Norsk Hydro ASA has announced its first-quarter results of 2020, mentioning the growth of underlying EBIT from NOK 559 million during the same period last year to NOK 2,247 million. The successful ramp up of production at the Alunorte refinery, reduced costs, and positive currency effects are believed to have contributed positively to the first-quarter results. But these positive effects were partly offset by lower realised alumina and aluminium prices.
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Separately for bauxite and alumina, Hydro’s underlying EBIT in Q1 2020 came in at NOK 535 million, up from NOK 153 million, attributing to increased production following the lifting of production embargo last year and lower raw material costs.
Underlying EBIT for primary aluminium improved from negative NOK 771 million in Q1 2019 to NOK 573 million in Q1 2020, while that for rolled products and extruded solutions increased from NOK 138 million to NOK 299 million and from NOK 593 million to NOK 702 million, respectively. Hydro’s 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.
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, of which NOK 1.3 billion was used to investment activities, excluding short term investments. The total cash and cash equivalents in hand were NOK 12.2 billion at the end of Q1 2020.
The Covid-19 impacts, which resulted in reduced sales volumes and temporary plant shut-downs towards the end of the quarter, have had similar negative effects as the Cyber-attack had in the first quarter of 2019.
Hydro’s President and CEO Hilde Merete Aasheim said, “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.”
She also said, “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.”
The immediate actions taken by Hydro in line with COVID19 containment include temporary production curtailments and employee layoffs, deferring resumption of Husnes aluminium plant, cost cuts and cost discipline across the company, freezing 25 per cent of remaining 2020 capex, and board resolution to amend dividend.
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