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Severance arrangements and write-offs will be charged to accounts

June 26, 2001, 01:00 CEST

Hydro's improvement process in Norway and the United Kingdom includes severance arrangements and write-offs that affect the financial results for the second quarter, according to a statement from the company Tuesday.

Since December last year, Norsk Hydro has conducted a comprehensive improvement process to increase earnings and improve competitiveness for the company's Grenland operations in Norway. In this connection, approximately 500-550 man years have been identified as being supernumerary.

A total of 415 employees have entered into agreements regarding different forms of severance arrangements. The costs related to the severance arrangements amount to approximately NOK 660 million, and will be charged to the accounts for the second quarter of 2001. NOK 180 million of this amount will be charged to the accounts of the Plant Nutrition segment, NOK 105 million to Magnesium, NOK 75 million to Petrochemicals and the remaining NOK 300 million to Other Activites.

Hydro aims to find alternative work for the employees for whom no solution so far has been found. In some parts of the group, there is a need for increased manpower.

As part of the program to improve profitability at plant level in Porsgrunn, Hydro has decided to close down the production of potassium nitrate that over time has shown poor profitability. This will involve a write-off of NOK 75 million within Hydro Plant Nutrition, while the provisions for demanning are covered by the above mentioned accrual.

The improvement program Hydro Agri Turnaround has enabled the identification of a considerable increased efficiency potential through an alteration of the logistics and distribution system in the United Kingdom. The alteration will entail a workforce reduction of 85 people. Total non-recurring expenses will amount to NOK 130 million, the
substance of which consists of a write-off of non-current assets in the stock and distribution chain.

The mentioned non-recurring costs, amounting to NOK 865 million in total, will be charged against Hydro's second quarter operating income. Approximately NOK 165 million consists of a write-off of non-current assets.