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Hydro Results First Quarter 2004
OSLO, Norway, May 10 /PRNewswire-FirstCall/ --
Consolidated Results (US GAAP) (unaudited)
First quarter Year
2004 2004 2003 2003
Million, except per share data NOK EUR(1) NOK NOK
Operating revenues 39,598 4,694 35,763 133,761
Operating income 9,276 1,100 5,982 21,625
Non-consolidated investees 131 16 187 620
Financial income (expense), net (624) (74) (651) 154
Other income (loss), net 110 13 0 (1,253)
Income from continuing operations
before tax and minority interest 8,893 1,055 5,518 21,146
Income tax expense (5,786) (686) (3,976) (12,922)
Minority interest 28 3 28 151
Income from continuing operations
before cumulative effect of
change in accounting principle 3,135 372 1,570 8,375
Income from discontinued operations 1,083 128 631 2,312
Income before cumulative effect of
change in accounting principle 4,218 500 2,201 10,687
Cumulative effect of change
in accounting principle 0 0 281 281
Net income 4,218 500 2,482 10,968
Earnings per share from continuing
operations (in NOK and Euro) 12.30 1.46 6.10 32.50
Earnings per share before change
in accounting principle
(in NOK and Euro) 16.50 1.96 8.50 41.50
Financial data
EBITDA (2) - million 13,546 1,606 9,935 38,628
Investments - million 4,776 566 4,669 17,712
Net interest bearing
debt/equity (3) 0.18 0.18 0.51 0.38
(1) Presentation in Euro is a convenience translation based on the
exchange rate at 31 March 2004, which was 8.4365.
(2) Earnings Before Interest, Tax, Depreciation and Amortization.
(3) Net interest-bearing debt divided by shareholders' equity plus
minority interest, adjusted for unfunded pension obligation (after
tax) and present value of future obligations on operating leases.
All comparative figures are for the corresponding period in 2003 unless
otherwise stated. Certain amounts in previously issued consolidated financial
statements were reclassified to conform with the 2004 presentation.
Hydro's income from continuing operations in the first quarter of 2004 was NOK
3,135 million (NOK 12.30 per share), compared with NOK 1,570 million (NOK 6.10
per share) in the first quarter of 2003. Hydro's income before cumulative
effect of change in accounting principle including Yara's activities up to the
demerger was NOK 4,218 million (NOK 16.50 per share) compared with NOK 2,201
million (NOK 8.50 per share) in 2003.
Net income, excluding the demerged operation, reflected a considerable
improvement compared with the equivalent quarter last year. Both principal
business areas, Oil & Energy and Aluminium, delivered stronger results.
"Good operations and start-up of new fields contribute to continued strong
production growth, which combined with high oil and gas prices gives excellent
results in Oil & Energy. The aluminium markets are improving. Production and
sale of aluminium and downstream products increase, and it is satisfactory that
the results in Aluminium also reflect the effects of the completed improvement
measures," says President and CEO Eivind Reiten.
"We have also carried out a strategic restructuring of the company's
operations, with complete focus on developing the main activities Oil & Energy
and Aluminium. The demerger of the Agri operation, and its successful listing
on the Oslo Stock Exchange under the name of Yara International were realized,
resulting in added value creation for Hydro's shareholders and a stronger
financial platform for Hydro," says Reiten.
Operating income for the first quarter of 2004 amounted to NOK 9,276 million
compared with NOK 5,982 million in the first quarter of 2003. Results in both
Oil & Energy and Aluminium have improved significantly. However, operating
income in the first quarter of both years was impacted by unrealized effects
from changes in the market value of electricity and aluminium futures and
forward contracts, gains on disposals and non-recurring effects. Operating
income for the quarter included a positive effect of NOK 154 million in
connection with changes to the market value of power supply contracts, and
unrealized gains on aluminium futures and forward contracts amounting to NOK
350 million. The first quarter also included the gain from the divestment of
the Gjoea discovery on the Norwegian Continental Shelf (NCS) of NOK 285
million. NOK 428 million was charged in the first quarter of 2003 as a result
of a lower market value of the contract portfolio due to considerably lower
forward prices for electricity at the end of the quarter compared to the
unusually high electricity prices at the end of 2002. A non-recurring effect in
connection with pensions of around NOK 230 million was also charged to the
operating income in the first quarter of 2003. When adjusted for these effects,
the improvement in operating income was about NOK 1.9 billion, including NOK
1.2 billion relating to Oil & Energy and NOK 600 million relating to Aluminium.
Petrochemicals has also produced a significant improvement in results.
The higher results in Oil & Energy were mainly due to increased production and
higher gas prices. The average price measured in US dollars was at the same
level as the year before. Oil and gas production was around 615,000 barrels of
oil equivalents (boe) per day in the first quarter, an increase of 63,000 boe
per day, compared with the equivalent quarter the year before. This was mainly
due to the start up of production from the Grane, Fram Vest and Mikkel fields
in the second half of 2003, in addition to a 15 percent increase in production
from operations outside of Norway. Production is targeted at an average of
560,000 boe per day for 2004. Exploration activities have been somewhat lower
than in the equivalent quarter of 2003. Electricity production was
significantly higher in the first quarter of 2004 than in the equivalent
quarter of 2003, but this was partly offset by considerably lower electricity
prices.
