Underlying EBIT. NOK 1,619 million

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1

2

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Financial review

Summary of Results 3

Aluminium Metal 5

Aluminium Products 10

Energy 12

Corporate, other and eliminations 13

Items excluded from underlying EBIT and income from continuing operations 14

Finance 16

Tax 17

Discontinued operations 17

interim Financial statements

Condensed consolidated statements of income 18

Condensed consolidated balance sheets 19

Condensed consolidated statements of cash flows 20

Condensed consolidated statements of changes in equity 21

Notes to the condensed consolidated financial statements 23

responsibility statement

29

other

30 NOK 23,980 million

Revenues

0 5,000 10,000 15,000 20,000 25,000 30,000 q2 08 q1 08 q4 07 q3 07 q2 07 NOK million NOK 1.00

Underlying Earnings per share

0.0 0.5 1.0 1.5 2.0 2q 08 1q 08 4q 07 3q 07 2q 07 NOK NOK 1,619 million

Underlying EBIT

0 500 1,000 1,500 2,000 2,500 3,000 2q 08 1q 08 4q 07 3q 07 2q 07 NOK million

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Summary of results

To provide a better understanding of Hydro’s underlying per-formance, the following discussion of operating performance excludes certain items from EBIT (earnings before financial

items and tax) and income from operations. See “Items excluded from underlying EBIT and income from continuing opera-tions” later in this report for more information on these items.

Key financial information

Second quarter 2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 Year 2007 NOK million, except per share data

Revenue 23,980 21,529 11 % 25,042 (4) % 45,510 50,699 94,316

Earnings before financial items and tax (EBIT) 708 1,179 (40) % 3,001 (76) % 1,887 6,674 9,025 Items excluded from underlying EBIT 1) ₉₁₁ ₈₅₃ _{7 %} ₍₁₁₆₎ _{>100 %} _1,764 ₍₉₀₅₎ _1,128

Underlying earnings before financial items and tax (EBIT) 1,619 2,032 (20) % 2,886 (44) % 3,651 5,768 10,153

Underlying earnings before financial items and tax (EBIT):

Aluminium Metal 953 1,255 (24) % 2,374 (60) % 2,208 4,749 8,265

Aluminium Products 535 370 45 % 493 9 % 905 991 1,352

Energy 270 399 (32) % 369 (27) % 669 635 1,184

Corporate and other (140) 8 >(100) % (349) 60 % (132) (606) (647)

Underlying earnings before financial items and tax (EBIT) 1,619 2,032 (20) % 2,886 (44) % 3,651 5,768 10,153

Income from continuing operations 902 1,443 (37) % 2,581 (65) % 2,345 5,839 9,158

Underlying income from continuing operations 1,335 1,442 (7) % 2,152 (38) % 2,776 4,497 8,015 Earnings per share from continuing operations 2) _0.70 _1.20 _{(42) %} _2.00 _{(65) %} _1.90 _4.60 _7.20

Underlying earnings per share from continuing operations 2) _1.00 _1.20 _{(17) %} _1.70 _{(41) %} _2.20 _3.50 _6.20

Financial data:

Investments 1,553 2,267 (31) % 854 82 % 3,821 1,728 5,206

Adjusted net interest bearing debt to equity / Adjusted equity ratio 3) _0.01 _(0.07) _0.02 _0.01 _0.02 _(0.02)

1) See section later in this report “Items excluded from underlying EBIT and income from operations” for more information on these items.

2) “Earnings per share from continuing operations” and “Underlying earnings per share from continuing operations” are calculated using Income from continuing operations and Underlying income from continuing operations less Net income attributable to minority interests, and using the weighted average number of ordinary shares outstanding. There were no diluting elements.

3) Calculation based on figures as of end of period. See section later in this report Other - “Adjusted net interest-bearing debt to equity”.

Operating statistics 1) Second

quarter 2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 2007Year Realized aluminium price LME (USD/mt) 2) _2,699 _2,442 _{11 %} _2,606 _{4 %} _2,573 _2,597 _2,559

Realized aluminium price LME (NOK/mt) 2) _{14,008 13,309} _{5 % 16,174} _{(13) %} _{13,672 16,327 15,522}

Primary aluminium production (kmt) 437 433 1 % 435 - 870 868 1,742

Rolled Products sales volumes to external market (kmt) 259 253 2 % 264 (2) % 512 530 1,030 Extrusion sales volumes to external market (kmt) 133 130 2 % 135 (2) % 263 269 508

Automotive sales volumes to external market (kmt) 3) ₃₁ ₃₁ _- ₃₀ _{1 %} ₆₁ ₅₉ ₁₁₇

Power production (GWh) 3,021 2,850 6 % 2,749 10 % 5,871 5,403 11,018

1) Operating statistics includes proportionate share of production and prices in equity accounted investments. 2) Including the effect of strategic hedges (hedge accounting applied).

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Hydro’s underlying income from continuing operations declined to NOK 1,335 million in the second quarter of 2008 from NOK 1,442 million in the previous quarter and NOK 2,152 million in the second quarter of 2007, mainly due to the weakening US dollar and an industry-wide rise in upstream input costs which more than offset the positive effect of higher aluminium prices. Second quarter underlying results for Aluminium Products increased substantially from the first quarter of 2008, driven by a significant improvement in the company’s Rolled Products busi-ness. Lower spot prices for electricity in Norway negatively affected Hydro’s Energy business during the quarter.

“Hydro experienced a drop in its second-quarter results due to the rising input costs affecting the entire industry,” said Hydro President and CEO Eivind Reiten. “While these pressures will likely remain for some time we continue to show strong opera-tional performance. Particularly encouraging is the progress in our Rolled Products and Extrusion segments,” Reiten said. Global aluminium prices remained strong during the quarter, with forward markets reaching record levels towards the end of the three-month period. However, compared with the second quarter last year, Hydro’s realized prices when measured in Nor-wegian kroner declined due to a weakening US dollar.

Underlying EBIT in the second quarter was NOK 1,619 million, down from NOK 2,032 million in the previous quarter and NOK 2,886 million in the second quarter of 2007.

Underlying EBIT for Aluminium Metal declined in the quarter compared to the first quarter of 2008, mainly due to higher oper-ating costs from rising input costs for alumina, freight and car-bon, as well as increasing oil and gas prices. Disclosed realized aluminium prices when measured in Norwegian kroner rose compared with the first quarter of 2008, partly offsetting the ris-ing operational costs, but declined substantially compared with the second quarter of 2007 due to the strong depreciation of the US dollar against Norwegian kroner.

Hydro’s joint venture with Qatar Petroleum on the 585,000-tonne Qatalum smelter project, in which Hydro owns 50 per-cent, was about 26 percent complete by the end of the second quarter. “We are pleased to see the Qatalum project remains on target for the planned start-up around year-end 2009,” Reiten said.

