Underlying EBIT. NOK 868 million

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1

2

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Financial Review

3

Aluminium Metal 6

Aluminium Products 11

Energy 14

Corporate, other and eliminations 15

Items excluded from underlying EBIT and income from continuing operations 15

Finance 18

Tax 18

inTeRim Financial sTaTemenTs

Condensed consolidated statements of income 19

Condensed consolidated balance sheets 20

Condensed consolidated statements of cash flows 21

Condensed consolidated statements of changes in equity 22

Notes to the condensed consolidated financial statements 24

addiTiOnal inFORmaTiOn

Return on average Capital Employed (RoaCE) 30

Financial calendar 31 NOK 21,368 million

Revenues

0 5,000 10,000 15,000 20,000 25,000 4q 08 3q 08 2q 08 1q 08 4q 07 NOK million NOK (0.29)

Underlying earnings per share

-0.4 0.0 0.4 0.8 1.2 4q 08 3q 08 2q 08 1q 08 4q 07 NOK NOK 868 million

Underlying EBIT

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

Cautionary note in relation to certain forward-looking statements

Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management’s plans, objectives and strategies for Hydro, such as planned expansions, investments or other projects, (c) targeted production volumes and costs, capacities or rates, start-up costs, cost reductions and profit objectives, (d) various expectations about future developments in Hydro’s markets, particularly prices, supply and demand and competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, as well as (i) statements preceded by “expected”, “scheduled”, “targeted”, “planned”, “proposed”, “intended” or similar statements.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. Factors that could cause these differences include, but are not limited to: our continued ability to reposition and restructure our upstream and downstream aluminium business; changes in availability and cost of energy and raw materials; global supply and demand for aluminium and aluminium products; world economic growth, including rates of inflation and industrial production; changes in the relative value of currencies and the value of commodity contracts; trends in Hydro’s key markets and competition; and legislative, regulatory and political factors.

No assurance can be given that such expectations will prove to have been correct. Hydro disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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Summary of results

To provide a better understanding of Hydro’s underlying perform-ance, the following discussion of operating performance excludes certain items from EBIT (earnings before financial items and tax)

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

Key financial information

Fourth quarter 2008 Third quarter 2008 % change prior quarter Fourth quarter 2007 % change prior year quarter Year 2008 Year 2007 NOK million, except per share data

Revenue 21,368 21,765 (2) % 21,651 (1) % 88,643 94,316

Earnings before financial items and tax (EBIT) (3,106) 2,414 >(100) % 338 >(100) % 1,194 9,025 Items excluded from underlying EBIT 1) _3,975 ₍₉₂₄₎ _1,361 _4,815 _1,128 Underlying earnings before financial items and tax (EBIT) 868 1,490 (42) % 1,699 (49) % 6,009 10,153 Underlying earnings before financial items and tax (EBIT) :

Aluminium Metal 435 932 (53) % 1,333 (67) % 3,575 8,265 Aluminium Products (239) 322 >(100) % 74 >(100) % 988 1,352 Energy 592 475 25 % 341 73 % 1,736 1,184 Corporate, other and eliminations 81 (239) >100 % (50) >100 % (290) (647) Underlying earnings before financial items and tax (EBIT) 868 1,490 (42) % 1,699 (49) % 6,009 10,153

Income (loss) from continuing operations (5,845) 233 >(100) % 527 >(100) % (3,267) 9,158 Underlying income (loss) from continuing operations (184) 1,075 >(100) % 1,411 >(100) % 3,579 8,057 Earnings per share from continuing operations 2) _(4.99) _0.06 _{>(100) %} _0.36 _{>(100) %} _(3.04) _7.17 Underlying earnings per share from continuing operations 2) _(0.29) _0.75 _{>(100) %} _1.09 _{>(100) %} _2.62 _6.26

Financial data:

Investments 2,749 2,443 13 % 2,173 26 % 9,012 5,206 Adjusted net interest-bearing debt 3) _{(15,440) (5,491)} _{>(100) %} ₍₈₄₂₎ _{>(100) %} _(15,440) ₍₈₄₂₎

Operating statistics 4)

Realized aluminium price LME (USD/mt) 5) _2,654 _2,848 _{(7) %} _2,485 _{7 %} _2,638 _2,561 Realized aluminium price LME (NOK/mt) 5) _{16,904 15,114} _{12 % 14,138} _{20 %} _{14,724 15,521} Primary aluminium production (kmt) 442 439 1 % 439 1 % 1,750 1,742 Rolled Products sales volumes to external market (kmt) 213 240 (11) % 246 (13) % 965 1,030 Extrusion sales volumes to external market (kmt) 103 122 (15) % 117 (12) % 488 508 Automotive sales volumes to external market (kmt) 6) ₁₈ ₂₆ _{(32) %} ₂₉ _{(39) %} ₁₀₅ ₁₁₇ Power production (GWh) 2,813 2,677 5 % 2,321 21 % 11,361 11,018

1) See section later in this report “Items excluded from underlying EBIT and income from continuing 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 is based on amounts as of the end of the periods presented. See note 35 Capital Management in Hydro’s Financial statements - 2007 for a discussion on net interest-bearing debt. We have revised our definition of certain items included in the calculation of adjusted net interest-bearing debt. See “Fourth quarter 2008 Presentation” on www.hydro.com for the items included in this calculation. Prior periods have been restated on a comparable basis. 4) Operating statistics includes proportionate share of production and prices in equity accounted investments.

5) Including the effect of strategic hedges (hedge accounting applied). In the fourth quarter of 2008, Hydro changed its definition of realized prices to be determined when products are shipped and invoiced to customers. Previously, realized prices were determined as liquid metal is transferred from electrolysis to casthouses for further processing. This price mainly reflected the prevailing three month forward LME aluminium price three months prior to production. The casting process results in about an additional three week time lag before metal is finally shipped and invoiced to customers. Prior periods in this report have been restated to reflect the change in definition.

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Hydro’s underlying EBIT was NOK 868 million in the fourth quarter, including inventory write-downs of about NOK 700 mil-lion. Underlying EBIT amounted to NOK 1,490 million in the third quarter and 1,699 million in the fourth quarter of 2007. Hydro’s results for the quarter reflect the ongoing financial crisis, which has led to a dramatic drop in aluminium prices as a result of a sharp fall in global demand.

Underlying EBIT for the full-year 2008 fell to NOK 6,009 mil-lion from the solid result of NOK 10,153 milmil-lion in 2007, as higher raw material costs affecting the entire industry had a sub-stantial impact on Hydro’s results in addition to the economic downturn in the fourth quarter.

“Hydro has acted quickly and decisively in response to the unprec-edented drop in aluminium markets toward the end of last year,” President and CEO Eivind Reiten said. “We have a very demand-ing year ahead of us, and we will continue to take proactive meas-ures to meet the unprecedented market conditions,” he said. “Improving Hydro’s competitive position will be our key focus in 2009,” Reiten said. “Progressing Qatalum according to plan will be a top priority, moving Hydro’s smelter system down the indus-try cost curve and ensuring that we emerge as a stronger company when markets normalize.”

