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2003: a very good year for Hydro

Feb 16, 2004
Consolidated Results (US GAAP)
(unaudited)
Fourth quarter Year
2003 2003 2002 2003 2003 2002
Million, except per share data NOK EUR1) NOK NOK EUR1) NOK
Operating revenues 44 533 5 306 44 007 171 782 20 468 167 040
             
Operating income 7 137 850 5 996 24 258 2 891 19 841
Non-consolidated investees 379 45 484 1 229 146 33
Interest income and other financial income 349 42 334 1 467 175 1 418
Other income (loss), net 490 58 - (1 212) (145) 219
Earnings before interest expense and taxes (EBIT) 8 355 995 6 814 25 742 3 067 21 511
Interest expense and
foreign exchange gain/(loss)
22 3 223 (1 266) (151) 517
Income before taxes and minority interest 8 377 998 7 037 24 476 2 916 22 028
Income tax expense (4 636) (552) (3 729) (13 937) (1 661) (13 278)
Minority interest 24 3 (28) 148 18 15
Income before cumulative effect of change in accounting principle 3 765 449 3 280 10 687 1 273 8 765
Cumulative effect of change in accounting principle - - - 281 34 -
Net income 3 765 449 3 280 10 968 1 307 8 765
Earnings per share before change
in accounting principle (in NOK and Euro)
14.70 1.75 12.70 41.50 4.94 34.00
Earnings per share (in NOK and Euro) 14.70 1.75 12.70 42.60 5.08 34.00
             
Financial data            
EBITDA 2) - million 12 398 1 477 10 455 43 253 5 154 35 658
Investments - million 5 187 618 5 949 18 900 2 252 45 716
Net interest-bearing debt/equity 3) 0.38 0.38 0.60 0.38 0.38 0.60
1) Presentation in Euro is a convenience translation based on the exchange rate at December 31, 2003, which was 8.3928.
2) EBITDA : Earnings Before Interest, Tax, Deprecation and Amortization.
3) Net interest-bearing debt divided by shareholders' equity plus minority interest, adjusted for non-financed pension obligation and present value of future obligations on operating leases, both after tax.
 
The result reflects overall improvements in Hydro's main business areas compared to the prior year. The most substantial improvement related to a significant increase in oil and gas production together with somewhat higher oil and gas prices. The fertilizer business also improved its results due to higher product prices and productivity gains. The improvement programs carried out by Aluminium generated considerable savings for the year, although the weaker US dollar had a negative influence on earnings for Aluminium and the other business areas.
 
In the fourth quarter Hydro's net income was NOK 3,765 million (NOK 14.70 per share), compared with NOK 3,280 million (NOK 12.70 per share) for the corresponding period in 2002. Operating income in the fourth quarter amounted to NOK 7,137 million, compared with NOK 5,996 million in the same period last year.
 
The Board proposes to the Annual General Assembly a dividend of NOK 11.00 per share for 2003, compared with NOK 10.50 for 2002.  
 
"2003 was an very good year for Hydro", says President and CEO Eivind Reiten. "Our three business areas show solid improvement. Even though market conditions have been good for many of our products, the improvements also reflect the efficient implementation of improvement programs. We have also made important strategic decisions, and the listing process for Agri is progressing according to plan."
 
"Markets for semi-fabricated aluminium products have been weak, but we can see small signs of improvement. The competitive position for our European aluminium smelters is challenging, and we will continue our work to improve cost position in these plants", says Reiten.
 
In the fourth quarter of 2003 Hydro's oil and gas production was 596,000 barrels of oil equivalents (boe) per day. Production for the year averaged 530,000 boe per day, an increase of  about 10 percent from 2002. The growth in production was evenly distributed between oil and gas. The strong production growth was above original targets, and  reflected  high production regularity and high gas offtake in the period. Average production for 2004 is estimated to be 560 000 boe per day. Hydro's access to new oil and gas reserves comprises 215 percent of its annual production. The increase in reserves is primarily attributable to the Ormen Lange gas field, for which the development plan was submitted to the authorities in the fourth quarter of 2003.
 
