Edgar Filing: NORSK HYDRO A S A

e6vk

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the quarter ended December 31, 2002

NORSK HYDRO ASA
(Translation of registrant’s name into English)

Bygdøy allé 2
N-0240 OSLO
Norway
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.


Form 20-F X		Form 40-F

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.


Yes		No X

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g-32(b): 82-__________

This Report on Form 6-K shall be deemed to be incorporated by reference in the prospectus included in each of the Registration Statements on Form F-3 (No. 333-8110 and No. 333-10580) and to be a part thereof from the date on which this Report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.

NORSK HYDRO ASA and SUBSIDIARIES
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
for the year ended 31 December, 2002

In this Quarterly Report on Form 6-K (the “Report”), references to the “Company” are to Norsk Hydro ASA; references to “Hydro” or the “Group” are to the Company and its consolidated subsidiaries. The Company publishes its consolidated financial statements in Norwegian kroner (“NOK”). In this Report, references to “US dollar”, “USD”, or “$” are to United States dollars.

Preliminary results 2002 — Norsk Hydro

CONSOLIDATED RESULTS (US GAAP)
(UNAUDITED)


	Fourth quarter									Year
	2002			2002			2001			2002			2002			2001

Million, except per share data	NOK			EURO¹⁾			NOK			NOK			EURO¹⁾			NOK

Operating revenues		39,635			5,448			34,670			162,936			22,396			152,835

Operating income		6,139			844			2,832			19,984			2,747			21,083
Non-consolidated investees		484			67			265			33			5			566
Interest income and other financial income		334			46			788			1,418			194			2,847
Other income, net		—			—			(19	)		219			30			578

Earnings before interest expense and taxes (EBIT)		6,957			957			3,866			21,654			2,976			25,074
Interest expense and foreign exchange gain/(loss)		223			31			(1,036	)		517			71			(3,609	)

Income before taxes and minority interest		7,180			988			2,830			22,171			3,047			21,465
Income tax expense		(3,769	)		(518	)		(1,703	)		(13,318	)		(1,830	)		(13,750	)
Minority interest		(28	)		(4	)		17			15			2			177

Net income		3,383			466			1,144			8,868			1,219			7,892
Earnings per share (in NOK and Euro)		13.10			1.80			4.40			34.40			4.70			30.50

Financial data
EBITDA — million		10,598			1,457			7,297			35,801			4,921			37,757
Investments — million		6,037			830			6,284			45,804			6,296			16,328
Net interest-bearing debt/equity ²⁾		0.44			0.44			0.27			0.44			0.44			0.27

1)		Presentation in EURO is a convenience translation based on the exchange rate at December 31, 2002, which was 7.2754.

2)		Net interest-bearing debt divided by shareholders’ equity plus minority interest.

All comparative figures are for the corresponding period in 2001 unless otherwise stated.

Norsk Hydro’s net income in 2002 was NOK 8,868 million (NOK 34.40 per share) compared with NOK 7,892 million (NOK 30.50 per share) in 2001.

The improvement compared to the prior year was primarily due to a significant increase in oil and gas production, more extensive aluminium operations following the acquisition of VAW in the first quarter, unrealised gains in connection with energy contracts together with unrealised gains associated with the Company’s debt. Lower oil and gas prices, difficult market conditions for Hydro Aluminium, and the strengthening of the Norwegian kroner negatively impacted the results.

In the fourth quarter, Hydro’s net income was NOK 3,383 million (NOK 13.10 per share), compared with NOK 1,144 million (NOK 4.40 per share) for the corresponding period in 2001. Operating income in the fourth quarter amounted to NOK 6,139 million, compared with NOK 2,832 million in the same period last year.

The Board proposes to the Annual General Assembly a dividend of NOK 10.50 per share for 2002, compared with NOK 10 per share in 2001. The RISK regulation for this year for Norsk Hydro ASA was estimated at NOK 14.90 per share.

• “Hydro has achieved a return on capital in 2002 which is consistent with established targets for the year. The debt/equity ratio remains strong despite significant acquisitions, which reflects a strong cash flow throughout the year. Productivity has improved in all our business areas, particularly in the oil and gas segment, where a significant production increase has made an important contribution to the company’s profitability,”

• “Market conditions for our aluminium operations have been difficult, while the high price of oil is a strong positive factor. There is considerable uncertainty associated with international economic development in the future. This implies a large degree of uncertainty with regards to price development for Hydro’s main products. We will continue to emphasize efforts to improve Hydro’s competitiveness and maintain the company’s financial strengths.” says President and CEO, Eivind Reiten.

In the fourth quarter Hydro’s oil and gas production was 540,000 barrels of oil equivalents (boe) per day. Production in 2002 averaged 480,000 boe per day, an increase of some 14 percent from 2001. Average production for 2003 was estimated at 510,000 boe per day. Hydro’s access to new oil and gas reserves, including the purchase and sale of field licences, comprised 187 percent of its annual production. The reserve replacement ratio was 98 percent, excluding purchases and sales of liscenses. Exploration results in 2002 were disappointing and NOK 3.4 billion was expensed for the year.

Aluminium operations expanded significantly in 2002 through the acquisition of the companies, VAW and Technal, both of which were fully integrated into Hydro’s business operations during the year. Efforts to realize synergies after the integration and other improvement programs continue according to plan. Market conditions for metal and value added products were difficult. The strong Norwegian kroner contributed significantly to a weakened competitive position for Norwegian production units. This, in combination with low aluminium prices, has resulted in weak results for these Norwegian units.

Hydro Agri maintained its level of earnings from the corresponding period of the previous year, despite a weak fertilizer market during most of the year, and the negative effect of changes in exchange rates and higher raw material costs. Market shares increased in Europe and sales volume outside of Europe increased to a level greater than sales in the European market.

During 2002, KFK divested substantial parts of its operations. In addition, Hydro signed an agreement for the sale of the Flexible Packaging unit. In total, Hydro has entered into contracts for divestments of over NOK 6 billion out of its total target for 2002 — 2003 of NOK 10 billion.

The provision for current and deferred taxes for 2002 amounted to NOK 13,318 million, approximately 60 percent of pre-tax income.


Fourth quarter 2002
	Operating		Non-cons. inv., Interest &		Other		Depreciation
NOK million	income (loss)		selected fin.items		income		and amortization		EBITDA

Hydro Oil and Energy		5,527		132		—		2,371		8,030
Hydro Aluminium		230		385		—		701		1,316
Hydro Agri		209		122		—		314		645
Other Activities		20		66		—		247		333
Corporate and Eliminations		153		113		—		8		274

Total ¹⁾		6,139		818		—		3,641		10,598


Year 2002				Non-cons. inv.,
	Operating			Interest &			Other			Depreciation
NOK million	income (loss)			selected fin.items			income			and amortization		EBITDA

Hydro Oil and Energy		16,090			304			77			9,012		25,483
Hydro Aluminium		1,698			(90	)		—			2,726		4,334
Hydro Agri		2,207			292			166			1,280		3,945
Other Activities		13			(81	)		—			1,112		1,044
Corporate and Eliminations		(24	)		1,026			(24	)		17		995

Total ¹⁾		19,984			1,451			219			14,147		35,801

See specification on page 21.

EBITDA for 2002 was NOK 35,801 million (NOK 37,757 million). EBITDA for the fourth quarter was NOK 10,598 million (NOK 7,297 million).

The increase in EBITDA in the fourth quarter for Oil and Energy of NOK 2,502 million was mainly due to high oil and gas production, both as a result of high production regularity and high gas sales. The oil price measured in Norwegian kroner was approximately 11 percent higher in the fourth quarter than the equivalent period in 2001, while for the year as a whole it was approximately 11 percent lower than in 2001. Cost reductions had a positive effect.

EBITDA for Hydro Aluminium increased by NOK 1,618 million, mainly due to the additional business brought in by VAW and Technal, companies acquired in the first quarter. However, the aluminium markets remain weak. The exchange rate between the Norwegian kroner and the US dollar resulted in reduced competitiveness particularly for Norwegian operations. The integration of VAW and internal improvement programs are proceeding according to plan, and the cost reductions realized are ahead of the original schedule. The target for cost reductions by the end of 2003 has, as a result of these measures, been increased by NOK 400 million to NOK 2.0 billion. Cost reduction measures in magnesium operations are expected to yield additional cost savings of NOK 500 million.

Hydro Agri showed consistently good results, but was considerably affected by the weak US dollar in relation to the Norwegian kroner. International fertilizer markets remained weak in the fourth quarter, but a narrower gap between supply and demand after year end led to higher prices for important products.

Earnings from non-consolidated investees in the fourth quarter amounted to NOK 484 million compared to NOK 265 million in the fourth quarter of 2001. In the fourth quarter, a reduction in the currency loss connected to the alumina operations in Brazil of NOK 166 million contributed to the result. The corresponding currency gain was NOK 177 million in the fourth quarter of 2001. Earnings from non-consolidated investees were NOK 33 million in 2002 compared to NOK 566 million in 2001. A currency loss of NOK 460 million connected to the alumina operations in Brazil was expensed in 2002, compared to NOK 185 million in 2001.