Hydro has made wide-ranging adjustments in response to the severe drop in aluminium markets, and has announced reductions in its primary aluminium production of 23 percent, representing about 400,000 tonnes per year of high-cost production capacity, which will improve the average cost of Hydro’s smelter system. Approximately 140,000 tonnes of the total will be shut down by the end of the first quarter of 2009, with the remainder to be shut down by the end of the second quarter of 2009.

Production of remelted metal at Hydro’s casthouses has been cut by 45 percent, or around 500,000 tonnes per year, and alumina production at the part-owned Alpart refinery in Jamaica has been reduced by 50 percent. Hydro has also taken out significant capac-ity in its downstream operations through shift-reductions and implemented cost-cutting measures throughout the company. Due to demanding markets and low forward visibility in both the aluminium and financial markets, Hydro’s Board of Directors pro-poses to forgo a dividend payment for 2008. With Hydro’s sub-stantial investment program resulting from the Qatalum project and the high cost of raising capital in financial markets, the Board regards it as prudent to conserve the company’s cash resources to reduce funding requirements.

Underlying EBIT for Aluminium Metal declined significantly from both the previous quarter and the fourth quarter of 2007. Results were impacted by inventory write-downs of about NOK 700 million relating to primary aluminium and remelting opera-tions following the historic fall in aluminium prices during the

quarter. Underlying results were positively affected by higher real-ized prices measured in Norwegian kroner, due to the strengthen-ing of the US dollar durstrengthen-ing the quarter.

Underlying results for bauxite and alumina operations improved from the third quarter despite sharply lower realized alumina prices in US dollars. Production increased at the part-owned Alu-norte refinery following start-up of the expansion in the third quarter and the plant operated at close to full capacity throughout the quarter. Energy costs for Alunorte declined due to a significant drop in oil prices and improved energy mix.

Hydro’s joint venture with Qatar Petroleum on the 585,000-tonne Qatalum smelter, in which Hydro owns 50 percent, was about 60 percent complete by the end of the year, on schedule and within budget frame for start-up around year-end 2009 and ramp-up to full production during 2010. Once on stream, Qatalum will be one of the most cost-efficient smelters in the world.

Aluminium Products incurred an underlying loss for the quarter, down significantly from both the third quarter of 2008 and the fourth quarter 2007, as results were hit by a sharp drop in demand. Volumes were relatively stable for the building systems business, and overall extrusion margins remained at a satisfactory level despite the significant market decline. Underlying results for US operations remained at depressed levels. Automotive incurred sub-stantial losses compared to both the third quarter of 2008 and fourth quarter of the previous year.

Energy delivered record underlying results both for the quarter and the year, mainly due to high power production and continued strong spot prices. Hydro’s solar operations recorded an underly-ing loss in the quarter.

Net cash provided by operating activities was NOK 2.9 billion for 2008, down from NOK 14.3 billion in 2007. Hydro had a net cash position amounting to NOK 3.5 billion at the end of 2008. Reported EBIT and income from continuing operations Reported EBIT for Hydro amounted to a loss of NOK 3,106 mil-lion for the quarter including charges of roughly NOK 2.5 bilmil-lion, comprised of impairment losses of NOK 2,150 million due to the deteriorating market conditions and high input costs, and write-downs of roughly NOK 300 million relating to our minority interests in solar businesses. Reported EBIT for the quarter also included substantial net unrealized losses on LME derivative con-tracts of about NOK 2.0 billion, net unrealized gains on power contracts of about NOK 1.5 billion and other net negative effects of roughly NOK 1 billion. Reported EBIT for the third quarter of NOK 2,414 million was impacted by significant net unrealized gains on power contracts of about NOK 1 billion.

Reported Income from continuing operations amounted to a loss of NOK 5,845 million in the fourth quarter including net foreign exchange losses of NOK 4.6 billion. Approximately half of the

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losses related mainly to Hydro’s US dollar hedging program. The remainder related to losses on intercompany balances denomi-nated in Euro. The Euro losses have no cash effect and are offset in equity by translation of the corresponding subsidiaries during consolidation. During the quarter, both the US dollar and Euro have strengthened against the Norwegian kroner by about 18 per-cent. Reported Income from continuing operations amounted to NOK 233 million in the third quarter including net unrealized and realized foreign exchange losses of NOK 2,015 million.

Market developments and outlook

The severe downturn in the global economy has led to a sharp decline in demand for aluminium and rapidly increasing stocks. The LME three month price for aluminium continued its sharp decline in fourth quarter falling from USD 2,446 per mt at the end of September to a low of USD 1,464 per mt in December before closing the year at USD 1,497 per mt. By year-end prices reached a level that is lower than the cash-costs of a substantial portion of global smelter production. The decline from the high price levels experienced in the beginning of the third quarter of 2008 was of a magnitude which is unprecedented in the history of the aluminium industry. In response, announced smelter curtail-ments reached a global level of around 1.5 million mt per year excluding China as of the end of 2008, and have increased further to around 3.2 million mt.

The market for metal products (extrusion ingot, sheet ingot, foun-dry alloys and wire rod) in Europe and North America weakened dramatically during the fourth quarter of 2008. The automotive markets collapsed leading to a sharp decrease in demand, mainly for foundry alloys but also for the other metal products. In addi-tion, the building and construction markets in US and Europe deteriorated significantly leading to reduced demand.

Outlook for Hydro

Hydro has taken decisive proactive measures responding to the extreme market developments by closing or idling substantial pro-duction capacity. In order to secure our on-going operations, we are reviewing our global network of primary aluminium plants closing, idling or curtailing production in high cost units. We have identified additional areas both upstream and downstream for potential measures to reduce costs and preserve cash and we are in process of reviewing the size and structure of our adminis-trative staff functions. Company-wide initiatives to capitalize on falling commodity prices have been implemented. Together these initiatives are expected to result in significant cost reductions in 2009.

At the end of 2008, Hydro had sold 85 percent of its metal pro-duction for the first quarter of 2009 forward for an average price of USD 1,872 per mt. Production of primary metal is expected to be about 10 percent lower in the first quarter as a result of the curtailments described above. Despite the curtailments and cost reduction initiatives described above, Hydro expects significantly lower earnings for its Aluminium metal operations in the first half of 2009.

Our business activities expose us to the risk that one or more counterparties may default on their obligations, resulting in direct financial loss, an unexpected increase in market exposure or higher operating costs. Weak and deteriorating economic conditions on a global, regional or industry sector level, combined with chal-lenging financial markets, increase the risk of defaulting counter-parties. So far we have not experienced any significant defaults and are carefully monitoring the situation.

Hydro is currently investing heavily in organic growth with its 50 percent interest in the Qatalum smelter representing the single, most important development. Approximately fifty percent of the estimated USD 5.6 billion cost of the plant is funded by project financing on favorable terms. An existing USD 1.7 billion multi-currency stand-by credit facility is also fully available. Due to our present high investment level and expected lower level of cash gen-erated from operations, Hydro is in the process of raising addi-tional financing to meet future capital requirements. In order to secure our financial position, capital expenditures (excluding Qatalum) have been reduced by roughly 40 percent from the 2008 expenditures of NOK 6 billion through postponement of non-critical projects.

