for Metal Markets gikk opp fra 178 millioner kroner i første kvartal 2018 til 190 millioner kroner i første kvartal 2019, grunnet bedre resultater fra omsmelteverkene og handelsvirksomheten, noe som delvis ble utliknet av negative valuta- og lagervurderingseffekter.
Underliggende EBIT for Rolled Products gikk ned fra 232 millioner kroner i første kvartal 2018 til 138 millioner kroner i første kvartal 2019. Resultatene fra valseverkene var stabile, da positive valutaeffekter ble utliknet av økte personalkostnader. Resultatene ved smelteverket i Neuss gikk ned grunnet lavere all-in metallpriser og økte aluminakostnader.
Underliggende EBIT for Extruded Solutions gikk ned fra 734 millioner kroner i første kvartal 2018 til 593 millioner kroner i første kvartal 2019, som et direkte resultat av cyber-angrepet. Effekten av cyber-angrepet ble delvis utliknet av høyere marginer, spesielt fra virksomheten i Nord-Amerika.
Underliggende EBIT for Energy økte fra 278 millioner kroner i første kvartal 2018 til 517 millioner kroner i første kvartal 2019. Økningen skyldtes hovedsakelig høyere priser og bedre kommersielle resultater.
Hydros forbedringsprogram "Bedre" vil ikke nå det opprinnelige målet for 2019. Dette skyldes hovedsakelig produksjonsbegrensningen ved Alunorte og påfølgende produksjonskutt ved Alunortes bauksittkilde Paragominas, og ved Hydros deleide aluminiumverk Albras.
Hydros netto gjeldsposisjon økte fra 8,7 milliarder kroner til 12,1 milliarder kroner ved utgangen av kvartalet, blant annet som følge av en gjeldsøkning på 3,1 milliarder kroner knyttet til innføring av IFRS 16 - Leieavtaler. Netto kontantstrøm tilført fra driften utgjorde 0,8 milliarder kroner. Netto kontantstrøm benyttet til investeringsaktiviteter, utenom kortsiktige investeringer, utgjorde 1,6 milliarder kroner.
Hydros rapporterte EBIT utgjorde 20 millioner kroner i første kvartal 2019, sammenliknet med 3.301 millioner kroner i første kvartal 2018.
I tillegg til faktorene som er drøftet over, omfatter rapportert resultat før finansposter og skatt (EBIT) og resultat etter skatt poster som er oppgitt i den vedlagte kvartalsrapporten. Poster som er utelatt fra underliggende EBIT og resultat etter skatt er definert og beskrevet i avsnittet om alternative resultatmål (APM) i den engelske kvartalsrapporten.
Investorkontakter
Stian Hasle
https://ml-eu.globenewswire.com/Resource/Download/bf75d023-901d-490d-9acc-52333c89abfe
https://ml-eu.globenewswire.com/Resource/Download/b68ef558-3b41-4b55-9d60-4dc839802d75
Hydros underliggende resultat før finansposter og skatt var 559 millioner kroner i første kvartal, sammenliknet med 3.147 millioner kroner i samme kvartal i fjor. Dette reflekterer hovedsakelig lavere realiserte priser på aluminium, høyere råvarekostnader og effekten av produksjonsbegrensningen ved aluminaraffineriet Alunorte.
Underliggende EBIT 559 millioner kroner
Produksjonsbegrensningen ved Alunorte er opphevet av den statlige domstolen - Alunorte, Paragominas og Albras gjenopptar normal produksjon
Den økonomiske effekten av cyber-angrepet var 300-350 millioner kroner i første kvartal . størst innvirkning på Extruded Solutions
Gode resultater i Extruded Solutions, spesielt i den nordamerikanske virksomheten
Resultatet i Primary Metal gikk ned grunnet lavere priser og høyere råvarekostnader
Solid resultat i Energy som følge av høye priser
Det globale markedet for primæraluminium ventes å gå i underskudd i 2019, fortsatt makroøkonomisk usikkerhet
. Jeg er glad for at produksjonsbegrensningen ved Alunorte er opphevet, slik at vi nå kan konsentrere oss om å gjenoppta trygg og normal drift ved Alunorte, Paragominas og Albras. Den brasilianske virksomheten danner grunnlaget for Hydros overordnede agenda og vår ambisjon om å øke lønnsomheten, sier konsernsjef Hilde Merete Aasheim.
. Vi er fortsatt optimistiske når det gjelder de langsiktige utsiktene for aluminium. Men grunnet usikkerheten i markedet og utfordringen med lønnsomhet i bransjen generelt, vil vi heve forbedringsambisjonene våre, foreta en strategisk gjennomgang av Rolled Products og sørge for strengere finansiell disiplin og høyere inntjening, sier Aasheim, og legger til at Hydro vil arrangere en investordag 24. september for å legge fram de oppdaterte ambisjonene for selskapet.
Underliggende EBIT for Bauxite & Alumina gikk vesentlig ned sammenliknet med første kvartal året før, fra 741 millioner kroner i 2018 til 153 millioner kroner i 2019. Resultatutviklingen skyldes effekten av redusert produksjon både ved Alunorte og Paragominas som følge av produksjonsbegrensningen, og høyere råvarepriser, som delvis ble utliknet av positive valutaeffekter.
Underliggende EBIT for Primary Metal gikk ned fra 823 millioner kroner i første kvartal 2018 til et tap på 771 millioner kroner i første kvartal 2019, hovedsakelig som følge av lavere all-in metallpriser og høyere råvarekostnader.
Underliggende EBIT for Metal Markets gikk opp fra 178 millioner kroner i første kvartal 2018 til 190 millioner kroner i første kvartal 2019, grunnet bedre resultater fra omsmelteverkene og handelsvirksomheten, noe som delvis ble utliknet av negative valuta- og lagervurderingseffekter.
Underliggende EBIT for Rolled Products gikk ned fra 232 millioner kroner i første kvartal 2018 til 138 millioner kroner i første kvartal 2019. Resultatene fra valseverkene var stabile, da positive valutaeffekter ble utliknet av økte personalkostnader. Resultatene ved smelteverket i Neuss gikk ned grunnet lavere all-in metallpriser og økte aluminakostnader.
Underliggende EBIT for Extruded Solutions gikk ned fra 734 millioner kroner i første kvartal 2018 til 593 millioner kroner i første kvartal 2019, som et direkte resultat av cyber-angrepet. Effekten av cyber-angrepet ble delvis utliknet av høyere marginer, spesielt fra virksomheten i Nord-Amerika.
Underliggende EBIT for Energy økte fra 278 millioner kroner i første kvartal 2018 til 517 millioner kroner i første kvartal 2019. Økningen skyldtes hovedsakelig høyere priser og bedre kommersielle resultater.
Hydros forbedringsprogram "Bedre" vil ikke nå det opprinnelige målet for 2019. Dette skyldes hovedsakelig produksjonsbegrensningen ved Alunorte og påfølgende produksjonskutt ved Alunortes bauksittkilde Paragominas, og ved Hydros deleide aluminiumverk Albras.
Hydros netto gjeldsposisjon økte fra 8,7 milliarder kroner til 12,1 milliarder kroner ved utgangen av kvartalet, blant annet som følge av en gjeldsøkning på 3,1 milliarder kroner knyttet til innføring av IFRS 16 - Leieavtaler. Netto kontantstrøm tilført fra driften utgjorde 0,8 milliarder kroner. Netto kontantstrøm benyttet til investeringsaktiviteter, utenom kortsiktige investeringer, utgjorde 1,6 milliarder kroner.
Hydros rapporterte EBIT utgjorde 20 millioner kroner i første kvartal 2019, sammenliknet med 3.301 millioner kroner i første kvartal 2018.
I tillegg til faktorene som er drøftet over, omfatter rapportert resultat før finansposter og skatt (EBIT) og resultat etter skatt poster som er oppgitt i den vedlagte kvartalsrapporten. Poster som er utelatt fra underliggende EBIT og resultat etter skatt er definert og beskrevet i avsnittet om alternative resultatmål (APM) i den engelske kvartalsrapporten.
Investorkontakter
Stian Hasle
https://ml-eu.globenewswire.com/Resource/Download/bf75d023-901d-490d-9acc-52333c89abfe
https://ml-eu.globenewswire.com/Resource/Download/b68ef558-3b41-4b55-9d60-4dc839802d75
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Underlying EBITDA1) 2,633
Underlying earnings per share1) 0.13
Underlying earnings per share1) 0.13
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Resultatet er likevel sterkere enn hva analytikerne på forhånd hadde ventet.
– Vi er fortsatt optimistiske når det gjelder de langsiktige utsiktene for aluminium. Men grunnet usikkerheten i markedet og utfordringen med lønnsomhet i bransjen generelt, vil vi heve forbedringsambisjonene våre, foreta en strategisk gjennomgang av Rolled Products og sørge for strengere finansiell disiplin og høyere inntjening, sier Aasheim.
https://www.aftenbladet.no/innenriks/i/EWBqjG/Svekket-Hydro-resultat--dataangrepet-kostet-300350-millioner
– Vi er fortsatt optimistiske når det gjelder de langsiktige utsiktene for aluminium. Men grunnet usikkerheten i markedet og utfordringen med lønnsomhet i bransjen generelt, vil vi heve forbedringsambisjonene våre, foreta en strategisk gjennomgang av Rolled Products og sørge for strengere finansiell disiplin og høyere inntjening, sier Aasheim.
https://www.aftenbladet.no/innenriks/i/EWBqjG/Svekket-Hydro-resultat--dataangrepet-kostet-300350-millioner
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Norsk Hydro redovisar oväntad vinst i första kvartalet
Norska aluminiumföretaget Norsk Nydro redovisar en oväntad vinst för det första kvartalet.
Det underliggande resultatet blev 124 miljoner norska kronor, mot en väntad förlust på 57,4 miljoner norska kronor, enligt en sammanställning av Bloomberg News.
Det underliggande rörelseresultatet blev 559 miljoner norska kronor, jämfört med väntade 147,9 miljoner norska kronor.
Intäkterna uppgick till 37,58 miljarder norska kronor. Väntat var 37,54 miljarder norska kronor.
I rapporten sade Norsk Hydro att den slutliga kostnaden för cyberattacken uppgår till 300-350 miljoner norska kronor.
Bolaget räknar vidare med ett underskott på aluminiummarknaden på 1-1,5 miljoner ton under 2019, samt att användningsgraden vid Alunorte-smältverket i Brasilien når 75-85 procent inom två månader. Norsk Hydro har kört anläggningen på halv kapacitet efter skadliga utsläpp förra året. Bolaget fick nyligen grönt ljus för full produktion av de brasilianska myndigheterna.
Alunorte är världens största smältverk för aluminium.
Norska aluminiumföretaget Norsk Nydro redovisar en oväntad vinst för det första kvartalet.
Det underliggande resultatet blev 124 miljoner norska kronor, mot en väntad förlust på 57,4 miljoner norska kronor, enligt en sammanställning av Bloomberg News.
Det underliggande rörelseresultatet blev 559 miljoner norska kronor, jämfört med väntade 147,9 miljoner norska kronor.
Intäkterna uppgick till 37,58 miljarder norska kronor. Väntat var 37,54 miljarder norska kronor.
I rapporten sade Norsk Hydro att den slutliga kostnaden för cyberattacken uppgår till 300-350 miljoner norska kronor.
Bolaget räknar vidare med ett underskott på aluminiummarknaden på 1-1,5 miljoner ton under 2019, samt att användningsgraden vid Alunorte-smältverket i Brasilien når 75-85 procent inom två månader. Norsk Hydro har kört anläggningen på halv kapacitet efter skadliga utsläpp förra året. Bolaget fick nyligen grönt ljus för full produktion av de brasilianska myndigheterna.
