• Underlying EBIT of NOK 1 566 million for Q4, NOK 9 656 million for full-year 2015
• Proposed dividend for 2015 of NOK 1 per share
• Record high quarterly bauxite and alumina production
• Lower costs, including record low implied alumina cost
• Lower realized alumina and all-in aluminium prices, higher Nordic energy prices
• Build decision for the Karmøy technology pilot
• NOK 800 million improvements delivered across the value chain in 2015
• 2016 global primary demand growth outlook of 3-4%, global market largely balanced

  "The decision to build the Karmøy technology pilot marks an important milestone for aluminium, and our ambition to be the industry leader on technology and innovation. We are investing for the future, challenging the current boundaries of productivity and energy-efficiency," says President and CEO, Svein Richard Brandtzæg.

Underlying EBIT for Bauxite & Alumina decreased compared to third quarter primarily due to lower LME and index-linked alumina prices and higher depreciation, partly offset by higher sales volumes and positive currency effects from the weaker Brazilian Real. Production at both Paragominas and Alunorte increased, reaching record levels1) for the quarter.

"I am very pleased with the record bauxite and alumina production in Brazil, contributing to reaching another important milestone in the Bauxite & Alumina business area with the successful completion of the ‘From B to A’ improvement program," says Brandtzæg.

"Following several, successful improvement programs in our business areas, we recently raised our combined improvement ambition with an additional 2.9 billion NOK by end-2019. These efforts are vital in maintaining our industry lead," says Brandtzæg.

Underlying EBIT for Primary Metal declined in the fourth quarter due to lower realized prices and premiums. This was partly offset by a stronger US dollar and a decline in raw material costs mainly due to lower alumina costs. Sales volumes were somewhat lower mainly due to seasonality.

Underlying EBIT for Metal Markets decreased in the quarter mainly due to negative currency effects. 

Compared to the third quarter of 2015, underlying EBIT for Rolled Products declined mainly due to seasonally lower sales volumes.

In the fourth quarter, underlying EBIT for Energy increased mainly due to higher prices from the low level in the previous quarter and lower property taxes.2)

Underlying EBIT for Sapa declined compared to the third quarter mainly due to seasonally lower demand.

Operating cash flow amounted to NOK 4.3 billion for the fourth quarter, including a working capital reduction of NOK 1.7 billion. Cash used for investment activities amounted to NOK 2.1 billion. Hydro's net cash position increased during the fourth quarter by NOK 1.8 billion to NOK 5.1 billion at the end of the quarter. At the end of 2014, Hydro had a net debt position of NOK 0.1 billion, implying a positive net cash development of NOK 5.2 billion throughout the year.

By the end of 2015, Hydro's industry-leading improvement programs contributed roughly NOK 4.5 billion of annual improvements compared to 20113) including about NOK 800 million realized in 2015. For the full year, underlying EBIT improved significantly to NOK 9,656 million from NOK 5,692 million. In 2015, Bauxite & Alumina and Rolled Products achieved the best underlying EBIT since Hydro became a pure aluminium company in 2007, while Sapa underlying results doubled compared to the previous year. Negative effects from lower realized LME prices and premiums were more than offset by positive currency effects from the stronger USD and ongoing improvement efforts.

For 2015, Hydro's Board of Directors proposes to pay a dividend of NOK 1 per share, demonstrating the company's commitment to provide a stable cash return to shareholders, and taking into account the uncertain market outlook. The proposed payment represents a 101 percent payout ratio for the year reflecting Hydro's operational performance for 2015 and strong financial position.

Reported earnings before financial items and tax amounted to NOK 725 million in the fourth quarter. In addition to the factors discussed above, reported EBIT included net unrealized derivative gains and negative metal effects of negative NOK 139 million in total. Reported earnings also included charges of NOK 285 million relating to the termination of the Vækerø Park lease contract and net losses on divestments of NOK 365 million including losses of NOK 434 million related to the sale of the Slim rolling mill and gains of NOK 69 million in total related to sale of other assets. In addition, reported earnings included a net charge of NOK 53 million for Sapa (Hydro's share net of tax), including NOK 88 million relating to restructuring charges, NOK 73 million relating to unrealized derivative gains and NOK 38 million related to net foreign exchange losses.

In the previous quarter reported earnings before financial items and tax amounted to NOK 1,630 million including net unrealized derivative losses and negative metal effects of NOK 520 million in total. Reported earnings also included a charge of NOK 65 million for Sapa (Hydro's share net of tax), including NOK 48 million relating to restructuring charges.  

Net income amounted to NOK 541 million in the fourth quarter including a net foreign exchange gain of NOK 48 million mainly reflecting marginal currency fluctuations and effects for the period, as well as significantly reduced US dollar intercompany debt. In the previous quarter, net income was negative NOK 1,345 million including a net foreign exchange loss of NOK 3,205 million mainly due to unrealized currency losses on US dollar debt, in particular in Brazil, and embedded derivatives in power contracts denominated in Euro.

For the full year 2015, reported earnings before financial items and tax amounted to NOK 8,258 million including net unrealized derivative gains and negative metal effects of negative NOK 454 million in total. Reported earnings also included charges of NOK 285 million relating to the termination of the Vækerø Park lease contract and other positive effects amounting to NOK 37 million. In addition, reported earnings included a net charge of NOK 331 million for Sapa (Hydro's share net of tax), including NOK 256 million relating to restructuring charges, NOK 66 million relating to unrealized derivative losses, a net foreign exchange loss of NOK 23 million and other positive effects of NOK 14 million.

In the previous year, reported earnings before financial items and tax amounted to NOK 5,674 million including net unrealized derivative gains and positive metal effects of NOK 729 million in total. Reported earnings also included impairment charges of NOK 207 million, net charges of NOK 512 million in Sapa mainly relating to restructuring activities and impairments of fixed assets in China (Hydro's share NOK 250 million) and other items amounting to a net charge of NOK 28 million.

In 2015 net income amounted to NOK 2,333 million including a net foreign exchange loss of NOK 4,397 million. The net exchange loss in 2015 was mainly comprised of currency losses on US dollar debt in Brazil and embedded derivatives in power contracts denominated in Euro. The net foreign exchange loss also included losses on US dollar debt in Norway. In the previous year net income amounted to NOK 1,228 million including a net foreign exchange loss of NOK 3,161 million. In 2014 the net exchange loss related mainly to debt denominated in US dollars and intercompany balances denominated in Euro. In 2014 the foreign exchange loss also included unrealized losses on embedded derivatives in power contracts denominated in Euro.

Fig.

1. Since Hydro acquired Vale's aluminium business in 2011.
2. From 2015 property tax is charged to the period it becomes an unconditional payment obligation (in Norway when invoiced). This leads to periodic variations within the year without affecting the annual property tax level.
3. Except for the Primary Metal USD 300 per mt program which is compared to 2009.