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Market developments

The LME price for aluminium continued its rapid decline in the fourth quarter, falling from USD 2,446 per mt at the end of Sep-tember to a low of USD 1,464 per mt in December before closing the year at USD 1,497 per mt. The severe downturn in the global economy has lead to a sharp fall in demand for aluminium and rapidly increasing inventory levels. LME inventories, which repre-sent a major part of the increase, reached 2.3 million mt by the end of the year, compared with a level of 1.4 million mt by the end of the third quarter of 2008.

By year-end prices reached a level that was lower than the cash-cost of a substantial portion of global smelter production. In response, announced smelter curtailments reached a global level of around 1.5 million mt per year excluding China as of the end of 2008. As conditions deteriorated in early 2009, announced capac-ity curtailments increased to 3.2 million mt annually on a global basis excluding China Estimates of Chinese curtailments are in the magnitude of 3.5 million mt per year.

Chinese aluminium production has experienced a relatively sharper slowdown than the rest of the world partly due to the higher operating cost levels for Chinese producers. Production in China amounted to about 950,000 mt in December or roughly 11.1 million mt on an annualized basis. This was substantially lower than annualized production of 14.3 million mt reached ear-lier in 2008. As a result of the relatively high supply curtailment in China and the purchases of aluminium by the Chinese authori-ties, prices declined less severely on the Shanghai futures exchange (SHFE) and aluminium on the SHFE traded at a premium to the LME price toward the end of 2008. Demand for primary alu-minium in China declined 15 percent and 17 percent respectively compared with the third quarter of 2008 and the fourth quarter of 2007. The Chinese authorities have discouraged the export of energy in the form of primary aluminium through the imposition of export duties. Fiscal measures make China a self-contained market for primary metal. As a result, the market balance for pri-mary aluminium in China is not expected to have a significant impact on primary metal markets outside of China.

Aluminium Metal

Earnings before financial items and tax (EBIT)

Fourth quarter 2008 Third quarter 2008 % change prior quarter Fourth quarter 2007 % change prior year

quarter 2008Year 2007Year NOK million

Aluminium Metal EBIT (1,725) 1,692 >(100) % 1,194 >(100)% 2,151 8,365

Items excluded from underlying EBIT 2,160 (760) 139 1,424 (100) Aluminium Metal underlying EBIT 435 932 (53) % 1,333 (67) % 3,575 8,265

Bauxite and Alumina 160 93 72 % 27 >100 % 334 681 Primary Aluminium 257 909 (72) % 1,142 (77) % 2,666 6,552

Commercial (79) (147) 47 % 105 >(100) % 435 946 Other and eliminations 96 76 27 % 60 62 % 140 84 Aluminium Metal underlying EBIT 435 932 (53) % 1,333 (67) % 3,575 8,265

Operating and financial statistics

Realized premium above LME (USD/mt) 1) 2) ₂₈₉ ₃₄₀ _{(15) %} ₃₄₆ _{(16) %} ₃₃₉ ₃₄₃ Realized premium above LME (NOK/mt) 1) 2) _1,964 _1,805 _{9 %} _1,934 _{2 %} _1,912 _2,037

Market statistics 3)

LME three month average (USD/mt) 1,882 2,844 (34) % 2,499 (25) % 2,620 2,662 LME three month average (NOK/mt) 12,690 15,202 (17) % 13,583 (7) % 14,446 15,638

Global production of primary aluminium (kmt) 9,661 10,246 (6) % 9,970 (3) % 39,828 38,112

Global consumption of primary aluminum (kmt) 8,586 9,569 (10) % 9,837 (13) % 37,665 37,838

Reported primary aluminium inventories (kmt) 4,564 3,503 30 % 2,804 63 % 4,564 2,804 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.

3) 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 market for metal products (extrusion ingot, sheet ingot, foun-dry alloys and wire rod) in Europe and North America weakened dramatically during the fourth quarter of 2008. The automotive markets collapsed leading to a sharp decrease in demand, mainly for foundry alloys but also for the other metal products. In addi-tion, the building and construction markets in the US and Europe deteriorated significantly, leading to reduced demand.

Outlook

Since the end of the year, prices have reached the lowest level in more than five years of USD 1,316 per mt. Aluminium prices are expected to remain low in the medium-term, but there is limited forward visibility and significant uncertainty regarding developments.

The significant drop in demand for aluminium has resulted in declining demand for raw materials and smelter input costs are falling. The cost of alumina is normally linked to aluminium prices and therefore price adjustments are relatively quick. Signifi-cant curtailments in alumina production have also been announced as a result of planned smelter shutdowns, in particular in China. Prices for other important raw materials are also declining but with a somewhat longer time lag to the decline in aluminium prices. However, there are indications that energy prices in Europe and the US, although trending downwards, will remain elevated. Demand within main aluminium market segments is expected to remain depressed, a situation that could continue throughout the entire year. There is substantial uncertainty regarding the timing of a recovery.

Global primary aluminium consumption excluding China could potentially decline by up to 10 to 15 percent in 2009 from a con-sumption level of 25 million mt in 2008. Chinese concon-sumption of primary aluminium may fall slightly from the 2008 level of 12.5 million mt.

Outlook for Hydro

Hydro has taken decisive, proactive measures in response to the extreme market developments beginning with the reduction of metal products based on remelted metal at our primary based cast-houses and cutting production at our stand-alone remelters. This was quickly followed by decisions to close or idle primary capacity, focusing on the operations in our portfolio with the highest costs. A decision was taken for the early closure of the Søderberg line at our Karmøy plant, which was due to be shut-down at the end of 2009. This facility, which has an annual capacity of about 120,000 mt, will be closed by the end of the first quarter of 2009. We also decided, together with our partner Rio Tinto Alcan, to reduce primary production at the Søral aluminium smelter in Norway by around 50 percent (Hydro’s share about 44,000 mt per year). Electrolysis production at our Neuss smelter in Germany, which

has a total annual capacity of about 230.000 mt will be temporar-ily shut down. Production cost at Neuss is significantly higher than our average smelter costs due to high power prices in Ger-many. Casthouse operations at Neuss will continue. In total, cur-tailment measures taken will lead to reductions of approximately 400,000 mt per year of higher cost capacity further improving the average cost of our smelter system.

In January 2009, a decision was taken by the partners of Alpart, an alumina refinery in Jamaica, to reduce production by 50 per-cent corresponding to approx 290,000 mt per year of alumina for Hydro’s share (35 percent). The reduction in supply corresponds to about 150,000 mt of primary aluminium. Further measures are under evaluation.

Hydro is taking initiatives towards its suppliers to capitalize on falling commodity prices which will lead to input cost reductions at Hydro’s smelters during the first half of 2009. Alumina prices which are linked to LME prices 1)_{will be reduced as will other}

important raw material prices such as petroleum coke where a sig-nificant decline in price has already occurred.