Alunorte är världens största smältverk för aluminium.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
NORSK HYDRO: SPÅR EFTERFRÅGAN PRIMÄRALUMINIUM ÖKAR 1-3% 2019
STOCKHOLM (Direkt) Aluminiumproducenten Norsk Hydro räknar i rapporten för det första kvartalet med att den globala efterfrågan på primäraluminium kommer att öka med 1-3 procent under 2019.
Under det första kvartalet var den globala aluminiumkonsumtionen stabil jämfört med samma period i fjol, med en marginell säsongsmässig nedgång i Kina och långsam tillväxt i världen i övrigt.
Produktionen av primäraluminium i Kina väntas öka med 1-3 procent under 2019, efter att ha varit oförändrad under 2018. Den kinesiska efterfrågan antas öka med 2-4 procent.
Den globala marknaden för primäraluminium väntas visa ett underskott om 1-1,5 miljoner ton under 2019, efter att ha slutat 2018 med ett underskott på cirka 1,5 miljoner ton.
STOCKHOLM (Direkt) Aluminiumproducenten Norsk Hydro räknar i rapporten för det första kvartalet med att den globala efterfrågan på primäraluminium kommer att öka med 1-3 procent under 2019.
Under det första kvartalet var den globala aluminiumkonsumtionen stabil jämfört med samma period i fjol, med en marginell säsongsmässig nedgång i Kina och långsam tillväxt i världen i övrigt.
Produktionen av primäraluminium i Kina väntas öka med 1-3 procent under 2019, efter att ha varit oförändrad under 2018. Den kinesiska efterfrågan antas öka med 2-4 procent.
Den globala marknaden för primäraluminium väntas visa ett underskott om 1-1,5 miljoner ton under 2019, efter att ha slutat 2018 med ett underskott på cirka 1,5 miljoner ton.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Odi.1
05.06.2019 kl 08:21
3201
Søren ikke godt å si dette, blir det Knask eller Knas ?
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Dette er helt på det jevne. Så får vi satse på at Brasil går i orden, det er nok av andre bekymringer i markedet til NHY for tiden.
Eric
Eric
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
NHY:ESTIMERT LEVETID PÅ 1 ÅR FOR DRS 1-DEPONIET
Oslo (TDN Direkt): Norsk Hydro venter at den gjenværende levetiden for DRS 1-deponiet ved Alunorte er rundt et år, skriver selskapet i sin kvartalsrapport onsdag.
På en oppdatering 30. april ventet selskapet en levetid på 8-18 måneder.
Selskapet gjentar i dag at videre geotekniske undersøkelser foretas, med mål om å forlenge levetiden på DRS 1-deponiet. Selskapet understreker også at den eneste langsiktige løsningen er å kunne benytte DRS 2-deponiet, som fortsatt er under embargo.
21. mai uttalte selskapet til TDN Direkt at det venter en gradvis høyere utnyttelsesgrad fra Alunorte-anlegget ettersom de får erfaring med pressfilterteknologien, som nå benyttes i DRS 1-deponiet. Selskapet gjentar også at de vil starte opp et niende pressfilter i DRS 1-deponiet i tredje kvartal 2019.
Oslo (TDN Direkt): Norsk Hydro venter at den gjenværende levetiden for DRS 1-deponiet ved Alunorte er rundt et år, skriver selskapet i sin kvartalsrapport onsdag.
På en oppdatering 30. april ventet selskapet en levetid på 8-18 måneder.
Selskapet gjentar i dag at videre geotekniske undersøkelser foretas, med mål om å forlenge levetiden på DRS 1-deponiet. Selskapet understreker også at den eneste langsiktige løsningen er å kunne benytte DRS 2-deponiet, som fortsatt er under embargo.
21. mai uttalte selskapet til TDN Direkt at det venter en gradvis høyere utnyttelsesgrad fra Alunorte-anlegget ettersom de får erfaring med pressfilterteknologien, som nå benyttes i DRS 1-deponiet. Selskapet gjentar også at de vil starte opp et niende pressfilter i DRS 1-deponiet i tredje kvartal 2019.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
https://www.hydro.com/globalassets/06-investors/analytical-information/consensus-estimates/q1-2019-consensus.jpg?quality=85&width=911&height=759&mode=crop¢er=0.5,0.5
Adskillig bedre enn average estimat, nærmere det høye estimatet, men noen skal vel selge likevel tenker jeg....i dag. Så siger den oppover.
Adskillig bedre enn average estimat, nærmere det høye estimatet, men noen skal vel selge likevel tenker jeg....i dag. Så siger den oppover.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Siger vel litt opp som du sier, men deponi problematikken er fortsatt relevant for selskapet, spesielt på litt sikt.
Ser ikke bort i fra at kursen igjen trekker seg tilbake igjen slik som den pleier å gjøre.
Ser ikke bort i fra at kursen igjen trekker seg tilbake igjen slik som den pleier å gjøre.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
https://www.tradegate.de/orderbuch_umsaetze.php?isin=NO0005052605
Tyskerne ligger på 32.77, men Oslo på 33.18...
Tyskerne ligger på 32.77, men Oslo på 33.18...
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Hr Dust
05.06.2019 kl 08:40
3075
NHY har ofte falt tilbake. Så mange forventer at det blir sånn hver gang. Men så en dag så endrer dette seg. NHY vil da gå og gå. Så legg aksjen i skuffen til den når 45,-
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Placeyourbet
05.06.2019 kl 08:45
3052
Konsernsjefen er ekstremt offensiv på vegne av selskapet. Det mest overraskende er at de vil se på selskapsstrukturen. Forretningsområdene er veldig forskjellige og dette er noe de vil komme tilbake til på investorkonf i sep. Dette er BULL..
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Nexa
05.06.2019 kl 09:36
2961
Aasheim: om RP: Vil utforske alle muligheter.
Eneste fornuftige er å splitte nhy i et oppstrøms og et nedstrøms selskap. Hører ikke sammen, i tillegg har nhy altfor mange selskaper, over 200.
Eierstrukturene i primær aluminium er ikke bra. 50% eirerandelene i 4 verk gir en masse problemer både administrative og med kapitalforvaltning. Bør selge ev. bytte slik at de har 100%. Ellers skriver nhy at de har en robust cyberforsikring hos anerkjente forsikringsselskap.
Potensiale er kjempestort, en splitt som Alcoa gjorde vil gi en mye større verdi.
Eneste fornuftige er å splitte nhy i et oppstrøms og et nedstrøms selskap. Hører ikke sammen, i tillegg har nhy altfor mange selskaper, over 200.
Eierstrukturene i primær aluminium er ikke bra. 50% eirerandelene i 4 verk gir en masse problemer både administrative og med kapitalforvaltning. Bør selge ev. bytte slik at de har 100%. Ellers skriver nhy at de har en robust cyberforsikring hos anerkjente forsikringsselskap.
Potensiale er kjempestort, en splitt som Alcoa gjorde vil gi en mye større verdi.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Norsk Hydro ASA (NHYDY) CEO Hilde Merete Aasheim on Q1 2019 Results - Earnings Call Transcript
Start Time: 02:30 January 1, 0000 3:37 AM ET
Norsk Hydro ASA (OTCQX:NHYDY)
Q1 2019 Earnings Conference Call
June 05, 2019, 02:30 AM ET
Company Participants
Hilde Merete Aasheim - President and CEO
Eivind Kallevik - CFO
Stian Hasle - Head of IR
Conference Call Participants
Eivind Sars Veddeng - DNB Markets
Hans-Erik Jacobsen - Nordea
Morten Normann - Carnegie
Liam Fitzpatrick - Deutsche Bank
Menno Sanderse - Morgan Stanley
Daniel Major - UBS
Unidentified Company Representative
Good morning, everyone. Welcome to the presentation of Hydro’s Financial Results for the First Quarter and welcome also to all of you following us on webcast. As you know and due to the cyber attack, we have previously presented the operational and market update for the first quarter.
So today we will focus on the financial results for the same quarter and the results will be presented by our new CEO, Hilde Merete Aasheim, and then followed by a detailed financial overview by our CFO, still Eivind Kallevik. And Hilde will also use the opportunity to present her focus areas for Hydro going forward. And as usual, we will have time for a Q&A after the presentation also from the webcast.
So with that, Hilde?
Hilde Merete Aasheim
Good morning to all of you. Welcome to my first presentation of the quarter as the new CEO. I will come back a little bit to the details of the quarter, but I will start by giving you a walkthrough of my CEO agenda and my priorities going forward.
I’m really excited to have the change to lead Hydro into the next chapter; such a fine company with such a bright future. Leadership is about setting a direction and be clear on expectation. My direction can be expressed very simply. It’s about lifting profitability and it’s about driving sustainability.
Lifting profitability simply because our earnings has been too weak for too long time. We have been heavily influenced by the Brazil situation, the cyber attack but even beyond that the earnings has been too low and that we need to address as a company. We need to lift our ambitions and we need to make sure that each part of the long value chain that we are invested in is they’re competing in the world championship everyday and they need to be one of the best in each part of their businesses.
Sustainability is about producing our products and services in a sustainable way, in a responsible way and that is the requirement from our customers but it’s a requirement from the society at large. And here we have a good position in Hydro and I would like us to differentiate ourselves among our competitors in terms of bringing to the market green products.
Before I continue on how we will work in order to lift profitability, driving sustainability, I will talk about something that will not change which is our foundation going forward. We have a strong foundation in Hydro. We have The Hydro Way which is about our purpose. It’s about creating viable societies and it’s about our values; care, courage and collaboration. This is not only fine words; it’s about who we are and what we believe in.
We have cultivated a strong company culture over years and that is something that should sustain also going forward. We have 36,000 people in the organization; top scale, very competent, very engaged and that’s a fantastic asset for the company. One of our core strengths overall this year has been good operation and that value and that brand we should continue to cultivate.
We have attractive assets across the whole value chain. We have a good position in the upstream part on the cost curve but we also have efficient plans in the Extruded Solutions part which are producing advanced products to advanced customers every day. We have a leading position in sustainability in terms of our primary production based on renewables and we are producing more and more products based on post-consume scrap and that we should continue to work on in order to differentiate ourselves in the market with green products.
Start Time: 02:30 January 1, 0000 3:37 AM ET
Norsk Hydro ASA (OTCQX:NHYDY)
Q1 2019 Earnings Conference Call
June 05, 2019, 02:30 AM ET
Company Participants
Hilde Merete Aasheim - President and CEO
Eivind Kallevik - CFO
Stian Hasle - Head of IR
Conference Call Participants
Eivind Sars Veddeng - DNB Markets
Hans-Erik Jacobsen - Nordea
Morten Normann - Carnegie
Liam Fitzpatrick - Deutsche Bank
Menno Sanderse - Morgan Stanley
Daniel Major - UBS
Unidentified Company Representative
Good morning, everyone. Welcome to the presentation of Hydro’s Financial Results for the First Quarter and welcome also to all of you following us on webcast. As you know and due to the cyber attack, we have previously presented the operational and market update for the first quarter.
So today we will focus on the financial results for the same quarter and the results will be presented by our new CEO, Hilde Merete Aasheim, and then followed by a detailed financial overview by our CFO, still Eivind Kallevik. And Hilde will also use the opportunity to present her focus areas for Hydro going forward. And as usual, we will have time for a Q&A after the presentation also from the webcast.
So with that, Hilde?
