Norsk Hydro Business report FY2006

Business Highlights

Financial Overview

(in NOK million)  FY2006 FY2005 Rate of
Operating revenues 196,234 171,231 14.6%
Operating income 52,224 46,237 12.9%
Net Income 17,224 15,542 10.8%
Aluminium Products
Operating revenues  49,844 42,477 17.3%

-Rolled products

23,227 19,490 19.2%


20,418 16,826 21.3%


6,463 6,423 0.1%
Operating income  (83) (370) -

-Rolled products

782 754 3.7%


231 275 (16.0%)


(1,006) (1,579) -

-Other and elimination

(90) 180 -

Aluminium Products
Alminium Products incurred an operating loss of NOK 83 million in FY2006, compared with an operating loss of NOK 370 million in FY2005. Its European extrusion and global building systems delivered a strong performance during FY2006. However, the FY2006 results were heavily influenced by writedowns and charges related to its ongoing restructing and divestment program.

Structure Change

The Company announced its aluminium tubing units in Workington, UK, and in Hannover, Germany, have been merged into a strategic business unit. The strategic business unit will specialize in welded tube manufacture. The Workington-based plant, specializes in smaller tubes for the automotive heat transfer market, while in Hannover plant specializes in larger tubes for structural applications.(From a press release by the company on Apr. 7, 2006)

The Company decided to close Becancour, Quebec-based magnesium plant during the first half of 2007. The timing of closure is in connection with the windup of a 10-year supply contract with General Motors. It is primarily the extensive export of very low-priced metal from China that is preventing continued production at Becancour, Canada. As a result of the Company's decision to exit the magnesium industry, it will work toward divesting its magnesium casthouses in Bottrop, Germany, and in Xi'an, China. (From a press release on Oct. 31, 2006)

In November 2006, the Company announced the sale of its automotive casting business. The sale was finalized in March 2007 resulting in a gain of about NOK 900 million.

The Company agreed to sell its 49-percent share in the Canadian company Meridian Technologies Inc. to a consortium led by Swiss holding company Estatia AG. The sale marks another step in the ongoing restructuring of the Company's downstream aluminium portfolio. Meridian Technologies, which is headquartered in Ontalio, Canada, is the world's largest supplier of die-cast magnesium components to the automotive industry. The transaction is based on an enterprise value of busienss of CAD 200 million (NOK 1.1 billion). (From a press release on Dec. 6, 2006)

Automotive sales volumes (1,000 tons to market)
- FY2006 FY2005 FY2004
Precision tubing 65 60 70
Structures 40 50 65
Magnesium 85 100 100


R&D Structure
The automotive structures competence center is based at Raufoss, Norway with branches in :
-Oslo, Norway
-Munich, Germany
-Louviers, France
-Tonder, Denmark
-Worcester, England
-Michigan, USA

The Company is starting to work on the new technology center in Ardal, Norway. The investments is in the order of NOK 200 million, and the center is scheduled to open in 2007. (From a press release on Jun. 15, 2006)

R&D Expenditure

(NOK in million) FY2006 FY2005 FY2004
Overall 726 716 760
Aluminium business 487 N.A 220

During FY2006, the Company allocated NOK 726 million to R&D. Roughly half of this goes to its in-house research organization, while the half supports work carried out at external institutions. Its aluminium business spent total of NOK 487 million in FY2006.

Investment Activities

Capital Expenditure
(in NOK million) FY2006 FY2005 FY2004
Oil & Energy 22,804 36,179 12,067
Aluminium Metal 1,979 1,792 4,244
Aluminium Products 1,250 1,970 1,951
Other Activities 647 1,097 1,058
Corporate & Eliminations 35 72 145
Total 26,713 41,110 19,464

Investments for Aluminium Products in 2006 related primarily to a revamp of the rolled products plant in Slim, Italy and the completion of the precision tubing plant in Reynosa, Mexico.