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Sapa shows strong improvement in fourth quarter, full-year results

Owners Orkla and Hydro today reported to the financial markets Sapa's results for the fourth quarter of last year and for the full year. Sapa showed good improvement.

Sapa's underlying EBIT in the fourth quarter of 2015 increased to NOK 128 million, compared to a loss of NOK 54.5 million in the same quarter of the previous year. The change was mainly due to the effects of the company's improvement programs, continued growth in North American demand for extruded aluminium products, and increased added-value activities. Underlying EBIT for the fourth quarter was negatively impacted by Sapa's measures to address, and consequences of, unsanctioned quality testing practices in the North American extrusion operation in Portland, Oregon.

In its restructuring program, which was initiated in 2013, Sapa targeted annual synergies of around NOK 1 billion by the end of 2016. The company reached its target in 2015 - one year ahead of time.

Sapa's fourth quarter results also included charges related to restructuring activities. These charges were partly offset by unrealized gains from derivatives.

Positive for full year

Sapa's underlying EBIT for the full year of 2015 was NOK 1,407 million. The company's result in the previous year was NOK 652 million.

The 2015 improvement was driven mainly by internal measures and the strong performance of the extrusion operation in North America. The positive effects from a weakening Norwegian currency were offset by sharply falling metal premiums.

Demand growth

Fourth quarter demand for extruded aluminium products in North America increased by 1 percent compared with the same quarter of the previous year as a result of increased building and construction activity and strong automotive demand. For the full year, North American extrusion demand was 5 percent higher than in 2014.

In Europe, overall demand was stable, both for the full year and the quarter, in comparison with 2014. A weak European building and construction market was offset by increases in most other segments. The demand for extruded products is expected to seasonally improve going into the first quarter of 2016.