Hydro Energy is responsible for securing electricity in the market for Hydro’s own consumption, delivery commitments and reducing the risk in the electricity portfolio against unfavorable price fluctuations. This is accomplished by making adjustments in production and by entering into contracts in the electricity derivative market. Electricity prices were abnormally high towards the end of 2002 as a result of low water reservoir levels and increased consumption. To compensate for low water reserves, and the consequent expected reduction in Hydro’s own production of electricity in 2003, Hydro entered into purchase contracts in the derivative market maturing in 2003. High prices at the end of 2002 led to an increase in the value of Hydro’s energy contracts portfolio with an unrealized effect on profit for the fourth quarter of roughly NOK 900 million. Approximately NOK 300 million of this was accounted for in Hydro Energy and approximately NOK 600 million in Corporate Activities and Eliminations. The value of the electricity contracts portfolio will fluctuate in accordance with changes in market prices and the size and composition of the portfolio at any given time. Electricity prices have fallen after year-end, whereby the value of these contracts will be reduced. This value reduction is expected to be expensed in the coming quarters.

Investments in 2002 totaled NOK 45.8 billion. The purchase of VAW amounted to NOK 20.9 billion. The investment in SDFI assets amounted to NOK 5.5 billion, including the effect of deferred taxes of NOK 2.1 billion.

CROGI (Cash Return on Gross Investment) was 8.6 percent in 2002 compared with 9.4 percent in 2001. Hydro Oil and Energy achieved a CROGI of 11.9 percent (13 percent in 2001). CROGI for Hydro Aluminium was 7.1 percent (5.7 percent in 2001). Hydro Agri achieved a CROGI of 9.4 percent (9.6 percent in 2001).

Calculated based on normalized prices ²⁾, CROGI was 9 percent in 2002, compared with 8 percent in 2001. CROGI based on normalized prices for the areas were 9.6 percent for Hydro Oil and Energy, 8.9 percent for Hydro Aluminium and 11.2 percent for Hydro Agri, respectively.

2) See page 17.

HYDRO OIL AND ENERGY

EBITDA


	Fourth quarter				Year
NOK million	2002		2001		2002		2001

Exploration and Production		7,312		5,271		23,475		25,768
Energy and Oil Marketing		692		257		1,982		1,836
Eliminations		26		—		26		—

Total		8,030		5,528		25,483		27,604

Operating income (loss)


	Fourth quarter				Year
NOK million	2002		2001		2002		2001

Exploration and Production		4,926		2,964		14,472		17,813
Energy and Oil Marketing		575		221		1,592		1,365
Eliminations		26		—		26		—

Total		5,527		3,185		16,090		19,178

Fourth quarter

Year

2002

2001

2002

2001

Oil and gas production (thousands boe/d)

540

451

480

421

Oil price (USD/bbl)

25.60

18.90

24.70

24.20

Oil price (NOK/bbl)

186.70

168.20

194.20

217.20

Average exchange rate NOK/USD

7.30

8.88

7.88

8.98

Gas price (NOK/Sm³)

0.98

1.14

0.95

1.21

Exploration expense (NOK million)

424

477

3,416

1,417

Hydro Oil and Energy consists of two sub-segments: “Exploration and Production” and “Energy and Oil Marketing.” EBITDA for Oil and Energy in the fourth quarter of 2002 was NOK 8,030 million, an increase of 45 percent compared with the fourth quarter of 2001. EBITDA in 2002 was NOK 25,483 million, a reduction of 8 percent in relation to 2001.

EXPLORATION AND PRODUCTION

EBITDA for Exploration and Production in the fourth quarter was NOK 7,312 million, 39 percent higher than the fourth quarter of 2001. The increase was mainly due to increased production of both oil and gas, and higher oil prices in Norwegian kroner. The oil price expressed in Norwegian kroner for the quarter was roughly 11 percent higher than in the fourth quarter of 2001. Operating income in the fourth quarter was NOK 4,926 million, compared with NOK 2,964 million in the equivalent period last year. A NOK 174 million write-down of the Vale field, a satellite of the Heimdal field, reduced operating income in the fourth quarter. The write-down resulted from problems with the production profile of one well leading to a reduction in forecasted volume of gas production. EBITDA for 2002 was NOK 23,475 million, 9 percent lower than in 2001. Operating income for 2002 was NOK 14,472 million (NOK 17,813 million).

Hydro’s production of oil and gas in the fourth quarter of 2002 averaged 540,000 barrels of oil equivalents per day (boed), an increase of 89,000 boed compared with the fourth quarter of 2001. Oil production in the fourth quarter was 397,000 barrels, an increase of roughly 18 percent. The increase was largely attributable to production from the new fields, Terra Nova in Canada and Girassol in Angola, which came on stream in January 2002 and December 2001, respectively. In addition, Hydro increased production from the Oseberg fields as a result of an increase in ownership interest following the acquisition of the Norwegian State’s Direct Financial Interest (SDFI) state-owned licences in May 2002. Production related to these licences amounted to 41,000 barrels in the fourth quarter, which was equivalent to 24,000 barrels for the year. Production regularity has been high. Fourth quarter gas production was 143,000 barrels of oil equivalents, approximately 25 percent higher than in the equivalent period last year. Sold volumes of gas were higher than expected for the quarter due to low temperatures on the Continent. Hydro’s production of oil and gas for 2002 was on average 480,000 boed, an increase of 14 percent.

The average crude oil price in the fourth quarter was USD 25.6 per barrel, compared with USD 18.9 per barrel in the same period of the previous year. Expressed in Norwegian kroner, the realized oil price was around 11 percent higher than in the fourth quarter of 2001, and for the year averaged USD 24.7 per barrel, an increase of 2 percent from 2001. However the price in Norwegian kroner was 11 percent lower than in 2001. The average realized gas price in the fourth quarter was 14 percent lower than in the equivalent period in 2001 and amounted to NOK 0.98 per Sm³.

Costs (production costs, depreciation and net tariffs) for 2002 were NOK 79 per barrel produced, compared with NOK 81 in 2001. The main reason for the reduction was lower total costs combined with increased production, and lower unit depreciation as a result of upgrading reserves.

As of 1 January, 2003, operatorship of Tampen was transferred to Statoil. This involved the transfer of 535 employees. In addition, during January 2003 a decision to reorganize operations was announced reflecting anticipated lower development activity on the Norwegian Continental Shelf and fewer development projects. Related measures to reduce manning are expected to result in approximately 300 fewer employees and consultants by the end of 2003. Costs associated with these efforts will be included in the results for 2003.

Exploration costs amounted to NOK 424 million in the fourth quarter, compared with NOK 460 million in the fourth quarter of 2001. Discoveries were made during the quarter in Block 17 in Angola (Zenia) and in Norway on PL050 (Aurora) and PL073 (Tyrihans). Exploration well results in Angola and Canada are under evaluation. The Solsikke well on PL253 off mid-Norway proved to be dry. Exploration costs for 2002 amounted to NOK 2,495 million. NOK 3,416 million of exploration cost was expensed in 2002, which is approximately NOK 2 billion greater than in 2001. The increase relates primarily to the discovery of dry wells within the international exploration activities and the expensing of the previously capitalized property acquisition costs. During the course of 2002, 30 wells were completed, 11 of which resulted in discoveries and three of which are still under evaluation.

Hydro’s remaining oil and gas reserves were 2,225 million barrels of oil equivalents (mboe) at the end of 2002. At the end of 2001 the remaining reserves were 2,073 mboe. Hydro’s reserve replacement ratio for 2002 was 187 percent including 186 mboe relating to the purchase of SDFI licences. Excluding purchases and sales of licenses, the reserve replacement rate was 98 percent. The increase in reserves resulted from the reclassification of technical resources to proved reserves, in particular Snøhvit and Libya, in addition to the upgrading of producing fields. Reserve life (defined as the number of years of production from proved reserves at the present production level) was 13 at the end of 2002; with 9 years for oil and 26 years for gas.

ENERGY AND OIL MARKETING

EBITDA for Energy and Oil Marketing for the fourth quarter of 2002 was NOK 692 million, compared to NOK 257 million in the same period of the prior year. EBITDA for 2002 was NOK 1,982 million, 8 percent higher than in 2001. EBITDA in 2001 included a gain on the sale of electricity grid assets amounting to NOK 179 million. Operating income for 2002 was NOK 1,592 million compared to NOK 1,365 million in 2001.

EBITDA and operating income from the power sourcing and marketing activities increased by approximately NOK 412 million in the fourth quarter of 2002 compared to 2001. Norwegian power prices increased to record high levels during the quarter as a result of unusually low water reservoir levels caused by a dry autumn. Increased energy consumption in the quarter resulting from exceptionally cold weather contributed to the price climb. To offset the low reservoir levels, Hydro entered into purchase contracts in the derrivative market maturing 2003.

