Hydro Annual Report 2011b

FINANCIAL AND OPERATING PERFORMANCE
Rolled Products
Volumes declined somewhat in total, reflecting weaker markets in the second half of 2011. General engineering volumes
declined significantly, impacted mainly by destocking as well as somewhat lower industrial demand. Shipments of thin gauge
foil and lithography applications were also dampened by weaker markets. Sales of beverage can applications developed
positively, supported by good market demand. Automotive products shipment demonstrated solid growth, influenced by
strong demand for premium cars.
Margins improved in the first half of 2011, but were under pressure during the second half, mainly related to general
engineering applications. For the year in total margins, were higher than in 2010. However, the positive effects were more than
offset by currency losses on export sales. 1)
Operating costs were higher in absolute terms and also per mt driven by higher energy prices and other production related
costs.
1) Rolled Products incurs currency gains and losses on export sales from its Euro based operations mainly denominated in US dollars. These gains and
losses impact the value of the margin contribution to underlying EBIT. Offsetting gains and losses on internal hedges are reported as financial items.
Extruded Products
Operational and financial information
Year
2011
Year
2010
% change
prior year
Underlying EBIT (NOK million) 151 444 (66) %
Underlying EBITDA (NOK million) 655 987 (34) %
Sales volumes to external market (kmt) 536 529 1 %
Sales volumes to external markets (kmt) ­ sectors
Extrusion Eurasia 303 293 3 %
Building Systems 64 73 (12) %
Extrusion Americas 101 95 5 %
Precision Tubing 69 67 3 %
Extruded Products 536 529 1 %
Extrusion sales volume per market segment 2011 Extrusion Extrusion Building Precision
Volumes to external market (kmt) Eurasia Americas Systems Tubing
Domestic & office equipment 19 9 ­ ­
Building & construction 110 31 64 ­
General Engineering 27 8 ­ ­
Electrical 17 14 ­ ­
Transport 55 23 ­ 59
Other 74 15 ­ 10
Total 303 101 64 69
Underlying EBIT declined substantially in 2011, mainly as a result of lower volumes for our higher margin building systems
operations and lower margins for our European general extrusion operations. Cost reduction initiatives resulted in lower
operating costs, partly offsetting the negative market developments. Our Americas extrusion operations and global precision
tubing business delivered improved underlying results for the year.
Overall volumes increased compared to the previous year, as markets improved during the first half of 2011. However, demand
weakened in the second half of the year due to growing economic uncertainty impacting our European extrusion business in
particular. Declining market demand for building applications throughout the year resulted in significantly lower volumes for
our building systems operations. Volumes for our North American extrusion operations increased in line with a general market
improvement. Our South American operations delivered somewhat higher volumes, but lower than the market as a whole due
to capacity constraints at our Brazilian plant. Volumes increased for our global precision tubing business.
91