Hydro Annual Report 2011b

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84 FINANCIAL AND OPERATING PERFORMANCE Operational overview Operational overview Key Operational information 4) Year 2011 Year 2010 % change prior year Alumina production (kmt) 5 264 1 976 >100 % Primary aluminium production (kmt) 1 982 1 415 40 % Realized aluminium price LME (USD/mt) 5) 2 480 2 113 17 % Realized aluminium price LME (NOK/mt) 5) 13 884 12 674 10 % Realized NOK/USD exchange rate 5,60 6,00 (7) % Metal Markets sales volumes to external market (kmt) 6) 2 091 1 717 22 % Rolled Products sales volumes to external market (kmt) 929 945 (2) % Extruded Products sales volumes to external market (kmt) 536 529 1 % Power production (GWh) 9 582 8 144 18 % 4) Amounts include Hydro's proportionate share of production and prices in equity accounted investments. 5) Including the effect of strategic LME hedges (hedge accounting applied). 6) Excluding ingot trading volumes. Bauxite & Alumina Bauxite & Alumina generated total revenues of about NOK 14.5 billion in 2011. Bauxite production in Paragominas reached record levels amounting to 7.1 million mt since the acquisition date (8.2 million mt for the year). Alumina production from Alunorte amounted to 5.3 million mt (5.8 million mt for the year). Bauxite & Alumina sourced roughly 2 million mt of alumina in 2011. The business area employs around 2,900 people. Primary Metal Primary Metal generated about NOK 35 billion in total revenues in 2011. Production of electrolysis metal amounted to 2 million mt, from our plants in Australia, Brazil, Canada, Germany, Norway, Qatar and Slovakia. We delivered 2.5 million mt of casthouse products to internal and external customers, from casthouses which are integrated with our primary aluminium plants. Deliveries included about 0.9 million mt of extrusion ingot, 0.5 million mt of sheet ingot and 0.5 million mt of foundry alloys and wire rod. We also sold about 0.6 million mt of standard ingot. The business area employs around 5,100 people. Metal Markets Metal Markets generated total revenues of around NOK 49 billion in 2011. The business area employs around 700 people at plants and offices in Asia, Europe and North America. Our six remelters in Europe, two in the U.S. and one in Asia, produced approximately 600,000 mt of metal products in 2011. We sold 3.3 million mt of metal products last year, including deliveries from the casthouses integrated with our primary smelters. Of this figure, we sold approximately 2 million mt to external customers. Rolled Products Rolled Products generated total revenues of approximately NOK 21 billion in 2011. The business area has locations in 12 countries, and employs about 4,000 people. In 2011, we shipped approximately 930,000 mt of rolled products from six European plants and our plant in Malaysia. Extruded Products Extruded Products had total revenues of approximately NOK 20 billion from the sale of aluminium products in 2011. The business area employs around 9,500 people. Our network of extrusion plants, including those dedicated to building systems, delivered 536,000 mt of extruded products. About 75 percent of our total extrusion revenues came from our general extrusion and tubing businesses and 25 percent came from our building systems operations. Energy Energy generated about NOK 6.4 billion in total revenues in 2011. The business area employs around 200 people, mainly in Norway. We produced 9.6 TWh of renewable hydroelectric power, slightly above annual normal production. Production during 2011 was impacted by high precipitation during the second half of the year, resulting in a strongly improved hydrological balance at year-end.