Average spot prices for the quarter were 35.7 øre per kWh compared to 17.0 øre per kWh in the same period of the prior year. The spot price at the end of 2002 was 62.6 øre per kWh. Forward prices for 2003 also increased considerably. This resulted in a higher fair value of the electricity portfolio by approximately 900 million. Part of this portfolio consists of sales contracts to other Hydro units. As a result, only part of the unrealized gain was reflected in the Energy results.

In the fourth quarter of 2002, power production decreased by 11 percent to 2.4 TWh compared to the same period in 2001. Production for the year was slightly higher than the prior year. The price increase in fourth quarter caused the average price for 2002 to increase to a level approximately 8 percent above 2001 level. The price for electricity declined significantly at the beginning of 2003.

EBITDA and operating loss from gas sourcing and marketing activities was NOK 29 million compared to a NOK 79 million gain in the same period of the prior year. Gas sourcing and marketing experienced weaker trading during the quarter.

EBITDA and operating income from oil trading and refinery operations increased by approximately NOK 35 million in the fourth quarter of 2002 compared to the same period of the previous year. The increase was mainly due to improved oil trading results, which increased by NOK 74 million compared to the same period of the previous year. Start up problems after the planned maintenance shut down at the Scanraff refinery at the end of the third quarter had an adverse effect on the fourth quarter results. Hydro’s average refinery margin for the fourth quarter was USD 2.62 per barrel, compared to USD 2.56 in 2001. For the year, the refinery margin was reduced from an unusually high average of USD 3.76 in 2001 to USD 2.21 for 2002.

EBITDA for Oil Marketing in the fourth quarter of 2002 was NOK 76 million compared to NOK 10 million in the same period of the prior year. The increase reflects improved margins mainly due to lower inventory losses. In the fourth quarter inventory losses amounted to NOK 15 million, compared to NOK 173 million in the same period of the prior year. Volumes remained virtually unchanged compared to the prior year. EBITDA for 2002 was NOK 323 million, NOK 208 million higher than in 2001, mainly due to improved margins including inventory gains of NOK 91 million compared to inventory losses of NOK 172 million during 2001.

HYDRO ALUMINIUM

EBITDA


	Fourth quarter					Year
NOK million	2002		2001¹⁾			2002		2001¹⁾

Metals		964		(349	)		2,703		1,766
Rolled Products		47		25			258		162
Extrusion and Automotive		285		(91	)		1,084		632
Other and eliminations		20		113			289		(17	)

Total		1,316		(302	)		4,334		2,543

Operating income (loss)


	Fourth quarter						Year
NOK million	2002			2001¹⁾			2002			2001¹⁾

Metals		425			(747	)		1,690			372
Rolled Products		(187	)		3			(295	)		58
Extrusion and Automotive		(29	)		(366	)		14			(228	)
Other and eliminations		21			113			289			(17	)

Total		230			(997	)		1,698			185

Fourth quarter

Year

2002

2001

2002

2001

Aluminium price LME (US dollar/tonne)

1,313

1,378

1,354

1,484

USD/NOK, realized ²⁾

7.62

9.04

8.34

8.90

Primary production (Kmt)

349

177

1,253

785

1)		Hydro has changed its presentation to include all unrealized gains and losses related to the LME contracts at the Hydro Aluminium area level. Prior periods have been reclassified to be presented on a consistent basis.

2)		Difference between realized exchange rate and spot rate at the date of transaction is reported as currency gain/loss and not included in EBITDA.

As of the first quarter of 2002, the Aluminium business area is comprised of Hydro’s and VAW`s aluminium and magnesium activities with the exception of VAW’s Flexible Packaging operations which are included in “Other Activities”. The Aluminium business area consists of the following sub-segments:

• Metals (Primary Metals and Metal Products)

• Rolled Products

• Extrusion and Automotive (including the North America unit)

Prior year amounts have been restated in accordance with this reporting structure.

During the first quarter of 2002, Hydro acquired VAW Aluminium AG and Technal. Both companies are fully integrated into the operations of Hydro Aluminium. Hydro’s consolidated results include the operating results of VAW as of March 15, 2002 and Technal, as of January 26, 2002.

Hydro Aluminium’s EBITDA for the fourth quarter of 2002 was NOK 1,316 million compared to a loss of NOK 302 million during the same period of the prior year. Operating income for the quarter was NOK 230 million compared to an operating loss of NOK 997 million in the fourth quarter of 2001. A large part of the improvement is attributable to the contributions made by VAW and Technal. However, the fourth quarter 2001 also included

losses related to trade receivables and aluminium options as well as restructuring costs of NOK 700 million related to the closure of the primary magnesium plant in Porsgrunn, Norway.

Results were negatively impacted by a decline of approximately 20 percent of realized aluminium prices stated in Norwegian kroner compared to the fourth quarter of 2001. Fixed costs increased in the fourth quarter by NOK 125 million compared to the prior year, among other things as a result of accruals related to environmental costs, wage inflation and costs related to projects

EBITDA for 2002 was NOK 4,334 million, an increase of 1,791 million. EBITDA from new businesses acquired during 2002 was NOK 2,489 million.

Hydro Aluminium’s results reflected the difficult market conditions which impacted all sub-segments during 2002. In response to the economic conditions, customers reduced their inventories which led to a decline in demand for metal products. As a result, overcapacity in the markets put pressure on both London Metals Exchange (LME) prices and product margins.

Cost and manning targets were met in 2002 for improvement programs designed to increase Hydro Aluminium’s overall efficiency. Total cost reductions amounted to approximately NOK 1 billion in 2002. Closure of the primary magnesium production in Norway yielded cost savings of NOK 430 million in 2002 (compared to total planned annual saving of NOK 500 million by the end of 2003). Additional improvement programs were announced in connection with the VAW acquisition to capture synergies within the combined organization. These programs resulted in the remaining NOK 560 million in saving compared to the level of costs of the combined businesses in 2001.

Total costs incurred in 2002 related to the improvement programs were NOK 300 million of which NOK 211 million was expensed in 2002 (NOK 65 million in the fourth quarter). The remainder was included in the opening balance liabilities upon the acquisition of VAW. The results were also negatively impacted by additional VAW integration costs of approximately NOK 150 million in 2002 (NOK 22 million in the fourth quarter).

Staff reductions during 2002 totalled 528 employees in the primary magnesium operations and 708 employees associated with other cost reduction initiatives.

Hydro Aluminium increased total saving targets in the fourth quarter of 2002. Cost saving targets for the combined programs, including magnesium, were increased by NOK 400 million to NOK 2.5 billion by the end of 2003 compared to the cost level of the combined businesses in 2001. Total costs directly related to the implementation of the improvement programs are expected to be NOK 1,400 million, of which NOK 990 million were incurred by the end of 2002.

Results from non-consolidated investees contributed NOK 341 million to EBITDA for the fourth quarter of 2002. During the year, the results were strongly influenced by the unrealized currency losses on USD-denominated loans held by the Brazilian alumina producer, Alunorte. Positive results for the fourth quarter reflected a reversal of NOK 166 million of previously recognised currency losses. For the year as a whole, the results from non-consolidated investees was a loss of NOK 219 million compared to a a profit of NOK 118 million in 2001. The annual results included currency losses of NOK 460 million in 2002 and NOK 159 million in the previous year.

METALS

Metals includes Hydro’s former Aluminium Metal Products, consisting of production of primary aluminium, remelt activities in Europe and magnesium metal activities, as well as the primary materials and metal products activities of VAW. Similar activities in the US are included as part of the Extrusion and Automotive sub-segment.

EBITDA for Metals in the fourth quarter of 2002 was NOK 964 million including approximately NOK 442 million from VAW activities acquired. During the same period of the prior year, the segment recorded a loss of NOK 349 million, which included NOK 700 million in restructuring costs for magnesium activities. EBITDA in 2002 was NOK 2,703 million, compared to NOK 1,766 million during 2001. The operating result for the fourth quarter was NOK 425 million compared with a negative operating result of NOK 747 million in 2001. The operating result for 2002 was NOK 1,690 million, compared with NOK 372 million in 2001.

Hydro’s realized LME price of USD 1,313 per tonne for the fourth quarter of 2002 was approximately 5 percent lower than the corresponding price of USD 1,378 per tonne for the prior year. Measured in Norwegian kroner, the LME price declined approximately 20 percent.

Volumes increased with the addition of the VAW business while the former Hydro Aluminium business volume remained stable. Product premiums increased, but remained lower during the fourth quarter than in the corresponding quarter in 2001.

Due to the strong Norwegian kroner and the low aluminium price, results for the Norwegian smelters were weak. Metals completed a major part of an environmental review and increased provisions for environmental liabilities by NOK 65 million.

Short-term high power prices during the fourth quarter in Norway did not significantly impact Hydro Aluminium’s earnings. Metals has long-term power contracts and is therefore not influenced by the spot market.