Aluminium Products delivered strong underlying results for the quarter. Hydro’s Rolled Products business delivered significantly higher underlying results, with firm margins and increased ship-ments mainly in the packaging products and foil segship-ments. Vol-umes improved for Hydro’s Extrusion operations despite a weakening European market and a US market that remained at depressed levels. Underlying second quarter results in the US operations improved substantially compared with the same

period last year due to significant cost reduction efforts. In April and July Hydro acquired new businesses in Spain, strengthening its position in the extrusion and building systems markets. Underlying EBIT for Energy declined significantly in the second quarter from the strong first quarter of 2008, primarily due to lower spot prices in Southern Norway. The negative price effects were partly offset by higher production volumes and lower pro-duction costs. Hydro made additional investments in its Solar business during the quarter and celebrated the opening of the new NorSun wafer plant in Årdal, Norway, in which Hydro owns 18.4 percent.

Cash from operating activities was NOK 3.7 billion in the first half of 2008, down from NOK 5.1 billion in the same period last year, reflecting a similar development as for underlying EBIT. Reported EBIT and income from continuing operations EBIT for Hydro amounted to NOK 708 million in the quarter, down from NOK 1,179 million in the previous quarter. EBIT was impacted by significant net unrealized losses on power con-tracts of roughly NOK 2 billion compared with around NOK 1.3 billion in the first quarter of 2008. The substantial unrealized losses resulted primarily from an unprecedented increase in for-ward prices for coal during the quarter. Unrealized effects on LME derivatives were positive for the quarter. EBIT for the quar-ter also included a gain on the sale of 85 percent of Hydro Pro-duction Partner and ProPro-duction Services of NOK 389 million. Income from continuing operations amounted to NOK 902 mil-lion in the second quarter, down from NOK 1,443 milmil-lion in the previous quarter. Income from continuing operations included net foreign exchange gains amounting to NOK 298 million, compared with NOK 854 million in the previous quarter. Market developments and outlook

Demand from emerging markets such as South East Asia and China continued to drive up prices for energy and other raw materials. The strong commodity markets are expected to increas-ingly impact input costs for the aluminium industry. Record-high prices for oil-related products, coal, power, alloying metals, caustic soda and freight are expected to be phased into the indus-try’s cost base during 2008 and 2009. We expect to see further increases in our own costs related to these factors over the coming twelve months, as favorable sourcing contracts gradually are replaced by new sourcing contracts at current market conditions.

During the second quarter, LME three-month aluminium prices ranged between USD 2,828-3,150 per mt before closing at USD 3,114 per mt at the end of June. Forward prices reached an all-time high during the quarter. Five-year prices traded above USD 3,300 per mt at the end of the quarter, up from USD 3,070 per mt at the end of the previous quarter.

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Aluminium prices are expected to remain high due to increasing energy and raw material prices and energy supply uncertainties. However, there is also uncertainty regarding market demand. Economic indicators point to a weaker development in industrial production in the western world in the coming months, while industrial production in China remains strong.

Hydro expects a moderate market slowdown for semi-fabricated products in Europe on top of seasonally lower demand, impact-ing business in the second half of the year. In the US, we expect the market for semi-fabricated products to remain at the current depressed levels.

Aluminium Metal

Earnings before financial items and tax (EBIT)

Second quarter 2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 Year 2007 NOK million

Aluminium Metal EBIT 1,468 716 >100 % 2,465 (40) % 2,183 4,999 8,365

Items excluded from underlying EBIT (515) 539 >(100) % (91) >(100) % 24 (250) (100) Aluminium Metal underlying EBIT 953 1,255 (24) % 2,374 (60) % 2,208 4,749 8,265

Bauxite & Alumina 70 10 >100 % 298 (76) % 80 555 681

Primary Aluminium 628 872 (28) % 1,790 (65) % 1,499 3,691 6,552

Commercial 251 409 (39) % 278 (10) % 661 532 946

Other and eliminations 3 (36) >100 % 8 (60) % (33) (29) 84

Aluminium Metal underlying EBIT 953 1,255 (24) % 2,374 (60) % 2,208 4,749 8,265

Operating and financial statistics Second_quarter

2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 Year 2007

Realized premium above LME (USD/mt) 1) 2) ₃₆₀ ₃₆₂ _{(1) %} ₃₅₃ _{2 %} ₃₆₁ ₃₄₁ ₃₄₃

Realized premium above LME (NOK/mt) 1) 2) _1,868 _1,973 _{(5) %} _2,143 _{(13) %} _1,917 _2,101 _2,037

1) Includes proportionate share of premiums in equity accounted investments.

2) Average realized margin above LME for total metal products sold from Primary Aluminium and Commercial, excluding ingot trading volumes.

Market statistics 1) Second

quarter 2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 2007Year

LME three month average (USD/mt) 2,989 2,772 8 % 2,797 7 % 2,881 2,774 2,662

LME three month average (NOK/mt) 15,196 14,705 3 % 16,824 (10) % 14,952 16,974 15,638

Global production of primary aluminium (kmt) 10,203 9,793 4 % 9,342 9 % 19,996 18,356 38,130

Global consumption of primary aluminum (kmt) 10,013 9,510 5 % 9,555 5 % 19,523 18,584 37,815

Reported primary aluminium inventories (kmt) 3,174 3,039 4 % 2,574 23 % 3,174 2,574 2,804 1) Industry statistics have been derived from analyst reports, trade associations and other public sources unless otherwise indicated. Amounts presented in prior

reports may have been restated based on updated information.

Market developments

Primary production in China increased 10 percent in the quar-ter compared with the first quarquar-ter of 2008. Apparent consump-tion also increased by 10 percent. Net export of pure and alloyed primary aluminium in April and May was at a quarterly level of 160,000 mt up from a quarterly average of 66,000 mt in 2007, driven by higher export of alloyed aluminium which is not

sub-ject to export taxes. Export of pure primary aluminium was very limited.

Global primary aluminium production excluding China increased 1.2 percent from the first quarter of 2008, while global consumption excluding China increased 3 percent over the same period. The fragile energy supply situation in important

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produc-ing regions continued to impact production with the closure of 120,000 mt of primary aluminium production in the US. European demand for metal products (extrusion ingot, sheet ingot, foundry alloys and wire rod) slowed during the quarter. The North American extrusion market continued to weaken, reflecting a further depressed US economy. Imports into the US market, mainly from China and the Middle East, eased due to lower US premiums and increasing freight costs.

Outlook

Aluminium prices are expected to remain high due to increasing energy and raw material prices and energy supply uncertainties. However, there is also uncertainty in demand development. Economic indicators point to a weaker development in indus-trial production in the western world in the coming months, while industrial production in China remains strong.

Hydro has priced 83 percent of its production for the third quar-ter of 2008 at USD 2,856 per mt. Hydro expects to achieve an average price on total production for the third quarter which is aroud USD 250 - 300 above what was achived in the second quarter.

The aluminium industry is currently experiencing an unprece-dented increase in the cost of key components driven by higher prices for energy and natural resources. The higher prices directly and indirectly influence prices for power, alumina, petroleum coke, alloying elements and other input factors. In addition, dry bulk freight rates and bunker costs have risen sharply. Higher levels of general economic activity have also lead to increasing salary and maintenance costs, and also rising costs for construct-ing new capacity.

