• Underlying EBIT of NOK 2,247 million
• Positive effect from lower costs, currency and volume
• Negative effect from lower realized aluminium and alumina prices
• Significant market uncertainty and sharp drop in demand expected in 2020 amid Covid-19
• Mitigating actions for safe operations, supporting communities and safeguarding liquidity
• 2023 improvement target unchanged, 2020 estimated behind full year target due to Covid-19 demand decline – cost initiatives and Alunorte ramp-up ahead of plan

“The Covid-19 situation is challenging the global economy, causing significant uncertainty for Hydro's operations and business areas. Our top priority is the health and safety of our people and the communities where we operate,” says President and CEO Hilde Merete Aasheim.

“Amid significant market uncertainty, it is more important than ever to focus on the elements that we control ourselves. Hydro’s improvement efforts are moving forward with full force, and I am pleased to see Alunorte ramp-up and cost improvements ahead of plan,” Aasheim says.

"We have implemented forceful mitigating actions to adapt to the Covid-19 situation and will continuously evaluate further measures as the situation develops,” Aasheim says.

Current mitigating actions include:

• Temporarily curtailments and temporary layoffs
• Postponed Husnes aluminium plant restart
• Cost cuts and cost discipline across the company
• Freeze of 25% of remaining 2020 capex
• Board resolution to amend dividend
• proposal of NOK 1.25 per share and instead propose that Board is authorized to resolve distribution of dividend at later stage if conditions allow for it

Underlying EBIT for Bauxite & Alumina increased compared to the first quarter of last year, from NOK 153 million in Q1 2019 to NOK 535 million in Q1 2020. The results were driven by positive effects from increased production following the lifting of the production embargo on May 20, 2019, lower raw material costs and positive currency effects, partly offset by lower alumina sales prices.

Underlying EBIT for Primary Metal improved from negative NOK 771 million in Q1 2019 to NOK 573 million in the Q1 2020, mainly due to lower raw material cost and positive currency effects, partly offset by lower all-in metal prices.

Underlying EBIT for Metal Markets improved from NOK 190 million Q1 2019 to NOK 261 million in Q1 2020, due to positive currency effects, partly offset by lower results from the remelters and the sourcing and trading activities.

Underlying EBIT increased for Rolled Products, from NOK 138 million in Q1 2019 to NOK 299 million in Q1 2020. The result from the rolling mills was stable as reduced sales volumes, margins and higher deprecation were offset by reduced costs. The Neuss smelter benefited from lower raw material costs.

Underlying EBIT for Extruded Solutions increased compared to the same quarter last year, from NOK 593 million in Q1 2019 to NOK 702 million in Q1 2020. The Covid-19 situation, which reduced sales volumes and caused temporarily plant shut-downs towards the end of the quarter has had similar negative effects as the Cyber-attack had on the first quarter of 2019. Results were positively impacted by insurance compensation of NOK 113 million related to the cyber-attack in 2019. The negative effects of declining markets have been offset by reduced costs, increased margins and positive currency effects.

Underlying EBIT in Energy decreased compared to the same quarter in the previous year, from NOK 517 million in Q1 2019 to NOK 437 million in Q1 2020. The decrease was mainly due to significantly lower prices, partly offset mainly by higher production and strong commercial results.

Hydro's net debt position increased from NOK 11.8 billion to NOK 15.2 billion at the end of the quarter. Net cash provided by operating activities amounted to NOK 1.4 billion. Net cash used in investment activities, excluding short term investments, amounted to NOK 1.3 billion.

Hydro held NOK 12.2 billion in cash and cash equivalents, and NOK 0.8 billion short-term deposits, classified as short-term investments, at the end of the first quarter. The revolving credit facility of USD 1.6 billion was fully available at the end of the quarter.

Hydro's reported EBIT amounted to NOK 2,301 million in Q1 2020, compared to NOK 20 million in Q1 2019. 

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 attached quarterly report. Items excluded from underlying EBIT and underlying net income (loss) are defined and described as part of the alternative performance measures (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.

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.

This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act.