Magnesium operations have developed positively during the year. The market is, however, still under pressure.

Hydro Aluminium has several expansion projects in progress which are expected to improve the cost per tonne of the primary metal production. The first phase of the expansion of the aluminium plant in Sunndal in Norway started production during the fourth quarter as planned. Costs of NOK 27 million related to the start up have been expensed. Other expansion projects (primary capacity in Alouette, Canada, alumina refinery, Alunorte, in Brazil, anode production factory, Aluchemie, and the anode baking furnace in Årdal, Norway) are meeting progress and cost targets.

ROLLED PRODUCTS

EBITDA for Rolled Products for the fourth quarter of 2002 was NOK 47 million compared to NOK 25 million for the comparable period of the previous year. Activities relating to acquired VAW plants contributed NOK 50 million in EBITDA for the quarter. Operating loss for the fourth quarter of 2002 was NOK 187 million.

EBITDA for 2002 totaled NOK 258 million. The operating result for 2002 was a negative NOK 295 million, compared to a positive operating result of NOK 58 million in 2001.

At the acquisition date, inventories relating to VAW were adjusted to fair market value. This negatively impacted earnings by increasing cost of goods sold by approximately NOK 125 million for 2002. For the fourth quarter, this resulted in a positive effect of approximately NOK 25 million due to the refinement of fair value estimates from the first quarter. Other integration and demanning costs charged to 2002 earnings were approximately NOK 85 million (NOK 8 million in the fourth quarter).

Rolled Products’ sales prices are based on a margin over metal prices. The production process requires a long lead time, resulting in a normal inventory level during the process corresponding to between two and three months production. Therefore margins are impacted by variances in inventory values resulting from changing metal prices. Falling prices result in losses on inventory, which are reflected in the segment’s margin. Such losses amounted to approximately NOK 94 million for the fourth quarter and approximately NOK 200 million for 2002.

The result for fourth quarter was weak due to a normal seasonal effect on volume. After a decline during the first nine months of 2002, the average margin for the rolling mills recovered during the fourth quarter. Sales volumes of flat rolled products during 2002 increased approximately 6 percent compared to the previous year. The manufacturing system consists of two major rolling mills and several smaller mills. The rolling mill in Holmestrand, Norway experienced serious challenges relating to higher costs for scrap sourcing, (a major raw material) operational difficulties and the strong Norwegian kroner.

EXTRUSION AND AUTOMOTIVE

EBITDA for Extrusion and Automotive for the fourth quarter of 2002 was NOK 285 million, an increase of NOK 376 million compared to the corresponding period of the prior year. Excluding the operations of Technal and VAW and non-recurring items, EBITDA increased by NOK 144 million. Non-recurring charges of NOK 18 million were incurred in the quarter compared to NOK 194 million during the fourth quarter of the prior year. Operating loss for the fourth quarter amounted to NOK 29 million compared to NOK 366 million for the corresponding period in 2001.

EBITDA for 2002 was NOK 1,084 million compared to NOK 632 million in 2001. Excluding newly acquired units and non-recurring items, EBITDA decreased by approximately NOK 16 million. The decline related to lower results in North America, while Extrusion Europe and Automotive improved performance.

The market continues to be weak both in Europe and North America. On both continents weak demand has put pressure on the margins, although margins in the US have been more stable in spite of continuously decreasing volumes. The result for the European Extrusion activities was better in 2002 than 2001 due to efficiency and productivity improvements. Hydro’s Automotive activities experienced higher volumes in the fourth quarter than in the previous quarter which was partially offset by higher cost from the ramp up of new products.

HYDRO AGRI

Fourth quarter

Year

NOK million

2002

2001

2002

2001

EBITDA

645

1,099

3,945

4,402

Operating income

209

646

2,207

2,114

EBITDA for the fourth quarter of 2002 amounted to NOK 645 million (NOK 1,099 million). Fourth quarter operating income amounted to NOK 209 million compared to NOK 646 million in 2001. The main reasons for the decline include the appreciation of the NOK compared with USD and Euro resulting in an estimated decline of approximately NOK 300 million, increased oil and gas costs of approximately NOK 90 million and lower sales volumes reducing EBITDA by an additional NOK 100 million. The negative effects were partly offset by increased prices and lower fixed costs. Hydro’s market share in Europe improved in the quarter, mainly as a result of enhanced customer relations and a decline in imports. Prices in Europe increased towards the end of the quarter as a result of a tighter supply-demand balance and higher urea prices.

Hydro Agri achieved an EBITDA in 2002 of NOK 3,945 million (NOK 4,402 million in 2001). The decline was caused by the depreciation of the USD and Euro relative to the NOK. EBITDA expressed in USD remained unchanged at approximately USD 500 million.

The 2002 result was heavily influenced by the depreciation of USD and Euro relative to NOK. The estimated effect of the currency changes for 2002 was a decline in operating income and EBITDA of approximately NOK 700 million. Excluding the effects of currency changes, EBITDA improved by an estimated NOK 250 million. The major items having a positive effect on EBITDA included: increased volumes to markets outside of Europe (approximately NOK 100 million), lower oil and gas costs (approximately NOK 400 million), improved profit from industrial products (approximately NOK 100 million), lower fixed costs excluding currency effects (approximately NOK 355 million) and lower level of non-recurring items (approximately NOK 400 million). The major negative effects on EBITDA were: reduced prices and margins (approximately NOK 700 million), lower result in non-consolidated investees (approximately NOK 180 million) and lower interest income from receivables, (approximately NOK 180 million).

Operating income for 2002 amounted to NOK 2,207 million compared with NOK 2,114 million for 2001. Operating income improved as a result of lower depreciation in 2002 and write down of assets in 2001.

The global fertilizer industry continued to experience difficult markets in the fourth quarter, characterized by low international prices of commodity nitrogen products like urea and high feedstock prices, especially in the US. For European activities the Euro appreciation caused additional concern. At the end of the year the supply-demand balance tightened and prices have since increased.

In 2002, European fertilizer prices for all major nitrogen products were strongly influenced by the low international urea price. Nitrate prices were reduced by 7 percent measured in USD, while balanced fertilizer (NPK) prices showed a smaller reduction. Hydro gained market share due to the decrease in imported goods which declined by approximately 16 percent. On the whole, Hydro Agri maintained European sales volumes in a difficult year.

Outside of Europe, Hydro Agri improved sales in all key business segments during 2002. Sales volumes increased from 10.0 million tonnes of fertilizers in 2001 to 11.3 million tonnes in 2002. In terms of volume, the non-European fertilizer activity amounted to 54 percent of the total fertilizer business. In Latin America, Africa, Asia and North America the market position improved within Hydro Agri’s core segments. The strategic co-operation and marketing agreement with the Chilean speciality fertilizer producer, SQM, contributed positively to the progress of the business improvement in all regions. Sale of investment in the phosphate joint venture, Farmland Hydro, located in Florida in the US, was another step to strengthen the focus on core activities.

The industrial segment (Hydro Gas and Chemicals) significantly improved performance in 2002 from a satisfactory level in 2001. EBITDA improved to almost NOK 800 million, an underlying improvement of more than NOK 100 million compared to 2001. Technical nitrates, nitrogen chemicals and industrial gases showed strong performance and volumes increased in all major segments.

Fixed costs for Hydro Agri were reduced by NOK 355 million for the year 2002 compared with 2001 excluding the effects of the currency changes. Approximately one-third of the savings related to the sale of low performing non-core assets. Savings in the fourth quarter amounted to NOK 60 million of which NOK 40 million was due to divestments.

Net operating capital was reduced by NOK 2,300 million partly as a result of reduced inventory and receivable days, and partly as a result of the USD depreciation. Capital expenditures were NOK 1,543 million in 2002.

OTHER ACTIVITIES

EBITDA


	Fourth quarter				Year
NOK million	2002		2001		2002		2001

Petrochemicals		35		—		320		363
Flexible Packaging		58		—		265		—
Other		240		471		459		852

Total		333		471		1,044		1,215

Operating income (loss)


	Fourth quarter						Year
NOK million	2002			2001			2002			2001

Petrochemicals		(64	)		(145	)		(35	)		(101	)
Flexible Packaging		(3	)		—			83			—
Other		87			133			(35	)		(240	)

Total		20			(12	)		13			(341	)

Other activities consist of Petrochemicals, Treka AS (previously A/S Korn- og Foderstof Kompagniet or KFK), VAW Flexible Packaging, Pronova, the industial insurance company, Industriforsikring, and Hydro Business Partner.

PETROCHEMICALS

EBITDA in 2002 was NOK 320 million compared with NOK 363 million in 2001. EBITDA in 2001 included non-recurring costs of approximately NOK 225 million and a gain of NOK 59 million resulting from the sale of Singapore Polymers Corporation. The weaker result in 2002 primarily reflected lower prices for S-PVC and sodium hydroxide solution. In addition, a maintenance shutdown at the Rafnes plant resulted in costs and lost volume amounting to NOK 60 million. Lower raw materials costs for wet gas and purchased ethylene resulted in a positive effect.