Hydro has access to substantial self-generated power capacity based on hydropower production in Norway and has long-term power contracts for the majority of its world-wide production. As a result, we do not expect a sharp increase in our energy costs in the short to medium term. However, we expect further increases in other variable costs, in particular the cost of carbon. Petroleum coke, the main raw material for the production of carbon anodes, is typically purchased on short term contracts. Prices are influenced by oil prices and refining capacity available for the production of heavy oil products. We also expect to see an increase in the cost of alumina freight going forward. In total, Hydro expects variable costs (excluding alumina and power) to increase by about NOK 200 - 250 million in the full second half of 2008 compared to the cost level in the second quarter. We also expect to see pressure on fixed costs.

China’s apparent consumption of primary metal is forecast to increase by around 20 percent for the full year of 2008, down from an extraordinarily high annual growth rate of 38 percent in 2007. Estimated production growth of around 20 percent will depend on energy supply and ongoing efforts by the Chinese

authorities to moderate the expansion of primary capacity. In July, twenty of China’s major aluminium producers, including Chalco, signed an agreement with the government to cut pro-duction of primary aluminium by 5 to 10 percent representing up to 85,000 mt on a monthly basis. There are indications that the production cuts could last at least through September. We expect a continued gradual increase in Chinese net exports of flat rolled products and fabricated products due to cost advan-tages and export duty incentives. We also expect a certain level of export of alloyed primary aluminium as long as the current favourable price differentials between the LME and Shanghai Futures Exchange and absence of export duty on alloyed metal continue.

Global consumption of primary aluminium is estimated to grow with about 8 percent in 2008.

Market conditions for metal products in Europe are expected to weaken in the second half of 2008 from the high levels in 2007 and the first half of 2008 mainly due to lower demand from the building and construction sectors and weaker transportation markets. No significant recovery in the US market is expected during the second half of 2008. Weaker global market condi-tions and higher premiums in the US are expected to result in increased imports into the US market in the second half of 2008.

Major projects

Construction of the Qatalum primary aluminium plant in Qatar was 26 percent complete by the end of June 2008, and on target for start-up around the end of 2009. All main contractors have mobilized at the site and manning has more than doubled since early April, reaching 8,000 by the end of June. The Gulf area is currently a demanding region with regards to major construc-tion activities, placing considerable demands on project execu-tion. Hydro increased the shareholder loan to Qatalum by NOK 1.3 billion during the first half of 2008. Total investment costs for the 50/50 joint venture between Qatar Petroleum and Hydro are estimated at US dollar 5.6 billion.

Start-up of the third expansion of the Alunorte alumina plant in Brazil (Hydro share 34 percent) is on schedule, with the first alumina production expected in the third quarter of 2008. The expansion is expected to impact results towards the end of the year.

Further progress was made towards finalizing an agreement with the mining group Vale for construction of the first phase of a new alumina refinery in Brazil. The plant will have an initial capacity of 1.85 million mt with potential expansions up to 7.2 million mt. Under the proposed agreement, Hydro will have a 20 percent share in the refinery.

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Underlying EBIT - Sub Segments Bauxite and Alumina

Operating and financial statistics

Second quarter 2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 Year 2007 Underlying earnings before financial items and tax (EBIT) (NOK million) 70 10 >100 % 298 (76) % 80 555 681 Underlying results - Alunorte (NOK million) 1) ₆₆ ₃₀ _{>100 %} ₂₀₄ _{(68) %} ₉₆ ₃₉₆ ₅₂₄

Underlying results - Alpart (NOK million) 1) ₇ ₍₁₁₎ _{>100 %} ₉₄ _{(93) %} ₍₄₎ ₁₅₄ ₁₅₀

Alumina production (kmt) 2) ₅₀₇ ₅₀₉ _- ₄₈₀ _{6 %} _1,016 ₉₅₃ _2,007

1) Underlying results for Alunorte and Alpart represent Hydro’s share of the underlying profit (loss) for these equity accounted investments. 2) Includes proportionate share of production in equity accounted investments.

3) Alumina prices for Alunorte are adjusted monthly based on the monthly average LME three-month prices, applied with one month delay. 4) Bauxite prices for Alunorte are linked to average LME prices for the past three quarters with an additional one-quarter delay.

Underlying EBIT for Bauxite and Alumina improved from the weak first quarter of 2008 but was significantly lower than the result in second quarter 2007.

Underlying results for Alunorte improved compared to the first quarter of 2008 mainly due to higher alumina prices. Realized alumina prices measured in US dollars increased compared to the previous quarter due to the higher LME 3)_{and were comparable}

to second quarter 2007. However, measured in Norwegian kro-ner, realized prices were only slightly higher compared with the first quarter of 2008 but significantly lower than in second quar-ter 2007. Positive effects from the higher realized prices were also offset to some extent due to losses on an LME price hedge pro-gram which runs until the end of 2008.

Total operating costs for Alunorte were stable compared to the first quarter. Bauxite prices declined due to lower average LME prices 4)_{. Increased energy prices were offset by cost benefits}

result-ing from the utilization of the coal-fired co-generation unit at the plant. However, energy costs were substantially higher compared to the second quarter of 2007 mainly due to a significant increase in oil prices.

Underlying results for Alpart remained weak but was up com-pared to the first quarter 2008 mainly due to higher alumina prices offsetting higher energy costs. Compared to the second quarter of 2007, underlying EBIT was significantly lower due to lower alumina prices measured in Norwegian kroner and increased energy costs as a result of higher prices for heavy fuel oil. Heavy fuel oil is the main energy source for the Alpart opera-tion and the recent steep increase in the market price has severely impacted the operating margins of Alpart.

Underlying EBIT for Bauxite and Alumina for the first half of 2008 was significantly lower than in the comparable period in 2007 despite somewhat higher production volumes. Lower real-ized alumina prices measured in Norwegian kroner had a signifi-cant impact on underlying results for the period. Measured in US dollars, realized alumina prices were relatively unchanged com-pared to the first half of 2007. Higher costs, especially for energy, and local currency effects also had a substantial negative impact on the results compared to the previous period.

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Underlying EBIT for Primary Aluminium declined in the quarter compared with the first quarter of 2008 mainly due to increased costs including alumina, freight, carbon and fixed operating costs.

Higher aluminium prices measured in Norwegian kroner con-tributed a positive effect for the quarter compared to the first quarter of 2008 of about NOK 40 million including the effect of strategic hedges. Our disclosed realized prices are deter-mined when liquid metal is transferred from electrolysis to casthouses for further processing. (Disclosed realized prices mainly reflect the prevailing three month forward LME alu-minium price three months prior to production.) The casting process results in a time lag of about a month before metal products are shipped and invoiced to customers. As a result of this time lag, the achieved price as reflected in Hydro’s underly-ing results in the second quarter was significantly lower than the disclosed realized price.

Variable costs increased substantially compared to the first quarter of 2008. Alumina costs rose by about NOK 80 million due to higher LME prices. (Fluctuations in LME prices impact our alumina costs with a lag of about two to three months due to the timing of price indexing as well as transport and stor-age.) Higher freight costs for alumina had a negative impact on our costs of about NOK 80 million due to higher freight rates

and bunker costs. Costs for carbon also increased impacting our underlying results by about NOK 30 million due to higher prices for petroleum coke.