Hilde Merete Aasheim
Good morning to all of you. Welcome to my first presentation of the quarter as the new CEO. I will come back a little bit to the details of the quarter, but I will start by giving you a walkthrough of my CEO agenda and my priorities going forward.
I’m really excited to have the change to lead Hydro into the next chapter; such a fine company with such a bright future. Leadership is about setting a direction and be clear on expectation. My direction can be expressed very simply. It’s about lifting profitability and it’s about driving sustainability.
Lifting profitability simply because our earnings has been too weak for too long time. We have been heavily influenced by the Brazil situation, the cyber attack but even beyond that the earnings has been too low and that we need to address as a company. We need to lift our ambitions and we need to make sure that each part of the long value chain that we are invested in is they’re competing in the world championship everyday and they need to be one of the best in each part of their businesses.
Sustainability is about producing our products and services in a sustainable way, in a responsible way and that is the requirement from our customers but it’s a requirement from the society at large. And here we have a good position in Hydro and I would like us to differentiate ourselves among our competitors in terms of bringing to the market green products.
Before I continue on how we will work in order to lift profitability, driving sustainability, I will talk about something that will not change which is our foundation going forward. We have a strong foundation in Hydro. We have The Hydro Way which is about our purpose. It’s about creating viable societies and it’s about our values; care, courage and collaboration. This is not only fine words; it’s about who we are and what we believe in.
We have cultivated a strong company culture over years and that is something that should sustain also going forward. We have 36,000 people in the organization; top scale, very competent, very engaged and that’s a fantastic asset for the company. One of our core strengths overall this year has been good operation and that value and that brand we should continue to cultivate.
We have attractive assets across the whole value chain. We have a good position in the upstream part on the cost curve but we also have efficient plans in the Extruded Solutions part which are producing advanced products to advanced customers every day. We have a leading position in sustainability in terms of our primary production based on renewables and we are producing more and more products based on post-consume scrap and that we should continue to work on in order to differentiate ourselves in the market with green products.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
I would like the sustainability agenda to be very closely connected to the commercial agenda so that we can stand out and go to the customers and demonstrate that we can be a partner to them in terms of providing their material with a low carbon footprint. We believe in aluminum simply because of the characteristics of the product. Aluminum is the metal of choice.
Aluminum is the metal that is growing the most and we see that substitution also are improving sort of the plate of products and solutions to the market in transportation and automotive, in packaging and recycling, in building and construction and in more and more applications for end user products, and that is what I find interesting now that we have included Extruded Solutions in our company.
They are working – I was in [indiscernible] a few days ago. I was talking to designers working with IKEA, I was talking to designers working with the automakers, I was working with designers working on building solutions using aluminum and that’s when we grow the plate of the application of aluminum when we work in the first end of the market.
But we need also to defend aluminum in the market and that is why the carbon footprint is so important, the low carbon footprint is important. And as I said, we have a good position here in terms of our low carbon products and we should continue to work on that to have our green products becoming even greener. I believe that that will defend and safeguard the metal also for the longer term.
But coming back to the profitability challenge, we have had severe financial effects of the Brazil situation. We have had financial effect of the cyber attack. Extraordinary events, but the profitability challenge go beyond these events. The earnings have simply been too low for a long time which is also an industry challenge, but we have to face that towards our investors, towards people that invest in Hydro. It’s a disappointment when we are not delivering decent returns.
And that we have to address on top of the situation is also the increasing political unpredictability. We see the world around us has changed quite a lot. We see trade bias, we see trade wars even and we see that that is influencing the whole global economy. And aluminum is very closely connected to the global GDP. And what we see now is that there is a dampening in the global economy and we see that in Europe, we see it in Asia, we see it even in China and we are following U.S. closely. And that we also have to cater for and to prepare for in order to be robust because my ambition for Hydro is to be a robust profitable industry leader based on innovation and sustainability.
On my day one, I addressed some immediate actions. We simply have to face the brutal fact of not having good enough earnings or not having been able to deliver the profitability that we should and to create a sense of urgency in the whole organization that we have to lift our ambitions. Obviously safe and efficient operation is sort of the base. That is the most cost effective way to produce, that is the environment we would like to have in terms of an injury-free environment and it’s also the best way to go to the market to demonstrate to the customers that we can deliver each time on time with the quality that the customer has asked for.
When I was standing here on the 8th of May, I said that the Brazil situation is so severe for the company that this needs to be fixed. I’m very happy today that we got the embargos lifted on May 20th, so to return Alunorte, Paragominas and Albras back to full production is of vital importance and that’s what we’re working on right now and I will come back to that in a few moments.
Then, as many of you know that have followed us during many years, Rolled Products has simply had too weak performance over too long time. That is why I announced on my first day that we will take a strategic review, a full review of the Rolled Products business area to explore all opportunities to see how this can become a better business for Hydro. It is simply not good enough and that work has already started. It has started also inside Rolled Products. We are now in the restructuring of part of Grevenbroich simply to adjust to better market segments in order to improve our margins.
Aluminum is the metal that is growing the most and we see that substitution also are improving sort of the plate of products and solutions to the market in transportation and automotive, in packaging and recycling, in building and construction and in more and more applications for end user products, and that is what I find interesting now that we have included Extruded Solutions in our company.
They are working – I was in [indiscernible] a few days ago. I was talking to designers working with IKEA, I was talking to designers working with the automakers, I was working with designers working on building solutions using aluminum and that’s when we grow the plate of the application of aluminum when we work in the first end of the market.
But we need also to defend aluminum in the market and that is why the carbon footprint is so important, the low carbon footprint is important. And as I said, we have a good position here in terms of our low carbon products and we should continue to work on that to have our green products becoming even greener. I believe that that will defend and safeguard the metal also for the longer term.
But coming back to the profitability challenge, we have had severe financial effects of the Brazil situation. We have had financial effect of the cyber attack. Extraordinary events, but the profitability challenge go beyond these events. The earnings have simply been too low for a long time which is also an industry challenge, but we have to face that towards our investors, towards people that invest in Hydro. It’s a disappointment when we are not delivering decent returns.
And that we have to address on top of the situation is also the increasing political unpredictability. We see the world around us has changed quite a lot. We see trade bias, we see trade wars even and we see that that is influencing the whole global economy. And aluminum is very closely connected to the global GDP. And what we see now is that there is a dampening in the global economy and we see that in Europe, we see it in Asia, we see it even in China and we are following U.S. closely. And that we also have to cater for and to prepare for in order to be robust because my ambition for Hydro is to be a robust profitable industry leader based on innovation and sustainability.
On my day one, I addressed some immediate actions. We simply have to face the brutal fact of not having good enough earnings or not having been able to deliver the profitability that we should and to create a sense of urgency in the whole organization that we have to lift our ambitions. Obviously safe and efficient operation is sort of the base. That is the most cost effective way to produce, that is the environment we would like to have in terms of an injury-free environment and it’s also the best way to go to the market to demonstrate to the customers that we can deliver each time on time with the quality that the customer has asked for.
When I was standing here on the 8th of May, I said that the Brazil situation is so severe for the company that this needs to be fixed. I’m very happy today that we got the embargos lifted on May 20th, so to return Alunorte, Paragominas and Albras back to full production is of vital importance and that’s what we’re working on right now and I will come back to that in a few moments.
Then, as many of you know that have followed us during many years, Rolled Products has simply had too weak performance over too long time. That is why I announced on my first day that we will take a strategic review, a full review of the Rolled Products business area to explore all opportunities to see how this can become a better business for Hydro. It is simply not good enough and that work has already started. It has started also inside Rolled Products. We are now in the restructuring of part of Grevenbroich simply to adjust to better market segments in order to improve our margins.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
But coming back to Brazil, very excited about the fact that the federal court lifted the embargo on May 15 and May 20. There were two embargos to be lifted, one for the civil court and one for the criminal court allowing the full value chain to come back to normal production. We still have an embargo to be able to use the new DRS2 residue deposit and that we have to work on going forward.
In terms of operations and ramp up we have started, we estimate to be between 75% to 85% capacity utilization in Alunorte within the next two months. The timing of returning relies very much on how the press filters are working. Remember that when we got the embargos we were – we have started on the commissioning of the new press filter technology. We did not get that learning curve, so now we are in the learning curve to bring the press filter technology up to full speed. That is why we cannot state when we are back to full capacity. We will bring in a 9th press filter in Q3 and then we will work on that to come back to full operation.
We are now using the old deposit, the DRS1 and we estimate that we can use that for one year. Having said that, we have geotechnical studies ongoing right now to see how we can verify an extended lifetime. Having said that, what is our main focus is the DRS2 and to get that embargo lifted simply because that is for the longer term to use the new press filter technology now to be able to have a long-term sustainable solution for Alunorte in the new DRS2. That was the plan back in 2014 when we invested in the press filter technology and that’s what is our main objective.
Obviously when Alunorte now is ramping up, Paragominas is ramping up based on the schedule of Alunorte and also in Albras which was curtailed 50%, we are now warming up the sales and expect to have a period now within the next three to four months to bring back Albras to full speed.
So going forward, what is the main focus going forward? Well, it’s obviously safe ramp-up of Alunorte, Albras and Paragominas. That is our key priority. Then we are fully committed to deliver on obligations that we have put in the technical and social agreement both within defense of the plant to make the plant robust but then also to continue to do good in the local society to be a good force in the local society and have good dialogue with the local community as well as the government.
What is the main focus in terms of the full coming back to normal is to continue the dialogue with SEMAS which is the state environmental agency together with Ministerio Público on creating a common platform to go to the judge and document that we can operate the new DRS2 in a safe and good way. That was successful when we finally were able to lift the embargo or got the lift of the embargo on Alunorte to join forces to work hard to make sure that everybody understand how we have put up this new DRS2 and that we can document that we can operate that in a safe way. That is our main priority to join forces and lift the embargo. The timing for that as I know you will ask for is uncertain. We do not have a specific timeline for when the judge will lift that embargo.
Then a short update on the cyber attack. As already stated, 300 million to 350 million has been booked in first quarter of which 250 million to 300 million is booked in Extruded Solutions. We are now almost back to normal production in Extruded Solutions as well as the rest of the company. I have to say that I’m very impressed about how the organization has been able to handle such an attack and very impressive efforts, a lot of creativity related to how to find ways to operate without the normal systems in place and also the extra work that we have done in order to have a good dialogue with the customers in order to limit the effect for the customer of the fact that we had this attack; very important for the long term.
In terms of operations and ramp up we have started, we estimate to be between 75% to 85% capacity utilization in Alunorte within the next two months. The timing of returning relies very much on how the press filters are working. Remember that when we got the embargos we were – we have started on the commissioning of the new press filter technology. We did not get that learning curve, so now we are in the learning curve to bring the press filter technology up to full speed. That is why we cannot state when we are back to full capacity. We will bring in a 9th press filter in Q3 and then we will work on that to come back to full operation.
We are now using the old deposit, the DRS1 and we estimate that we can use that for one year. Having said that, we have geotechnical studies ongoing right now to see how we can verify an extended lifetime. Having said that, what is our main focus is the DRS2 and to get that embargo lifted simply because that is for the longer term to use the new press filter technology now to be able to have a long-term sustainable solution for Alunorte in the new DRS2. That was the plan back in 2014 when we invested in the press filter technology and that’s what is our main objective.
Obviously when Alunorte now is ramping up, Paragominas is ramping up based on the schedule of Alunorte and also in Albras which was curtailed 50%, we are now warming up the sales and expect to have a period now within the next three to four months to bring back Albras to full speed.