EBITDA in the fourth quarter was NOK 35 million compared with a breakeven result in the fourth quarter of 2001, which included non-recurring costs of around NOK 130 million and gains of NOK 59 million. The underlying decline in earnings resulted primarily from lower prices for sodium hydroxide solution and higher raw material costs for wet gas and purchased chlorine.

TREKA AS (FORMERLY A/S KORN-OG FODERSTOF KOMPAGNIET -KFK)

Following the sale of its feed and grain operation, A/S Korn og Foderstof Kompagniet was renamed Treka AS. The sale of the Danish operation was completed in the fourth quarter of 2002. The sale of the operations in Sweden was approved by the authorities in the fourth quarter and the transaction was completed in January 2003. The completion of these transactions did not have a significant effect on the results due to an earlier write-down of assets amounting to approximately NOK 150 million in the third quarter. The main activities remaining in Treka relate primarily to the Biomar fish feed operations.

FLEXIBLE PACKAGING

Results for Flexible Packaging are included in Hydro’s operating results from March 15, 2002. During the fourth quarter an agreement was signed to sell the Flexible Packaging operations to Alcan. The transaction is pending regulatory approvals. No significant gain or loss relating to the sale is expected with the exception of potential currency translation effects at closing. Currency changes resulted in an unrealised translation loss of NOK 150 million as of the end of 2002.

EBITDA for Flexible Packaging in the fourth quarter of 2002 was NOK 58 million, which was slightly lower than in the third quarter. EBITDA for 2002 was NOK 265 million.

CORPORATE ACTIVITIES AND ELIMINATIONS

Hydro Energy has outstanding purchase contracts for electricity that are primarily intended to secure the power supply for operations in Hydro. Accordingly, Energy has corresponding sales

contracts with other units within the group. Contracts meeting certain criteria are deemed to be derivative contracts and are revalued at market value by Energy at the end of each period. At the end of 2002, exceptionally high electricity prices in Norway led to unrealized gains on external derivative contracts and corresponding losses on related internal sales contracts for Hydro Energy. Hydro units account for power contracts with Hydro Energy as ordinary purchase contracts. Therefore such contracts are not revalued at market value at the end of each period. Elimination of the effect of market value evaluation of internal contracts in the fourth quarter constituted a positive effect on the operating result and EBITDA of approximately NOK 600 million, and was included in the group eliminations. There have been no such significant effects in previous periods. The value of the energy contracts portfolio will fluctuate in accordance with changes in market prices and the size and composition of the portfolio at any given time. Electricity prices have fallen after year-end, and the value of these contracts has been reduced.

FINANCE


	Fourth quarter						Year
NOK million	2002			2001			2002			2001

Interest income		328			750			1,548			2,775
Dividends received / net gain (loss) on securities		6			38			(130	)		72

Interest income and other financial income		334			788			1,418			2,847

Interest expense		(767	)		(932	)		(3,189	)		(3,721	)
Capitalized interest		170			164			607			685
Net foreign exchange gain (loss)		857			(203	)		3,262			(416	)
Other		(37	)		(65	)		(163	)		(157	)

Interest expense and foreign exchange gain/(loss)		223			(1,036	)		517			(3,609	)

Net financial income (expense)		557			(248	)		1,935			(762	)

Net financial income for 2002 was NOK 1,935 million, including a currency gain of NOK 3,262 million. During the year the US dollar and closely linked currencies such as the Canadian dollar have weakened considerably against both the Norwegian kroner, the Euro and the Australian dollar, resulting in gains on loans and currency forwards but also currency losses on receivables. Hydro started the year with an extraordinarily high cash level which was subsequently used for funding the VAW acquisition early in the year. As a result, interest income was lower in 2002 than in the preceding year.

Net financial income for the fourth quarter of 2002 was NOK 557 million, including a foreign exchange gain of NOK 856 million. The weakening trend of the USD was the same in the quarter as for the full year. A return to a more normal cash situation compared to 2001 was also reflected in lower interest income.

Net interest bearing debt at the end of 2002 was NOK 34 billion, an increase of NOK 13 billion compared to 2001. There was no new issuance of debt during the year; however, a certain amount of debt included as part of the VAW acquisition remains outstanding.

Hydro’s debt/equity ratio, calculated as net interest bearing debt divided by equity plus minority interest, was 0.44 at the end of 2002. The ratio was positively affected by the currency development in addition to a high cash flow generation. Throughout the year, the debt/equity ratio was at or better than the Company’s long term target of 0.5, despite the major acquisitions.

TAX

The provisions for current and deferred taxes for 2002 amounted to NOK 13,318 million, approximately 60 percent of income before tax. This amount is mainly comprised of current taxes. The equivalent figures for 2001 were NOK 13,750 million and 64 percent.

On February 7, 2003, The Norwegian Supreme Court unanimously decided to accept Norsk Hydro’s tax treatment of Group contribution for the year 1993. Hydro will be reimbursed NOK 177 million in taxes and NOK 148 million in interest which will be reflected in first quarter 2003 results.

Oslo, February 10, 2003
Board of Directors

US GAAP

NORSK HYDRO ASA and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


										Year ended
	Fourth quarter									December 31,
	2002			2002			2001			2002			2002			2001

Million, except per share data	NOK			EURO¹⁾			NOK			NOK			EURO¹⁾			NOK

Operating revenues		39,635			5,448			34,670			162,936			22,396			152,835
Depreciation, depletion and amortization		3,706			509			3,102			13,912			1,912			12,273
Other operating costs		29,790			4,095			27,775			129,050			17,738			118,518
Restructuring costs		—			—			961			(10	)		(1	)		961

Operating income		6,139			844			2,832			19,984			2,747			21,083

Equity in net income of non-consolidated investees		484			67			265			33			5			566
Interest income and other financial income		334			46			788			1,418			194			2,847
Other income, net		—			—			(19	)		219			30			578

Earnings before interest expense and tax (EBIT)		6,957			957			3,866			21,654			2,976			25,074

Interest expense and foreign exchange gain/(loss)		223			31			(1,036	)		517			71			(3,609	)

Income before tax and minority interest		7,180			988			2,830			22,171			3,047			21,465

Income tax expense		(3,769	)		(518	)		(1,703	)		(13,318	)		(1,830	)		(13,750	)
Minority interest		(28	)		(4	)		17			15			2			177

Net income		3,383			466			1,144			8,868			1,219			7,892

Earnings per share (in NOK and Euro)		13.10			1.80			4.40			34.40			4.70			30.50

Average number of outstanding shares		257,960,532			257,960,532			257,411,860			257,799,411			257,799,411			258,434,202

Presentation in EURO is a convenience translation based on the exchange rate at December 31, 2002, which was 7.2754.

US GAAP

NORSK HYDRO ASA and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

December 31,

December 31,

2002

2001

Million, except per share data

NOK

EURO¹⁾

NOK

ASSETS

Cash and cash equivalents

5,965

820

27,148

Other liquid assets

2,647

364

2,421

Receivables

40,547

5,573

34,960

Inventories

17,232

2,368

15,794

Total current assets

66,391

9,125

80,323

Property, plant and equipment, less accumulated depreciation, depletion and amortization

112,465

15,458

95,277

Other assets

28,473

3,914

22,322

Total non-current assets

140,938

19,372

117,599

Total assets

207,329

28,497

197,922

LIABILITIES AND SHAREHOLDERS’ EQUITY

Bank loans and other interest bearing short-term debt

7,306

1,004

8,458

Current portion of long-term debt

1,958

269

1,966

Other current liabilities

38,593

5,305

32,569

Total current liabilities

47,857

6,578

42,993

Long-term debt

30,902

4,247

37,853

Other long-term liabilites

14,633

2,011

10,127

Deferred tax liabilities

36,838

5,064

31,105

Total long-term liabilities

82,373

11,322

79,085

Minority shareholders’ interest in consolidated subsidiaries

1,143

157

1,051

Shareholders’ equity

75,956

10,440

74,793

Total liabilities and shareholders’ equity

207,329

28,497

197,922

Presentation in EURO is a convenience translation based on the exchange rate at December 31, 2002, which was 7.2754.

CHANGES IN SHAREHOLDERS’ EQUITY


	Year
NOK million	2002			2001

Shareholders’ equity at beginning of period		74,793			71,227
Net income		8,868			7,892
Dividend declared and paid		(2,576	)		(2,470	)
Foreign currency translation, net		(7,221	)		(793	)
Hedge of net investment and cash flow hedge		2,312			225
Other items recorded directly to shareholders’ equity		(354	)		(356	)
Reissue (purchase) of treasury stock		134			(932	)

Shareholders’ equity at end of period		75,956			74,793

All figures are based on generally accepted accounting principles in the United States (US GAAP) unless otherwise stated.

Hydro’s accounting principles are included in its 2001 Annual Report. The principles are similar for the interim accounts, with the exception of the new accounting standards implemented on January 1, 2002 in accordance with the description in the 2001 Annual Report and in this Report.

