Focus for the future

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2000

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N O R S K H Y D R O

1) Reported as one segment for financial reporting

2) Reported as “Other Light Metals” for financial reporting

Norsk Hydro prepares its financial statements in accordance with the generally accepted accounting principles in Norway and the United States. The comments of the company´s Board of Directors concerning developments in the operations of industry segments are applicable to both sets of accounting principles, unless otherwise stated. The differences in net income under Norwegian accounting principles and USGAAP are not material.

Quarterly results 2000:

16 October 2000

The results will be released at 0930 hours CET. The company reserves the right to revise these dates.

Hydro on the Internet

Hydro's web site on the Internet provides information about the company and its activities, financial status and annual reports. The information is updated on a regular basis, offering news, press releases, results and presentations. Visit us at www.hydro.com.

Norsk Hydro ASA, Bygdøy Allé 2, N-0240 Oslo, Norway Telephone: +47 22 43 21 00 Fax: +47 22 43 27 25 E-mail: [email protected] Oil Marketing Exploration and Production Norway1) Exploration and Production International1) Energy Aluminium Metal Production Aluminium Extrusion Aluminium Rolled Products2) Automotive Structures2) Magnesium2) Plant Nutrition Gas and Chemicals KFK

Petrochemicals Industrial Insurance

Hydro Seafood

Pronova

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Consolidated results

(US GAAP)

1999 2000 2000 2000 1999 1999

2nd qtr 1st qtr 2nd qtr NOK million 1st half 1st half Year 1,750 6,729 7,032 Operating income 13,761 2,864 7,735

79 166 229 Non-consolidated investees 395 188 339

(271) (983) (1,006) Net financial expense (1,989) (385) (1,551)

949 - 139 Other income 139 1,098 1,350

2,507 5,912 6,394 Income before tax 12,306 3,765 7,873 (1,226) (3,470) (3,589) Income tax expense (7,059) (1,746) (4,337)

1,260 2,451 2,775 Net income 5,226 1,969 3,416

5.50 9.40 10.60 Earnings per share 20.00 8.60 13.80

Norsk Hydro's net income in the first half of 2000 was NOK 5,226 million (USD 613.5 million), or NOK 20.00 per

share (USD 2.35). The corresponding figures in 1999 were NOK 1,969 million (USD 252.9 million) and NOK 8.60 per share (USD 1.10). The substantial improvement was primarily the result of a significantly higher crude oil price and increased oil production, as well as higher margins and business volume in Light Metals and Energy. In addition, Plant Nutrition showed positive results mainly due to cost reductions and improved margins. Operating income in the first six months of NOK 13,761 million (USD 1,617.6 million) was NOK 10,897 million above earnings in the first half of 1999.

Net income in the second quarter was NOK 2,775 million (USD 315.7 million), or NOK 10.60 per share (USD 1.21).

This represents an increase of 120% over the same period of 1999.

Earnings for non-consolidated investees in the first half of 2000 increased by 110% to NOK 395 million. The progress

was due to better profitability for Hydro's affiliates in Light Metals and Agriculture.

Other income represents the gain on the sale of Fundo as, an aluminium wheel manufacturer, and KFK's sale of BS Pet

Products AS, an animal feed operation.

Cash flow from operations in the first half of this year was NOK 13.8 billion, an increase of 83%. The improvement was

mainly due to improved earnings.

Efforts to realize Hydro's established improvement targets are progressing according to plan. Measures carried out in

the first half of 2000 improved operating income by about NOK 1.0 billion. This is in addition to the NOK 1.3 billion which was realized in 1999.

Hydro's investments in the first half of 2000 totaled NOK 7.4 billion, of which approximately 51% were made in the oil

and gas operations.

EBITDA for core areas and the introduction of CROGI as a return measure

The transition to the new steering model, Value-Based Management, has moved Hydro's focus to cash flow-based

indicators, before and after taxes. EBITDA, defined as income (loss) before tax, interest expense, depreciation, amortizati-on, writedowns and certain other financial items, is an approximation of cash flow from operations before tax. It is being used as a measure to assess performance in Hydro's operational areas and business segments. Hydro will continue to dis-cuss operating income in addition to EBITDA.