So going forward, what is the main focus going forward? Well, it’s obviously safe ramp-up of Alunorte, Albras and Paragominas. That is our key priority. Then we are fully committed to deliver on obligations that we have put in the technical and social agreement both within defense of the plant to make the plant robust but then also to continue to do good in the local society to be a good force in the local society and have good dialogue with the local community as well as the government.
What is the main focus in terms of the full coming back to normal is to continue the dialogue with SEMAS which is the state environmental agency together with Ministerio Público on creating a common platform to go to the judge and document that we can operate the new DRS2 in a safe and good way. That was successful when we finally were able to lift the embargo or got the lift of the embargo on Alunorte to join forces to work hard to make sure that everybody understand how we have put up this new DRS2 and that we can document that we can operate that in a safe way. That is our main priority to join forces and lift the embargo. The timing for that as I know you will ask for is uncertain. We do not have a specific timeline for when the judge will lift that embargo.
Then a short update on the cyber attack. As already stated, 300 million to 350 million has been booked in first quarter of which 250 million to 300 million is booked in Extruded Solutions. We are now almost back to normal production in Extruded Solutions as well as the rest of the company. I have to say that I’m very impressed about how the organization has been able to handle such an attack and very impressive efforts, a lot of creativity related to how to find ways to operate without the normal systems in place and also the extra work that we have done in order to have a good dialogue with the customers in order to limit the effect for the customer of the fact that we had this attack; very important for the long term.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
And to me it’s really encouraging to see the effort from the organization which is documentation also of the strength we have in the Hydro organization. When we mobilize, we mobilize with the full power and as I’ve said if I can use that on improving the profitability of the company on making the company more robust rather than working on handling incidents, that’s the way we should work going forward.
Estimated financial effect of the cyber attack is 200 million to 250 million in the second quarter. That’s what has been estimated and also here most of the work is ongoing in Extruded Solutions. But having said that, there is still a lot of work in terms of bringing back the IT solutions back to normal.
As we have told before, Hydro has a robust insurance policy in place with a recognized insurance. We are not taking account of any insurance payment in the first quarter results, so that will come when time is right and when the case has been dealt with by the insurance companies.
As I said, going forward there’s a lot of recovery work towards a normal IT operations. There are thousands of services that need to be recovered, but they are following a plan and they are according to the plan. But while we are working on that we are also increasing the robustness when it comes to further strengthening of IT infrastructure and cyber security. We know that attacks will come also in the future, but with the extra work that we put in now we hope to see that we are much more robust and that we don’t take out the whole company as was the case on the 19th of March.
Let me then move to the global supply/demand balance. As I said, China largely balanced; world outside China still in deficit. If we look at world ex China, as I said we have taken down the global demand growth to 1% to 3% per magnitude to the fact that we see less demand in the world ex China, in particular related to Europe and in particular related to Germany. We also see that the demand growth is less in Asia exposed to export from China.
In terms of supply in the western world ex China, we know that there are plans coming up but also here we are taking down the growth projections from 3% to 4% to 2% to 3%. We know that Alba is coming up with their new line. We know that there are some restructuring in the U.S., but we also know about disruptions in Venezuela as well as – and the situation in [indiscernible].
When it comes to China, we stick to our growth estimate of 2% to 4%. That is metal making the total balance still in deficit. But we are closely following the inventory levels. Some of the deficit is taken by the reduction of the world inventory levels. We see the graph to the left which is the total inventory levels have come down from the very high levels but still higher than what it was pre-financial crisis level. We see now a level of 60 to 70 days inventories and which are approaching the 50s but still higher than the 50 days. We believe that that will continue to take place to reduce the inventory levels going forward.
But we also have to keep a very close eye on China. We see to the right on this slide the growth of semis exports from China, there’s not that much primary export, but semis is also dampening the need for the primary when China export at the level they do. They have increased export with 14% from Q1 last year to Q1 this year. The last quarter, from fourth quarter to first quarter was down 7% and we now see that the Shanghai price has come down and arbitrage is also coming down and which makes this not so competitive to export from China than what it was when the Shanghai price was lower than LME. This we need to focus on. China is an extremely important element in our industry and so we have to closely follow that and also with the market uncertainty with the trade barriers, I don’t think any company can be very clear on how this will play out and this we need to follow going forward.
Estimated financial effect of the cyber attack is 200 million to 250 million in the second quarter. That’s what has been estimated and also here most of the work is ongoing in Extruded Solutions. But having said that, there is still a lot of work in terms of bringing back the IT solutions back to normal.
As we have told before, Hydro has a robust insurance policy in place with a recognized insurance. We are not taking account of any insurance payment in the first quarter results, so that will come when time is right and when the case has been dealt with by the insurance companies.
As I said, going forward there’s a lot of recovery work towards a normal IT operations. There are thousands of services that need to be recovered, but they are following a plan and they are according to the plan. But while we are working on that we are also increasing the robustness when it comes to further strengthening of IT infrastructure and cyber security. We know that attacks will come also in the future, but with the extra work that we put in now we hope to see that we are much more robust and that we don’t take out the whole company as was the case on the 19th of March.
Let me then move to the global supply/demand balance. As I said, China largely balanced; world outside China still in deficit. If we look at world ex China, as I said we have taken down the global demand growth to 1% to 3% per magnitude to the fact that we see less demand in the world ex China, in particular related to Europe and in particular related to Germany. We also see that the demand growth is less in Asia exposed to export from China.
In terms of supply in the western world ex China, we know that there are plans coming up but also here we are taking down the growth projections from 3% to 4% to 2% to 3%. We know that Alba is coming up with their new line. We know that there are some restructuring in the U.S., but we also know about disruptions in Venezuela as well as – and the situation in [indiscernible].
When it comes to China, we stick to our growth estimate of 2% to 4%. That is metal making the total balance still in deficit. But we are closely following the inventory levels. Some of the deficit is taken by the reduction of the world inventory levels. We see the graph to the left which is the total inventory levels have come down from the very high levels but still higher than what it was pre-financial crisis level. We see now a level of 60 to 70 days inventories and which are approaching the 50s but still higher than the 50 days. We believe that that will continue to take place to reduce the inventory levels going forward.
But we also have to keep a very close eye on China. We see to the right on this slide the growth of semis exports from China, there’s not that much primary export, but semis is also dampening the need for the primary when China export at the level they do. They have increased export with 14% from Q1 last year to Q1 this year. The last quarter, from fourth quarter to first quarter was down 7% and we now see that the Shanghai price has come down and arbitrage is also coming down and which makes this not so competitive to export from China than what it was when the Shanghai price was lower than LME. This we need to focus on. China is an extremely important element in our industry and so we have to closely follow that and also with the market uncertainty with the trade barriers, I don’t think any company can be very clear on how this will play out and this we need to follow going forward.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Then let me move to the upstream cost which I know that you are interested in. We have talked about raw material cost coming down. We haven’t seen it yet in the numbers but now we see it in the first quarter numbers. If I take primary to the right here, we see that the cost has come down primarily due to a lower alumina cost compared to fourth quarter which was very high. But the fact that alumina is much lower than Q4, we see that the alumina effect is offsetting the raw material effect or the lower alumina cost which makes the margin more or less the same as we had in fourth quarter for primary. Compared to first quarter, we see that both alumina is much lower than first quarter and raw material costs are still higher than what we saw in first quarter last year.
Then moving to alumina, we see that we have lower alumina cost in first quarter than we had in fourth quarter. In the fourth quarter we were sourcing a lot of external alumina simply to make sure that we did have alumina for the smelters and also for the third parties. Sourcing alumina at a very high cost; that we see now has come down. We have not sourced so much as we did in fourth quarter and the prices of alumina has come down. That’s why the cost has come down in Q1. But we see that prices was also much higher in fourth quarter. When we were outsourcing in the alumina market, prices picked up. That is not the case in Q1. Prices are more close to normal and that is what makes the change from Q4 to Q1. Compared to Q1 last year, it’s still higher raw material prices than what we had in Q1 last year.
Then let’s move to the downstream and Rolled Products. We see a flat development when it comes to sales compared to Q1 last year. Lower demand, lower sales related to foil, we see also some destocking effect in foil but the foil demand is low. But the automotive segment is better despite the fact that car production is down in Europe, but we see the substitution effect in terms of bringing more aluminum into the cars. It’s good news also that we have a better performance on this new automotive line 3, so we have sold 35% more to body in white segment compared to first quarter last year. That’s good news for the new plants in Grevenbroich.
Then when it comes to the first quarter, it’s more seasonal effects. But I would like to say that we should expect a normal demand in the next quarters relating to Rolled Products. We see lower demand in foil, we see that car production is down and we see also fierce competition of imports into Europe from China, from Turkey and from the Middle East.
Then Extruded Solutions; as you know, Extruded Solutions are following the value over volume strategy and are continuously working on net added value per kilo produced extruded products and they’re very much focused on the value creation after the press. And here we see a good development in all business units in terms of net added value per kilo, positive development in all business units except for precision tubing which is affected by the new acquisition in Brazil which still are lower than expected but expected to improve obviously. But all-in-all, we are very happy with the performance and the development in Extruded Solutions. As I said to start with, Extruded Solutions had a very good first quarter and we are encouraging Extruded Solutions to continue that good development.
That’s what I had planned to say in details for the first quarter. And then I leave the floor to Eivind to talk more details of the numbers. Thank you.
Eivind Kallevik
Thank you, Hilde. Good morning, everyone, and welcome from me as well. I will then take you through the financial results for the quarter. Now if we start with the high level result development for the quarter, in Q1 this year we did deliver an online earnings before financial items and tax of roughly 0.6 billion. This is significantly down from the 3.1 billion we delivered in the same quarter last year.
Then moving to alumina, we see that we have lower alumina cost in first quarter than we had in fourth quarter. In the fourth quarter we were sourcing a lot of external alumina simply to make sure that we did have alumina for the smelters and also for the third parties. Sourcing alumina at a very high cost; that we see now has come down. We have not sourced so much as we did in fourth quarter and the prices of alumina has come down. That’s why the cost has come down in Q1. But we see that prices was also much higher in fourth quarter. When we were outsourcing in the alumina market, prices picked up. That is not the case in Q1. Prices are more close to normal and that is what makes the change from Q4 to Q1. Compared to Q1 last year, it’s still higher raw material prices than what we had in Q1 last year.
Then let’s move to the downstream and Rolled Products. We see a flat development when it comes to sales compared to Q1 last year. Lower demand, lower sales related to foil, we see also some destocking effect in foil but the foil demand is low. But the automotive segment is better despite the fact that car production is down in Europe, but we see the substitution effect in terms of bringing more aluminum into the cars. It’s good news also that we have a better performance on this new automotive line 3, so we have sold 35% more to body in white segment compared to first quarter last year. That’s good news for the new plants in Grevenbroich.
Then when it comes to the first quarter, it’s more seasonal effects. But I would like to say that we should expect a normal demand in the next quarters relating to Rolled Products. We see lower demand in foil, we see that car production is down and we see also fierce competition of imports into Europe from China, from Turkey and from the Middle East.
Then Extruded Solutions; as you know, Extruded Solutions are following the value over volume strategy and are continuously working on net added value per kilo produced extruded products and they’re very much focused on the value creation after the press. And here we see a good development in all business units in terms of net added value per kilo, positive development in all business units except for precision tubing which is affected by the new acquisition in Brazil which still are lower than expected but expected to improve obviously. But all-in-all, we are very happy with the performance and the development in Extruded Solutions. As I said to start with, Extruded Solutions had a very good first quarter and we are encouraging Extruded Solutions to continue that good development.
That’s what I had planned to say in details for the first quarter. And then I leave the floor to Eivind to talk more details of the numbers. Thank you.
