Hydro's fourth quarter results affected by impairments
(Thomson Reuters ONE) -
Norsk Hydro ASA will write down the value of certain fixed assets by
approximately NOK 1.3 billion, affecting its fourth-quarter 2011 results. The
impairments are a result of a weakening in certain markets and low prices, in
combination with raw material and currency pressures. Hydro continues to
implement significant corrective measures to address the challenges in the
affected businesses.
"Over the past quarters, we have seen a worsening in some markets, especially in
southern Europe, where we have a significant exposure in our extrusion business.
In addition, the global primary aluminium industry is facing strong headwinds
from the combination of low metal prices and high cost of raw materials,
reflecting imbalances in the markets," said Hydro's President and CEO Svein
Richard Brandtzæg.
"The measures that we are implementing across the value chain will improve our
competitive position, in an industry with shorter-term challenges," Brandtzæg
said.
Kurri Kurri
The current financial situation in combination with a weak outlook implies a
reduction to the value of the assets in Hydro's Australian aluminium plant,
Kurri Kurri, by approximately NOK 1.0 billion. Hydro announced on January
18, 2012, a decision to curtail one of three potlines at Kurri Kurri, as a
response to the demanding situation and to reduce further losses. The impairment
confirms a challenging financial situation at Kurri Kurri, and the situation is
continuously being monitored.
Remaining book value of fixed assets in Kurri Kurri is NOK 1.2 billion.
Kurri Kurri is negatively influenced by a strengthened Australian dollar in
addition to the industry-wide challenges related to low metal prices and high
raw material costs. The uncertainty with regards to future power supply and cost
is further challenging the long-term viability of the plant.
Extruded Products
The European extrusion industry has been significantly affected by the Eurozone
debt crisis, while some markets outside Europe are experiencing a more balanced
development. Lower demand, especially in Southern Europe, in combination with
customer destocking and margin pressure is significantly influencing the result
of Hydro's extrusion business. At present, there are no signs of near-term
improvement in these markets.
Hydro will in the fourth quarter of 2011 write down assets within Building
Systems in Spain, Portugal and Italy by approximately NOK 230 million, which is
about half of the carrying value.
The ongoing initiatives in Building Systems, including closing down plants,
production lines and warehouses, aim to reduce the cost base by EUR 40 million
(around NOK 300 million), by the end of 2012. As a result of these restructuring
efforts, about NOK 80 million of restructuring charges will be realized in the
fourth quarter of 2011.
Other portfolio adjustments
As announced on September 16, 2011, Hydro has divested its 35 percent interest
in Alpart alumina refinery in Jamaica to UC Rusal. The transaction was closed
during fourth quarter, resulting in an after-tax gain of NOK 465 million.
The strategic importance of Hydro's solar investments has been reduced after
Hydro became a fully integrated aluminium company with the acquisition in 2011
of Brazilian Vale's aluminium business. Challenging markets with overcapacity
resulting in lower prices have led to reduced values of the solar assets. Hydro
will in the fourth quarter of 2011 write down the value of these investments by
NOK 115 million, resulting in an insignificant residual book value.
Taxes and reporting effects
None of the impairment charges referred to above will result in any
corresponding tax asset in the accounts. In addition, fourth quarter results
will include a write-down of recognized deferred tax assets in Australia, Italy
and Spain of about NOK 300 million.
All of the effects mentioned will be excluded from underlying income.
Hydro will release its fourth quarter result on February 16 at 07:00 (CET).
Investor contact
Contact: Rikard Lindqvist
Cellular: +47 41751199
E-mail: Rikard.Lindqvist(at)hydro.com
Press contact
Contact: Halvor Molland
Cellular: +47 92979797
E-mail: Halvor.Molland(at)hydro.com
*********
Certain statements included within this announcement contain forward-looking
information, including, without limitation, those relating to (a) forecasts,
projections and estimates, (b) statements of management's plans, objectives and
strategies for Hydro, such as planned expansions, investments 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, as well as (i) statements preceded by "expected", "scheduled",
"targeted", "planned", "proposed", "intended" or similar statements.
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 aluminium business;
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 of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Norsk Hydro via Thomson Reuters ONE
[HUG#1581591]
Unternehmensinformation / Kurzprofil:
Datum: 01.02.2012 - 07:01 Uhr
Sprache: Deutsch
News-ID 109731
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contact information:
Town:
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Kategorie:
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