The second quarter result is strongly impacted by foreign currency effects and includes gains, primarily in connection with loans and financial derivatives, of NOK 2,471 million.

Operating income was NOK 5,077 million, compared with NOK 6,065 million in the same period last year. Hydro’s operating revenues for the second quarter amounted to NOK 44,702 million, compared with NOK 40,951 million last year.

Net income for the first half-year was NOK 4.972 million, or NOK 19.30 per share. Net income for the first half last year was NOK 5,415 million, or NOK 20.90 per share.

Earnings in all business areas were negatively impacted by a weaker US dollar and a stronger Norwegian krone. The effect of the weaker US dollar was particularly noticeable towards the end of the second quarter. The US dollar weakened by 17 percent over the first half-year and by 15 percent in the second quarter alone. An unchanged exchange rate will negatively affect future earnings from operating activities.

Strong financial position

"I consider these results satisfactory given current market conditions. It is pleasing to report that internal improvement processes have brought results in the form of lower costs, and that our financial position is still strong at a time of continued uncertainty regarding global economic developments," says President and CEO Eivind Reiten.

"Our aluminium operation has successfully completed the integration of the acquired companies VAW and Technal. There has been considerable growth in oil and gas production, but it is disappointing that exploration has not increased our resources in any substantial way.

"Our results to come will be negatively influenced by recent foreign exchange movements, and I do not envisage that current market conditions will improve substantially. This underlines the necessity for us to continue placing considerable emphasis on Hydro’s improvement processes and strengthening our market positions."

Record high production of oil and gas

Hydro has in the second quarter achieved a record high production of oil and gas. The increase is largely due to new fields coming on stream and to the acquisition of former SDFI (State Direct Financial Interest) assets on Norwegian fields. Exploration costs amounting to NOK 936 million have been charged to the accounts for the second quarter, compared with NOK 365 million in the same period of the prior year.

Second quarter 2002 results for Hydro Aluminium include the VAW and Technal operations, both of which were acquired by Hydro in the course of the first quarter. The increased activity resulting from these acquisitions has contributed to the improved results for this business area. Lower aluminium prices, especially when expressed in Norwegian kroner, have weakened the result.

The result for Hydro Agri, when adjusted for non-recurring effects, declined in both the second quarter and the first half compared to the corresponding periods in 2001, due particularly to low ammonia and urea prices.

Results for the first half of 2002 include a NOK 6,848 accrual for income tax expense. This represents approximately 58 percent of income before taxes and minority interest. During the first half of 2001, income tax expense represented approximately 60 percent of income before taxes and minority interest.