Eivind Kallevik
Thank you, Hilde. Good morning, everyone, and welcome from me as well. I will then take you through the financial results for the quarter. Now if we start with the high level result development for the quarter, in Q1 this year we did deliver an online earnings before financial items and tax of roughly 0.6 billion. This is significantly down from the 3.1 billion we delivered in the same quarter last year.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
In this period, we have seen a continuous increase in raw material costs, which combined with somewhat higher fixed cost taken the results down by roughly 1.2 billion. Higher alumina cost in primary metal account for roughly a quarter of this with energy, carbon and bauxite costs adding another 0.5 billion to the cost picture. The increase in fixed cost of 0.4 billion is partly personnel related cost throughout the business areas of Hydro but also partly related to the cyber attack.
The realized alumina price have remained relatively flat over this period but we have seen an 11% decrease in realized aluminum prices taking the results down some 900 million. We also saw negative effects on the volume side, roughly 0.6 billion primarily driven by the curtailment situation in Brazil but also partly related to the cyber attack we experienced in March this year.
On the positive side, we also had a currency effect, the stronger dollar against most of our currencies supported results with roughly 0.6 billion. And finally, the other net out to a negative 0.5 billion. This is a combination of a positive effect in energy and improved results and then offset by a negative variation in other eliminations as well as loss on power cells in Brazil due to the curtailment situation.
If we compare the results to the previous quarter, development is relatively flat. The decline in the upstream results is driven by lower realized prices as both the LME as well as the PAX index has decreased in this period reducing the results with about 600 million on the LME side and roughly 400 million on the PAX side.
This negative effect was partly offset by the reduction in raw material costs with a total effect of 0.6 billion. We saw a significant reduction in the alumina cost for primary metal adding up to roughly 500 million in cost relief for this period. Carbon, caustic and coal makes up the rest.
At the same time, we see that in our downstream division’s Extruded and Rolled we see a good improvement of 0.6 billion, 600 million which we can mostly attribute to the normal seasonality variations we see between Q4 and Q1. And remember that this also is done including the additional cyber cost in particular for Extruded Solutions.
Finally, the other item is a combination of smaller items, mainly changes in eliminations, again loss on power cells due to the curtailment in Brazil and some cyber related costs, all netting out to 0.3 billion negative.
We then turn quickly to the key financials for the quarter. We do see revenues down some 2.4 billion versus first quarter of 2019. This is primarily driven by lower volumes on the bankruptcy curtailments in Brazil as well as some lower volumes due to the cyber attack.
This quarter we did exclude from a reported EBIT of 20 million 539 million in items excluded. This is primarily relating to the normal timing effects that we exclude every quarter. In addition, we have some smaller one-time effects.
This quarter, we had a marginal financial income as the interest expense was offset by the net foreign exchange gain of 0.2 billion. This mainly reflects the stronger NOK versus the euro impacting the embedded derivatives we have on our Norwegian power contracts.
As a result, the income before tax was also marginal, 26 million and significantly down from the 2.8 billion we delivered in the same quarter last year. We have income taxes of 150 million this quarter. That reflects the high proportion of energy earnings and then subject to the power sur-tax which gives this relatively high number.
This gives us a negative net income of minus 124 million, down from positive 2.1 billion last year. Consequently, also the underlying EPS is down this quarter and is roughly NOK 0.13 per share.
We then turn to the business areas and start with bauxite and alumina. The underlying EBIT for the business area decreased from 741 million Q1 '18 to 153 million in the first quarter of '19. The results obviously were negatively impacted by the 50% curtailment at Alunorte and consequently 50% production at Paragominas has a negative effect of roughly 0.5 billion for the quarter.
The realized alumina price have remained relatively flat over this period but we have seen an 11% decrease in realized aluminum prices taking the results down some 900 million. We also saw negative effects on the volume side, roughly 0.6 billion primarily driven by the curtailment situation in Brazil but also partly related to the cyber attack we experienced in March this year.
On the positive side, we also had a currency effect, the stronger dollar against most of our currencies supported results with roughly 0.6 billion. And finally, the other net out to a negative 0.5 billion. This is a combination of a positive effect in energy and improved results and then offset by a negative variation in other eliminations as well as loss on power cells in Brazil due to the curtailment situation.
If we compare the results to the previous quarter, development is relatively flat. The decline in the upstream results is driven by lower realized prices as both the LME as well as the PAX index has decreased in this period reducing the results with about 600 million on the LME side and roughly 400 million on the PAX side.
This negative effect was partly offset by the reduction in raw material costs with a total effect of 0.6 billion. We saw a significant reduction in the alumina cost for primary metal adding up to roughly 500 million in cost relief for this period. Carbon, caustic and coal makes up the rest.
At the same time, we see that in our downstream division’s Extruded and Rolled we see a good improvement of 0.6 billion, 600 million which we can mostly attribute to the normal seasonality variations we see between Q4 and Q1. And remember that this also is done including the additional cyber cost in particular for Extruded Solutions.
Finally, the other item is a combination of smaller items, mainly changes in eliminations, again loss on power cells due to the curtailment in Brazil and some cyber related costs, all netting out to 0.3 billion negative.
We then turn quickly to the key financials for the quarter. We do see revenues down some 2.4 billion versus first quarter of 2019. This is primarily driven by lower volumes on the bankruptcy curtailments in Brazil as well as some lower volumes due to the cyber attack.
This quarter we did exclude from a reported EBIT of 20 million 539 million in items excluded. This is primarily relating to the normal timing effects that we exclude every quarter. In addition, we have some smaller one-time effects.
This quarter, we had a marginal financial income as the interest expense was offset by the net foreign exchange gain of 0.2 billion. This mainly reflects the stronger NOK versus the euro impacting the embedded derivatives we have on our Norwegian power contracts.
As a result, the income before tax was also marginal, 26 million and significantly down from the 2.8 billion we delivered in the same quarter last year. We have income taxes of 150 million this quarter. That reflects the high proportion of energy earnings and then subject to the power sur-tax which gives this relatively high number.
This gives us a negative net income of minus 124 million, down from positive 2.1 billion last year. Consequently, also the underlying EPS is down this quarter and is roughly NOK 0.13 per share.
We then turn to the business areas and start with bauxite and alumina. The underlying EBIT for the business area decreased from 741 million Q1 '18 to 153 million in the first quarter of '19. The results obviously were negatively impacted by the 50% curtailment at Alunorte and consequently 50% production at Paragominas has a negative effect of roughly 0.5 billion for the quarter.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
In this quarter, the curtailment effect was not compensated with higher realized prices as we have seen in previous periods and price effects were then relatively stable between Q1 '18 and Q1 '19. At the same time, we have seen raw material costs continuing to increase impacting results as we’ve seen them. Caustic and soda started to come down but these have been offset by higher energy costs for Alunorte in Brazil. On a positive side, we have seen a 16% weaker BRL giving us an earnings lift of some NOK 300 million between the quarters.
If we look into second quarter, we are as Hilde has already said very happy to see the ramp up schedule or ramp up of Alunorte and Paragominas already moving ahead. We do estimate that we will get to 75% to 85% production within the next two months and Paragominas will ramp up at the same speed as we do in Alunorte.
When it comes to cost related to this, we will see somewhat higher material and service cost in the second quarter during the ramp up stage, meaning that the absolute numbers will increase somewhat unless we do get capacities up, this will of course be diluted by the increased production, so cost per ton will come down. Let me also remind you that the fixed cost in Alunorte is roughly 15% to 20% of total cost and in Paragominas it’s much higher at 65% to 70%.
On the raw material outlook into second quarter, it is relatively flat overall between the quarters. We do see some alleviation on the caustic side which we do expect to come down as a cost in Q2 but we at the same time expect to see somewhat higher energy cost and I think that benefits us.
If we look at the market prices for Q2 both PAX as well as the LME impacting the LME related contracts, early [ph] contracts have come somewhat down compared to the Q1 levels and we do now expect to realize alumina prices of just north of $360 per ton.
If we turn to primary metal, the underlying EBIT here decreased significantly by approximately 1.6 billion from 823 million in Q1 '18 to 737 million negative this quarter. This is largely explained by two elements. One, it’s of course the 11% decrease in alumina taking down the results roughly 900 million. In addition, we have seen significant raw material cost increases in this period primarily on the alumina side but also on energy and carbon costs altogether adding up to roughly 700 million in this period.
Production is somewhat down compared to the first quarter last year. It’s primarily driven by Albras but it’s partly offset by the production we have at the Karmøy Technology Pilot. We also had losses on the power cells or higher losses on the power cells this quarter in Brazil as prices as we guided on before are typically very low in the midst of the rainy season. The stronger dollar had a net positive effect of some 150 million for the business area in this period.
If we look into the second quarter, we have started the ramp up process in Albras. This is expected to take three to four months. When it comes to ramp up cost for Albras, that is mostly related to the first fill and that cost of course is capitalized, so in terms of EBIT impact you shouldn’t see a significant consequence for the second quarter.
We have sold approximately 85% of the primary alumina production at the end of April at some $1,875 per metric ton and then of course that you’ve seen that alumina prices in May have been below that level, so realized prices should be no surprise that that would be below 1,875 when we close the second quarter.
On the premium side, we have booked 75% of the premiums around $360 per ton and the estimate then for the complete quarter is in the range of $300 to $350 per ton. If we look at the raw material side for primary metal in the second quarter, we do expect to see a continued alleviation on raw material cost again in particular on the alumina side which should give us a good benefit and also there will be some cost reduction when it comes to energy and carbon cost in the second quarter. Also worth noting as Alunorte is now ramping up, the need for us to go to external market to source more alumina has ended and we are now well covered in the quarters to come.
If we look into second quarter, we are as Hilde has already said very happy to see the ramp up schedule or ramp up of Alunorte and Paragominas already moving ahead. We do estimate that we will get to 75% to 85% production within the next two months and Paragominas will ramp up at the same speed as we do in Alunorte.
When it comes to cost related to this, we will see somewhat higher material and service cost in the second quarter during the ramp up stage, meaning that the absolute numbers will increase somewhat unless we do get capacities up, this will of course be diluted by the increased production, so cost per ton will come down. Let me also remind you that the fixed cost in Alunorte is roughly 15% to 20% of total cost and in Paragominas it’s much higher at 65% to 70%.
On the raw material outlook into second quarter, it is relatively flat overall between the quarters. We do see some alleviation on the caustic side which we do expect to come down as a cost in Q2 but we at the same time expect to see somewhat higher energy cost and I think that benefits us.
If we look at the market prices for Q2 both PAX as well as the LME impacting the LME related contracts, early [ph] contracts have come somewhat down compared to the Q1 levels and we do now expect to realize alumina prices of just north of $360 per ton.
If we turn to primary metal, the underlying EBIT here decreased significantly by approximately 1.6 billion from 823 million in Q1 '18 to 737 million negative this quarter. This is largely explained by two elements. One, it’s of course the 11% decrease in alumina taking down the results roughly 900 million. In addition, we have seen significant raw material cost increases in this period primarily on the alumina side but also on energy and carbon costs altogether adding up to roughly 700 million in this period.
Production is somewhat down compared to the first quarter last year. It’s primarily driven by Albras but it’s partly offset by the production we have at the Karmøy Technology Pilot. We also had losses on the power cells or higher losses on the power cells this quarter in Brazil as prices as we guided on before are typically very low in the midst of the rainy season. The stronger dollar had a net positive effect of some 150 million for the business area in this period.
