Per share the income was NOK 8.70, compared with NOK 7.00 in the second quarter of 2003.

Hydro’s agri business was transferred to Yara International ASA in a demerger transaction completed on 24 March 2004. The figures in this article relate to the continuing operations.
 
For the first half of 2004, Hydro’s income from continuing operations was NOK 5,359 million, compared with NOK 3,379 million in the first half of 2003.

Best half-year results in Hydro's history

"The second quarter marks another period with strong results for Hydro, both in terms of financial as well as operational performance. The results were influenced by high oil prices and improved aluminium markets and it is encouraging that both our main businesses delivered solid operational performance. Oil & Energy reported a significant increase in oil and gas production from the same period last year while Aluminium demonstrates continued progress," says President and CEO Eivind Reiten.

"Hydro’s financial results in the first six months of 2004 represent the best half-year results in our history. Our financial position remains robust and the organization is geared toward reaching ambitious targets and continuing to deliver value to our shareholders," Eivind Reiten says.

Operating income for the second quarter of 2004 amounted to NOK 8,290 million compared with NOK 3,989 million in the second quarter of 2003. Both Oil & Energy and Aluminium delivered strong results for the quarter. Operating income for the first half of 2004 was NOK 17,566 million compared to NOK 9,971 million in the first half of 2003.

Oil & Energy: Increased production

The improved earnings in Oil & Energy were mainly due to increased production, continued high oil prices and good cost control. The average realized oil price was USD 34.7 per barrel in the second quarter of 2004, compared to USD 25.5 in second quarter 2003. Measured in NOK, the oil price was 33 percent above the corresponding period last year.
 
Oil and gas production in the second quarter averaged 569,000 barrels of oil equivalents (boe) per day, compared to 484,000 boe per day in the second quarter of 2003. For the first half of 2004, production averaged 592,000 boe per day, an increase of 14 percent compared to the first half of 2003. The increase was mainly due to new fields coming on stream during the second half of 2003.

Aluminium: Positive market conditions

Aluminium operations benefited from positive market conditions. Higher aluminium prices, higher volumes and the effects of improvement programs contributed to improved results.

Hydro’s realized price for aluminium increased from USD 1,417 per tonne in the second quarter of 2003, to USD 1,657 per tonne in the second quarter of 2004. Measured in NOK, the realized aluminium price improved by approximately 13 percent. Downstream activities benefited from increased demand, leading to higher volumes both from new capacity and improved capacity utilization. Margins were under pressure mainly due to increased metal costs. However, converted into NOK, margins improved slightly.

Higher cash flow

Cash flow from operations in the first half of 2004 was NOK 12.2 billion compared to NOK 11.3 billion in the first half of 2003.

Investments in the second quarter of 2004 amounted to NOK 3.9 billion. Around half of the amount invested related to oil and gas operations.

The provision for current and deferred taxes in the first half of 2004 was NOK 11,391 million, approximately 68 percent of pre-tax income.

Outlook for the coming months

Oil prices are expected to remain at a high level for the coming months due to continued strong global demand, capacity constraints and low stocks. Hydro’s production of oil and gas during the second half of 2004 is expected to decline as a result of maintenance shutdowns and seasonal fluctuations in gas volumes. Oil and gas production on the Norwegian Continental Shelf (NSC) may also be impacted if the current labor dispute relating to floating rigs continues for an extended period.

For Aluminium, the first half of 2004 was characterized by high volumes and increasing aluminium prices. The growth in aluminium shipments is expected to gradually level off as consumer inventories are filled. The downstream activity has experienced margin pressure in local currencies during the first half of the year, which is expected to continue in the second half.