Interim figures and year-end figures for 2002 are unaudited.

GOODWILL AND OTHER INTANGIBLE ASSETS

Beginning January 1, 2002 Hydro adopted Statement of Financial Accounting Standards No. 141 (SFAS 141), “Business Combinations” and Statement No. 142 (SFAS 142), “Goodwill and Other Intangible Assets”. SFAS 141 requires all business combinations initiated after June 30, 2001 to be accounted for under the purchase method. SFAS 141 also sets forth guidelines for the accounting for intangible assets including goodwill, and expands financial disclosures concerning business combinations consummated after June 30, 2001.

Under SFAS 142, goodwill and certain other intangible assets are no longer systematically amortized but reviewed at least annually for impairment. The largest portion of goodwill was recorded in the North America sector of the Extrusion and Automotive sub-segment. Hydro has determined that the reporting unit level where goodwill is to be recorded is the sector level. Hydro was required to complete the first step of the transitional goodwill impairment test by June 30, 2002 and the second step by the end of the 2002 calendar year. The first step required Hydro to compare the fair value of sectors with goodwill to the carrying value of the net assets of the respective sectors. If this assessment indicated that the fair value to be less than the carrying value for certain sectors, such sectors would then be subject to the second step of the impairment test which can lead to identifying and measuring impairments to goodwill.

Hydro completed the transitional goodwill impairment test for the North America sector as of January 1, 2002 as well as the annual goodwill impairment test in the fourth quarter of 2002. These tests did not result in any impairment charges.

Hydro incurred a NOK 52 million goodwill impairment charge in the “Other Activities” segment related to KFK’s divestment of its feed activity.

Under SFAS 142, intangible assets determined to have indefinite useful lives are not amortized until a finite life can be estimated. These intangible assets are subject to impairment testing on an annual basis. Hydro performed a reassessment of the trademarks related to the Technal acquisition within the Extrusion and Automotive segment and determined that it has a finite life estimated to be 20 years.

The following table reconciles the reported Earnings Before Interest Expenses and Taxes (EBIT), reported net income, and reported earnings per share to that which would have resulted for the fourth quarter ended December 31, 2001 and for the year ended December 31, 2001, assuming SFAS 142 was adopted on January 1, 2001.


	Fourth quarter		Year
NOK million, except per share data	2001		2001

Reported earnings before interest expenses and taxes (EBIT)		3,866		25,074
Goodwill amortization		42		158

Pro forma EBIT		3,908		25,232

Net income		1,144		7,892
Goodwill amortization (after tax)		42		158

Pro forma net income		1,186		8,050

Reported earnings per share		4.40		30.50
Goodwill amortization per share		0.20		0.60

Pro forma earnings per share		4.60		31.10

Hydro has the following intangible assets and goodwill included in Other Assets:

2002

2001

Gross

Accumulated

Gross

Accumulated

carrying

amortization/

carrying

amortization/

NOK million

amount

impairment

Net

amount

impairment

Net

Intangible assets with finite useful life

3,284

(1,605

)

1,679

1,889

(1,354

)

535

Intangible assets with indefinite useful life

—

Total intangible assets

3,289

(1,605

)

1,684

1,889

(1,354

)

535

Goodwill

1,217

1,265

Goodwill in non-consolidated investees accounted for by the equity method

215

258


	Extrusion and
NOK million	Automotive			Other			Total

Balance at December 31, 2001		1,042			223			1,265

Adjustments:
Goodwill acquired		194			128			322
Impairment loss		—			(52	)		(52	)
Currency translation effect		(255	)		(20	)		(275	)
Other		37			(80	)		(43	)

Balance at December 31, 2002		1,018			199			1,217

EBITDA* AND RECONCILIATION TO INCOME BEFORE TAXES AND MINORITY INTEREST

Hydro’s steering model, Value-Based Management, reflects Hydro’s focus on cash flow-based indicators, before and after taxes, to measure performance in Hydro’s operating segments. EBITDA, which Hydro defines as income/(loss) before tax, interest expense, depreciation, amortization and write-downs, is an approximation of cash flow from operations before tax. EBITDA is a measure that includes in addition to operating income, interest income and other financial income, results from non-consolidated investees and gains and losses on sales of activities classified as “Other income, net” in the income statement. It excludes depreciation, write-downs and amortization, as well as amortization of excess values and goodwill in non-consolidated investees. Hydro’s definition of EBITDA may differ from that of other companies.

EBITDA should not be construed as an alternative to operating income and income before taxes as an indicator of the Company’s operations in accordance with generally accepted accounting principles. Nor is EBITDA an alternative to cash flow from operating activities in accordance with generally accepted accounting principles.

Hydro has also introduced Cash Return On Gross Investments (CROGI) as an annual rate of return measure. CROGI is defined as gross cash flow after taxes, divided by gross investment. Gross cash flow is defined as EBITDA less taxes, while gross investment is defined as total assets ¹⁾ plus accumulated depriciation, amoritization and write downs, less short-term interest free liabilities ²⁾.

CROGI in 2002 was 8.6 % compared with 9.4 % for 2001. Calculated on normalized prices, CROGI in 2002 was 9 % and 8 % for 2001. The normalized prices used are: oil — USD 18 per barrel, aluminum (LME) — USD 1,500 per tonne, fertilizer — CAN 27, USD 113 per tonne, with an exchange rate of NOK 8.00 per US dollar and NOK 7.60 per euro.

The EBITDA figures by core business area are presented in the table below, in addition to the reconciliation from EBITDA to income before taxes and minority interest.


	Fourth quarter						Year
NOK million	2002			2001			2002			2001

Hydro Oil and Energy		8,030			5,528			25,483			27,604
Hydro Aluminium		1,316			(302	)		4,334			2,543
Hydro Agri		645			1,099			3,945			4,402
Other Activities		333			471			1,044			1,215
Corporate and Eliminations		274			501			995			1,993

Total EBITDA		10,598			7,297			35,801			37,757

Depreciation, depletion and amortization ³⁾		(3,706	)		(3,102	)		(13,912	)		(12,534	)
Amortization of excess values in non-consolidated investees		65			(329	)		(235	)		(149	)
Interest expense		(767	)		(932	)		(3,189	)		(3,721	)
Capitalized interest		170			164			607			685
Net foreign exchange gain/(loss)		857			(203	)		3,262			(416	)
Other financial items		(37	)		(65	)		(163	)		(157	)

Income before tax and minority interest		7,180			2,830			22,171			21,465

EBITDA information by segment in each of the core business areas, as well as explanation of the financial performance of each segment, is included in the presentation of the business areas.

• EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.

1)		Deferred tax assets are not included in gross investment.

2)		Deferred tax liabilities are not deducted from gross investment.

3)		This includes write-downs of property, plant and equipment included in restructuring costs of NOK 261 million for 2001.

US GAAP
NORSK HYDRO ASA and SUBSIDIARIES

INDIVIDUAL OPERATING SEGMENT

OPERATING REVENUES


	Fourth quarter						Year
NOK million	2002			2001¹⁾			2002			2001¹⁾

Exploration and Production		9,507			7,562			34,009			33,282
Energy and Oil Marketing		8,066			9,622			39,780			43,959
Eliminations		(4,451	)		(5,646	)		(22,048	)		(25,225	)

Hydro Oil and Energy		13,122			11,538			51,741			52,016

Metals		10,161			6,980			39,646			31,475
Rolled Products		4,156			955			14,790			4,228
Extrusion and Automotive		5,852			5,218			24,245			22,487
Other and eliminations		(3,534	)		(1,464	)		(13,630	)		(7,107	)

Hydro Aluminium		16,635			11,689			65,051			51,083

Hydro Agri		6,927			8,807			33,348			37,407

Other activities		4,652			5,124			21,769			22,361
Corporate and Eliminations		(1,701	)		(2,488	)		(8,973	)		(10,032	)

Total		39,635			34,670			162,936			152,835

EXTERNAL REVENUES


	Fourth quarter				Year
NOK million	2002		2001¹⁾		2002		2001¹⁾

Exploration and Production		4,907		1,830		11,175		7,848
Energy and Oil Marketing		7,095		8,550		35,795		39,450
Eliminations		26		—		26		—

Hydro Oil and Energy		12,028		10,380		46,996		47,298

Metals		6,607		5,609		26,025		24,961
Rolled Products		3,952		936		14,135		4,126
Extrusion and Automotive		5,851		5,101		24,186		21,854
Other and eliminations		50		124		162		1

Hydro Aluminium		16,460		11,770		64,508		50,942

Hydro Agri		6,805		8,663		32,818		36,809

Other activities		3,745		3,843		17,988		17,713
Corporate and eliminations		597		14		626		73

Total		39,635		34,670		162,936		152,835

Hydro has changed its presentation to include all unrealized gains and losses related to the LME contracts at the Hydro Aluminium area level. Prior periods have been reclassified to be presented on a consistent basis.