In the first half of 2000 EBITDA was NOK 21,345 million, an increase of NOK 12,505 million compared to the first

half of the prior year. Of this increase, NOK 5,967 million occurred in second quarter of 2000.

Hydro has also introduced cash return on gross investment (CROGI) as an annual rate of return measure. CROGI is

defined as gross cash flow after taxes, divided by gross investment. Hydro's CROGI in 1999 was 8.4%. The target for 2002 is 10%.

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HYDRO OIL AND ENERGY

EBITDA

1999 2000 2000 2000 1999

2nd qtr 1st qtr 2nd qtr NOK million 1st half 1st half 1,875 6,406 7,041 Exploration and Production 13,447 3,442

246 479 579 Energy 1,058 557

108 97 76 Oil Marketing 173 183

(1) - 1 Eliminations 1 8

2,228 6,982 7,697 Total Hydro Oil and Energy 14,679 4,190

Operating income

1999 2000 2000 2000 1999

2nd qtr 1st qtr 2nd qtr NOK million 1st half 1st half 1,001 4,230 4,863 Exploration and Production 9,093 1,715

182 442 544 Energy 986 383

50 48 11 Oil Marketing 59 62

- - (1) Eliminations (1) 9

1,233 4,720 5,417 Total Hydro Oil and Energy 10,137 2,169

1999 2000 2000 2000 1999

2nd qtr 1st qtr 2nd qtr 1st half 1st half

Oil and gas production

269 438 408 (thousands boe/d) 423 276

15.40 26.50 27.40 Oil price (USD/bbl) 27.00 13.30

119.60 217.80 240.70 Oil price (NOK/bbl) 229.10 103.00

0.50 0.79 0.91 Gas Price (NOK) 0.84 0.54

196 233 279 Exploration expense (NOK million) 512 384

Exploration and Production

EBITDA for Exploration and Production was NOK 13,447 million in the first half of 2000, about four times higher than

in the same period of last year. Operating income was slightly more than five times higher than earnings in the first half of 1999. The improvement in operating income in the second quarter of 2000, compared to last year, increased at virtually the same proportional rate. The favorable change was due to significantly higher oil and gas prices, and a 53% increase in production. The increase in production was mainly due to the acquisition of Saga Petroleum in July 1999.

Hydro's oil and gas production in the second quarter averaged 408,000 barrels of oil equivalents per day (boe), which was

52% higher than average production in the second quarter of 1999. Of its total production, Hydro had average oil production of 322,000 barrels per day. Second quarter production as a whole decreased by 30,000 boe compared to the first quarter of 2000, reflecting seasonally low volumes for gas, maintenance and shutdowns on the Snorre, Vigdis and Njord fields.

The average price of crude oil in the second quarter was USD 27.4 per barrel, compared to USD 15.4 per barrel in the

cor-responding period of 1999. Stated in Norwegian kroner, the oil price doubled. Average realized gas prices were 80% above prices in the second quarter of last year.

Exploration expense in the second quarter was NOK 279 million, compared to NOK 196 million in the corresponding

period of last year. Lower capitalization as a result of fewer commercial discoveries accounted for the increase. Exploration activity in the second quarter was at the same level as in the same quarter of 1999, which did not include Saga Petroleum.

Hydro entered into an agreement to sell its assets on the British Continental Shelf for USD 540 million, excluding net opera-ting capital. The portfolio comprises interests in the Britannia, Alba and Gryphon fields and in exploration licenses. Hydro expects the transaction to provide a gain of about NOK 500 million. At the same time, the sale will create a tax-related loss that is expected to reduce current tax by approximately NOK 450 million. The exact figures will be dependent upon the exchange rate at the time the transaction is consummated. The transaction is subject to the approval of relevant authorities, which is anticipated in the third quarter of 2000.

