Norsk Hydro ASA — Earnings Release 2016

Apr 27, 2016

Norsk Hydro: First quarter 2016: Higher downstream results offset by lower prices

Norsk Hydro: First quarter 2016: Higher downstream results offset by lower prices

Hydro's underlying earnings before financial items and tax declined to NOK

1,501 million in the first quarter, down from NOK 1,566 million in

the fourth quarter of 2015. The decline mainly reflected lower realized

aluminium and alumina prices, partly offset by positive currency effects, lower

raw material costs and seasonally stronger downstream results.

* Underlying EBIT of NOK 1 501 million for Q1

* Lower realized alumina and all-in aluminium prices

* Record low implied alumina and all-in primary costs

* Seasonally stronger downstream results

* BNOK 2.9 Better improvement ambition progressing according to plan

* 2016 global primary metal market largely balanced

"Downstream operations have delivered the strongest first quarter since Sapa was

established in 2013, driven by seasonally higher volumes in Rolled Products and

Sapa, as well as stronger margins on value -added extrusion products," says

President and CEO Svein Richard Brandtzæg.

Underlying EBIT for Bauxite & Alumina decreased compared to fourth quarter

mainly due to lower realized alumina prices and lower sales

volumes. The negative price development was partly offset by positive currency

effects from a weaker Brazilian Real, lower fuel prices and lower depreciation

following catch up effects on reassessment of useful life of certain assets in

2015. Production in Alunorte and Paragominas fell slightly after reaching record

production levels in the fourth quarter of 2015.

"I am happy to see our 2.9 billion Better ambition launched last year is

progressing according to plan, contributing to our first-quartile position on

the global cost curves. This is underpinned by continued high production in

Bauxite & Alumina, as well as stronger performance in our primary aluminium

joint ventures," says Brandtzæg.

Underlying EBIT for Primary Metal declined in the first quarter due to lower

realized prices, higher fixed costs and additional cost related to ICMS tax on

sales of surplus power in Brazil in the previous periods. This was partly offset

by a stronger USD, a decline in alumina costs and positive effects on premiums

in Qatalum following a negative time lag adjustment in the fourth quarter of

Underlying EBIT for Metal Markets increased somewhat in the first quarter mainly

due to positive currency effects and improved results in remelters. This

was partly offset by weaker results from sourcing and trading activities.

Adjusted for the divestment of the Slim rolling mill, sales volumes were

seasonally higher in Rolled Products in the first quarter. This together with

reduced alumina cost for the Neuss smelter, supported improved profitability

compared to the fourth quarter of 2015.  Reduced net margins partly offset the

positive effects.

Underlying EBIT for Energy increased compared to the previous quarter due to

higher production, partly offset by higher production cost. The cost

increase was mainly driven by transmission costs and property taxes.

Underlying EBIT for Sapa increased mainly due to seasonally higher demand and

stronger margins.

During the first quarter, Hydro progressed according to plan on its "Better"

improvement ambition targeting NOK 2.9 billion of annual improvements by 2019.

Operating cash flow amounted to NOK 0.1 billion for the first quarter, including

a working capital build up of NOK 1.8 billion. Net cash used for investment

activities amounted to NOK 1.3 billion. Hydro's net cash position decreased

during the first quarter by NOK 1.2 billion to NOK 3.9 billion at the end of

the quarter.

Reported earnings before financial items and tax amounted to NOK 1,693 million

in the first quarter. In addition to the factors discussed above, reported EBIT

included net unrealized derivative gains of NOK 224 million and negative metal

effects of NOK 43 million. Reported earnings also included a negative adjustment

of NOK 15 million related to the sale of the Slim rolling mill in the fourth

quarter of 2015. In addition, reported earnings included a net gain of NOK 26

million for Sapa (Hydro's share net of tax), mainly relating to unrealized

derivative gains.

In the previous quarter reported earnings before financial items and tax

amounted to NOK 725 million including net unrealized derivative gains and

negative metal effects of negative NOK 139 million in total. Reported earnings

also included charges of NOK 285 million relating to the termination of the

Vækerø Park lease contract (head-office building) and net losses on divestments

of NOK 365 million including losses of NOK 434 million related to the sale of

the Slim rolling mill and gains of NOK 69 million in total related to sale of

other assets. In addition, reported earnings included a net charge of NOK 53

million for Sapa (Hydro's share net of tax), including NOK 88 million relating

to restructuring charges, NOK 73 million relating to unrealized derivative gains

and NOK 38 million related to net foreign exchange losses.