At the end of 2008, Hydro had sold 85 percent of its metal pro-duction for the first quarter of 2009 forward for an average price of USD 1,872 per mt. Production of primary metal is expected to be about 10 percent lower in the first quarter as a result of the curtailments described above. Despite the curtailments and cost reduction initiatives described above, Hydro expects significantly lower earnings for its Aluminium metal operations in the first half of 2009.

Major projects

The construction of the Qatalum primary aluminium plant in Qatar was about 60 percent complete by the end of the year. The plan for start-up is around the end of 2009 with ramp-up to full production during 2010. Activities related to establishing the operating organization accelerated during the quarter. When completed, Qatalum will make a significant contribution to low-ering the average cost of our smelter system. Total investment costs for the 50/50 joint venture between Qatar Petroleum and Hydro are estimated at USD 5.6 billion of which Hydro’s 50 per-cent share amounts to NOK 2.8 billion.

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3) Alumina prices for Alunorte are adjusted monthly based on the monthly average LME three-month prices, applied with one month delay.

Underlying EBIT - Sub Segments

Bauxite and Alumina

Fourth quarter 2008 Third quarter 2008 % change prior quarter Fourth quarter 2007 % change prior year quarter Year 2008 2007Year Underlying earnings before financial items and tax (EBIT) (NOK million) 160 93 72 % 27 >100 % 334 681 Underlying results - Alunorte (NOK million) 1) ₂₂₅ ₁₂₆ _{79 %} ₅₃ _{>100 %} ₄₄₆ ₅₂₄ Underlying results - Alpart (NOK million) 1) ₍₆₇₎ ₍₃₁₎ _{>(100) %} ₍₁₇₎ _{>(100) %} ₍₁₀₂₎ ₁₅₀ Alumina production (kmt) 2) ₆₈₄ ₅₈₉ _{16 %} ₅₄₁ _{26 %} _2,289 _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.

Underlying EBIT for our Bauxite and Alumina operations improved from the third quarter of 2008 and fourth quarter 2007.

Underlying results for Alunorte improved compared to the third quarter despite sharply lower realized alumina prices in USD due to the decline in LME prices 3)_{. The increase resulted from higher}

production volumes related to the third expansion of the plant and significantly lower energy costs. Negative effects from the lower realized prices were partly offset by gains of NOK 40 mil-lion on an LME price hedge program which ran until the end of 2008.

Following the start-up of the expansion in the third quarter, pro-duction was close to full capacity for the fourth quarter. Operating costs per mt decreased significantly compared to the third quarter mainly due to a significant drop in oil prices since prices peaked in

July. Energy costs were also lower than the fourth quarter of 2007, due to an improved energy mix as a result of an increase in the use of coal versus oil and the co-generation of electricity.

Underlying results for Alpart were down compared to the previous quarter and fourth quarter of 2007 due to the decline in realized alumina prices which more than offset a significant decline in the price of heavy fuel oil.

Underlying EBIT for our Bauxite and Alumina operations for the full year 2008 was significantly lower than 2007, despite higher production volumes. Lower realized alumina prices and increased costs, in particular energy, had a substantial negative impact on the results compared to the previous year.

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Our production of electrolysis metal was strong and stable for the quarter, however, underlying EBIT for Primary Aluminium declined significantly from both the third quarter of 2008 and fourth quarter of 2007. Results for the quarter were impacted by inventory write-downs of roughly NOK 540 million mainly due to the substantial decline in aluminium prices towards the end of the year. Realized prices measured in Norwegian kroner increased in the quarter, contributing about NOK 600 million to underly-ing results compared to the third quarter. The price increase reflected the significant strengthening of the US dollar during the quarter.

Compared to the third quarter, fixed costs increased by about NOK 260 million, substantially impacted by translation effects of a stronger Euro and US dollar for our non-Norwegian smelters. Prices for carbon increased, having a negative impact on underly-ing results of about NOK 120 million. Other variable costs were relatively stable for the quarter. Volumes from our casthouses declined due to the increasingly difficult markets for our products, impacting underlying results by roughly NOK 190 million. Income from our equity accounted investments was about NOK 70 million lower than the third quarter of 2008 partly driven by costs related to establishing the new operating organization at

Qatalum which amounted to NOK 63 million for the fourth quarter and NOK 130 million for 2008 as a whole.

Underlying EBIT declined for the quarter compared with fourth quarter 2007, mainly due to the inventory write-downs discussed above and higher variable costs, particularly carbon, which more than offset the positive effects of higher realized aluminium prices measured in Norwegian kroner.

Underlying results for the year 2008 declined significantly, impacted by lower realized prices measured in Norwegian kroner and substantial increases in the cost of power, freight, alloying materials and carbon, in addition to the effect of the inventory write-down discussed above. Lower realized prices measured in Norwegian kroner resulted in a negative impact on underlying results of about NOK 1,330 million. In the first half of 2008, a heated commodity market resulted in increased variable costs of about NOK 1,240 million compared with 2007. Carbon costs rose sharply mainly due to a strong increase in the price of petro-leum coke. Power costs also rose due to indexation to various com-modity prices in different power contracts. Volume declines from our casthouses in the second half of the year and other cost increases had a negative impact on underlying results for the year. Primary aluminium

Operating and financial statistics 1) Fourth

quarter 2008 Third quarter 2008 % change prior quarter Fourth quarter 2007 % change prior year

quarter 2008Year 2007Year Underlying earnings before financial items and tax (EBIT) (NOK million) 257 909 (72) % 1,142 (77) % 2,666 6,552 Primary aluminium production (kmt) 442 439 1 % 439 1 % 1,750 1,742 Total casthouse production (kmt) 494 563 (12) % 539 (8) % 2,084 2,164 Realized aluminium price LME (USD/mt) 2) 4) _2,654 _2,848 _{(7) %} _2,485 _{7 %} _2,638 _2,561 Realized aluminium price LME (NOK/mt) 2) 4) _{16,904 15,114} _{12 % 14,138} _{21 %} _{14,724 15,521} Realized NOK/USD exchange rate 3) _6.37 _5.31 _{20 %} _5.69 _{14 %} _5.58 _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). 3) Including effects of strategic currency hedges (hedge accounting applied).

4) In the fourth quarter of 2008, Hydro changed its definition of realized prices to be determined when products are shipped and invoiced to customers. Previously, realized prices were determined as liquid metal is transferred from electrolysis to casthouses for further processing. This price mainly reflected the prevailing three month forward LME aluminium price three months prior to production. The casting process results in about an additional three week time lag before metal is finally shipped and invoiced to customers. Prior periods in this report have been restated to reflect the change in definition.