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Energy

EBITDA and operating income for Energy in the first half of 2000 was NOK 1,058 million and NOK 986 million,

respectively.

Operating income in the first half of 1999 was impacted by writedowns and charges of NOK 123 million. Excluding

these charges, EBITDA and operating income increased by around 90%, or approximately NOK 500 million, compared to the first half of 1999. In the second quarter of 2000, EBITDA and operating income improved by slightly more than NOK 300 million compared to the same period of last year.

Higher refining margins, combined with better results from the international trade of crude oil and liquefied natural gas,

helped improve performance for Hydro's oil marketing and refining activities. Earnings increased in the first half of this year by NOK 250 million, of which NOK 200 million occurred in the second quarter.

Operating income for natural gas sales in Europe was higher in the second quarter of 2000 than in the same quarter of

last year. The favorable change reflected increased activity and improved margins.

Electricity production in the second quarter of 2000 was somewhat higher than production in the same period of last

year. However, spot market prices were unchanged. Electricity contracts from 1999 improved earnings. In total, this improved results by about NOK 110 million in the first half of 2000. The improvement in earnings in the second quarter alone was approximately NOK 60 million compared to last year.

Reservoir levels are well above average in seasonal terms. As a result, electricity production is expected to increase over

the remainder of 2000.

Oil Marketing

EBITDA and operating income for Oil Marketing, which is responsible for the retail marketing of gasoline and other

refined oil products in Sweden, was NOK 173 million and NOK 59 million, respectively, in the first half of 2000. The corresponding figures in 1999 were NOK 183 million and NOK 62 million. Reduced earnings were due to lower realized margins, due mainly to high oil prices during the period.

Hydro's share of net income in the retail marketing company, Hydro Texaco, in the first half of this year was NOK 52 mil-lion. This was somewhat above last year's figure.

HYDRO LIGHT METALS

EBITDA

1999 2000 2000 2000 1999

2nd qtr 1st qtr 2nd qtr NOK million 1st half 1st half

334 1,342 1,085 Aluminium Metal Products 2,427 633

271 311 392 Aluminium Extrusion 703 524

250 164 181 Other Light Metals 345 482

(6) (14) 1 Eliminations (13) (17)

849 1,803 1,659 Total Hydro Light Metals 3,462 1,622

Operating income

1999 2000 2000 2000 1999

177 1,086 800 Aluminium Metal Products 1,886 307

166 188 190 Aluminium Extrusion 378 309

111 25 39 Other Light Metals 64 156

(7) (13) - Eliminations (13) (18)

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Aluminium Metal Products

EBITDA for Aluminium Metal Products was NOK 2,427 million in the first half of 2000, an increase of NOK 1,794

million compared to the first half of last year. In the second quarter, EBITDA advanced by NOK 751 million. Operating income in the first half of this year was NOK 1,886 million, of which NOK 800 million was recorded in the second quarter. The improvement in the first six months and in the second quarter of 2000 was primarily due to higher realized metal prices, a higher USD exchange rate, and good results for metal trading activities.

Aluminium prices on the London Metal Exchange (LME) weakened by USD 150 per tonne during the course of the

second quarter to an average of USD 1,502 per tonne. However, due to time lags in the pricing of aluminium, the full effect of the decrease was not reflected in realized prices in the second quarter, which were somewhat higher than in the previous quarter. In the first half of 2000, average realized prices for Hydro's production of primary metal was slightly below USD 1,540 per tonne.

At the end of 1999, Hydro had contracts in place for about one third of its expected primary metal production in 2000 at prices slightly below USD 1,430 per tonne. Through a price-hedging program and sales contracts, Hydro has pre-sold an additional 50% of its remaining expected primary aluminium production in 2000 at a price of approximately USD 1,460 per tonne. The main part of the pre-sold metal is tied to sales contracts, while the remainder is connected to the price-hedging program carried out in the first half of 1999. Measured against current market prices, the program for 2000 will have a negative effect on the remainder of the year. At the end of the first six months, Hydro estimated this loss to be about NOK 150 million. Changes in the LME price can result in significant fluctuations due to marked-to-market adjustments of the sales contracts.