US GAAP
NORSK HYDRO ASA and SUBSIDIARIES

INTERNAL REVENUES


	Fourth quarter						Year
NOK million	2002			2001			2002			2001

Exploration and Production		4,600			5,732			22,834			25,434
Energy and Oil Marketing		971			1,072			3,985			4,509
Eliminations		(4,477	)		(5,646	)		(22,074	)		(25,225	)

Hydro Oil and Energy		1,094			1,158			4,745			4,718

Metals		3,554			1,371			13,621			6,514
Rolled Products		204			19			655			102
Extrusion and Automotive		1			117			59			633
Other and eliminations		(3,584	)		(1,588	)		(13,792	)		(7,108	)

Hydro Aluminium		175			(81	)		543			141

Hydro Agri		122			144			530			598

Other activities		907			1,282			3,781			4,649
Corporate and eliminations		(2,298	)		(2,503	)		(9,599	)		(10,106	)

Total		—			—			—			—

DEPRECIATION, DEPLETION AND AMORTIZATION


	Fourth quarter					Year
NOK million	2002		2001			2002		2001

Exploration and Production		2,308		2,272			8,785		7,791
Energy and Oil Marketing		60		31			221		229

Hydro Oil and Energy		2,368		2,303			9,006		8,020

Metals		284		(146	)		1,117		751
Rolled Products		228		23			496		104
Extrusion and Automotive		281		304			1,010		895

Hydro Aluminium		793		181			2,623		1,750

Hydro Agri		302		344			1,172		1,570

Other activities		242		269			1,100		912
Corporate and eliminations		1		5			11		21

Total		3,706		3,102			13,912		12,273

US GAAP
NORSK HYDRO ASA and SUBSIDIARIES

OPERATING INCOME (LOSS)


	Fourth quarter						Year
NOK million	2002			2001¹⁾			2002			2001¹⁾

Exploration and Production		4,926			2,964			14,472			17,813
Energy and Oil Marketing		575			221			1,592			1,365
Eliminations		26			—			26			—

Hydro Oil and Energy		5,527			3,185			16,090			19,178

Metals		425			(747	)		1,690			372
Rolled Products		(187	)		3			(295	)		58
Extrusion and Automotive		(29	)		(366	)		14			(228	)
Other and eliminations		21			113			289			(17	)

Hydro Aluminium		230			(997	)		1,698			185

Hydro Agri		209			646			2,207			2,114

Other activities		20			(12	)		13			(341	)
Corporate and eliminations		153			10			(24	)		(53	)

Total		6,139			2,832			19,984			21,083

EBITDA


	Fourth quarter					Year
NOK million	2002		2001¹⁾			2002		2001¹⁾

Exploration and Production		7,312		5,271			23,475		25,768
Energy and Oil Marketing		692		257			1,982		1,836
Eliminations		26		—			26		—

Hydro Oil and Energy		8,030		5,528			25,483		27,604

Metals		964		(349	)		2,703		1,766
Rolled Products		47		25			258		162
Extrusion and Automotive		285		(91	)		1,084		632
Other and eliminations		20		113			289		(17	)

Hydro Aluminium		1,316		(302	)		4,334		2,543

Hydro Agri		645		1,099			3,945		4,402

Other activities		333		471			1,044		1,215
Corporate and eliminations		274		501			995		1,993

Total		10,598		7,297			35,801		37,757

US GAAP
NORSK HYDRO ASA and SUBSIDIARIES

OPERATING INCOME - EBIT – EBITDA - FOURTH QUARTER 2002


									Selected								Depr.
	Operating			Non-cons.		Interest			Financial			Other					And
NOK million	income			investees		income			items			income		EBIT			Amort.		EBITDA

Exploration and Production		4,926			7		74			(4	)		—		5,003			2,309		7,312
Energy and Oil Marketing		575			53		7			(5	)		—		630			62		692
Eliminations		26			—		—			—			—		26			—		26

Hydro Oil and Energy		5,527			60		81			(9	)		—		5,659			2,371		8,030

Metals		425			239		12			26			—		702			262		964
Rolled Products		(187	)		46		(1	)		5			—		(137	)		184		47
Extrusion and Automotive		(29	)		56		6			(3	)		—		30			255		285
Other and eliminations		21			—		—			(1	)		—		20			—		20

Hydro Aluminium		230			341		17			27			—		615			701		1,316

Hydro Agri		209			74		50			(2	)		—		331			314		645

Other activities		20			5		67			(6	)		—		86			247		333
Corporate and eliminations		153			4		113			(4	)		—		266			8		274

Total		6,139			484		328			6			—		6,957			3,641		10,598

OPERATING INCOME - EBIT – EBITDA - YEAR 2002


									Selected									Depr.
	Operating			Non-cons.			Interest		Financial			Other						And
NOK million	income			investees			income		items			income			EBIT			Amort.		EBITDA

Exploration and Production		14,472			31			100		5			77			14,685			8,790		23,475
Energy and Oil Marketing		1,592			148			26		(6	)		—			1,760			222		1,982
Eliminations		26			—			—		—			—			26			—		26

Hydro Oil and Energy		16,090			179			126		(1	)		77			16,471			9,012		25,483

Metals		1,690			(275	)		19		92			—			1,526			1,177		2,703
Rolled Products		(295	)		7			5		5			—			(278	)		536		258
Extrusion and Automotive		14			49			18		(10	)		—			71			1,013		1,084
Other and eliminations		289			—			—		—			—			289			—		289

Hydro Aluminium		1,698			(219	)		42		87			—			1,608			2,726		4,334

Hydro Agri		2,207			57			206		29			166			2,665			1,280		3,945

Other activities		13			12			178		(271	)		—			(68	)		1,112		1,044
Corporate and eliminations		(24	)		4			996		26			(24	)		978			17		995

Total		19,984			33			1,548		(130	)		219			21,654			14,147		35,801

US GAAP
NORSK HYDRO ASA and SUBSIDIARIES

INVESTMENTS ¹⁾

Fourth quarter

Year

NOK million

2002

2001

2002

2001

Exploration and Production

2,471

3,340

14,285

9,618

Energy and Oil Marketing

205

235

499

472

Hydro Oil and Energy

2,676

3,575

14,784

10,090

Metals

670

818

12,728

1,872

Rolled Products

377

125

7,437

201

Extrusion and Automotive

524

443

5,153

1,454

Hydro Aluminium

1,571

1,386

25,318

3,527

Hydro Agri

657

316

1,543

797

Other activities

352

736

3,115

1,372

Corporate and eliminations

781

271

1,044

542

Total

6,037

6,284

45,804

16,328

Additions to property, plant and equipment (capital expenditures) plus long-term securities, intangibles, long-term advances and investments in non-consolidated investees.

EBITDA


	2002									2001
NOK million	4th qtr		3rd qtr			2nd qtr		1st qtr ¹⁾		4th qtr ¹⁾			3rd qtr ¹⁾			2nd qtr ¹⁾		1st qtr ¹⁾

Exploration and Production		7,312		5,022			5,776		5,365		5,271			6,533			6,902		7,062
Energy and Oil Marketing		692		429			379		482		257			224			523		832
Eliminations		26		—			—		—		—			—			—		—

Hydro Oil and Energy		8,030		5,451			6,155		5,847		5,528			6,757			7,425		7,894

Metals		964		474			715		550		(349	)		287			593		1,235
Rolled Products		47		101			82		28		25			46			36		55
Extrusion and Automotive		285		274			331		194		(91	)		210			179		334
Other and eliminations		20		(22	)		164		127		113			(17	)		81		(194	)

Hydro Aluminium		1,316		827			1,292		899		(302	)		526			889		1,430

Hydro Agri		645		719			1,198		1,383		1,099			725			1,008		1,570

Other activities		333		365			183		163		471			636			88		20
Corporate and eliminations		274		128			297		296		501			487			560		445

Total		10,598		7,490			9,125		8,588		7,297			9,131			9,970		11,359

Hydro has changed its presentation to include all unrealized gains and losses related to the LME futures contracts at the Hydro Aluminium area level. Prior periods have been reclassified to be presented on a consistent basis.