Fixed costs were up by about NOK 60 million compared to the first quarter of 2008 mainly due to higher maintenance and salary costs and costs related the build up of the Quatalum organization. Depreciation increased by about NOK 30 mil-lion during the quarter compared to the first quarter of 2008. Underlying EBIT declined for the quarter compared with sec-ond quarter 2007. Realized prices measured in Norwegian kro-ner declined substantially compared with the second quarter of 2007 mainly due to the strong depreciation of the US dollar against the Norwegian kroner. Variable costs declined by about NOK 130 million mainly due to lower alumina prices. Underlying results for the first half of 2008 was substantially lower than the same period of 2007 heavily impacted by lower realized aluminium prices measured in Norwegian kroner, impacting underlying EBIT by about NOK 2.2 billion. Vari-able costs decreased by about NOK 270 million in the first half year of 2008 compared with the first half year of 2007 due to lower alumina costs and a lower US dollar currency exchange rate.

Primary aluminium

Operating and financial statistics 1) Second

quarter 2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 2007Year Underlying earnings before financial items and tax (EBIT) (NOK million) 628 872 (28) % 1,790 (65) % 1,499 3,691 6,552

Primary aluminium production (kmt) 437 433 1 % 435 - 870 868 1,742

Total casthouse production (kmt) 553 556 (1) % 542 2 % 1,109 1,080 2,164

Realized aluminium price LME (USD/mt) 2) _2,699 _2,442 _{11 %} _2,606 _{4 %} _2,573 _2,597 _2,559

Realized aluminium price LME (NOK/mt) 2) _{14,008 13,309} _{5 % 16,174} _{(13) %} _{13,672 16,327 15,522}

Realized NOK/USD exchange rate 3) _5.19 _5.45 _{(5) %} _6.21 _{(16) %} _5.31 _6.29 _6.06

1) Operating and financial statistics includes proportionate share of production, prices and exchange rates in equity accounted investments. 2) Including effect of strategic LME hedges (hedge accounting applied).

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Commercial

2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 2007Year Underlying earnings before financial items and tax (EBIT) (NOK million) 251 409 (39) % 278 (10) % 661 532 946 Underlying EBIT - Commercial products (NOK million) 153 185 (18) % 156 (2) % 338 310 414 Underlying EBIT - Sourcing and Trading (NOK million) 102 144 (29) % 147 (31) % 246 337 633

Remelt production (kmt) 145 141 3 % 179 (19) % 286 369 685

Sale of metal products from own production (kmt) 1) 2) ₇₅₃ ₇₂₄ _{4 %} ₇₇₂ _{(2) %} _1,477 _1,510 _2,888

Sale of third-party metal products (kmt) 48 64 (25) % 76 (37) % 112 161 315

Total metal products sales excluding ingot trading (kmt) 1) ₈₀₁ ₇₈₈ _{2 %} ₈₂₃ _{(3) %} _1,589 _1,671 _3,203

External sales (kmt) 1) ₄₈₆ ₄₇₁ _{3 %} ₄₇₁ _{3 %} ₉₅₈ ₉₄₉ _1,858

External revenue (NOK million) 9,854 8,200 20 % 9,893 - 18,054 20,556 37,952

Product sales (NOK million) 3) _7,256 _6,646 _{9 %} _7,714 _{(6) %} _{13,902 15,720 29,090}

1) Excluding Slovalco sales to local market in 2007-figures. 2) Including sales of liquid metal directly to Karmøy Rolling Mill.

3) External sales revenue for our Commercial operations including revenues from our casthouse production, remelters, high purity aluminium business and contracts with external metal sources. Excludes results from our aluminium trading and hedging activities and commercial operations to optimize our physical alumina portfolio on a short and medium term basis.

Underlying results for our Commercial operations declined during the quarter compared to the first quarter of 2008, which was positively influenced by effects of our risk mitigation strat-egy 4)_.

Underlying results for commercial products declined in the second quarter. Our remelters in Europe continued to deliver good operating results with slightly higher sales volume than in the first quarter of 2008 while our remaining remelters in the US had somewhat lower results 5)_{for the quarter.}

Total metal sales volumes excluding ingot trading decreased compared with the second quarter of 2007 due to the transfer of our US remelters and the shutdown of the Ellenville remelter.

Total metal sales excluding ingot trading decreased for the first half year mainly due to lower sales from third party sources and the transfer and shut-down discussed above.

Underlying results for our Commercial operations increased for the first half of 2008 compared to the same period of 2007 largely reflecting positive effects of our risk mitigation strategy in 2008. Underlying results for our commercial products oper-ations improved for the first half year mainly due to improved results from our European remelt operations while underlying results from our sourcing and trading activities weakened.

4) In market situations where forward prices are, or could become, lower than spot prices (backwardation) operational hedges expose us to potential losses as short positions mature and are replaced with new forward contracts. As a result, we have risk mitigation strategies in place that result in unrealized and realized gains and losses. In the second quarter of 2008, results from our Commercial operations included net negative effects of NOK 3 million compared with net positive effects of NOK 80 million in the first quarter of 2008 and net negative effects of NOK 24 million in the second quarter of 2007. For the first half of 2008, net positive effects amounted to NOK 77 million compared with net negative effects of NOK 114 million in the first half of 2007.

5) In January 2008, the operations of our US wall-to-wall remelters in St. Augustine, Florida, Monett, Missouri and Phoenix, Arizona were transferred to Aluminium Products in order to increase operational synergies with the extrusion plants located at the same sites. These remelters had a combined production of 122,000 mt in 2007 and combined underlying losses of NOK 25 million in the second quarter of 2007. Following the transfer, US remelters included in our commercial sub-segment are Henderson, Kentucky and Commerce, Texas with a combined production of 162,000 mt in 2007.

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Market developments

Demand in the flat rolled products market in Europe remained firm across a range of market segments with the exception of the construction sector. Demand in the US remained at a low level reflecting the downturn of the US economy. In particular, the construction and transport market segments remained weak.

There was an overall decline in the European consumption of extruded aluminium products compared to the previous quar-ter and the same quarquar-ter in 2007. Transportation and engi-neering markets remained firm, but the construction market weakened mainly in southern Europe. Consumption in north-ern Europe, particularly Germany, remained strong.

The market for extruded aluminium products in North Amer-ica reflected the continued weak economy impacting most market segments, with the largest declines in the building and construction industry. Demand continued to grow in Brazil and Argentina driven by robust building and construction activities and continued strength in the transportation and industrial sectors. However, there were signs of a lower growth, particularly in Argentina. Efforts are being made to increase margins in the US to compensate for higher energy and raw material prices.

The automotive market in Europe has been stable during the second quarter of 2008. A softer market in Western Europe has been offset by stronger demand in Eastern Europe. The North American market was heavily impacted by the weak economy. Markets in Asia and South America continued their robust growth.

Outlook

Market demand for flat rolled products in Europe is expected to decline during the coming months, partly due to seasonally lower demand in the second half of the year, mainly driven by lower demand from the automotive and engineering market segments. The continued weak US market combined with the weak US dollar could lead to increased imports into Europe, putting pressure on margins. The rolling industry is experienc-ing increasexperienc-ing cost pressure above the current rate of inflation mainly driven by increasing energy and raw material prices. The overall outlook for the European extrusion market indi-cates a further softening of demand, in addition to a normal seasonal decline in the second half of the year, driven by a weak construction market particularly in Southern Europe. A gen-eral softer demand, combined with a volatile LME, could put further downward pressure on margins in the months to come.