Earnings for metal trading activities were high in the first six months and substantially above the weak level realized

in the corresponding period of 1999. Earnings in the second quarter were lower than in the first quarter of 2000, but remained high. The improved performance reflected aluminium and alumina contracts signed in 1999, which increased Hydro's trading activities in the current year.

Aluminium Extrusion

EBITDA for Aluminium Extrusion was in the first half of this year NOK 703 million, an improvement of 34%, but

EBITDA for the second quarter was NOK 392 million, an advance of 45% compared to the same period of 1999. Operating income was NOK 378 million in the first half of 2000 and NOK 190 million in the second quarter.

The improvement in the first six months was largely due to higher volumes, while margins weakened slightly. Results

for Extrusion Europe in the first half of 2000 continued to rise over its already strong standard, reflecting a high activity level and improved productivity. Heat Transfer, the business unit that produces automotive components, experienced a slight setback in performance compared to the previous year. Building Systems in Europe showed significant improve-ment in a market characterized by increased construction activity. Aluminium Extrusion's results for the first half of 2000 included the results from March through June of Wells Aluminum Corporation, which experienced a decrease in new orders during the second quarter. Hydro acquired the US company in the first quarter of 2000.

Other Light Metals

EBITDA and operating income for Aluminium Rolled Products in the first half of 2000 were both lower than in the

same period of last year, mainly due to favorable one-time effects in the second quarter of 1999. Sales volumes in the first six months increased in comparison to last year, while realized margins were unchanged.

Automotive Structures in the first half of this year had a negative EBITDA and an operating loss that were comparable

to last year's results. The demand for bumper beams and aluminium body structures for cars remains strong, and many new products are ready to be launched. However, a continued lack of economies of scale and high costs related to pre-production accounted for the weak performance.

Magnesium's performance, both in EBITDA and operating income, weakened compared to the first half of 1999. Sales

volumes were higher, but lower market prices led to a reduction in realized margins. A growing amount of exported metal from China is more than offsetting the strong demand for magnesium and is the main source of the price pressure.

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HYDRO AGRI

EBITDA

1999 2000 2000 2000 1999

2nd qtr 1st qtr 2nd qtr NOK million 1st half 1. half

414 767 861 Plant Nutrition 1,628 737

190 185 217 Gas and Chemicals 402 371

147 69 175 KFK 244 188

25 20 23 Eliminations 43 4

776 1,041 1,276 Total Hydro Agri 2,317 1,300

Operating Income

1999 2000 2000 2000 1999

36 359 376 Plant Nutrition 735 (26)

108 106 101 Gas and Chemicals 207 205

66 (8) 9 KFK 1 34

23 20 23 Eliminations 43 4

233 477 509 Total Hydro Agri 986 217

Plant Nutrition

Plant Nutrition had EBITDA of NOK 1,628 million in the first half of 2000, more than double last year's result of

NOK 737 million. Operating income was NOK 735 million, compared to an operating loss of NOK 26 million in the first six months of 1999.

EBITDA in the second quarter was NOK 861 million, an increase of NOK 447 million compared to the corresponding

period of last year. Operating income rose by NOK 340 million to NOK 376 million in the second quarter of 2000.

EBITDA in the first six months of 2000 included non-recurring charges of NOK 350 million, compared to NOK 169

mil-lion in the same period of last year. Non-recurring charges in the second quarter alone were NOK 215 milmil-lion, against NOK 54 million in 1999. Consequently, the underlying improvement in EBITDA in the first half of 2000 was NOK 1,072 million. This year's non-recurring charges of NOK 350 million included a restructuring charge of NOK 135 million in demanning costs for nitrate fertilizer plants and NOK 108 million in closure costs for complex (NPK) fertilizer plants in France. The remaining charges of NOK 107 million were largely workforce-reduction costs connected to management functions and the reversal of losses on contracts. Furthermore, operating income in the second quarter of 2000 was impacted by a writedown of property, plant and equipment of NOK 56 million. In addition to the costs incurred in the first six months, Hydro expects further costs of about NOK 250 million over the remainder of 2000.

