John Ottestad: "Always prepared and financially strong"

December 11, 2003, 00:00 CET

John O. Ottestad, Hydro's executive vice president and chief financial officer, aims to increase the company's revenues and earnings per share. "Hydro's strong financial position enables it to pursue new opportunities and provides security when faced with more difficult times," he stated at the company's Capital Markets Day in Oslo on Thursday.

In his presentation he described Hydro’s financial position as very strong. A debt/equity ratio of roughly 0.4 including non-balanced pension and leasing obligations is very strong. He added that the aim is to maintain a "pure A" credit rating.

Ottestad underscored that Hydro aims to maintain its dividend policy after the listing of Agri in the spring. Earnings per share have grown steadily over the last decade.

"However, we must increase earnings in the two main areas Oil & Energy and Aluminium after the listing of Agri to maintain the nominal trend," he said.

Hydro’s capital expenditures in 2003 look as though they will be somewhat lower than originally planned, with the final figure winding up under NOK 20 billion. Two of the most important explanations are lower costs on the Grane and Fram Vest developments.

"I am very satisfied with our capital has been employed, first and foremost because of the high quality of our investment projects," said Ottestad, pointing to the current oil and gas developments Ormen Lange in Norway and Block 17 in Angola, as well as the expansion of the aluminium metal plants in Sunndal in Norway, Alouette in Canada and the further expansion of alumina production at Alunorte in Brazil.

He presented a summary of the businesses Hydro has sold over the past two years. It shows that the company has come very close to its goal of selling enterprises for NOK 10 billion. During the last five years Hydro has divested businesses for NOK 25 billion. He added that the company would continue to sell non-core businesses, while adjusting its core business portfolio.

For the first time Hydro presented a summary of annual cost savings and workforce reductions in connection with the various improvement processes implemented during recent years:

"The initiatives have brought considerable improvements in all of Hydro’s businesses. In addition to the major cost reductions in all business areas Hydro Business Partner, the company’s service sector, has reduced its workforce by 1 400 man-years and contributed NOK 1.5 billion in cost savings," said Ottestad.