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Commercial

Operating and financial statistics _quarterFourth

2008 Third quarter 2008 % change prior quarter Fourth quarter 2007 % change prior year

quarter 2008Year 2007Year Underlying earnings before financial items and tax (EBIT) (NOK million) (79) (147) 47 % 105 >(100)% 435 946 Underlying EBIT - Commercial products (NOK million) (169) 60 >(100) % 67 >(100) % 229 414 Underlying EBIT - Sourcing and Trading (NOK million) 77 (125) >100 % 58 33 % 199 633 Remelt production (kmt) 97 121 (20) % 153 (37) % 505 685 Sale of metal products from own production (kmt) 1) 2) ₅₇₁ ₆₆₇ _{(14) %} ₆₈₀ _{(16) %} _2,716 _2,888 Sale of third-party metal products (kmt) 39 56 (30) % 73 (47) % 207 315 Total metal products sales excluding ingot trading (kmt) 1) ₆₁₀ ₇₂₃ _{(16) %} ₇₅₃ _{(19) %} _2,923 _3,203 External sales (kmt) 1) ₃₂₄ ₄₅₂ _{(28) %} ₄₄₉ _{(28) %} _1,744 _1,858 External revenue (NOK million) 8,611 8,579 - 8,441 2 % 35,244 37,952

Product sales (NOK million) 3) _5,341 _6,262 _{(15) %} _6,393 _{(16) %} _{25,505 29,090} 1) Excluding Slovalco sales to local market in 2007.

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.

Our Commercial activities delivered an underlying loss in the quarter including a write down of inventory of about NOK 160 million. Results improved compared with the previous quarter but declined significantly compared to the fourth quarter of 2007.

Underlying results for our Commercial Products operations were impacted by the sharp drop in sales volumes in the second half of the year as production was cut in our remelters. Product premi-ums remained relatively firm.

Results for our Sourcing and Trading activities improved in the quarter. LME and ingot trading activities provided positive

con-tributions while the result from our alumina trading activities was significantly lower than in previous quarters.

Total metal sales excluding ingot trading were sharply lower in the quarter, reflecting the weak market.

Underlying results for our Commercial operations decreased for the full year of 2008 compared to 2007 mainly reflecting signifi-cantly lower results from our Sourcing and Trading business and lower production due to the market development in second half of the year.

In market situations where forward prices are, or could become, lower than spot prices (backwardation) our operational hedge program and our aluminium trading activities 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. We have such strategies in place both relating to our operational hedging system and our aluminium trading business. Both are accounted for in the Commercial subsegment. In the fourth quarter of 2008, results from our Commercial operations included combined net positive effects of NOK 64 million of these strategies, compared with a net negative effects of NOK 161 million in the third quarter of 2008 and net negative effects of NOK 39 million in the fourth quarter of 2007. For the full year 2008, net positive effects amounted to NOK 28 million compared with net negative effects of NOK 144 million in the full year 2007.

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Market developments

The severe downturn in the global economy had a significant impact on demand in downstream aluminium markets during the quarter. Demand for flat rolled products weakened across most market segments in Europe and declined further from already low levels in the US. In particular, the construction and transportation market segments remained weak.

There was a significant decline in consumption of extruded alu-minium products in Europe compared to the previous quarter and the same quarter in 2007. The market deterioration impacted nearly all market segments, in particular southern Europe. Demand in northern Europe held up somewhat better with the exception of a very weak transportation market.

The market for extruded aluminium products in North America reflected the continued weak economy impacting most market segments, with the largest declines in the building and construc-tion industry. Demand in the US market has been declining for ten consecutive quarters, and is now back to levels experienced in the early nineties. In South America, demand is holding up fairly well in Brazil driven by robust building and construction activities and continued strength in the transportation and industrial sec-tors. However, Argentina is experiencing lower growth, as the economy is weakening.

In the second half of 2008 the automotive industry experienced the most significant contraction in demand since it was formed. The automotive market in Europe declined significantly during

the fourth quarter of 2008 where most original equipment manu-facturers (OEMs) prolonged holiday shut-downs to reduce capac-ity and car production. The North American market was heavily influenced by the weak economy. Demand in Asia and South America continued growing but at a slower pace.

Outlook

Market demand for flat rolled products in Europe is expected to continue declining during the coming months, driven by lower demand from most markets and in particular the automotive and engineering market segments. The stronger US dollar is expected to reduce pressure on margins from potential US exports to Europe. However, we expect increasing margin pressure as pro-ducers are forced to reduce capacity utilization as a result of weak-ening demand. Cost pressure, mainly driven by energy and raw material prices, is expected to ease due to the negative economic developments and lower oil prices. However, developments are uncertain and volatility in the commodity markets will impact cost levels going forward.

The overall outlook for the European extrusion market is weak with lower demand across most market segments, in particular the automotive and transportation segments. Demand in the North-ern regions is stronger than SouthNorth-ern Europe. The negative mar-ket outlook is expected to result in increased pressure on margins. In the US, extrusion markets are expected to remain severely depressed, with no signs of recovery. South American markets are expected to experience continued growth, but at a lower pace.

Aluminium Products

Aluminium Products EBIT (2,946) (288) >(100) % (326) >(100) % (1,450) 1,098

Items excluded from underlying EBIT 2,706 610 399 2,438 254 Aluminium Products underlying EBIT (239) 322 >(100) % 74 >(100) % 988 1,352

Rolled Products 89 175 (49) % (31) >100 % 652 562 Extrusion (88) 239 >(100) % 179 >(100) % 668 852 Automotive (235) (92) >(100) % (75) >(100) % (326) (67) Other and eliminations (6) - >(100) % - >(100) % (6) 5 Aluminium Products underlying EBIT (239) 322 >(100) % 74 >(100) % 988 1,352

Market statistics 1)

Rolled products - Europe (kmt) 942 979 (4) % 953 (1) % 3,957 3,943

Rolled products - USA & Canada (kmt) 959 1,130 (15) % 1,122 (15) % 4,360 4,741

Extruded products - Europe (kmt) 584 626 (7) % 667 (12) % 2,635 2,884

Extruded products - USA & Canada (kmt) 296 370 (20) % 365 (19) % 1,489 1,699

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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Demand in North American automotive market shows no signs of recovering from the very low levels of previous quarters. Auto-motive demand in Asia and South America show signs of weaken-ing from the robust levels experienced previously.

The deepening global economic crisis is resulting in significant market uncertainty, in particular the capital intensive transport and building markets. We also expect the ongoing turmoil in the credit markets to continue to heavily impact developments in these markets.

Outlook for Hydro

Measures to significantly reduce costs and manning in our US extrusion operations were carried out in 2007 and continued in 2008. Improvement initiatives were also implemented resulting

in substantial cost savings and manning reductions in our North American precision tubing business and our world wide automo-tive structures operations. Our focused efforts to improve the profitability of these businesses have helped prepare us for the sudden and dramatic market developments which occurred towards the end of the year but can only partly compensate for the unprecedented fall in market demand. As the impact of the global recession influences European markets, further actions across all of our business sectors have been identified including additional shift and manning reductions, procurement initiatives to capital-ize on falling raw material prices as well as reductions in capital expenditures and working capital. These measures will enable us to meet market pressures as the on-going recession in Europe and the US impacts demand during 2009.