The improvement in performance was due to a combination of cost-reduction initiatives and favorable market effects. Fixed costs in the first half of 2000 were reduced by approximately NOK 500 million compared to the first half of last

year. Since 1998, the accumulated savings in fixed costs in Hydro's plant nutrition activities have totaled NOK 950 million. The work to achieve further cost reductions in Hydro's plant nutrition activities is on schedule with relation to the goals set in the Hydro Agri Turnaround program. Hydro has reduced its workforce by about 1,200 people since January 1999.

The favorable price effect in the first half of the current year amounted to approximately NOK 820 million, while

production costs, made up primarily of energy costs, where about NOK 360 million above last year's level. Energy costs in the third quarter of 2000 will probably be somewhat higher than they were in the second quarter.

As a result of restructuring measures in the European market that will result in a reduction of nitrate fertilizer capacity of

about 3 million tonnes compared with 1999 capacity, the market balance for nitrate fertilizer in Europe is improving. To illustrate, the price of calcium ammonium nitrate has increased by around DEM 100 per tonne since the latter half of 1999. The execution of the announced closures should provide the basis for a sustainable market balance.

The international fertilizer markets continued to improve in the second quarter. Ammonia and urea prices increased

substantially, and China's possible membership in the World Trade Organization is expected to increase the country's fertilizer imports in the future.

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Due to the normal seasonal variations, fertilizer volumes in the second half of 2000 are expected to be considerably less

than volumes in the first half of the year.

Hydro's share of net income in affiliated companies increased from NOK 97 million in the first half of 1999 to NOK

119 million in the first half of the current year. Significant improvement for the nitrogen companies, Tringen and Qafco, more than compensated for a weakening in earnings for the phosphate company, Farmland Hydro.

Total investments in the first half of 2000 amounted to NOK 169 million, or approximately 10% of EBITDA. On July 6, Hydro signed an agreement to acquire 58% of the shares in Adubos Trevo S.A., a Brazilian fertilizer

company, with production capacity of 1.7 million tonnes. The company is expected to bring economies of scale to Hydro's fertilizer activities in Latin America as well as synergies to Hydro's existing production and distribution network.

Gas and Chemicals

EBITDA for Gas and Chemicals in the first half of 2000 of NOK 402 million was 8% higher than last year, while

operating income was virtually unchanged in comparison with earnings in the first half of 1999. A strong increase in the price of ammonia, which pressured margins for nitrogen-based products, was offset by cost reductions and favorable one-time effects that totaled NOK 66 million. The pre-tax gain on the sale of Hydelko KS and Hydro's share of the Hydrogas-Messer joint venture in the second quarter of 2000 accounted for most of the improvement in EBITDA.

A/S Korn- og Foderstof Kompagniet – KFK

KFK had EBITDA of NOK 244 million in the first half of 2000, which was NOK 56 million above EBITDA in the same

period of last year. In the second quarter alone, EBITDA improved by 19% to NOK 175 million. Operating income in the first half of the current year was NOK 1 million, compared to NOK 34 million in the first half of 1999. A pre-tax gain of NOK 89 million on the sale of BS Pet Products AS, an animal feed operation, favorably affected EBITDA in the second quarter of 2000. Results for KFK's fish feed activities were below earnings from last year, when margins were particularly good. A decline in KFK's operating income compared to the first half of 1999 reflected higher costs for animal feed operations caused by higher oil prices and other factors.

Petrochemicals

1999 2000 20000 2000 1999

(30) 275 173 EBITDA 448 152

1999 2000 2000 2000 1999

(96) 185 78 Operating income 263 (165)

EBITDA for Petrochemicals increased by NOK 296 million in the first half of 2000 compared to the same period last

year. In the first half of 1999, EBITDA included a pre-tax gain of NOK 149 million on the sale of Mabo AS. Operating income rose by NOK 428 million compared to the first half of 1999. The progress was mainly due to a 76% increase in the price of S-PVC compared to last year. However, the effects of the price increase were partially offset by higher raw materials costs for natural gas liquids and purchased ethylene. Prices for caustic soda weakened by 11% compared to the first half of last year.