Aluminium Products

Second quarter 2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 2007Year NOK million

Aluminium Products EBIT 789 995 (21) % 355 >100 % 1,784 1,670 1,098

Items excluded from underlying EBIT (253) (625) 138 (878) (680) 254

Aluminium Products underlying EBIT 535 370 45 % 493 9 % 905 991 1,352

Rolled Products 241 147 64 % 262 (8) % 388 456 562

Extrusion 292 225 30 % 227 29 % 517 472 852

Automotive 2 (2) >100 % 1 >100 % - 57 (67)

Other and eliminations - - - 3 >(100) % - 5 5

Aluminium Products underlying EBIT 535 370 45 % 493 9 % 905 991 1,352

Market statistics 1) Second quarter 2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 2007Year Total market consumption (kmt)

Rolled products - Europe 1,039 1,004 4 % 1,029 1 % 2,043 2,011 3,939

Rolled products - US 1,189 1,135 5 % 1,201 (1) % 2,324 2,399 4,741

Extruded products - Europe 698 711 (2) % 752 (7) % 1,409 1,507 2,860

Extruded products - US 358 353 1 % 381 (6) % 711 762 1,427

1) Industry statistics have been derived from analyst reports, trade associations and other public sources unless otherwise indicated. Amounts presented in prior reports may have been restated based on updated information.

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The outlook for the US extrusion market remains depressed, with no signs of recovery. However, the soft US-dollar, com-bined with higher Chinese export duties is temporarily reducing imports into the US market. South American markets are expected to experience another strong year, with consumption in Brazil growing around 6-7 percent. Developments for Argen-tina are uncertain due to instability caused by strikes and inflation.

The outlook for the European automotive market is softening while the North American market is expected to remain at a

low level throughout 2008. Automotive markets in Asia and South America are expected to show solid growth.

Business acquisitions

In April Hydro acquired Expral s.a, a privately owned extrusion operation located near Madrid. Expral is mainly supplying the industrial applications market and the building industry. In July Hydro acquired Alumafel, a privately owned building systems company in Spain with the majority of its assets located in the northern regions. Alumafel provides Hydro with a stronger market presence and opportunities to further develop the Iberian market.

Underlying EBIT - Sub Segments Rolled Products

2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 2007Year Underlying earnings before financial items and tax (EBIT) (NOK million) 241 147 64 % 262 (8) % 388 456 562

Sales volumes to external market (kmt) 259 253 2 % 264 (2) % 512 530 1,030

Underlying results for our Rolled Products business improved sub-stantially from first quarter 2008. Shipments increased mainly in the packaging products and high added-value foil segments. Mar-gins, especially in the general engineering segment, remained firm. Currency developments due to the stronger Euro versus the US dol-lar had a negative impact on margins. Approximately 20 percent of our total sales volume is sold in US dollar-denominated markets.

Compared to the second quarter and first half of 2007, margin improvements, mainly in general engineering, offset lower volumes and higher energy and raw material costs. A softer US dollar had a negative impact on the results compared to the second quarter and first half of 2007.

Extrusion

2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 2007Year Underlying earnings before financial items and tax (EBIT) (NOK million) 292 225 30 % 227 29 % 517 472 852

Sales volumes to external market (kmt) 133 130 2 % 135 (2) % 263 269 508

Higher volumes and margins improved the underlying results for our Extrusion business compared to first quarter 2008. Overall volumes increased by 2 percent in our European extrusion opera-tions despite a weakening market, while margins were stable. Vol-umes improved for our US extrusion operations, but the market remained at depressed levels. Positive developments in South America continued.

Our European extruders outperformed a general market decline with continued high margins and stable volumes compared to the second quarter and first half of 2007. Underlying results for our US operations improved substantially driven by significant cost reductions from efforts to align our overall cost structure with the sharp decline experienced during the last eighteen months in the US market. Together with the good development in our South American operations, these measures resulted in a positive contri-bution to the overall result of our Extrusion business.

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Automotive

2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 2007Year Underlying earnings before financial items and tax (EBIT) (NOK million) 2 (2) >100 % 1 >100 % - 57 (67)

Sales volumes to external market (kmt) 1) ₃₁ ₃₁ _- ₃₀ _{1 %} ₆₁ ₅₉ ₁₁₇

1) Excluding divested businesses Castings, Magnesium and Worcester.

Energy

Second quarter 2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 Year 2007 NOK million Energy EBIT 276 404 (32) % 396 (30) % 681 684 1,303

Items excluded from underlying EBIT (6) (5) (27) (11) (49) (119)

Energy underlying EBIT 270 399 (32) % 369 (27) % 669 635 1,184

2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 Year 2007

Direct production costs (NOK million) 1) ₉₈ ₁₃₂ _{(26) %} ₉₁ _{8 %} ₂₃₀ ₂₄₇ ₄₉₀

Power production (GWh) 3,021 2,850 6 % 2,749 10 % 5,871 5,403 11,018

External sourcing (GWh) 2) _1,402 _2,047 _{(32) %} _2,125 _{(34) %} _3,449 _4,093 _8,760

Internal contract sales (GWh) 3) _2,674 _3,501 _{(24) %} _3,520 _{(24) %} _6,175 _{6,965 14,109}

External contract sales (GWh) 4) ₄₁₈ ₄₂₇ _{(2) %} ₂₈₆ _{46 %} ₈₄₅ ₆₄₈ _1,042

Net spot sales (GWh) 5) _1,331 ₉₆₉ _{37 %} _1,069 _{25 %} _2,300 _1,884 _4,629

1) Includes maintenance and operational costs, transmission costs, property taxes and concession fees. 2) Includes long-term sourcing contracts in Norway and industrial sourcing in Germany.

3) Internal contract sales in Norway and Germany, including sales from own production and resale of externally sourced volumes. 4) External contract sales, mainly concession power deliveries and volumes to former Hydro businesses.

5) Spot sales volumes net of spot purchases.

Underlying results for our Automotive operations were around the same level as the first quarter of 2008 with stronger gins offsetting increased costs. Lower volumes in the US mar-ket were compensated by growth in the European and Asian markets.

Underlying EBIT was stable compared to the second quarter of 2007 which included net operating losses from divested activities of around NOK 20 million. Underlying results for our automotive structures operations declined, impacted by

lower volumes and higher costs, while underlying results for our precision tubing business improved slightly due to higher volumes.

Underlying EBIT for the first six months of 2008 declined compared to the same period last year, which included profits from divested activities of around NOK 30 million. Costs related to start-up activities for new product lines in our auto-motive structures business had a negative impact on the results.

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The average Nordic system price in the second quarter of 2008 was moderately lower than in the first quarter. However, the market environment has been highly volatile, at times driven by hydrological conditions in Norway and in other periods by record high German power prices. The daily system price ranged from below NOK 100 per MWh to more than NOK 420 per MWh during the quarter.

The average spot price in Southern Norway (NO1) was substan-tially lower than the Nordic system price and 54 percent below the Mid-Norway price in the second quarter. Influenced by high inflows from snow melting and outages in transmission export lines to Sweden and Continental Europe, the NO1 spot price averaged only 100 NOK/MWh during May. Prices recovered to a level of around NOK 250 per MWh towards the end of June, but still traded significantly below adjacent price areas.

