Hydro: Upstream results weak, downstream and energy activities improve

Hydro had an underlying loss before financial items and tax of NOK 651 million in the fourth quarter of 2009, compared with a loss of NOK 793 million in the previous quarter, firming slightly on higher realized aluminium prices. Hydro reached a major milestone in December with the start-up of the first cell at Qatalum, and production from all 704 cells at the world-leading aluminium plant in Qatar is expected by fourth quarter 2010.

"The fourth quarter was marked by the on-time start-up of Qatalum, one of the world's most cost-effective smelters, as a solid example of Hydro's exceptional project management skills. We have seen global aluminium markets gradually improving since reaching bottom early last year, and we expect modest growth in demand in the first half of 2010. Still, the market situation continues to be demanding, and we remain cautious in our outlook for 2010," President and Chief Executive Officer Svein Richard Brandtzæg said. Despite solid corrective measures throughout 2009, Hydro's results remain weak, calling for continuous focus on operational performance and cost control. "Our upstream cost position is too high. We have therefore launched new measures to improve operational performance at our smelters, and we will continue to adapt our organisation and operations to the changing market conditions," Brandtzæg added. Hydro completed the sales of Automotive Structures and the Inasa rolling mill in Spain in the fourth quarter. Reported results for the quarter included an after tax loss of roughly NOK 400 million relating to these transactions.

Higher realized aluminium prices contributed to an improvement in underlying results for Hydro's upstream activities in the fourth quarter. The positive effect of higher aluminium prices were offset by negative developments within the alumina business. Weak operating results for Hydro's sourcing and trading activities also had a negative impact on quarterly underlying results. Excluding increased losses for Automotive Structures, which was divested at the end of the year, underlying results for Rolled Products and remaining Extruded Products continued to improve in a normally seasonally weaker quarter. Overall demand for aluminium products was relatively stable, with seasonal declines partly offset by inventory restocking by custome