Underlying EBIT - Sub Segments

Rolled Products

quarter 2008Year 2007Year Underlying earnings before financial items and tax (EBIT) (NOK million) 89 175 (49) % (31) >100 % 652 562 Sales volumes to external market (kmt) 213 240 (11) % 246 (13) % 965 1,030

Underlying results for our Rolled Products business in the fourth quarter were significantly impacted by the negative economic developments in addition to seasonally lower demand. Shipments declined in most market segments with the exception of the high value-added lithographic products segment. Margins remained firm however, and the further strengthening of the US dollar against the Euro during the quarter had a positive effect.

Compared to the fourth quarter of 2007, higher margins offset lower volumes and increased energy and raw material cost. Underlying EBIT increased for the year 2008. Positive margin developments offset volume declines but a weaker US dollar had a negative impact on the full year results.

Extrusion

quarter 2008Year 2007Year Underlying earnings before financial items and tax (EBIT) (NOK million) (88) 239 >(100) % 179 >(100) % 668 852 Sales volumes to external market (kmt) 103 122 (15) % 117 (12) % 488 508

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Automotive

2008 Third quarter 2008 % change prior quarter Fourth quarter 2007 % change prior year quarter Year 2008 2007Year Underlying earnings before financial items and tax (EBIT) (NOK million) (235) (92) >(100) % (75) >(100) % (326) (67) Sales volumes to external market (kmt) 1) ₁₈ ₂₆ _{(32) %} ₂₉ _{(39) %} ₁₀₅ ₁₁₇ 1) Excluding divested businesses Castings, Magnesium and Worcester.

Our Automotive operations incurred substantial losses in the fourth quarter. Underlying results also declined compared to the weak results of both the third quarter of 2008 and fourth quarter of the previous year due to a sharp decline in volume as OEMs prolonged holiday shut-downs to reduce capacity and car production.

Significantly lower volumes also impacted underlying results for 2008 compared to the previous year in addition to costs related to start-up activities for new product lines in our automotive struc-tures business as well as costs for reducing capacity to align our operations to current market conditions. Underlying results for 2007 included profits from divested activities of around NOK 40 million.

Our Extrusion business delivered an underlying loss in the quarter due to a sharp drop in volumes beyond the normal seasonal decline.

Compared to the third quarter, volumes declined significantly for our Eurasian operations but were relatively stable for our Building Systems business. Margins for Eurasia remained at a good level despite the significant market decline and improved for our Build-ing Systems operations. UnderlyBuild-ing results for our US operations remained at depressed levels impacted by continued falling volumes. Margins also declined, impacted by the reduction of higher priced raw material inventory increasing cost of goods sold. Underlying results from the remelt operations integrated in our US downstream business from the beginning of 2008 also had a negative influence for the quarter. Underlying results for our South American opera-tions continued to be strong, but were negatively impacted by the stronger US dollar.

Underlying results were impacted by lower volume for all of our Extrusion operations compared to the fourth quarter of the

previ-ous year. However, margins were relatively stable despite the signifi-cant decline in market demand.

Underlying results declined for the year 2008 compared to the prior year. Our European extruders outperformed a general market decline with continued high margins and stable volumes compared to the first nine months of 2008, but the volume decline from the weaker market in the final quarter more than offset the positive developments. Volumes for our Building systems business were down, but higher margins partly offset the negative effects. Under-lying results for our US operations also improved from 2007 during the first nine months, driven by significant cost reductions from efforts to align our overall cost structure with the sharp decline experienced during the last two years in the US market. But the market turbulence in the final quarter of 2008 more than offset the positive developments. Underlying results for our South American operations improved for the year compared to 2007.

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Market developments

Nordic electricity prices remained strong during the fourth quar-ter, but decreased somewhat compared with the level at the end of the third quarter of 2008. The Nordic system price declined from a high of around NOK 550 per MWh in early October towards NOK 400 per MWh by the end of December. The decrease was primarily driven by declining thermal generation fuel costs and lower power prices on the European Continent.

The fourth quarter spot price in Southern Norway (NO1) aver-aged slightly higher than in the third quarter, but also declined significantly from the beginning of the quarter to the end of the period.

Outlook

Nordic power prices have declined further during the first weeks of 2009 but high winter consumption of power and lower than normal water reservoir levels in Norway and Sweden are expected to support power prices at a fairly high level throughout the first quarter of 2009. While power prices in the Nordic region will continue to be impacted by local market conditions, including hydrological conditions, price levels going forward are expected to be negatively impact by the general economic downturn and lower power prices on the European Continent.

Water reservoir levels in Norway were about 65 percent of full capacity in early January 2009, which is 5 percent points lower than normal and 9 percent points lower than the same period in 2008.

The planned recovery of the reduced import/export transmission capacity from Southern Norway has been significantly delayed. The Norwegian system operator, Statnett, does not expect all transmission lines to be fully operational before May 2009. Hydro’s power production is expected to remain at a seasonally high level in the first quarter of 2009. However, production plans will be influenced by the reservoir situation and power market developments.

Key development activities

On October 8, Hydro exercised an option to purchase additional shares of common stock in Ascent Solar Technologies Inc. With this investment of NOK 93 million, Hydro increased its ownership interest in Ascent Solar and now holds 35 percent of the company’s outstanding common shares and 35 percent of outstanding class B warrants. Ascent Solar is developing flexible thin film photovoltaic modules with plans for larger scale production within the next 1-2 years.

Energy

Energy EBIT 276 515 (46) % 376 (27) % 1,471 1,303

Items excluded from underlying EBIT 315 (39) (35) 265 (119) Energy underlying EBIT 592 475 25 % 341 73 % 1,736 1,184

Direct production costs (NOK million) 1) ₁₃₁ ₁₀₁ _{30 %} ₁₁₂ _{17 %} ₄₆₂ ₄₉₀ Power production (GWh) 2,813 2,677 5 % 2,321 21 % 11,361 11,018

External sourcing (GWh) 2) _2,262 _2,396 _{(6) %} _2,267 _- _8,831 _8,760 Internal contract sales (GWh) 3) _3,436 _3,430 _- _3,575 _{(4) %} _{13,765 14,109} External contract sales (GWh) 4) ₅₁₀ ₄₀₉ _{25 %} ₂₆₄ _{93 %} _1,764 _1,042 Net spot sales (GWh) 5) _1,130 _1,233 _{(8) %} ₇₄₈ _{51 %} _4,663 _4,629

Market statistics

Southern Norway spot price (NO1) (NOK per MWh) 433 403 7 % 338 28 % 324 206 Nordic system spot price (NOK per MWh) 452 446 1 % 337 34 % 369 224 1) Includes maintenance and operational costs, transmission costs, property taxes and concession fees.

2) Includes long-term sourcing contracts 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.

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Underlying EBIT

Underlying EBIT for Energy improved significantly from the third quarter of 2008 mainly due to higher power production and continued strong spot prices. Power production in the fourth quarter has been higher than expected, primarily due to higher reservoir precipitation than normal during the period. The improvement compared with the fourth quarter of 2007 was due to significantly higher power production and spot prices.

Direct power production costs increased by 31 percent compared with the third quarter of 2008, mainly due to higher transmission costs and higher maintenance activity.