Outlook

By the end of June, the total water reservoir level in Norway was reported at 75 percent of full capacity, which is 8 percent-age points above normal and 2 percentpercent-age points higher than the same period in 2007.

With expectations of normalized reservoir inflows, restart of transmission lines out of Southern Norway, and continued high prices on the European Continent, the traded forward market indicates support for higher power prices in the third and fourth quarter of 2008. The market is, however, expected to remain highly volatile due to uncertain hydrological condi-tions and other factors.

Key development activities

On June 11, NorSun AS officially opened its 130 MW silicon wafer plant in Årdal, Norway. Hydro holds an 18.4 percent ownership share in NorSun AS.

Ascent Solar Technologies, Inc. closed a public offering of 4,370,000 shares of common stock in May. Following the May share issue, Hydro’s ownership share was diluted from 35 per-cent to 26 perper-cent.

Underlying earnings before financial items and tax Underlying EBIT for Energy declined significantly from the first quarter of 2008 primarily due to lower spot prices in Southern Norway. The negative price effects were partly offset by higher production volumes and lower production costs. The decline compared with the second quarter of 2007 was mainly due to the same factors as well as weaker results from equity accounted investments.

Direct power production costs declined from the first quarter, primarily due to lower transmission grid tariffs.

Hydro’s Solar activities reported a loss of NOK 36 million in the second quarter compared with a loss of NOK 22 million in the first quarter of 2008 and a loss of NOK 16 million in the second quarter of 2007. Results for Solar activities include our share of losses in equity accounted companies and the losses reflect that these companies are in an early development phase.

Underlying EBIT in the first half of 2008 improved by 5 per-cent compared with the same period in 2007 primarily due to increased production and higher spot prices.

Corporate, other and eliminations

Underlying EBIT for Corporate, other and eliminations amounted to a negative NOK 140 million in the quarter com-pared with a positive NOK 8 million in the first quarter of 2008 and a negative NOK 349 million in the second quarter of 2007.

Underlying EBIT for Corporate, other and eliminations includes the elimination of unrealized profits on inventories purchased from group companies. Underlying results for the quarter included a charge of NOK 69 million compared to a credit of NOK 108 million in the first quarter of 2008 and a charge of NOK 31 million in the second quarter of 2007 related to this elimination. Underlying result for the second quarter and first half of 2007 were impacted by costs related to the transaction with StatoilHydro and the operations trans-ferred, of which parts were included in continuing operations. Market developments Market statistics Second quarter 2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 Year 2007 NOK per MWh

Southern Norway spot price (NO1) 171 289 (41) % 176 (3) % 230 196 206

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Items excluded from underlying EBIT and income

from continuing operations

To provide a better understanding of Hydro’s underlying per-formance, the items in the table below have been excluded from EBIT (earnings before financial items and tax) and income from continuing operations.

Items excluded from underlying EBIT are comprised mainly of unrealized gains and losses on certain derivatives, impair-ment and rationalization charges, effects of disposals of busi-nesses and operating assets, as well as other items that are of a special nature or are not expected to be incurred on an ongoing basis.

Items excluded from underlying income from continuing operations

First quarter 2008 Second quarter 2007 First half 2008 First half 2007 Year 2007 Second quarter 2008 NOK million

Unrealized derivative effects on LME related contracts 1) ₍₃₄₀₎ ₍₅₆₀₎ ₍₉₎ ₍₈₉₉₎ ₍₃₀₃₎ ₁₃₁

Unrealized derivative effects on power contracts 2) _1,997 _1,291 ₍₃₆₂₎ _3,287 ₍₂₎ ₉₂₈

Unrealized derivative effects on currency contracts 3) ₍₁₁₀₎ ₉ ₍₆₄₎ ₍₁₀₁₎ ₍₉₇₎ ₍₁₃₇₎

Metal effect, Rolled Products 4) ₍₂₄₇₎ ₁₁₃ ₂₈ ₍₁₃₃₎ ₍₁₂₁₎ ₂₃₅

Significant rationalization charges and closure costs 5) _- _- ₁₃₂ _- ₁₄₉ ₂₂₄

Impairment charges 6) _- _- ₁₄₄ _- ₁₄₄ ₁₄₄

(Gains)/losses on divestments 7) ₍₃₈₉₎ _- ₁₅ ₍₃₈₉₎ ₍₆₇₆₎ ₍₆₄₁₎

Correction of elimination of profit in inventory - - - - - 291

Germany, change in tax rate - - - - - (47)

Items excluded from underlying EBIT 911 853 (116) 1,764 (905) 1,128

Net foreign exchange (gain)/loss 8) ₍₂₉₈₎ ₍₈₅₄₎ ₍₅₁₇₎ _(1,153) ₍₉₈₁₎ _(2,254)

Calculated income tax effect 9) ₍₁₈₁₎ _- ₂₀₄ ₍₁₈₁₎ ₅₄₄ ₂₈₃

Germany, change in tax rate - - - - - (300)

Items excluded from underlying income from continuing operations 432 (1) (429) 431 (1,342) (1,143) 1) Unrealized derivative effects on LME related contracts include unrealized gains and losses on contracts used for operational hedging purposes where hedge

accounting is not applied, as well as for LME derivatives in equity accounted investments.

2) Unrealized derivative effects on power contracts include unrealized gains and losses on embedded derivatives in power contracts for own use and related financial power contracts.

3) Unrealized derivative effects on currency contracts relate to currency effects in equity accounted investments.

4) Metal effects relate to timing differences resulting from inventory adjustments due to changing aluminium prices during the production, sales and logistics process for our rolled products business.

5) Rationalization charges and closure costs include costs that are typically non-recurring for significant individual plants or operations, for example termination benefits, plant removal costs and clean-up activities in excess of legal liabilities.

6) Impairment charges relate to write-downs of assets or groups of assets to estimated recoverable amounts in the event of an identified loss in value. 7) Gains/losses on divestments includes net gain or loss on divested businesses and individual major assets.

8) Net foreign exchange gains/losses include realized and unrealized gains and losses on foreign currency denominated accounts receivable and payables, funding and deposits, and forward currency contracts selling US dollars that hedge net future cash flows from operations, sales contracts and working capital. 9) Calculated income tax effect is included in order to present income from continuing operations on a basis comparable with our underlying operating

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Items excluded from underlying EBIT - Sub segments The following includes a summary table of items excluded from underlying EBIT for each of the sub-segments included in Aluminium Metal and Aluminium Products business areas,

items excluded from underlying EBIT for the Energy business area and Corporate other and eliminations, and a brief discus-sion of the factors affecting the development of these items.

