Norwegian aluminium giant Norsk Hydro ASA released results for the third quarter of 2019 yesterday. Financials were down overall due to a drop in aluminum and alumina prices, but higher upstream production and lower raw material costs helped to temper those downward pulls on profitability in the quarter.
In the just-ended quarter Hydro reported a net loss of NOK1,390 million, reversing last year’s third-quarter net profit of NOK925 million and deeper than the prior quarter’s net loss of NOK190 million. Underlying net income in the quarter came to NOK606 million, off by 64 percent on the year from last year’s total of NOK1,696 million, but an improvement over the second quarter’s underlying net income of NOK281 million.
Hydro reported an underlying EBIT of NOK1,366 million, off by 49 percent on the year from last year’s underlying EBIT of NOK2,676 million. Underlying EBIT for Bauxite & Alumina fell from NOK685 million last year to NOK481 million in the just-ended quarter, largely due to a drop in realized alumina sales prices. However, a resumption of operations at Alunorte helped to stem the losses suffered by Bauxite & Alumina.
“A milestone was reached in September, when the final embargoes on Alunorte were lifted, allowing us to resume installation and commissioning activities at the new and modern bauxite residue deposit area, DRS2,” elaborated Hydro President and CEO Hilde Merete Aasheim. “Ramp-up is proceeding successfully, and we expect to reach 85-95 percent capacity utilization in 2020. Full capacity is expected from 2021.”
Underlying EBIT for Primary Metal fell to a loss of NOK39 million in the quarter, while Underlying EBIT for Metal Markets returned to the black with a total of NOK362 million. Underlying EBIT for Rolled Products rose on the quarter to NOK166 million, roughly doubling last quarter’s total, and Underlying EBIT for Extruded Solutions increased on the quarter to NOK559 million. Underlying EBIT for Energy suffered last quarter, falling to NOK254 million from the second quarter, when it was NOK652 million.
“It is encouraging to see costs coming down in our upstream business, combined with forceful restructuring and optimization measures downstream,” noted Aasheim. “Amid challenging markets, it is more important than ever to focus our efforts on what we control ourselves. I am therefore pleased to report progress on our new and ambitious improvement programs, which is an important enabler for our profitability and sustainability agenda.”
Norsk Hydro, which was founded in 1905, financed by the Swedish Wallenberg family and French banks, began its life named Norsk hydro-elektrisk Kvælstofaktieselskab (literally, “Norwegian hydro-electric nitrogen limited”) by Sam Eyde. The Norwegian government owns approximately 40% of the company at the present time. Norsk Hydro is one of the largest aluminium companies in the world, with plants in Rjukan, Raufoss, Vennesla, Karmøy, Høyanger, Årdal, Sunndalsøra, and Holmestrand. Norsk also has several plants abroad, including in Germany and Brazil.