Hydro is intensifying efforts to improve its competitive position by
launching new cost-reduction measures, following a year of demanding
markets and decisive corrective actions. Hydro's improvement efforts
have resulted in positive downstream earnings, while upstream
activities remain challenged by the weak aluminium market and a
strong Norwegian krone.
"Hydro has reacted swiftly to the ongoing crisis by implementing a
string of firm and efficient actions, which have improved our
position considerably. But the weak demand for aluminium and
aluminium products, combined with the strong Norwegian currency, call
for even tougher measures to cut costs throughout the company and
improve the upstream cost position," says Hydro CEO Svein Richard
Brandtz�g.
The Norwegian-based aluminium and energy company remains optimistic
about the long-term prospects for aluminium, as the light-weight and
endlessly recyclable metal is seen as a crucial part of the solution
to the world's climate challenges. In product application, aluminium
makes cars lighter and buildings more energy-efficient, paving the
way for business opportunities across Hydro's value chain.
"Our long-term view on aluminium is encouraging. Aluminium will play
an increasingly important role in an energy-constrained world.
Hydro's technological edge and leading metallurgical competence
provide a solid platform to take advantage of promising upstream and
downstream growth opportunities," Brandtz�g says.
Hydro's Capital Markets Day includes the following highlights:
* Hydro is launching a new cost-improvement program to reduce cash
operating costs by USD 100 per tonne primary aluminium in 2012
compared to the 2009 level. 90 percent of the improvement is
expected to be realized by end-2011. The improvement excludes
Qatalum and impact of raw material prices.
* Qatalum remains on target for start-up at the turn of the year
09/10 and will reach full production during fourth quarter 2010.
The earnings contribution from Qatalum is expected to be somewhat
negative in 2010 at the current aluminium price and affected by
build-up costs and full depreciation.
* Hydro has entered into an agreement to divest its Spanish 30,000
tonnes rolling mill Inasa in a cash-neutral transaction.
* Total capital expenditures in 2010 are expected to be NOK 5.3
billion, down from NOK 10.2 billion in 2009. This includes
project-financed investments in Qatalum of NOK 4.2 billion in
2009. Sustaining capital expenditures are being further reduced
from about NOK 3.0 billion in 2009 to about NOK 2.5-3.0 billion
in 2010.
* Hydro prioritizes highly the maintenance of an investment grade
credit rating. At the end of third quarter, Hydro had a net cash
position of NOK 2.4 billion mainly supported by significant
operating capital reductions during the first nine months.
* The current market imbalance for primary aluminium in the world
outside China is expected to continue into 2010, but at a lower
level. Hydro is well prepared to capture business opportunities
should markets change significantly.
* Long-term prospects for aluminium remain encouraging, supported
by high aluminium consumption in urbanization and infrastructure
development, aluminium as part of the solution to the climate
challenge and aluminium recyclability qualities. Aluminium semis
consumption is expected to average 6.5 percent the next 10 years,
led by the transportation and construction sectors.
Hydro's Capital Markets Day presentation material is available on
www.hydro.com.
Investor contact
Contact Stefan Solberg
Telephone +47 22539280
Cellular +47 91727528
E-mail Stefan.Solberg@hydro.com
Press contact
Contact Halvor Molland
Telephone +47 22532421
Cellular +47 92979797
E-mail Halvor.Molland@hydro.com
*********
Certain statements included within this announcement contain
forward-looking information, including, without limitation, those
relating to (a) forecasts, projections and estimates, (b) statements
of management's plans, objectives and strategies for Hydro, such as
planned expansions, investments or other projects, (c) targeted
production volumes and costs, capacities or rates, start-up costs,
cost reductions and profit objectives, (d) various expectations about
future developments in Hydro's markets, particularly prices, supply
and demand and competition, (e) results of operations, (f) margins,
(g) growth rates, (h) risk management, as well as (i) statements
preceded by "expected", "scheduled", "targeted", "planned",
"proposed", "intended" or similar statements.
Although we believe that the expectations reflected in such
forward-looking statements are reasonable, these forward-looking
statements are based on a number of assumptions and forecasts that,
by their nature, involve risk and uncertainty. Various factors could
cause our actual results to differ materially from those projected in
a forward-looking statement or affect the extent to which a
particular projection is realized. Factors that could cause these
differences include, but are not limited to: our continued ability to
reposition and restructure our upstream and downstream aluminium
business; changes in availability and cost of energy and raw
materials; global supply and demand for aluminium and aluminium
products; world economic growth, including rates of inflation and
industrial production; changes in the relative value of currencies
and the value of commodity contracts; trends in Hydro's key markets
and competition; and legislative, regulatory and political factors.
No assurance can be given that such expectations will prove to have
been correct. Hydro disclaims any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
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