Hydro’s solar activities recorded an underlying loss of NOK 52 million in the fourth quarter of 2008 compared with a loss of NOK 19 million in the third quarter and a loss of NOK 49 mil-lion in the fourth quarter of 2007.

Energy’s underlying EBIT for the full year of 2008 improved by 47 percent compared with 2007. The increase was mainly due to significantly higher spot prices and somewhat higher power pro-duction than the high level experienced in 2007. Solar activities reported a loss of NOK 130 million for the full year 2008.

Corporate, other and eliminations

Underlying EBIT for Corporate, other and eliminations amounted to NOK 81 million in the fourth quarter compared with a nega-tive NOK 239 million in the third quarter of 2008 and a neganega-tive NOK 50 million in the fourth quarter of 2007. Underlying EBIT included an elimination of unrealized profits on inventories pur-chased from group companies amounting to a credit of NOK 273 million in the fourth quarter compared to NOK 63 million and NOK 38 million in the third quarter of 2008 and fourth quarter of 2007, respectively. The amount for the third quarter included charges of NOK 150 million relating to a change in the allocation of corporate overhead costs which was offset by positive adjust-ments included in underlying EBIT for the business areas, mainly Aluminium Metal (NOK 89 million) and Aluminium Products (NOK 76 million).

Items excluded from underlying EBIT and

income from continuing operations

To provide a better understanding of Hydro’s underlying perform-ance, the items in the table below have been excluded from EBIT and income from continuing operations.

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

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Items excluded from underlying income from continuing operations 1) Fourth quarter 2008 Third quarter 2008 Fourth quarter 2007 2008Year 2007Year NOK million

Unrealized derivative effects on LME related contracts 2) _1,984 ₃₅ ₁₀₁ _1,120 ₁₃₁ Unrealized derivative effects on power contracts 3) _(1,481) _(1,038) ₆₆₆ ₇₆₈ ₉₂₈ Unrealized derivative effects on currency contracts 4) ₂₆₅ ₁₅₀ ₍₅₎ ₃₁₄ ₍₁₃₇₎ Metal effect, Rolled Products 5) ₄₀₇ ₍₃₈₎ ₃₀₀ ₂₃₅ ₂₃₅ Significant rationalization charges and closure costs 6) ₁₀₉ _- ₅₅ ₁₀₉ ₂₂₄ Impairment charges (PP&E and equity accounted investments) 7) _2,464 _- _- _2,464 ₁₄₄ Loss provisions (power contracts) 8) ₂₅₇ _- ₂₅₇ -(Gains)/losses on divestments 9) ₍₂₉₎ ₍₃₄₎ ₍₅₎ ₍₄₅₃₎ ₍₆₄₁₎ Correction of elimination of profit in inventory - - 296 - 291 Germany, change in tax rate - - (47) - (47) Items excluded from underlying EBIT 3,975 (924) 1,361 4,815 1,128 Net foreign exchange (gain)/loss 10) _4,629 _2,015 ₍₇₄₎ _5,491 _(2,254) Calculated income tax effect 11) _(2,943) ₍₂₄₈₎ ₍₃₅₃₎ _(3,460) ₃₂₅ Germany, change in tax rate - - (50) - (300) Items excluded from underlying income from continuing operations 5,661 843 884 6,846 (1,101) 1) Negative figures indicate a gain and positive figures indicate a loss.

2) 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.

3) Unrealized gains and losses on embedded derivatives in power contracts for own use and related financial power contracts. 4) Relates to currency effects in equity accounted investments.

5) Timing differences resulting from inventory adjustments due to changing aluminium prices during the production, sales and logistics process, as well as inventory write downs for our rolled products business.

6) 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.

7) Write-downs of assets or groups of assets to estimated recoverable amounts in the event of an identified loss in value. 8) Provision on onerous contracts.

9) Net gain or loss on divested businesses and individual major assets.

10) Realized and unrealized gains and losses on foreign currency denominated accounts receivable and payables, funding and deposits, and forward currency contracts selling currencies that hedge net future cash flows from operations, sales contracts and working capital.

11) In order to present underlying income from continuing operations on a basis comparable with our underlying operating performance, we have calculated the income tax effect of currency gains/losses with 28% and of items excluded from underlying EBIT based on Hydro’s effective tax rate excluding financial items. In previous quarters, this calculation has been based on Hydro’s overall effective tax rate. Prior periods have been restated.

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 in the business areas, and for Corporate, other and eliminations, with a brief dis-cussion of the major factors affecting the development of these items in the fourth quarter of 2008.

Aluminium Metal

A strengthened US dollar against the Brazilian real during the fourth quarter resulted in increased unrealized losses on long-term US dollar denominated loans for Alunorte. Impairment charges primarily relate to the write-down of our investment in the Alpart alumina operations and fixed assets in the Neuss smelter due to the weak aluminium prices in combination with high energy and other raw material costs. Rationalization charges and closure costs relate to a provision for closure costs at the Søderberg line at Karmøy which is planned to be finalized by the end of the first quarter of 2009. Unrealized derivative effects on power contracts were influenced by the downward shift in LME forward prices,

resulting in unrealized gains on embedded derivatives. Decreased forward prices on power resulted in unrealized losses on financial contracts in Søral. Provision for expected losses on power con-tracts relates to our Neuss smelter as a result of the cash losses on the operation in addition to decreasing forward prices for power. Unrealized derivative effects on LME related contracts relate to contracts that are part of our operational hedge program and were mainly influenced by the significant downward shift in the LME forward price curve during the quarter.

Aluminium Products

The negative metal effect reflected the decline in aluminium prices measured in Euro for the period from June 2008 towards the end of the year. The increase in unrealized derivative effects on LME related contracts resulted from a significant downward shift in the LME forward price curve during the quarter. Impairment charges relate to certain fixed assets and goodwill including one rolling mill, sev-eral plants within the US extrusion operations, and our European automotive structures and US precision tubing activities.

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Energy

Impairment charges for our Energy operations relate to the write-down in value of our three minority investments in solar busi-nesses due to declines in the share values.

Corporate, other and eliminations

Unrealized derivative effects 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 consum-ing units. These internal contracts, or embedded derivatives within the contracts, are accounted for at fair value by the Energy

seg-ment. Valuation effects are eliminated as part of Corporate, other and eliminations, and excluded from underlying results. In addi-tion to power forward prices, the main drivers for variability in fair value are embedded price links related mainly to aluminium and coal. Further drop in the forward price of coal and the down-ward shift in the fordown-ward LME prices resulted in an unrealized gain, partly off-set by the strengthened US dollar.