Net income amounted to NOK 2,382 million in the first quarter including a

reduction in tax expense and related interest income of NOK 700 million in total

following settlement of a tax case in April 2016. See note 4 to the interim

financial statements in Hydro's first quarter report for further information.

Net income also included a net foreign exchange gain of NOK 1,032 million

mainly reflecting the strengthening BRL versus US dollars affecting US dollar

liabilities in Brazil, as well as the strengthening Norwegian kroner versus Euro

affecting liabilities in Euro in Norway and embedded currency derivatives in

power contracts. In the previous quarter net income was NOK 541 million

including a net foreign exchange gain of NOK 48 million mainly reflecting

marginal currency fluctuations and effects for the period, as well as

significantly reduced US dollar intercompany debt.

Key financial

information

%change

NOK million, First Fourth %change First prior

except per quarter quarter prior quarter year Year

share data 2016 2015 quarter 2015 quarter 2015

-------------------------------------------------------------------------------

Revenue 20 138 20 374 (1) % 23 290 (14) % 87 694

Earnings before

financial items

and tax (EBIT) 1 693 725 >100 % 3 206 (47) % 8 258

Items excluded

from underlying

EBIT (192) 841 >(100) % 2 >(100) % 1 398

-------------------------------------------------------------------------------

Underlying EBIT 1 501 1 566 (4) % 3 208 (53) % 9 656

-------------------------------------------------------------------------------

Underlying EBIT

:

Bauxite &

Alumina 189 532 (64) % 780 (76) % 2 421

Primary Metal 318 407 (22) % 2 012 (84) % 4 628

Metal Markets 167 152 10 % 24 >100 % 379

Rolled Products 248 204 22 % 292 (15) % 1 142

Energy 398 353 13 % 382 4 % 1 105

Other and

eliminations 181 (83) >100 % (281) >100 % (19)

-------------------------------------------------------------------------------

Underlying EBIT 1 501 1 566 (4) % 3 208 (53) % 9 656

-------------------------------------------------------------------------------

Underlying

EBITDA 2 716 2 969 (9) % 4 437 (39) % 14 680

-------------------------------------------------------------------------------

Net income

(loss) 2 382 541 >100 % 1 072 >100 % 2 333

-------------------------------------------------------------------------------

Underlying net

income (loss) 822 1 296 (37) % 2 206 (63) % 6 709

-------------------------------------------------------------------------------

Earnings per

share 1.12 0.23 >100 % 0.46 >100 % 0.99

Underlying

earnings per

share 0.39 0.59 (34) % 0.95 (59) % 2.98

-------------------------------------------------------------------------------

Financial data:

-------------------------------------------------------------------------------

Investments 1 970 2 556 (23) % 802 >100 % 5 865

Adjusted net

interest-

bearing debt (9 206) (8 173) (13) % (13 478) 32 % (8 173)

-------------------------------------------------------------------------------

Key Operational

information

-------------------------------------------------------------------------------

Bauxite

production

(kmt) 2 682 2 959 (9) % 2 135 26 % 10 060

Alumina

production

(kmt) 1 517 1 577 (4) % 1 451 5 % 5 962

Primary

aluminium

production

(kmt) 514 521 (1) % 497 4 % 2 046

Realized

aluminium price

LME (USD/mt) 1 497 1 555 (4) % 1 897 (21) % 1 737

Realized

aluminium price

LME (NOK/mt) 12 950 13 125 (1) % 14 383 (10) % 13 813

Realized

USD/NOK

exchange rate 8.65 8.44 3 % 7.58 14 % 7.95

Rolled Products

sales volumes

to external

market (kmt) 229 229   - 227 1 % 948

Sapa sales

volumes (kmt) 174 156 12 % 177 (1) % 682

Power

production

(GWh) 3 160 2 882 10 % 3 071 3 % 10 894

-------------------------------------------------------------------------------

Investor contact

Contact Pål Kildemo

Cellular +47 97096711

E-mail Pal.Kildemo@hydro.com

Press contact

Contact Halvor Molland

Cellular +47 92979797

E-mail Halvor.Molland@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, startup 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 to the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.

[HUG#2007006]