Market conditions for Aluminium have improved, and the realized metal price in
Norwegian kroner increased by seven percent in relation to the first quarter of
2003. Better markets for metal and downstream products together with new
production capacity have boosted volumes. Primary metal production increased by
12 percent compared with the same period last year. Higher metal prices in US
dollars were somewhat offset by a lower dollar exchange rate. Increased volumes
in downstream activities and internal improvement measures have also had a
positive effect.
Hydro completed the demerger of its Agri operation transferring the Agri
business activities to Yara International ASA on 24 March 2004. Immediately
afterwards, Yara repaid its loan from Hydro of NOK 7.1 billion following the
establishment of Yara's independent financing arrangements. Yara was listed on
the Oslo Stock Exchange on 25 March. On 15 January, Hydro's Extraordinary
General Meeting resolved to demerge Hydro Agri by issuing one Yara share for
each Hydro share held by shareholders on the effective date of the demerger. As
of 25 March, Hydro's shares traded without rights to the demerged operation. As
part of the demerger transaction, Hydro retained 20 percent of the Yara shares.
These shares were sold in connection with the demerger transaction, through a
public offering, that was oversubscribed by around 20 times. The shares sold
for NOK 41 per share resulting in a total proceeds of NOK 2.6 billion and a net
gain of around NOK 530 million. The gain, together with Agri's net income from
operations for the period ending 25 March are included in Income from
discontinued operations for the quarter. Previous periods have been adjusted in
order to present the results on a comparable basis.
Cash flow from operations in the first quarter of 2004 was NOK 8.5 billion (NOK
6.4 billion).
Investments in the first quarter of 2004 amounted to NOK 4.8 billion. The
amount included NOK 1.3 billion relating to the effect of implementation of the
FASB Interpretation No. 46R requiring the consolidation of one of the Company's
20 percent owned investees. Excluding this amount, investments in the first
quarter amounted to NOK 3.5 billion. Around half of the amount invested related
to oil and gas operations.
The provision for current and deferred taxes in the first quarter was NOK 5,786
million, approximately 65 percent of pre-tax income.
NOK million Operating income (loss)
Hydro Oil & Energy 7,818
Hydro Aluminium 1,629
Other activities 93
Corporate and Eliminations (264)
Sum 9,276
In connection with the presentation of its first-quarter results, Hydro also
announced today that the company, at its own initiative, has contacted the
Securities and Exchange Commission (SEC) to provide information explaining the
methodologies, and the technical data derived from such methodologies, that
serve as the basis for Hydro's estimate of the "proved undeveloped reserves"
(as that term is defined in SEC rules and regulations) for the Ormen Lange gas
field. Hydro is now in the process of assembling additional information to be
provided to the SEC in order to further support the company's estimate of such
reserves for the field.
Hydro initiated the dialogue with the SEC after becoming aware of the
substantial variation in the estimates of the proved undeveloped reserves for
this field among the companies with interest in this field.
Hydro expects to have concluded the dialogue with the SEC on this subject in
time for the company to file its 2003 annual report on Form 20-F within the
June 30 deadline for that filing.
Hydro is the operator for Ormen Lange in the development phase. The partners in
the Ormen Lange field are: Hydro (18.0728%), Shell (17.0375%), Petoro
(36.475%), Statoil (10.8441%), BP (10.342%) and ExxonMobil (7.2286%). The Plan
for Development and Operation (PDO) was submitted to the Norwegian authorities
in December 2003 and approved April 2, 2004.
Further information about Norsk Hydro ASA and the company's results are
available on the Internet: http://www.hydro.com/
Certain statements in this press release are or may constitute
"forward-looking" statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Statements that are not in the nature of
historical facts may be deemed to be forward-looking statements and may contain
identifying words such as "believes", "anticipates", "plans", "expects" and
similar expressions. These forward-looking statements are based on Hydro's
current expectations, assumptions, estimates and projections about the company
and the industries in which it engages in business. All forward-looking
statements involve risks and uncertainties. For a detailed description of
factors that could cause Hydro's actual results to differ materially from those
expressed in or implied by such statements, please refer to its annual report
on Form 20-F for the year-ended December 31, 2002 and subsequent filings on
Form 6-K with the U.S. Securities and Exchange Commission. With respect to each
non-GAAP financial measure Hydro uses in connection with its financial
reporting and other public communications, Hydro provides a presentation of
what Hydro believes to be the most directly comparable GAAP financial measure
and a reconciliation between the non-GAAP and GAAP measures. This information
can be found in Hydro's earnings press releases, quarterly reports and other
written communications, all of which have been posted to Hydro's website
(http://www.hydro.com/).
Contact Cecilie Ditlev-Simonsen Idar Eikrem
Telephone (+47) 22 53 20 97 (+47) 22 53 32 73
Cellular (+47) 41 55 92 50 (+47) 95 02 83 63
E-mail
DATASOURCE: Norsk Hydro
CONTACT: Cecilie Ditlev-Simonsen, +47-22-53-20-97, or cellular,
+47-41-55-92-50, , or Idar Eikrem,
+47-22-53-32-73, or cellular, +47-95-02-83-63, , both of
Norsk Hydro
Web site: http://www.hydro.com/