• Underlying EBIT of NOK 3 147 million
• Alunorte producing at 50% as of March 1, negotiations ongoing with Brazilian authorities 
• Higher realized all-in aluminium and alumina prices, partly offset by increased raw material costs
• Strong result in Extruded Solutions
• Better improvement program hit by Brazil situation, not expected to reach 2018 target
• Karmøy Technology Pilot ramping up during first half 2018 
• 2018 global primary demand growth outlook of 4-5%, market moving towards deficit – increased market uncertainty following US tariffs, Rusal sanctions and Brazil situation

"We maintain the view of a global primary demand outlook of 4-5%, expecting the market moving towards a deficit for primary aluminium in 2018," says President and CEO Svein Richard Brandtzæg.

"The US sanctions on Rusal have caused great uncertainty in the world’s aluminium markets and will impact trade flows and availability of metal and raw materials throughout the aluminium value chain. The Brazilian authorities’ embargo on Alunorte adds to the uncertainty in the aluminum industry and has led to 50 percent curtailment of Albras primary plant and 50 percent production at the Paragominas bauxite mine," Brandtzæg adds. 

The 50 percent production restriction at Alunorte and subsequent reduction of production at Paragominas during March had a negative impact on the results for Bauxite & Alumina in the first quarter. Underlying EBIT was similar to the first quarter of last year. The results were driven by higher realized alumina sales prices offset by higher raw material prices and reduced output at both plants. 

Underlying EBIT for Primary Metal declined compared to the first quarter of last year due to higher raw material costs, partly offset by higher all-in metal prices

"The Karmøy Technology Pilot is ramping up production. We’re excited to see the world's most climate and energy efficient technology being realized, and we will continue the ramp-up during the first half of the year," says Brandtzæg. 

Underlying EBIT for Metal Markets increased compared to the first quarter of last year. The increase was due to higher sales volumes and margins from the remelters, higher results from sourcing and trading activities, as well as positive inventory valuation effects.

Underlying EBIT for Rolled Products increased compared to the first quarter of 2017. Increasing margins and improved production performance were partly offset by negative currency effects. Results from the Neuss smelter increased mainly due to positive effects from new power contracts, including an internal contract with Energy. 

Underlying EBIT for Extruded Solutions increased compared to the pro forma underlying EBIT in the first quarter 2017, driven by improved sales volumes and margins.

"For Hydro the priority is to continue a value-creating integration of the Extruded Solutions business area. We see the business area continuing its strong track-record for improvements, delivering value-added solutions to customers all over the world", says Brandtzæg. 

Underlying EBIT for Energy decreased compared to the same quarter last year. The decrease was mainly due to lower production and the negative effects from the repricing of an internal power contract with the Neuss smelter. These negative effects were partly offset by higher sales prices. First quarter production was reduced due to a planned maintenance outage at one of the power plants. 

Due to the situation in Brazil, Hydro's "Better" improvement program is not expected to reach the 2018 target of NOK 500 million. 

Hydro's net debt position improved from NOK 4.1 billion to NOK 3.6 billion at the end of the quarter. Net cash provided by operating activities amounted to NOK 2.0 billion. Net cash used in investment activities, excluding short term investments, amounted to NOK 1.5 billion.

In addition to the factors discussed above, reported earnings before financial items and tax (EBIT) and net income include effects that are disclosed in the below table. Items excluded from underlying EBIT and underlying net income (loss) are defined and described as part of the APM section in the quarterly report.

Cautionary note 
Certain statements included in this announcement contain forward-looking information, including, without limitation, information relating to (a) forecasts, projections and estimates, (b) statements of Hydro management concerning plans, objectives and strategies, such as planned expansions, investments, divestments, curtailments or other projects, (c) targeted production volumes and costs, capacities or rates, start-up costs, cost reductions and profit objectives, (d) various expectations about future developments in Hydro’s markets, particularly prices, supply and demand and competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, and (i) qualified statements such as “expected”, “scheduled”, “targeted”, “planned”, “proposed”, “intended” or similar. 

Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. Factors that could cause these differences include, but are not limited to: our continued ability to reposition and restructure our upstream and downstream businesses; changes in availability and cost of energy and raw materials; global supply and demand for aluminium and aluminium products; world economic growth, including rates of inflation and industrial production; changes in the relative value of currencies and the value of commodity contracts; trends in Hydro’s key markets and competition; and legislative, regulatory and political factors.