Items excluded from underlying EBIT 1)

NOK million Second quarter 2008 First quarter 2008 Second quarter 2007 First half 2008 First half 2007 Year 2007 Unrealized derivative effects on currency contracts (Alunorte) Alumina & Bauxite (106) (16) (64) (122) (97) (167) Unrealized derivative effects on LME related contracts (Alunorte) Alumina & Bauxite (8) 83 40 75 27 (163)

Rationalization charges and closure costs Primary Aluminium - - 69 - 86 114

Unrealized derivative effects on power contracts Primary Aluminium 10 348 (175) 358 (48) 108 Unrealized derivative effects on power contracts (Søral) Primary Aluminium (91) 20 (25) (71) 22 19 Unrealized derivative effects on currency contracts (Qatalum) Primary Aluminium (4) 25 - 21 - 30

Impairment charges (Ellenville) Commercial - - 144 - 144 144

Unrealized derivative effects on LME related contracts Other and eliminations (317) 79 (80) (237) (384) (303) Correction of elimination of profit in inventory Other and eliminations - - - - - 118

Total Aluminium Metal (515) 539 (91) 24 (250) (100)

Metal effect Rolled Products (247) 113 28 (133) (121) 235

Rationalization charges and closure costs (Inasa) Rolled Products - - - - - 29

Germany, change in tax rate (Alunorf) Rolled Products - - - - - (47)

Rationalization charges and closure costs (US and France) Extrusion - - 63 - 63 63

(Gains)/losses on divestments Extrusion - - - - - (17)

(Gains)/losses on divestments Automotive - - 15 - (676) (624)

Rationalization charges and closure costs (Structures) Automotive - - - - - 18

Unrealized derivative effects on LME related contracts Other and eliminations (7) (738) 31 (745) 54 597

Total Aluminium Products (253) (625) 138 (878) (680) 254

Unrealized derivative effects on power contracts Energy (6) (5) (27) (11) (49) (119)

Unrealized derivative effects on power contracts Corporate, other and elim. 2,083 928 (135) 3,011 73 920 Unrealized derivative effects on LME related contracts Corporate, other and elim. (8) 16 - 8 - - Correction of elimination of profit in inventory Corporate, other and elim. - - - - - 173

(Gains)/losses on divestments Corporate, other and elim. (389) - - (389) - -

Total Corporate, other and elim. 1,685 944 (135) 2,629 73 1,093

Items excluded from underlying EBIT Hydro 911 853 (116) 1,764 (905) 1,128

1) Negative figures indicate a gain and positive figures indicate a loss.

Aluminium Metal

A further depreciation of the US dollar against the Brazilian Real during the second quarter resulted in unrealized gains on long-term US dollar denominated loans for Alunorte. Unreal-ized derivative effects on power contracts were influenced by the increased forward power prices. Unrealized derivative effects on LME related contracts were mainly influenced by realized volumes relating to our operational hedge program. The impact of increased LME forward prices on open positions was minor due to an increased short position at the end of June 2008, compared with the end of the first quarter. The increase mainly resulted from new contracts entered into during June when prices were particularly high.

Aluminium Products

The positive Metal effect resulted from increased aluminium prices in Euro for the period from December 2007 through April 2008. Unrealized derivative effects on LME related con-tracts were impacted by an upward shift in the LME forward price curve during the quarter. However the positive effect was largely offset by realized volumes during the second quarter.

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Finance

Financial income (expense)

Second quarter 2008 First quarter 2008 % change prior quarter Second quarter 2007 % change prior year quarter First half 2008 First half 2007 Year 2007 NOK million Interest income 185 205 (10) % 285 (35) % 390 651 1,228

Dividends received and net gain (loss) on securities 17 27 (36) % 44 (61) % 43 113 174

Financial income 202 232 (13) % 329 (39) % 433 764 1,403

Interest expense (75) (77) 3 % (110) 32 % (152) (199) (415)

Capitalized interest - - - 2 >(100) % - 2 5

Net foreign exchange gain (loss) 298 854 (65) % 517 (42) % 1,153 981 2,254

Other 18 (11) >100 % (6) >100 % 7 (15) (39)

Financial expense 241 767 (69) % 403 (40) % 1,008 769 1,805

Financial income (expense), net 443 998 (56) % 733 (40) % 1,441 1,533 3,208

Second quarter 2008 First quarter 2008 Second quarter 2007 First half 2008 First half 2007 Year 2007 Exchange rates

NOK/USD Average exchange rate 5.08 5.31 6.06 5.20 6.15 5.86

NOK/USD Balance sheet date exchange rate 5.08 5.09 5.90 5.08 5.90 5.41

NOK/EUR Average exchange rate 7.94 7.96 8.13 7.95 8.15 8.02

NOK/EUR Balance sheet date exchange rate 8.01 8.05 7.97 8.01 7.97 7.96

Source: Norges Bank

Net foreign currency gains mainly relate to foreign currency contracts, in connection with Hydro’s hedge program. The amounts include positive interest effects on our foreign currency portfolio due to substantially different interest levels on US dol-lars versus Norwegian kroner.

Interest income declined in the quarter compared to the first quarter of 2008 mainly due to lower cash balances. Interest income was lower compared with the second quarter of 2007 due to lower cash balances following the payment of the demerger debt to StatoilHydro. Interest income declined for the first half of 2008 compared to the same period of last year for the same reason.

Corporate, other and eliminations

Unrealized derivative effects on power contracts were impacted by a significant upward shift in the forward price of coal result-ing in unrealized losses due to the elimination of the effects of internal sourcing contracts for the second quarter of 2008. Unrealized gains and losses on power contracts result from changes in the fair value of certain internal power contracts related to the delivery of power from Hydro’s Energy segment

to consuming units. These internal contracts, or embedded derivatives within the contracts, are accounted for at fair value by the Energy segment. The valuation effects are eliminated as part of Corporate, other and eliminations, and excluded from underlying results.

(Gains)/losses on divestments relate to the sale of Production Partner and Production Services in the second quarter of 2008.

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Tax

Income tax expense amounted to NOK 248 million in the quarter compared with NOK 734 million in the first quarter of 2008 and NOK 1,153 million in the second quarter of 2007.

Income tax expense was 22 percent of Income from continuing operations before tax in the second quarter compared with 34 percent in the first quarter of 2008 and 31 percent in the sec-ond quarter of 2007. The relatively low tax percent in the quar-ter resulted mainly from the effect of a tax free gain on the sale of Hydro’s former internal service units.

Income tax expense amounted to NOK 982 million in the first half of 2008 (30 percent) compared with NOK 2,368 million (29 percent) in the first half of 2007.

Discontinued operations

Losses from discontinued operations amounted to NOK 20 million in the quarter compared with NOK 357 million in the first quarter of 2008, both periods relating to Hydro’s Polymers activities. Income from discontinued operations in the second quarter of 2007 amounted NOK 3,479 million, of which NOK 157 million related to Polymers and NOK 3,322 mil-lion related to Hydro’s petroleum operations that were merged with StatoilHydro. See note 4 later in this report for additional information on discontinued operations.

