Looking for a specific product?

Make a search for products & suppliers, articles & news.

Hydro's fourth quarter results affected by impairments

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).

Associated companies:


Related news

Latest news

New barge to Målsøval Fiskeoppdrett

Akva Master 320 Classic is a modern feed barge optimized for efficient operations.

Supply chain management survey indicates greater pressure on companies to demonstrate sustainability

Companies are struggling to take efficient action across their supply chains, while facing increased demands from stakeholders.

From stamp to screen: DNV GL issues over 50,000 electronic certificates

Since the launch in mid-October 2017, DNV GL has issued approximately 50,000 certificates, 

THERMO-TRANSIT FURTHER STRENGTHENS THE COMPANYS GROWTH

THERMO-TRANSIT FURTHER STRENGTHENS THE COMPANYS GROWTH BY APPOINTING JESPER HANSEN AS CHAIRMAN AND JAKOB HOLM AS CEO.

New Zealand Navy turns to Vestdavit for hands-on experience

Since 2000, Vestdavit has supplied 14 davits for seven NZ Navy vessels.

DNV GL and AEP Ohio win Energy Award for helping new energy efficient technology in ultra-low temperature freezers reach the market

Stirling ultra-low temperature freezers now ENERGY STAR certified

New 4K Displays Enable Cutting-Edge Multi-Data Fishing Vessel Bridge Solution from Furuno Norway

Newbuild Danish trawler 'Gitte Henning' first to benefit from large-format, ultra high definition bridge display innovation.

New DNV GL class notations aim to improve stern tube bearing performance

In the “Shaft align” class notations and the revised main class requirements for single stern tube bearing installations,

DNV GL provides due diligence to institutional lenders for investment in 659 MW Walney offshore wind project

Through DNV GL’s technical assessment to the group of lenders,