"Over the past quarters, we have seen a worsening in some markets, especially in southern Europe, where we have a significant exposure in our extrusion business. In addition, the global primary aluminium industry is facing strong headwinds from the combination of low metal prices and high cost of raw materials, reflecting imbalances in the markets," said Hydro's President and CEO Svein Richard Brandtzæg. "The measures that we are implementing across the value chain will improve our competitive position, in an industry with shorter-term challenges," Brandtzæg said.
Kurri Kurri
The current financial situation in combination with a weak outlook implies a reduction to the value of the assets in Hydro's Australian aluminium plant, Kurri Kurri, by approximately NOK 1.0 billion. Hydro announced on January 18, 2012, a decision to curtail one of three potlines at Kurri Kurri, as a response to the demanding situation and to reduce further losses. The impairment confirms a challenging financial situation at Kurri Kurri, and the situation is continuously being monitored. Remaining book value of fixed assets in Kurri Kurri is NOK 1.2 billion.
Kurri Kurri is negatively influenced by a strengthened Australian dollar in addition to the industry-wide challenges related to low metal prices and high raw material costs. The uncertainty with regards to future power supply and cost is further challenging the long-term viability of the plant.
Extruded Products
The European extrusion industry has been significantly affected by the Eurozone debt crisis, while some markets outside Europe are experiencing a more balanced development. Lower demand, especially in Southern Europe, in combination with customer destocking and margin pressure is significantly influencing the result of Hydro's extrusion business. At present, there are no signs of near-term improvement in these markets.
Hydro will in the fourth quarter of 2011 write down assets within Building Systems in Spain, Portugal and Italy by approximately NOK 230 million, which is about half of the carrying value.
The ongoing initiatives in Building Systems, including closing down plants, production lines and warehouses, aim to reduce the cost base by EUR 40 million (around NOK 300 million), by the end of 2012. As a result of these restructuring efforts, about NOK 80 million of restructuring charges will be realized in the fourth quarter of 2011.
The international journal for industry, research and application of aluminium is published monthly. It provides information on all topical issues concerning the material, its production, processing, recycling and application. Furthermore, economic topics and ecological consequences of aluminium application are discussed. Thirty percent of all articles in the journal are written in English.
The trade journal is the leading title in the whole German-speaking area. It provides information on material-specific characteristics of aluminium, latest processing technologies and innovative applications in various branches and sectors of industry.
The international trade journal for metallurgy focuses on the non-metal branch with its basic metals copper, zink, aluminium, magnesium, lead, nickel and tin as well as composite materials on metallic basis and special metals. The trade journal provides information on installation engineering and testing technology, introduces latest material developments and reports on user experiences.