In the second quarter of 2000, EBITDA and operating income declined by NOK 102 million and NOK 107 million,

respectively. The maintenance shutdown at the production facilities in Rafnes, Norway, negatively impacted earnings by approximately NOK 185 million due to production losses and higher maintenance costs. A strike delayed the shutdown by 14 days, and problems related to start-up led to a longer stop in production than originally anticipated.

The price of S-PVC leveled out toward the end of the second quarter. Further price pressure during the second half of 2000 is expected.

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Other activities

19992000 2000 2000 1999

1,175 147 186 EBITDA 333 1,474

1999 2000 2000 2000 1999

82 92 139 Operating income 231 123

Other activities include Hydro Seafood, Pronova, Hydro Technology and Projects, and the casualty insurance company,

Industriforsikring.

Hydro Seafood's salmon farming activities showed improved EBITDA and operating income in the first half of 2000,

due primarily to higher prices. Hydro has reached an agreement to sell Hydro Seafood. The transaction is expected to be completed during the third quarter of 2000.

Finance

1999 2000 2000 2000 1999 1999

2nd qtr 1st qtr 2nd qtr NOK million 1st half 1st half Year

280 612 547 Net interest expense 1,159 539 1,167

41 266 381 Net foreign exchange loss 647 41 304

(8) 33 74 Net (gain) loss on securities 107 (187) (379)

(42) 72 4 Other, net 76 (8) 459

271 983 1,006 Net financial expense 1,989 385 1,551 7.86 8.48 8.58 NOK/USD exchange rate1) 8.58 7.86 8.05

1)As of the end of the period.

Net financial expense in the first half of 2000 was NOK 1,989 million, compared to NOK 385 million last year. In the

first half of the current year, net financial items was affected by a currency loss of NOK 647 million, primarily due to a higher USD exchange rate.

Capitalized interest on plant under construction totaled NOK 335 million in the first half of this year, compared to

NOK 363 million in the previous year. Capitalized interest was NOK 193 million in the second quarter of 2000 and NOK 181 million in the same period of last year.

Net interest bearing debt of NOK 41.8 billion has declined by NOK 1.2 billion since the end of 1999. Hydro will pay off a bank loan of USD 400 million in the third quarter of 2000.

Taxes

The provision for current and deferred taxes in the first half of 2000 was NOK 7,059 million, equivalent to 57% of

pre-tax income, primarily current tax. The corresponding figure for the same period of last year was NOK 1,746 million, equivalent to 46% of pre-tax income. The higher effective tax rate was due to increased earnings from oil activities.

Oslo, 17 July 2000 The Board of Directors

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Income statements

Second quarter First half Year

NOK million, except per share data 2000 1999 2000 1999 1999

Operating revenues 36,539 24,487 70,931 48,650 102,433

Depreciation, depletion and amortization 3,282 1,935 6,455 3,919 10,494 Other operating costs 26,225 20,802 50,715 41,867 84,204

Operating income 7,032 1,750 13,761 2,864 7,735

Equity in net income of non-consolidated investees 229 79 395 188 339 Financial expense, net (1,006) (271) (1,989) (385) (1,551)

Other income 139 949 139 1,098 1,350

Income before taxes and minority interest 6,394 2,507 12,306 3,765 7,873 Income tax expense (3,589) (1,226) (7,059) (1,746) (4,337) Minority interest (30) (21) (21) (20) (90) Income before cumulative effect of change in accounting

principle 2,775 1,260 5,226 1,999 3,446

Cumulative effect of change in accounting principle - - - (30) (30)

Net income 2,775 1,260 5,226 1,969 3,416

Earnings per share before change in accounting

principle 10.60 5.50 20.00 8.70 13.90

Earnings per share 10.60 5.50 20.00 8.60 13.80

Average number of outstanding shares 261,718,909 230,994,315 261,712,236 230,038,803 247,045,270

– All figures are based on generally accepted accounting principles in the United States (US GAAP), unless otherwise stated. Hydro’s accounting policies are included in the 1999 Annual Report.