Items excluded from underlying EBIT 1)

NOK million Fourth quarter 2008 Third quarter 2008 Fourth quarter 2007 2008Year 2007Year Unrealized derivative effects on currency contracts (Alunorte) Bauxite and Alumina 271 203 (35) 352 (167) Unrealized derivative effects on LME related contracts (Alunorte) Bauxite and Alumina (37) (134) (82) (96) (163) Impairment charges (Alpart) Bauxite and Alumina 512 - - 512 - Rationalization charges and closure costs (Søderberg, Karmøy) Primary Aluminium 79 - 8 79 114 Unrealized derivative effects on power contracts Primary Aluminium (442) (342) 76 (426) 108 Unrealized derivative effects on power contracts (Søral) Primary Aluminium 150 50 (2) 129 19 Unrealized derivative effects on currency contracts (Qatalum) Primary Aluminium (6) (53) 30 (37) 30 Impairment charges Primary Aluminium 845 - - 845 - Loss provision (power contracts) Primary Aluminium 257 - - 257 - Impairment charges Commercial 35 - - 35 144 Unrealized derivative effects on LME related contracts Other and eliminations 497 (485) 79 (225) (303) Correction of elimination of profit in inventory Other and eliminations - - 65 - 118 Total Aluminium Metal 2,160 (760) 139 1,424 (100) Metal effect Rolled Products 407 (38) 300 235 235 Rationalization charges and closure costs (Inasa) Rolled Products - - 29 - 29 Impairment charges Rolled Products 129 - - 129 - Germany, change in tax rate (Alunorf) Rolled Products - - (47) - (47) Rationalization charges and closure costs Extrusion - - - - 63 Impairment charges Extrusion 253 - - 253 - (Gains)/losses on divestments Extrusion - - (17) - (17) Impairment charges Automotive 370 - - 370 - (Gains)/losses on divestments Automotive - - 12 - (624) Rationalization charges and closure costs Automotive 30 - 18 30 18 Unrealized derivative effects on LME related contracts Other and eliminations 1,518 648 104 1,421 597 Total Aluminium Products 2,706 610 399 2,438 254 Unrealized derivative effects on power contracts Energy (5) (6) (35) (22) (119) Impairment charges Energy 321 - - 321 - (Gains)/losses on divestments Energy - (34) - (34) -

Total Energy 315 (39) (35) 265 (119)

Unrealized derivative effects on power contracts Corporate, other and eliminations (1,183) (740) 627 1,088 920 Unrealized derivative effects on LME related contracts Corporate, other and eliminations 5 6 - 19 - Correction of elimination of profit in inventory Corporate, other and eliminations - - 231 - 173 (Gains)/losses on divestments Corporate, other and eliminations (29) - - (419) - Total Corporate, other and eliminations (1,207) (734) 858 688 1,093 Items excluded from underlying EBIT Hydro 3,975 (924) 1,361 4,815 1,128 1) Negative figures indicate a gain and positive figures indicate a loss.

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Finance

Financial income (expense)

Interest income 225 154 46 % 175 29 % 769 1,228 Dividends received and net gain (loss) on securities (32) 15 >(100) % 21 >(100) % 27 174 Financial income 193 169 14 % 196 (2) % 795 1,403 Interest expense 1 (70) >100 % (139) >100 % (221) (415) Capitalized interest - - - 2 >(100) % - 5 Net foreign exchange gain (loss) (4,629) (2,015) >(100) % 74 >(100) % (5,491) 2,254 Other (51) (65) 20 % (3) >(100) % (109) (39) Financial expense (4,679) (2,150) >(100) % (66) >(100) % (5,821) 1,805 Financial income (expense), net (4,487) (1,980) >(100) % 131 >(100) % (5,026) 3,208

Fourth quarter 2008 Third quarter 2008 Fourth quarter 2007 2008Year 2007Year Exchange rates

NOK/USD Average exchange rate 6.80 5.37 5.44 5.64 5.86 NOK/USD Balance sheet date exchange rate 7.00 5.83 5.41 7.00 5.41 NOK/EUR Average exchange rate 8.94 8.06 7.89 8.22 8.02 NOK/EUR Balance sheet date exchange rate 9.87 8.33 7.96 9.87 7.96 Source: Norges Bank

During the quarter, both the US dollar and Euro have strength-ened against the Norwegian kroner resulting in net foreign exchange losses of about NOK 4.6 billion. Approximately half of the losses related mainly to Hydro’s US dollar hedging program. The remainder related to losses on intercompany balances denom-inated in Euro. The Euro losses have no cash effect and are offset in equity by translation of the corresponding subsidiaries during consolidation.1)

Interest income increased in fourth quarter compared to third quarter due to interest earnings related to tax claims.

At end of 2008 cash and cash equivalents amounted to NOK 3.3 billion down from NOK 9.3 billion at the end of 2007.

Tax

Income taxes amounted to a positive NOK 1,748 million in the fourth quarter compared with a charge of NOK 201 million in the third quarter of 2008 and a positive amount of NOK 58 mil-lion in the fourth quarter of 2007. For the year 2008, Income taxes amounted to a positive NOK 565 million compared with a charge of NOK 3,075 million for 2007 representing about 15 percent and 25 percent of Income from continuing operations before tax respectively.

Positive Income taxes for the fourth quarter of 2008 and for the year as a whole result from the operating losses incurred in these periods. Income taxes for 2008 were also influenced by tax charges related to power surtaxes amounting to roughly NOK 500 million.

1) The Euro losses arise from group positions that create accounting losses recognized in the income statement of the parent company when the Euro appreciates against the Norwegian kroner. No corresponding gains are recognized in the income statement of the subsidiaries that use Euro as functional currency. This has no cash effect for the group. When the subsidiaries Euro financial statements are translated into NOK for consolidation, currency effects on the Euro intercompany deposits are included directly in consolidated equity in the balance sheet, offsetting the currency loss recognized through the income statement.

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Condensed consolidated statements of income (unaudited)

Fourth quarter Year NOK million, except per share data 2008 2007 2008 2007

Revenue 21,368 21,651 88,643 94,316

Share of the profit (loss) in equity accounted investments (1,154) 160 (915) 1,000

Other income, net 161 174 865 1,093

Total revenue and income 20,375 21,986 88,593 96,409 Depreciation, amortization and impairment 2,480 839 4,915 3,552 Other expenses 21,001 20,809 82,483 83,833 Total expenses 23,481 21,648 87,399 87,385 Earnings before financial items and tax (EBIT) (3,106) 338 1,194 9,025 Financial income (expense), net (4,487) 131 (5,026) 3,208 Income (loss) from continuing operations before tax (7,593) 468 (3,832) 12,233

Income taxes 1,748 58 565 (3,075)

Income (loss) from continuing operations (5,845) 527 (3,267) 9,158 Income (loss) from discontinued operations (1) 3 (247) 9,447 Net income (loss) (5,846) 529 (3,514) 18,604 Net income attributable to minority interests 170 91 411 408 Net income (loss) attributable to equity holders of the parent (6,016) 438 (3,925) 18,196 Basic and diluted earnings per share from continuing operations (in NOK) 1) 2) _(4.99) _0.36 _(3.04) _7.17 Basic and diluted earnings per share from discontinued operations (in NOK) 1) _- _- _(0.20) _7.74 Basic and diluted earnings per share attributable to equity holders of the parent (in NOK) 1) _(4.99) _0.36 _(3.25) _14.90 Weighted average number of outstanding shares (million) 1,206 1,209 1,209 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.