Aluminium operations posted a notably improved result in the final quarter, with greater production volumes, a higher metal price and the business area's cost improvement program all impacting positively, although a weaker dollar exchange rate resulted in a negative effect. However, markets for semi-fabricated products were weak. The improvement program implemented following the acquisition of VAW has now been completed, achieving an annual cost reduction effect in line with the target of NOK 2.5 billion.  
 
Hydro Agri has achieved very good results in both the fourth quarter and in 2003 as a whole. Higher fertilizer prices and sound operations at production plants have contributed to the improved results, while higher energy costs have had a negative influence.
 
Hydro's Extraordinary General Meeting resolved on 15 January 2004 to demerge Hydro Agri. The new company will be named Yara International ASA, and be listed on the Oslo Stock Exchange. The company will have approximately 7,600 employees and be headquartered in Oslo where it will be among the larger public companies in Norway. Yara has the right to use Hydro's former Viking ship logo, which is an important fertilizer brand. Every Hydro shareholder, at the listing date, will obtain one Yara share for each Hydro share held. In the demerger, 80 percent of the Yara shares will be distributed to Hydro's shareholders. Provided that prevailing market conditions permit, Hydro intends to sell the remaining 20 percent of the Yara shares in an offering at the time of the consummation of the demerger. The Yara shares to be offered by Hydro have not been and will not be registered under the U. S. Securities Act of 1933, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the U. S. Securities Act.  
 
The provision for current and deferred taxes for 2003 amounted to NOK 13,937 million, approximately 57 percent of pre-tax income. The tax provision has been strongly influenced by the effects of amendments to the Norwegian tax regulations relating to the future costs of removing oil and gas installations on the Norwegian continental shelf after production has ceased. In addition, the tax provision for the third quarter included a one time positive effect of NOK 139 million relating to the final conclusion of an outstanding tax ruling in Norway. Excluding these effects, tax expense amounted to 62 percent of pre-tax income for 2003.
 
Investments in 2003 amounted to NOK 18.9 billion. The amount includes NOK 1.9 billion resulting from Hydro's adoption of Financial Accounting Standard No. 143, relating to asset retirement obligations. Excluding this effect, investments were NOK 17 billion for 2003. Just over half of the investment amount related to oil and gas operations. Investments are slightly lower than planned, partly because of savings in development projects.  
 
Cash flow from operations for 2003 was NOK 24.6 billion compared to NOK 21.8 billion for 2002. The increase compared to last year is mainly due to higher earnings.
 
Following the acquisition of VAW in 2002 Hydro established a goal to dispose of non-core business assets totaling NOK 10 billion. As of the end of 2003, disposals have been completed or agreed for approximately NOK 9.8 billion.
 
Fourth quarter 2003
NOK million Operating
income
(loss)
Non-cons. inv.,
Interest &
selected fin.items
Other
income
Depreciation
and amortization
EBITDA
Hydro Oil & Energy 5 994 37 490 2 618 9 139
Hydro Aluminium 709 119 - 981 1 809
Hydro Agri 907 288 - 289 1 484
Other Activities 10 170 - 152 332
Corporate and Eliminations (483) 114 - 3 (366)
Total1) 7 137 728 490 4 043 12 398
Year 2003
NOK million
Operating
income
(loss)
Non-cons. inv.,
Interest &
selected fin.items
Other
 income (loss)
Depreciation
and amortization
EBITDA
Hydro Oil & Energy 21 143 154 816 9 713 31 826
Hydro Aluminium 2 456 517 - 3 525 6 498
Hydro Agri 2 800 794 - 1 154 4 748
Other Activities (414) 492 162 900 1 140
Corporate and Eliminations (1 727) 739 (2 190) 2 219 (959)
Total1) 24 258 2 696 (1 212) 17 511 43 253
Further information about Norsk Hydro ASA and the company's results are available on the Internet: www.hydro.com
 
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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 (www.hydro.com).


Contact
Telephone
Cellular
E-mail
Peik Norenberg
(+47) 22 53 34 40
(+47) 91 76 15 56
Peik.Norenberg@hydro.com
Tor Steinum
(+47) 22 53 27 31
(+47 95 08 39 33
Tor.Steinum@hydro.com
Cecilie Ditlev-Simonsen
(+47) 22 53 20 97
(+47) 41 55 92 50
Cecilie.Ditlev-
Simonsen@hydro.com

 
 
 
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