– Interim figures are unaudited.

Quarterly results

NOK million except 2000 1999

per share data * 1st qtr 2nd qtr 1st qtr 2nd qtr 3rd qtr 4th qtr

Operating revenues 34,392 36,539 24,163 24,487 25,096 28,687 Operating income 6,729 7,032 1,114 1,750 2,139 2,732 Net income 2,451 2,775 709 1,260 634 813 Earnings per share 9.40 10.60 3.10 5.50 2.40 3.10

USD million except 2000 1999

per share data * 1st qtr 2nd qtr 1st qtr 2nd qtr 3rd qtr 4th qtr

Operating revenues 4,178.4 4,157.4 3,148.8 3,120.0 3,195.3 3,629.8 Operating income 817.5 800.1 145.2 223.0 272.3 345.7 Net income 297.8 315.7 92.4 160.5 80.7 102.9 Earnings per share 1.14 1.21 0.40 0.70 0.31 0.39

* Amounts have been converted to USD for convenience using the average exchange rate (NOK/USD) in effect during the quarters as follows: 8.231 8.789 7.6737 7.8483 7.8541 7.9032

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Balance sheets

NOK million, except per share data 30.06.2000 30.06.1999 31.12.1999

Assets

Current assets

Cash and cash equivalents 9,718 6,131 7,435

Other liquid assets 2,362 2,209 2,535

Receivables 37,304 24,934 32,398

Inventories 16,227 13,448 16,327

Total current assets 65,611 46,722 58,695

Non-current assets

Property, plant and equipment, less accumulated

depreciation, depletion and amortization 101,198 64,771 102,498

Other assets 19,584 30,470 16,226

Total non-current assets 120,782 95,241 118,724

Total assets 186,393 141,963 177,419

Liabilities and Shareholders’ Equity

Current liabilities

Bank loans and other interest bearing short-term debt 6,588 5,278 7,361 Current portion of long-term debt 4,178 2,008 907 Other current liabilities 31,019 20,354 28,725 Total current liabilities 41,785 27,640 36,993

Long-term liabilities

Long-term debt 40,730 29,497 42,228

Deferred tax liabilities 31,433 19,220 30,357 Other long-term liabilities 7,619 5,264 7,021 Total long-term liabilities 79,782 53,981 79,606

Minority shareholders’ interest

in consolidated subsidiaries 1,406 1,194 1,323

Shareholders’ equity 63,420 59,148 59,497

Total liabilities and shareholders’ equity 186,393 141,963 177,419

Shareholders’ equity per share 242.10 224.00 227.30

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STATEMENTS OF CASH FLOWS

01.01-30.06 Year NOK million 2000 1999 1999 Operating activities: Net income 5,226 1,969 3,416 Adjustments:

Depreciation, depletion and amortization 6,455 3,919 10,494

Other adjustments 2,136 1,657 834

Net cash provided by operating activities 13,817 7,545 14,744

Investing activities:

Purchases of property, plant and equipment (5,190) (5,976) (13,029)

Saga Petroleum ASA - (3,338) 719

Purchases of other long-term investments (3,187) (324) (907) Net sales (purchases) of short-term investments (43) 4 32 Proceeds from sales of property, plant and equipment 968 235 1,956 Proceeds from sales of other long-term investments 423 2,276 2,863

Net cash used in investing activities (7,029) (7,123) (8,366)

Financing activities:

Loan proceeds 965 9,675 21,707

Principal repayments (3,640) (4,249) (19,626)

Ordinary shares purchased - - (1,599)

Ordinary shares issued 16 - 3

Dividends paid (2,094) (1,718) (1,718)

Net cash provided by (used in) financing activities (4,753) 3,708 (1,233)