If we look into the second quarter, we have started the ramp up process in Albras. This is expected to take three to four months. When it comes to ramp up cost for Albras, that is mostly related to the first fill and that cost of course is capitalized, so in terms of EBIT impact you shouldn’t see a significant consequence for the second quarter.
We have sold approximately 85% of the primary alumina production at the end of April at some $1,875 per metric ton and then of course that you’ve seen that alumina prices in May have been below that level, so realized prices should be no surprise that that would be below 1,875 when we close the second quarter.
On the premium side, we have booked 75% of the premiums around $360 per ton and the estimate then for the complete quarter is in the range of $300 to $350 per ton. If we look at the raw material side for primary metal in the second quarter, we do expect to see a continued alleviation on raw material cost again in particular on the alumina side which should give us a good benefit and also there will be some cost reduction when it comes to energy and carbon cost in the second quarter. Also worth noting as Alunorte is now ramping up, the need for us to go to external market to source more alumina has ended and we are now well covered in the quarters to come.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Turning to metal markets, the metal markets area delivered an underlying EBIT of 190 million versus 178 million same quarter last year. Again, we have seen very strong performance in results out of the remelters both in Europe as well as in the U.S. driven by strong margins. This is despite somewhat lower production on the back of the Henderson incident we had earlier this year. Henderson is now back in full production as we speak.
In addition, we’ve also seen good positive contributions from the sourcing and trading activities in this period. If we exclude 40 million in negative currency effects, the result is 230 million which is up from 139 million last year and double compared to what we have guided on as normal running profits of 125 million per quarter or 500 million per year.
If we look into the second quarter, we continue to see very good market conditions for the remelters and we do expect strong contributions also here in the second quarter. But again, as always, let me remind you that the currency and trading results in metal markets are of course volatile by nature.
In Rolled Products, we have delivered an underlying result of 138 million, down from the 232 million in the same quarter last year. The results from the rolling mills are relatively stable, shipments were flat. We did see a somewhat improved margin picture in Q1 but that’s been offset by inflationary pressures on the personnel cost of salaries in Germany.
At the same time we have seen that the Neuss smelter results did decline as a result of the lower realized aluminum price as well as higher raw material cost and that basically explains the variations between the quarters.
When we look into the second quarter, we still see a positive demand growth in Europe but we do notice some softening in some of the key areas where we operate, like foil as well as general engineering. We also see increased margin pressure going into the second quarter and probably also a somewhat less fortunate product mix when we look at result expectations for the second quarter. And that’s why from a shipment perspective, we just also expect that to be relatively flat between Q1 and Q2 and not necessarily expect a normal season uptick in volumes.
When it comes to the Neuss smelter for the second quarter, remember that this is driven, as I’ve said, with metal prices and raw material cost. We do expect to get some raw material relief also on the Neuss smelter but that will principally be offset by the lower metal price as we observe it.
Turning to Extruded Solutions, the result did decline from 734 million last year to 593 million this quarter. As explained before, Extruded Solutions were clearly hit hardest in Hydro by the cyber attack. We do estimate that the impact here is 200 to 250. So if we haven’t had this unfortunate incident, we would have seen a continued improvement year-over-year in Extruded Solutions.
Also happy to see that the net added value per kilo, the value over volume strategy within Extruded Solutions do continue and we do see a year-on-year improvement. In particular, happy to see very strong results in North America delivering better results even if they have had a cyber attack, better results than what they delivered in Q1 2018.
If we look into the second quarter, still some effects of the cyber attack in the second quarter. We are basically back to normal operations in terms of production and delivery in Extruded Solutions now which is a good speed out of the second quarter, so we should be at the tail end of the effects.
On the market side, we do expect to see still good positive growth both in Europe as well as in North America, albeit probably at the slightly slower pace than what we saw in 2018, but still good markets.
In addition, we’ve also seen good positive contributions from the sourcing and trading activities in this period. If we exclude 40 million in negative currency effects, the result is 230 million which is up from 139 million last year and double compared to what we have guided on as normal running profits of 125 million per quarter or 500 million per year.
If we look into the second quarter, we continue to see very good market conditions for the remelters and we do expect strong contributions also here in the second quarter. But again, as always, let me remind you that the currency and trading results in metal markets are of course volatile by nature.
In Rolled Products, we have delivered an underlying result of 138 million, down from the 232 million in the same quarter last year. The results from the rolling mills are relatively stable, shipments were flat. We did see a somewhat improved margin picture in Q1 but that’s been offset by inflationary pressures on the personnel cost of salaries in Germany.
At the same time we have seen that the Neuss smelter results did decline as a result of the lower realized aluminum price as well as higher raw material cost and that basically explains the variations between the quarters.
When we look into the second quarter, we still see a positive demand growth in Europe but we do notice some softening in some of the key areas where we operate, like foil as well as general engineering. We also see increased margin pressure going into the second quarter and probably also a somewhat less fortunate product mix when we look at result expectations for the second quarter. And that’s why from a shipment perspective, we just also expect that to be relatively flat between Q1 and Q2 and not necessarily expect a normal season uptick in volumes.
When it comes to the Neuss smelter for the second quarter, remember that this is driven, as I’ve said, with metal prices and raw material cost. We do expect to get some raw material relief also on the Neuss smelter but that will principally be offset by the lower metal price as we observe it.
Turning to Extruded Solutions, the result did decline from 734 million last year to 593 million this quarter. As explained before, Extruded Solutions were clearly hit hardest in Hydro by the cyber attack. We do estimate that the impact here is 200 to 250. So if we haven’t had this unfortunate incident, we would have seen a continued improvement year-over-year in Extruded Solutions.
Also happy to see that the net added value per kilo, the value over volume strategy within Extruded Solutions do continue and we do see a year-on-year improvement. In particular, happy to see very strong results in North America delivering better results even if they have had a cyber attack, better results than what they delivered in Q1 2018.
If we look into the second quarter, still some effects of the cyber attack in the second quarter. We are basically back to normal operations in terms of production and delivery in Extruded Solutions now which is a good speed out of the second quarter, so we should be at the tail end of the effects.
On the market side, we do expect to see still good positive growth both in Europe as well as in North America, albeit probably at the slightly slower pace than what we saw in 2018, but still good markets.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
On the energy side, we saw a significant increase in results from 278 million last year to 517 million this quarter. The main driver for this is price driven. We saw a 30% increase in power prices increasing from NOK 361 per megawatt hour last year to NOK 468 per megawatt hour in the NO2 pricing area this year. The price effect alone lifted results with roughly 100 million.
The second big contributor is very strong results within the trading and hedging area of energy, again lifting the results with close to 100 million. Production somewhat up to 2.6 terawatt hours, up from 2.4 last year and that spot sales is not up to the same extent and that is because we consumed more of the power internally in the company in primary metal.
Important why we look forward and look into Q2, we see relatively low levels in Hydro’s reservoir systems both in terms of snow as well as in water and there has been relatively low inflows so far in Q2. So you should expect production to come significantly down in the second quarter compared to similar periods in 2018 and forward and also with the way we look at this today also relatively low production levels for the year as such. On the pricing scheme or pricing set so far in Q2 in NO2, prices have gone down and averaged around NOK 397 per megawatt hour.
Quickly turning to other and eliminations netted to a negative 261 this quarter compared to a positive 161 for same quarter last year. The other line mainly comprises corporate cost in addition to other elements like Sapa integration cost as well as results out of the industrial insurance area of Hydro. This quarter this was 307 million, 100 million higher than what we had last year and certainly somewhat above the guidance that we give of 175 million to 200 million per quarter, partly reflecting some cost relating to the cyber attack but also lower results in the industrial insurance company within Hydro. Also in the second quarter, we do expect the cyber cost to come in on the corporate line again giving us an elevated cost level for the quarter compared to the 175 to 200.
Turning to debt, first of all the net debt position that we reported at the end of Q4 of 8.7 billion has now been restated to reflect the implementation of the IFRS16 standard on leases. This has increased as we’ve guided the net debt with 3.1 billion up to 11.7 billion. Also this effect of net debt between the quarters have remained relatively stable at 0.4 billion.
We’ve generated an EBITDA of 2.6 billion. There is a flat development of net operating capital. What we see here is that we have started to realize a bit of the excess inventory we built in 2018 and we will continue to deliver that improvement during the year and that offsets the normal seasonal increase that we see in Q1.
Taxes and other, negative 1.9. This, amongst others, includes a large tax payment of 1.1 billion. We have investments this quarter of 1.6 billion. We still maintain the guidance of CapEx for the year of roughly 10 billion to 10.5 billion.
And then finally on the adjusted net debt, here we see an increase of adjusted net debt of 1.4 billion and this is mainly driven by the changes in net debt that I’ve just been through and the changes in IFRS16. The increase is partly – the 3.1 billion increase we saw in net debt is partly alleviated by changes we see in what we call other adjustments where we previously have included the lease obligations. So the net effect is then much smaller, almost 1.4 billion and this is also in line with what we have guided on before.
Let me also just comment quickly on P&L impacts on IFRS16. In Q1, we have then seen as a consequence an increase in depreciation of NOK 160 million and we see an increase in finance cost of roughly 20 million and this should be a recurring item as we go through the year. Net pension liabilities decreased by 0.4 billion partly due to the strengthening of the NOK versus euro as well as increased returns on the plant assets and also somewhat lower – offsetting then lower interest rates that we see in Germany. Then we have fairly stable debt in [indiscernible] equity accounted investments and that leaves us with net adjusted debt at the end of the quarter at 30.1 billion.
The second big contributor is very strong results within the trading and hedging area of energy, again lifting the results with close to 100 million. Production somewhat up to 2.6 terawatt hours, up from 2.4 last year and that spot sales is not up to the same extent and that is because we consumed more of the power internally in the company in primary metal.
Important why we look forward and look into Q2, we see relatively low levels in Hydro’s reservoir systems both in terms of snow as well as in water and there has been relatively low inflows so far in Q2. So you should expect production to come significantly down in the second quarter compared to similar periods in 2018 and forward and also with the way we look at this today also relatively low production levels for the year as such. On the pricing scheme or pricing set so far in Q2 in NO2, prices have gone down and averaged around NOK 397 per megawatt hour.
Quickly turning to other and eliminations netted to a negative 261 this quarter compared to a positive 161 for same quarter last year. The other line mainly comprises corporate cost in addition to other elements like Sapa integration cost as well as results out of the industrial insurance area of Hydro. This quarter this was 307 million, 100 million higher than what we had last year and certainly somewhat above the guidance that we give of 175 million to 200 million per quarter, partly reflecting some cost relating to the cyber attack but also lower results in the industrial insurance company within Hydro. Also in the second quarter, we do expect the cyber cost to come in on the corporate line again giving us an elevated cost level for the quarter compared to the 175 to 200.
Turning to debt, first of all the net debt position that we reported at the end of Q4 of 8.7 billion has now been restated to reflect the implementation of the IFRS16 standard on leases. This has increased as we’ve guided the net debt with 3.1 billion up to 11.7 billion. Also this effect of net debt between the quarters have remained relatively stable at 0.4 billion.
We’ve generated an EBITDA of 2.6 billion. There is a flat development of net operating capital. What we see here is that we have started to realize a bit of the excess inventory we built in 2018 and we will continue to deliver that improvement during the year and that offsets the normal seasonal increase that we see in Q1.
Taxes and other, negative 1.9. This, amongst others, includes a large tax payment of 1.1 billion. We have investments this quarter of 1.6 billion. We still maintain the guidance of CapEx for the year of roughly 10 billion to 10.5 billion.