US GAAP
NORSK HYDRO ASA and SUBSIDIARIES

CROGI


NOK million	2002			2001			2000			1999			1998
Exploration and Production		11.9	%		13.1	%		14.5	%		9.4	%		7.2	%
Energy and Oil Marketing		12.3	%		12.2	%		13.3	%		12.3	%		7.1	%

Hydro Oil and Energy		11.9	%		13.0	%		14.4	%		9.7	%		7.3	%

Metals		7.1	%		6.0	%		11.2	%		8.2	%		9.5	%
Rolled Products		3.5	%		5.8	%		3.8	%		10.4	%		9.6	%
Extrusion and Automotive		7.0	%		4.5	%		11.2	%		8.9	%		8.6	%

Hydro Aluminium		7.1	%		5.7	%		10.8	%		8.3	%		9.3	%

Hydro Agri		9.4	%		9.6	%		7.8	%		1.4	%		5.1	%

Other activities		4.7	%		4.9	%		9.7	%		11.1	%		5.4	%
Corporate and eliminations		-8.6	%		1.9	%		19.1	%		21.6	%		27.9	%

Total		8.6	%		9.4	%		12.5	%		8.5	%		7.8	%

QUARTERLY RESULTS


	2002								2001
NOK million	4th qtr		3rd qtr		2nd qtr		1st qtr		4th qtr		3rd qtr		2nd qtr		1st qtr

Operating revenues		39,635		40,560		44,702		38,039		34,670		36,086		40,951		41,128
Operating income		6,139		3,945		5,077		4,823		2,832		4,741		6,065		7,445
EBITDA		10,598		7,490		9,125		8,588		7,297		9,131		9,970		11,359
Net income		3,383		513		2,840		2,132		1,144		1,333		2,180		3,235
Earnings per share (NOK)		13.10		2.00		11.00		8.30		4.40		5.20		8.40		12.40


	2002								2001
EURO million	4th qtr		3rd qtr		2nd qtr		1st qtr		4th qtr		3rd qtr		2nd qtr		1st qtr

Operating revenues		5,448		5,521		6,029		4,933		4,352		4,449		5,202		5,118
Operating income		844		537		685		625		355		585		770		927
EBITDA		1,457		1,019		1,231		1,114		916		1,126		1,267		1,414
Net income		465		70		383		276		144		164		277		403
Earnings per share (EURO)		1.80		0.30		1.50		1.10		0.60		0.60		1.10		1.50

Amounts have been converted to EURO for convenience using the end exchange rate (NOK/EUR) in effect during the quarters as follows:


			7.2754				7.3469				7.4145				7.7116				7.9667				8.1105				7.8716				8.0356

VAW ACQUISITION

In January 2002, Hydro entered into an agreement to purchase all the outstanding shares of the German aluminum company, VAW Aluminium AG, a leading aluminum company in Europe. The acquisition was completed on March 15, 2002. VAW is included in Hydro’s consolidated results from that date. VAW had operations in more than 20 countries. The major part of these activities was located in the EU. In addition, VAW had important operations located in North America and the Pacific region. VAW is fully integrated into Hydro’s aluminium operations.

The consideration for VAW amounts to EURO 1,911 million (NOK 14.9 billion). In addition, interest-bearing debt of EURO 703 million (NOK 5.5 billion) and pension obligations of approximately EURO 410 million (NOK 3.2 billion) were assumed. The acquisition was financed by Hydro’s cash holdings.

Assets acquired and liabilities assumed in the VAW acquisition have been recorded at estimated fair value. The purchase price allocation is based on estimates for fair value of assets and liabilities in VAW, and is substantially complete. Excess values are for the most part allocated to tangible fixed assets. The allocation does not indicate material goodwill in the transaction.

Because VAW’s inventories have been recorded at estimated fair values as of the time of the acquisition, cost of goods sold was unusually high in the period after acquisition. The effect was approximately NOK 200 million.


NOK million

Preliminary allocation of purchase price:
Cash and cash equivalents	410
Other current assets	11,597
Property, plant and equipment, less accumulated depreciation, depletion and amortization	16,592
Other assets	6,140
Total current liabilities	(9,517	)
Total long-term liabilities	(10,022	)
Minority shareholders’ interest in consolidated subsidiaries	(356	)

Estimated fair value of assets in VAW as of March 15, 2002	14,844

Purchase price allocation may be changed until March 15, 2003.

PRO FORMA INFORMATION

The following unaudited pro forma information has been prepared assuming VAW was acquired as of the beginning of 2001.

Fourth quarter

Year

NOK million

2002

2001

2002

2001

Operating revenues

39,635

41,569

174,630

180,567

Operating income

6,058

3,388

20,696

22,941

EBITDA

10,562

8,317

37,020

40,656

Net income

3,378

1,365

9,228

8,268

Earnings per share in NOK

13.10

5.30

35.70

32.00

VAW’s results have been translated into Norwegian kroner at average exchange rates. Pro forma adjustments are made for the fair value adjustments relating to assets and liabilities, depreciation and the amortization of these adjustments as well as finance cost of the acquisition price and deferred tax related to the above mentioned adjustments.

However, no adjustment has been made for the fair valuation of inventories. Significant sales between the companies are eliminated.

The effect of other acquisitions and divestitures on accounting results for 2001 and 2002 is not material.

CHANGE IN PRESENTATION OF UNREALIZED GAINS AND LOSSES FOR LME CONTRACTS

Hydro Aluminium is susceptible to swings in both the aluminum price and currency exchange rates because of its activities in many different countries. To secure margins on physical contracts and to minimize its exposure to the aluminum price and US dollar exchange rate Hydro uses commodity derivatives for aluminum (LME contracts) and financial derivatives, primarily forward currency contracts. All derivatives are marked-to-market with the changes in the fair market value recorded in the income statement, except for certain derivative contracts designated as hedges. Changes in the fair market value of these contracts are recorded directly to shareholders’ equity (hedge accounting).

Changes in the fair value of LME contracts (unrealized gains or losses) are recorded as an income or expense and are included in operating income and EBITDA, in addition to realized gains or losses.

Changes in the fair value of forward contracts and other financial instruments result in unrealized gains or losses that are recorded as foreign exchange gain or loss together with the realized effects. These foreign exchange gains and losses are classified as financial income and expense and are thereby not included in operating income nor EBITDA.

In contrast to Hydro, VAW accounted for most of its LME contracts, forward currency contracts and currency options under hedge accounting where the unrealized gains and losses were recorded directly to shareholders’ equity and reclassed to operating income or operating expense matching the earnings impact of the hedged sales or purchases of aluminum. This accounting policy has been changed upon Hydro’s acquisition of VAW so that all commodity and financial derivative contracts are accounted for in accordance with Hydro’s accounting policy as described above.

Beginning from the second quarter of 2002 Hydro has changed its presentation of the effect of unrealized gains and losses associated with LME contracts. LME price exposure is managed centrally at the Hydro Aluminium level. All unrealized effects of these commodity derivatives are presented together on the “Other and eliminations” line at the Hydro Aluminium level and are not split between the different segments. When the contracts are realized, the realized gain and loss is recorded in operating income for the business segment. Unrealized and realized foreign exchange gain and loss on forward currency contracts and other financial derivatives is recorded as described above, and is still presented as a part of financial income and expense, which is not included in operating income and EBITDA. The 2001 numbers have been restated from what was presented in the second quarter.

SPECIFICATION OF THE CHANGE IN THE PRESENTATION OF UNREALISED GAINS AND LOSSES FOR LME CONTRACTS:


	2002			2002			2001			2001			2001			2001
NOK million	2nd qtr			1st qtr			4th qtr			3rd qtr			2nd qtr			1st qtr

Metals		(179	)		(87	)		(124	)		72			(123	)		175
Rolled Products		—			—			—			—			—			—
Extrusion and Automotive		(4	)		(26	)		17			(49	)		66			17
Other and eliminations		183			113			107			(23	)		57			(192	)

Hydro Aluminium		—			—			—			—			—			—

Norsk Hydro prepares its financial statements in accordance with generally accepted accounting principles in Norway (N GAAP) and in the United States (US GAAP). The comments of Hydro’s Board of Directors concerning developments in the operations of the operating segments are applicable to both sets of accounting principles, unless otherwise stated. The differences in net income under N GAAP and US GAAP are immaterial. The information provided in this report is in accordance with the requirements of the NRS(F) on interim reporting.

Quarterly results:

1st quarter: April 28, 2003
2nd quarter: July 21, 2003
3rd quarter: October 20, 2003

The results will be released at 0930 hours CET. Hydro reserves the right to revise these dates.
In order to utilize the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, Hydro is providing the following cautionary statement:

This document contains (and oral communications made by or on behalf of Hydro may contain) forecasts, projections, estimates, statements of management’s plans, objectives and strategies for Hydro, such as planned expansions, investments or other projects, targeted production volumes, capacity or rate, start-up costs, cost reductions, profit objectives, and various expectations about future developments in Hydro’s markets (particularly prices, supply and demand, and competition), results of operations, margins, risk management and so forth. These forward-looking statements are based on a number of assumptions and forecasts, including world economic growth and other economic indicators (including rates of inflation and industrial production), trends in Hydro’s key markets, and global oil and gas, aluminum and fertilizer supply and demand conditions. By their nature, forward-looking statements involve risk and uncertainty and various factors could cause Hydro’s actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. For a detailed description of factors that could cause Hydro’s actual results to differ materially from those expressed in or implied by such statements, please refer to Hydro’s annual report on Form 20-F for the year-ended December 31, 2001 and subsequent filings on Form 6-K with the U.S. Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

For and on behalf of
NORSK HYDRO ASA

/s/ John O. Ottestad

JOHN O. OTTESTAD
(Executive Vice President and
Chief Financial Officer)

Date: February, 2003