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Condensed consolidated statements of income (unaudited)

Second quarter First half Year

NOK million, except per share data 2008 2007 2008 2007 2007

Revenue 23,980 25,042 45,510 50,699 94,316

Share of the profit (loss) in equity accounted investments 256 326 162 575 1,000

Other income, net 470 62 581 911 1,093

Total revenue and income 24,706 25,430 46,253 52,185 96,409

Depreciation, amortization and impairment 819 988 1,610 1,894 3,552

Other expenses 23,179 21,441 42,756 43,617 83,833

Total expenses 23,999 22,429 44,367 45,511 87,385

Earnings before financial items and tax (EBIT) 708 3,001 1,887 6,674 9,025

Financial income (expense), net 443 733 1,441 1,533 3,208

Income from continuing operations before tax 1,150 3,734 3,328 8,207 12,233

Income taxes (248) (1,153) (982) (2,368) (3,075)

Income from continuing operations 902 2,581 2,345 5,839 9,158

Income (loss) from discontinued operations (20) 3,479 (377) 5,815 9,447

Net income 882 6,060 1,969 11,654 18,604

Net income attributable to minority interests 96 108 80 211 408

Net income attributable to equity holders of the parent 786 5,952 1,889 11,443 18,196 Basic and diluted earnings per share from continuing operations (in NOK) 1) 2) _0.70 _2.00 _1.90 _4.60 _7.20

Basic and diluted earnings per share from discontinued operations (in NOK) 1) _- _2.80 _(0.30) _4.70 _7.70

Basic and diluted earnings per share attributable to equity holders of the parent (in NOK) 1) _0.60 _4.90 _1.60 _9.30 _14.90

Weighted average number of outstanding shares (million) 1,210 1,227 1,210 1,226 1,221 1) Basic earnings per share are computed using the weighted average number of ordinary shares outstanding. There were no diluting elements.

2) Calulated using Income from continuing operations less Net income attributable to minority interests. There are no minority interests in Income from discontinued operations.

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Condensed consolidated balance sheets (unaudited)

30 June 31 December

NOK million, except number of shares 2008 2007 2007

Assets

Cash and cash equivalents 7,985 20,735 9,330

Short-term investments 2,112 6,273 2,742

Receivables and other current assets 19,967 19,942 16,531

Inventories 13,495 13,611 12,227

Total current assets from continuing operations 43,558 60,561 40,830

Assets held for sale, Discontinued operations 514 127,385 6,741

Property, plant and equipment 26,067 27,352 26,750

Other non-current assets 20,820 17,288 17,724

Total non-current assets 46,887 44,640 44,474

Total assets 90,960 232,586 92,046

Liabilities and equity

Bank loans and other interest-bearing short-term debt 1,152 2,227 1,045

Other current liablities 19,105 18,997 17,310

Total current liabilities from continuing operations 20,257 21,225 18,355

Liabilities included in disposal groups, Discontinued operations - 94,350 2,021

Long-term debt 215 307 263

Other long-term liabilities 18,990 14,175 14,152

Deferred tax liabilities 1,314 2,754 2,246

Total non-current liabilities 20,519 17,236 16,662

Total liabilities 40,776 132,810 37,038

Equity attributable to equity holders of the parent 49,550 98,952 54,049

Minority interest 634 825 959

Total equity 50,184 99,776 55,008

Total liabilities and equity 90,960 232,586 92,046

Total number of outstanding shares (million) 1,211 1,227 1,209

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Condensed consolidated statements of cash flows (unaudited)

Six months ended

30 June Year

NOK million 2008 2007 2007

Operating activities:

Net income 1,969 11,654 18,604

Net (income) loss from discontinued operations 377 (5,815) (9,447)

Depreciation, amortization and impairment 1,610 1,894 3,552

Other adjustments (290) (2,681) 1,564

Net cash provided by operating activities 3,666 5,052 14,273

Investing activities:

Purchases of property, plant and equipment (1,312) (1,262) (3,485)

Purchases of other long-term investments (2,377) (367) (1,403)

Purchases of short-term investments - (4,250) (5,000)

Proceeds from sales of property, plant and equipment 60 20 122

Proceeds from sales of other long-term investments 587 3,994 4,330

Proceeds from sales of short-term investments 250 12,950 17,200

Net cash provided by (used in) investing activities (2,792) 11,085 11,764

Financing activities:

Loan proceeds - 15 25

Principal repayments (172) (25) (1,108)

Ordinary shares purchased - - (2,887)

Ordinary shares issued 18 30 66

Dividends paid (6,340) (6,240) (6,236)

Net cash used in financing activities (6,494) (6,220) (10,140)

Foreign currency effects on cash and bank overdraft (263) 12 (285)

Net cash provided by (used in) discontinued operations 4,339 4,692 (12,799)

Net increase (decrease) in cash, cash equivalents and bank overdraft (1,544) 14,621 2,813 Cash, cash equivalents and bank overdraft reclassified to assets held for sale - (555) (105)

Cash, cash equivalents and bank overdraft at beginning of period 9,256 6,548 6,548

Cash, cash equivalents and bank overdraft at end of period 7,712 20,614 9,256

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Consolidated statements of changes in equity (unaudited)

Six months ended

30 June Year

NOK million 2008 2007 2007

Ordinary shares issued - amount

Balance at 1 January 1,370 4,708 4,708

Cancellation treasury shares - - (79)

Redeemed shares, the Ministry of Trade and Industry - - (62)

Demerger - - (3,197)

Balance at end of period 1,370 4,708 1,370

Additional paid-in capital

Balance at 1 January 360 9,736 9,736

Treasury shares reissued to employees (49) 53 53

Redeemed shares, the Ministry of Trade and Industry - - (2,701)

Demerger - - (6,727)

Balance at end of period 311 9,789 360

Other reserves

Balance at 1 January (1,348) (1,533) (1,533)

Currency translation differences (305) (2,377) (4,279)

Net unrealized gain (loss) on securities, net of tax 78 (1) (295)

Cash flow hedges, net of tax (205) 69 585

Demerger - - 4,174

Balance at end of period (1,779) (3,843) (1,348)

Retained earnings

Net income attributable to equity holders of the parent 1,889 11,443 18,196

Dividend declared and paid (6,053) (6,134) (6,134)

Cancellation treasury shares - - (2,317)

Transactions with minority equity holders (6) -

-Demerger - - (41,339)

Treasury shares issued - amount

Purchase of treasury shares - - (123)

Treasury shares reissued to employees 151 68 68

Cancellation treasury shares - - 2,396

Equity interests attributable to equity holders of the parent

Transactions with equity holders 102 121 (2,765)

Distributions to equity holders (6,053) (6,134) (6,134)

Transactions with minority equity holders (6) - -

Demerger - - (47,089)

Other changes in shareholders' equity 1,458 9,134 14,207

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Consolidated statements of changes in equity (unaudited)

Six months ended

30 June Year

NOK million 2008 2007 2007

Minority interest

Balance at 1 January 959 771 771

Minority's share of net income current period 80 211 408

Minority's share of dividend declared and paid (287) (106) (102)

Minority's share of increase in share capital (49) - -

Equity interest purchased (sold) (17) (1) -

Transactions with the group 6 - -

Currency translation differences (58) (49) (117)

Balance at end of period 634 825 959

Total Equity 50,184 99,776 55,008

Share information

Ordinary shares issued - numbers in thousands

Balance at 1 January 1,247,957 1,286,455 1,286,455

Cancellation treasury shares - - (21,627)

Redeemed shares, the Ministry of Trade and Industry - - (16,872)

Balance at end of period 1,247,957 1,286,455 1,247,957

Treasury shares issued - numbers in thousands

Purchase of treasury shares - - (622)

Treasury shares reissued to employees 1,365 622 622

Cancellation treasury shares - - 21,627