And then finally on the adjusted net debt, here we see an increase of adjusted net debt of 1.4 billion and this is mainly driven by the changes in net debt that I’ve just been through and the changes in IFRS16. The increase is partly – the 3.1 billion increase we saw in net debt is partly alleviated by changes we see in what we call other adjustments where we previously have included the lease obligations. So the net effect is then much smaller, almost 1.4 billion and this is also in line with what we have guided on before.
Let me also just comment quickly on P&L impacts on IFRS16. In Q1, we have then seen as a consequence an increase in depreciation of NOK 160 million and we see an increase in finance cost of roughly 20 million and this should be a recurring item as we go through the year. Net pension liabilities decreased by 0.4 billion partly due to the strengthening of the NOK versus euro as well as increased returns on the plant assets and also somewhat lower – offsetting then lower interest rates that we see in Germany. Then we have fairly stable debt in [indiscernible] equity accounted investments and that leaves us with net adjusted debt at the end of the quarter at 30.1 billion.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Then, Hilde, I will leave it up to you to summarize.
Hilde Merete Aasheim
Thank you. So then we have presented the first quarter results heavily influenced by the Brazil situation, influenced by the cyber attack and low prices. The good thing is that we are now resuming operation in Brazil and we hope that with the mitigating measures we have taken now that we will not be hit by a cyber attack as we did this year. So our focus now is what we can influence and that is very much along with the immediate measures that I talked about earlier. It’s about safe and efficient operations.
It’s to get the Brazil assets up in a safe way and to bring also – to lift embargo on the DRS2 that will be a high priority for us. Then to continue now with the strategic review of Rolled Products and then create a new momentum for an improvement drive throughout the whole company, raising the ambitions, facing the brutal factor of a situation which we need to turn into a better profitability and really focusing on cash in the short term.
That is the agenda that we will work on and I hope to see as many of you on the Investor Day on the 24th of September that we can go through more in details about the measures that we are now taking in order to improve profitability but also to drive sustainability. Thank you very much.
Question-and-Answer Session
Unidentified Company Representative
Thank you very much. Then we open for questions from the audience for Hilde or Eivind. And there’s a question in the back. Please introduce yourselves.
Eivind Sars Veddeng
Good morning. Eivind Veddeng, DNB Markets. Two questions, one on Rolled and one on B&A. You mentioned that you started restructuring in Grevenbroich. Can you elaborate on what exactly are you doing and what you expect of results financially and also on the time line? Further, bauxite and alumina, can you help us understand the ongoing discussions with authorities on DRS2? What’s keeping the embargo from being lifted? Thank you.
Hilde Merete Aasheim
So I’ll start with the Rolled Products. Well, we have started a strategic review of Rolled Products and I hope that we can come back to that on the Investor Day on the 24th of September what that means. When I mentioned the restructuring, there has already been taking a decision to take down one line related to foil production in order to take into effect the lower demand and the fierce competition in a market segment or a product segment that are more a commodity product. That is ongoing right now.
Eivind Kallevik
Then on the B&A side in terms of DRS2, I think what we’ve learned over this last year is that it is very important to get this resolution in place and to then have a – in a way a solved resolution that we can live with for some time. It is important to find a common foothold or common ground together with Ministerio Público before we go through the court system. So in the same way we worked on lifting the production embargo, we’re working on then lifting the production or the embargo on DRS2. There is good dialogue on this and good confidence between the parties, but the time it will take to get there is absolutely not certain which is why it’s important for us then to finish geotechnical studies on DRS1 to ensure that we have capacities beyond this one-year lifetime that we talk about today.
Unidentified Company Representative
Yes, in the front.
Hans-Erik Jacobsen
Hans-Erik Jacobsen, Nordea. Given reduced demand growth for aluminum and pressure we are seeing on aluminum prices, did you consider not to restart Albras?
Hilde Merete Aasheim
Albras is very closely connected to the nucleus [ph] in Brazil and it was – when we closed it down, we said that it was due to a shortage of alumina or the fact that we couldn’t storage alumina and it was obvious that we are also in the dialogue with the authorities that it was about ramping up the three plants.
Hilde Merete Aasheim
Thank you. So then we have presented the first quarter results heavily influenced by the Brazil situation, influenced by the cyber attack and low prices. The good thing is that we are now resuming operation in Brazil and we hope that with the mitigating measures we have taken now that we will not be hit by a cyber attack as we did this year. So our focus now is what we can influence and that is very much along with the immediate measures that I talked about earlier. It’s about safe and efficient operations.
It’s to get the Brazil assets up in a safe way and to bring also – to lift embargo on the DRS2 that will be a high priority for us. Then to continue now with the strategic review of Rolled Products and then create a new momentum for an improvement drive throughout the whole company, raising the ambitions, facing the brutal factor of a situation which we need to turn into a better profitability and really focusing on cash in the short term.
That is the agenda that we will work on and I hope to see as many of you on the Investor Day on the 24th of September that we can go through more in details about the measures that we are now taking in order to improve profitability but also to drive sustainability. Thank you very much.
Question-and-Answer Session
Unidentified Company Representative
Thank you very much. Then we open for questions from the audience for Hilde or Eivind. And there’s a question in the back. Please introduce yourselves.
Eivind Sars Veddeng
Good morning. Eivind Veddeng, DNB Markets. Two questions, one on Rolled and one on B&A. You mentioned that you started restructuring in Grevenbroich. Can you elaborate on what exactly are you doing and what you expect of results financially and also on the time line? Further, bauxite and alumina, can you help us understand the ongoing discussions with authorities on DRS2? What’s keeping the embargo from being lifted? Thank you.
Hilde Merete Aasheim
So I’ll start with the Rolled Products. Well, we have started a strategic review of Rolled Products and I hope that we can come back to that on the Investor Day on the 24th of September what that means. When I mentioned the restructuring, there has already been taking a decision to take down one line related to foil production in order to take into effect the lower demand and the fierce competition in a market segment or a product segment that are more a commodity product. That is ongoing right now.
Eivind Kallevik
Then on the B&A side in terms of DRS2, I think what we’ve learned over this last year is that it is very important to get this resolution in place and to then have a – in a way a solved resolution that we can live with for some time. It is important to find a common foothold or common ground together with Ministerio Público before we go through the court system. So in the same way we worked on lifting the production embargo, we’re working on then lifting the production or the embargo on DRS2. There is good dialogue on this and good confidence between the parties, but the time it will take to get there is absolutely not certain which is why it’s important for us then to finish geotechnical studies on DRS1 to ensure that we have capacities beyond this one-year lifetime that we talk about today.
Unidentified Company Representative
Yes, in the front.
Hans-Erik Jacobsen
Hans-Erik Jacobsen, Nordea. Given reduced demand growth for aluminum and pressure we are seeing on aluminum prices, did you consider not to restart Albras?
Hilde Merete Aasheim
Albras is very closely connected to the nucleus [ph] in Brazil and it was – when we closed it down, we said that it was due to a shortage of alumina or the fact that we couldn’t storage alumina and it was obvious that we are also in the dialogue with the authorities that it was about ramping up the three plants.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Hans-Erik Jacobsen
Also on the downstream activities, you’re guiding on continuous strong development for extrusions while Rolled Products seems like we are going to see further margin pressure. I understand it’s too quite different businesses, but could you understand why the margin pressure continues within one area and that continues to increase in the other area?
Eivind Kallevik
I’ll try to answer it. I think it’s a different business. When we talk about the margin pressure and the weakness that’s coming into second quarter, we in particular talk about foil and the general engineering market. While the foil market is subject to increased pressures from exports also out of China and to a certain extent Turkey put again dampening on both the demand for European produced products but also a dampening on price development. Extruded Solutions of course is much more protected against the Chinese imports due to uniqueness of the products that you produce which is one product flow, one customer, small volumes. So there is very different market dynamics and that is one of the big drivers behind it.
Hans-Erik Jacobsen
Thanks.
Morten Normann
Morten Normann, Carnegie. Two questions; one simple one for Eivind and maybe a nasty one for Hilde. What was the IFSR EBITDA effect in Q1?
Eivind Kallevik
Sorry. What?
Morten Normann
EBITDA IFSR effect in Q1?
Eivind Kallevik
IFRS16, roughly 200 million.
Morten Normann
200?
Eivind Kallevik
Yes.
Morten Normann
Okay. And then one for Hilde. You mentioned a bright future. The capital employed is very, very low. The capital intensity is very, very high. Hydro is trading at 70% of its book values. No one really understands why the aluminum price is so low despite two years with huge deficit and the cost curve has never been flatter as long as I have studied this aluminum market, about 30 years. So where do you see the brightness?
Hilde Merete Aasheim
In the metal. We believe that we have the capabilities to be the best in the industry and there’s still a lot of opportunities, Morten, to make this brighter than it is today. And I agree with you. That is why my first – on my first day stating that we have to lift the profitability, we have to lift our ambitions in order to be in the robust situation in the industry. The situation is the same in the whole industry but why shouldn’t Hydro stand out and that’s my belief that we can do that based on the capabilities we have, based on the products we have, based on the position we have. But we have to do much better.
Eivind Kallevik
If I can add just one comment. Morten, of course you’re correct. That’s from a production demand perspective we have been in a deficit for the last three years, but we still had – or the industry or the world still had ample inventory sitting around which has come in to fill that gap. What we’re seeing now and have seen for the last few years is that that inventory is coming down, it’s trailing down towards probably at the end of this year, beginning of next towards the 50 days which were viewed at least before the financial crisis as tight. And then when we get there, then let’s see what the market reacts like.
Unidentified Company Representative
Any other questions from the audience? No. Then we have questions from the webcast that Stian will present.
Stian Hasle
A question from Liam Fitzpatrick in Deutsche. Could you give some guidance on alumina and primary cash cost towards the end of 2019 when volumes normalize and current input cost are fully reflected?
Hilde Merete Aasheim
I’ll leave that to you.
Eivind Kallevik
Could you repeat it, Stian?
Stian Hasle
A question on the alumina and primary cash cost going into Q2, Q3 towards the end of this year, could you talk a bit about how they would develop?
Eivind Kallevik
Also on the downstream activities, you’re guiding on continuous strong development for extrusions while Rolled Products seems like we are going to see further margin pressure. I understand it’s too quite different businesses, but could you understand why the margin pressure continues within one area and that continues to increase in the other area?
Eivind Kallevik
I’ll try to answer it. I think it’s a different business. When we talk about the margin pressure and the weakness that’s coming into second quarter, we in particular talk about foil and the general engineering market. While the foil market is subject to increased pressures from exports also out of China and to a certain extent Turkey put again dampening on both the demand for European produced products but also a dampening on price development. Extruded Solutions of course is much more protected against the Chinese imports due to uniqueness of the products that you produce which is one product flow, one customer, small volumes. So there is very different market dynamics and that is one of the big drivers behind it.
Hans-Erik Jacobsen
Thanks.
Morten Normann
Morten Normann, Carnegie. Two questions; one simple one for Eivind and maybe a nasty one for Hilde. What was the IFSR EBITDA effect in Q1?
Eivind Kallevik
Sorry. What?
Morten Normann
EBITDA IFSR effect in Q1?
Eivind Kallevik
IFRS16, roughly 200 million.
Morten Normann
200?
Eivind Kallevik
Yes.
Morten Normann
Okay. And then one for Hilde. You mentioned a bright future. The capital employed is very, very low. The capital intensity is very, very high. Hydro is trading at 70% of its book values. No one really understands why the aluminum price is so low despite two years with huge deficit and the cost curve has never been flatter as long as I have studied this aluminum market, about 30 years. So where do you see the brightness?