Market developments and outlook Market statistics 1) Year 2011 Year 2010 % change prior year NOK/USD Average exchange rate 5.61 6.05 (7) % NOK/USD Balance sheet date exchange rate 5.99 5.86 2 % NOK/EUR Average exchange rate 7.79 8.01 (3) % NOK/EUR Balance sheet date exchange rate 7.75 7.81 (1) % Bauxite & Alumina: Alumina price Platts PAX FOB Australia (USD/t) 2) 375 339 11 % Global production of alumina (kmt) 90 040 81 843 10 % Global production of alumina (ex. China) (kmt) 54 129 52 478 3 % Primary Metal and Metal Markets: LME three month average (USD/mt) 2 420 2 199 10 % LME three month average (NOK/mt) 13 539 13 257 2 % Global production of primary aluminium (kmt) 45 538 41 936 9 % Global consumption of primary aluminum (kmt) 44 876 40 962 10 % Global production of primary aluminium (ex. China) (kmt) 26 385 24 969 6 % Global consumption of primary aluminum (ex. China) (kmt) 25 607 24 129 6 % Reported primary aluminium inventories (kmt) 6 942 6 338 10 % Rolled Products and Extruded Products: Consumption Rolled Products Europe (kmt) 4 477 4 268 5 % Consumption Rolled Products USA & Canada (kmt) 4 144 4 072 2 % Consumption Extruded Products Europe (kmt) 3 045 2 978 2 % Consumption Extruded Products USA & Canada (kmt) 1 289 1 362 (5) % Energy: FINANCIAL AND OPERATING PERFORMANCE Market developments and outlook Southern Norway spot price (NO2) (NOK/MWh) 360 407 (12) % Nordic system spot price (NOK/MWh) 367 426 (14) % 1) Industry statistics have been derived from analyst reports, trade associations and other public sources unless otherwise indicated. Recent information is based partly on estimates and is subject to revision as new information becomes available. As a result, differences between general market developments and actual Hydro volumes are not necessarily indicative of significant changes in market share. Amounts presented in prior reports may have been restated based on updated information. Currency rates have been derived from Norges Bank. 2) The daily Platts alumina index was established in August 2010. The average monthly CRU Australian spot price is used as a reference prior to the third quarter of 2010. Bauxite and alumina The alumina market was relatively strong in the beginning of 2011 with increased demand and production due to the ramp up of new primary aluminium capacity and start up of new alumina projects. The Platts alumina spot prices started the year at USD 372 per mt, reaching a peak in April/May, with prices over USD 400 per mt. Prices declined at the end of the year to USD 305 per mt. Spot prices ranged between 15 and 17 percent of the LME price during 2011. 3) During 2011, China continued to increase its domestic alumina production from around 29 million mt in 2010 to 34 million mt in 2011. Imports of alumina fell from 4.2 million mt in 2010 to 1.9 million mt in 2011. China imported more than 45 percent of its requirements for domestic alumina production. Bauxite imports into China increased from 30 million mt in 2010 to 45 million mt in 2011. Annualized bauxite imports into China in November 2011 reached a record level of 54 million mt. 3) Due to existing sales contracts, Hydro has limited volumes available for sale for the next few years. As a result, short-term alumina market developments have limited influence on Hydro's earnings for the period. 85
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Annual Report - 2011
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Annual Report - 2011 HyDRO’S REPO
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Aluminium market price weakens LME
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cost renewable energy production, w
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Corporate Management Board AnnuAl r
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• Secure stable production and fi
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Key financial information NOK milli
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for foundry alloys continued to be
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• Using viable energy sources •
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Share of non-Norwegian leaders Perc
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Capital employed - - upstream focus
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petitive supply of standard alumini
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Further improved bauxite and alumin
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Alumina production Million mt 7 6 5
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and Hydro - but both have also rest
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Operations Hydro’s primary alumin
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Page 39 and 40: Flat rolled products consumption We
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Page 45 and 46: Operations Hydro is a global energy
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Page 53 and 54: postponed in 2011 due to the market
Page 55 and 56: Water management Enough clean water
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Page 73 and 74: vIABIlItY perForMAnCe Auditor’s R
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Page 77 and 78: Environment Greenhouse gases gases
Page 79 and 80: Total waste vIABIlItY perForMAnCe F
Page 81 and 82: 81 FInAnCIAl AnD operAtInG perForMA
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Page 93 and 94: Items excluded from underlying EBIT
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Page 97 and 98: Financial income (expense), net Yea
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Page 108 and 109: 108 RISK REVIEW Risk factors Risk f
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Page 119 and 120: Key figures for the Hydro share Key
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Page 131 and 132: Description Developments and events
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Topic Comments References 8 Corpora
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Topic Comments References 13 Inform
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F2 FINANCIAL STATEMENTS Consolidate
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F8 FINANCIAL STATEMENTS Note 1 - Si
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F56 Financial assets, classified as
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F64 FINANCIAL STATEMENTS Financial
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F66 FINANCIAL STATEMENTS Financial
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F70 FINANCIAL STATEMENTS Note 2 - E
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F76 FINANCIAL STATEMENTS Responsibi
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F78 FINANCIAL STATEMENTS Auditor's
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PENDIX A2 Appendix A1 APPENDIX Term
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Hydro is a global supplier of alumi
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Hydro Annual Report 2011b

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