Hilde Merete Aasheim
In the metal. We believe that we have the capabilities to be the best in the industry and there’s still a lot of opportunities, Morten, to make this brighter than it is today. And I agree with you. That is why my first – on my first day stating that we have to lift the profitability, we have to lift our ambitions in order to be in the robust situation in the industry. The situation is the same in the whole industry but why shouldn’t Hydro stand out and that’s my belief that we can do that based on the capabilities we have, based on the products we have, based on the position we have. But we have to do much better.
Eivind Kallevik
If I can add just one comment. Morten, of course you’re correct. That’s from a production demand perspective we have been in a deficit for the last three years, but we still had – or the industry or the world still had ample inventory sitting around which has come in to fill that gap. What we’re seeing now and have seen for the last few years is that that inventory is coming down, it’s trailing down towards probably at the end of this year, beginning of next towards the 50 days which were viewed at least before the financial crisis as tight. And then when we get there, then let’s see what the market reacts like.
Unidentified Company Representative
Any other questions from the audience? No. Then we have questions from the webcast that Stian will present.
Stian Hasle
A question from Liam Fitzpatrick in Deutsche. Could you give some guidance on alumina and primary cash cost towards the end of 2019 when volumes normalize and current input cost are fully reflected?
Hilde Merete Aasheim
I’ll leave that to you.
Eivind Kallevik
Could you repeat it, Stian?
Stian Hasle
A question on the alumina and primary cash cost going into Q2, Q3 towards the end of this year, could you talk a bit about how they would develop?
Eivind Kallevik
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Yes, when it comes to on the alumina, if you think about the alumina production cash cost, we do expect – let me start in a different way. We have roughly 15% to 20% of the cost base in Alunorte as fixed cost base. As we have said, we haven’t really taken out a lot of people in this period, keeping them around, keeping the lines warm so we can ramp up as quickly as possible when we do get production back. That cost is of course scalable, so you should see quite a bit of an effect on fixed cost per ton basis as we get towards the end of the year or when we get to 75% to 85% in a couple of months time. Then I will be careful in giving a number. We can talk more about that at the Investor Day I think when we have clarity on the ramp up speed.
Stian Hasle
Can you say something about the extension options at DRS1 and guidance on how long life could potentially be extended?
Hilde Merete Aasheim
That’s what the geotechnical assessments will give us guidance on for how we can extend the lifetime above one year. That’s a – to say exactly what that is and the timeline for that, perhaps you have more details, Eivind?
Eivind Kallevik
Well, first of all, we are conducting some of these geotechnical studies as we speak, some of them will be concluded in the near term and some will take a little bit longer time. But this is several years of deposit capacity at DRS1 when we get the approvals in place. But as Hilde said, the most important part and over the long-term viable solution is to get the embargo in DRS2 lifted.
Stian Hasle
A question from Menno Sanderse, Morgan Stanley. The biggest lever in general to earnings and cash flow is the metal price. The metal price suggests the market is materially oversupplying. What will Hydro do to help balance that market?
Hilde Merete Aasheim
Right now we are focusing on bringing Brazil back to normal that we can normalize the situation also in primary. We have good assets in primary. We are well positioned on the cost curve and at this point we have not discussed the capacity adjustment, but that we always will have to view based on the development in the market and on the price levels.
Stian Hasle
And also from Menno, what measures can Hydro take to improve cash generation?
Hilde Merete Aasheim
That’s what I’ve been talking about during this presentation that we will have – we’ll lift cash as one of the main objectives and we will implement strategic capital discipline which is about CapEx and it’s about working capital and then the improvement programs to bring them back into cash. And so that is one of our main focuses.
Stian Hasle
And a question from Daniel Major, UBS. Can you give any detail on timing, amount of the insurance claim from the cyber attack?
Eivind Kallevik
When it comes to amounts we are not allowed to talk about the amounts. It’s actually prohibited in the insurance agreement. What we have said is that we have a robust insurance in place with reputable and good insurance companies. As far as timing is concerned, to use the proper accounting phase, we will recognize this in the books when we are actually certain which means that probably a very little is going to come in Q2 and I think most likely we’ll start to see this coming into Q3 as the most realistic option.
Stian Hasle
Last question from Daniel Major. Can you give an indication of what proportion of smelters are EBITDA negative and how long would you keep EBITDA negative smelters running for?
Eivind Kallevik
I think we’re – on a portfolio basis, we’re well placed in the second quartile. So we’re quite comfortable with the portfolio of assets we have today. When it comes to shutting down smelters, it’s not something that we do on a short-term margin squeeze. That very much depends do you have a very negative outlook for an extended period of time because it cost money to take smelters down and it is costly to take them back up. So you need to do that on a long-term management decision. I think what we partly see at least on our own results in Q4 and to a certain extent in Q1 is that you see a time squeeze on raw material cost because we carry old inventories of alumina at high prices while you’ve seen a decline at the LME price at the same time. We do believe that this will normalize over time. Then it’s the question again what you believe that LME prices is going to be over time which we of course never speculate in. But there is a fundamental deficit in the market between production and demand and the inventories are coming down both reported and unreported, which should mean at some point if the world behaves normally at the end of this year, the beginning of 2020 that we will have a much more balanced situation both on cost production and when it comes to inventory situations.
Stian Hasle
Can you say something about the extension options at DRS1 and guidance on how long life could potentially be extended?
Hilde Merete Aasheim
That’s what the geotechnical assessments will give us guidance on for how we can extend the lifetime above one year. That’s a – to say exactly what that is and the timeline for that, perhaps you have more details, Eivind?
Eivind Kallevik
Well, first of all, we are conducting some of these geotechnical studies as we speak, some of them will be concluded in the near term and some will take a little bit longer time. But this is several years of deposit capacity at DRS1 when we get the approvals in place. But as Hilde said, the most important part and over the long-term viable solution is to get the embargo in DRS2 lifted.
Stian Hasle
A question from Menno Sanderse, Morgan Stanley. The biggest lever in general to earnings and cash flow is the metal price. The metal price suggests the market is materially oversupplying. What will Hydro do to help balance that market?
Hilde Merete Aasheim
Right now we are focusing on bringing Brazil back to normal that we can normalize the situation also in primary. We have good assets in primary. We are well positioned on the cost curve and at this point we have not discussed the capacity adjustment, but that we always will have to view based on the development in the market and on the price levels.
Stian Hasle
And also from Menno, what measures can Hydro take to improve cash generation?
Hilde Merete Aasheim
That’s what I’ve been talking about during this presentation that we will have – we’ll lift cash as one of the main objectives and we will implement strategic capital discipline which is about CapEx and it’s about working capital and then the improvement programs to bring them back into cash. And so that is one of our main focuses.
Stian Hasle
And a question from Daniel Major, UBS. Can you give any detail on timing, amount of the insurance claim from the cyber attack?
Eivind Kallevik
When it comes to amounts we are not allowed to talk about the amounts. It’s actually prohibited in the insurance agreement. What we have said is that we have a robust insurance in place with reputable and good insurance companies. As far as timing is concerned, to use the proper accounting phase, we will recognize this in the books when we are actually certain which means that probably a very little is going to come in Q2 and I think most likely we’ll start to see this coming into Q3 as the most realistic option.
Stian Hasle
Last question from Daniel Major. Can you give an indication of what proportion of smelters are EBITDA negative and how long would you keep EBITDA negative smelters running for?
Eivind Kallevik
I think we’re – on a portfolio basis, we’re well placed in the second quartile. So we’re quite comfortable with the portfolio of assets we have today. When it comes to shutting down smelters, it’s not something that we do on a short-term margin squeeze. That very much depends do you have a very negative outlook for an extended period of time because it cost money to take smelters down and it is costly to take them back up. So you need to do that on a long-term management decision. I think what we partly see at least on our own results in Q4 and to a certain extent in Q1 is that you see a time squeeze on raw material cost because we carry old inventories of alumina at high prices while you’ve seen a decline at the LME price at the same time. We do believe that this will normalize over time. Then it’s the question again what you believe that LME prices is going to be over time which we of course never speculate in. But there is a fundamental deficit in the market between production and demand and the inventories are coming down both reported and unreported, which should mean at some point if the world behaves normally at the end of this year, the beginning of 2020 that we will have a much more balanced situation both on cost production and when it comes to inventory situations.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Unidentified Company Representative
Okay. Thank you very much. Any other questions from Oslo? No. Then I would like to thank you all for joining us this morning and have a nice day.
Stian Hasle
Thank you.
Okay. Thank you very much. Any other questions from Oslo? No. Then I would like to thank you all for joining us this morning and have a nice day.
Stian Hasle
Thank you.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Nikko
05.06.2019 kl 21:43
2563
Ser ikke særlig lovende ut for morgedagen med NHY...
Aluprisen er ned -1,09% til 1,766.50 nå i kveld
Alcoa er ned -2.88% 21.30
https://www.investing.com/commodities/aluminum
https://finance.yahoo.com/quote/AA/
På den positive siden, så er Wall Street opp nå i kveld :-))
Aluprisen er ned -1,09% til 1,766.50 nå i kveld
Alcoa er ned -2.88% 21.30
https://www.investing.com/commodities/aluminum
https://finance.yahoo.com/quote/AA/
På den positive siden, så er Wall Street opp nå i kveld :-))
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Ja, det kan ligne på at den lille oppgangen som er igjen fra i dag tidlig blir pulverisert i morgen.
Markedet svinger fra dag til dag og er veldig vanskelig. Slik som nå så må man ta gevinsten når man har den.
Markedet svinger fra dag til dag og er veldig vanskelig. Slik som nå så må man ta gevinsten når man har den.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Ofte siste 10-15 minuttene som er retningsgivende for morgendagen.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Ja, olja er ned og Wall street er opp, og det kan kanskje redde formiddagen i morgen, men tenk om futtene er røde utover dagen i morgen. Det er ikke umulig ettersom det er flere grønne dager over there.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
halvpris
05.06.2019 kl 22:00
2511
Alcoa ned på høyt volum. Virker som shortinndeking.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
https://finance.yahoo.com/quote/HINDALCO.BO?p=HINDALCO.BO&.tsrc=fin-srch&guccounter=1&guce_referrer=aHR0cHM6Ly9maW5hbmNlLnlhaG9vLmNvbS9xdW90ZS9ISU5EQUxDTy5CTz9wPUhJTkRBTENPLkJPJi50c3JjPWZpbi1zcmNo&guce_referrer_sig=AQAAAJb_NxssPHDsWsvn83wYRDBbU3KJrdy7d_o0UNR72UpHeoRJGp_0xhq-q9Tws-z_IMJ_Fce9PKXz7_VALjMUeN4iZy_3p6nSFArXFtSz0dG3hytvxpjvHIrrdhpQ9_ogKXULAl1-LPZqauggZiLG8EvmFGsq4MCx3oQP3pWSuqIv
Bombay børsen var stengt i dag, Markets will remain closed on 5th June, 2019 on account of Id-Ul-Fitr (Ramzan Id), men begynner nok i morgen kl. 0545 håper jeg.
Bombay børsen var stengt i dag, Markets will remain closed on 5th June, 2019 on account of Id-Ul-Fitr (Ramzan Id), men begynner nok i morgen kl. 0545 håper jeg.
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare
Curt Woodworth maintained a Neutral rating on Alcoa and reduced the price target from $27 to $24.
Alcoa sleit med denne også i dag.
https://finance.yahoo.com/news/alcoa-analyst-says-alumina-oversupply-144521465.html
Alcoa sleit med denne også i dag.
https://finance.yahoo.com/news/alcoa-analyst-says-alumina-oversupply-144521465.html
Redigert 21.01.2021 kl 07:35
Du må logge inn for å svare