Foreign currency effects on cash flows 248 65 354

Net increase in cash and cash equivalents 2,283 4,195 5,499

Cash and cash equivalents at beginning of period 7,435 1,936 1,936

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**EBITDA* and reconciliation to income before**

taxes and minority interest

The transition to the new steering model, Value-Based Management, has moved Hydro's focus to cash flow-based

indicators, before and after taxes. EBITDA, defined as income (loss) before tax, interest expense, depreciation, amortizati-on, writedowns and certain other financial items, is an approximation of cash flow from operations before tax. It is being used as a measure to assess performance in Hydro's operational areas and business segments. Accordingly, EBITDA is a measure that includes results from non-consolidated investee companies and gains and losses on sales of activities classifi-ed as "other income (loss)" in the income statement. It excludes depreciation, writclassifi-edowns and amortization, as well as amortization of goodwill in non-consolidated investee companies.

EBITDA should not be construed as an alternative to operating income and income before taxes as an indicator of the

company's operations in accordance with generally accepted accounting principles. Nor is EBITDA an alternative to cash flow from operating activities in accordance with generally accepted accounting principles. Hydro's definition of EBITDA can differ from that of other companies.

Hydro has also introduced cash return on gross investment (CROGI) as an annual rate of return measure. CROGI is

defined as gross cash flow after taxes, divided by gross investment . Gross cash flow is defined as EBITDA less taxes, while gross investment is defined as total assets plus accumulated depreciation, amortization and writedowns, less short-term interest-free debt .

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

1999 2000 2000 EBITDA 2000 1999 1999

2nd qtr 1st qt. 2nd qtr NOK million 1st half 1st half Year 2,228 6,982 7,697 Hydro Oil and Energy 14,679 4,190 13,579 849 1,803 1,659 Hydro Light Metals 3,462 1,622 3,760

776 1,041 1,276 Hydro Agri 2,317 1,300 1,141 1,176 523 364 Other 887 1,728 3,464 5,029 10,349 10,996 Total 21,345 8,840 21,944 1,935 3,173 3,282 - Depreciation 6,455 3,919 10,494 - - - - Write-down - - 444 - Amortization of goodwill 14 19 19 of non-consolidated investees 38 27 79 507 883 867 - Interest expense 1,750 1,017 2,566

41 266 381 - Net foreign exchange loss (gain) 647 41 304

25 96 53 - Other financial items 149 71 184

2,507 5,912 6,394 Income before tax and minority interest 12,306 3,765 7,873 EBITDA information by segment in each of the core business areas, as well as an explanation of the financial

performance of each segment, is included in the presentation of the business areas.

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

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

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INDIVIDUAL INDUSTRY SEGMENTS

Operating revenues

NOK million 2000 1999 2000 1999 1999

Exploration and Production 8,399 2,694 16,423 5,120 17,406

Energy 9,230 3,795 18,257 7,081 18,102

Oil Marketing 957 566 1,835 1,120 2,652

Eliminations (6,320) (2,526) (12,508) (4,424) (12,068) Hydro Oil and Energy 12,266 4,529 24,007 8,897 26,092 Aluminium Metal Products 6,520 4,024 12,225 8,158 17,281 Aluminium Extrusion 4,285 3,056 7,968 6,096 12,081 Other Light Metals 2,204 2,026 4,398 4,039 7,716 Eliminations (1,671) (1,197) (3,312) (2,422) (4,857) Hydro Light Metals 11,338 7,909 21,279 15,871 32,221 Plant Nutrition 8,348 7,203 16,991 14,974 26,799 Gas and Chemicals 1,222 1,156 2,388 2,317 4,718

KFK 2,827 2,743 5,052 4,872 9,756 Eliminations (594) (378) (996) (885) (1,615) Hydro Agri 11,803 10,724 23,435 21,278 39,658 Petrochemicals 1,502 1,203 3,070 2,411 5,346 Other Activities 1,152 1,003 2,189 2,173 3,847 Segments 38,061 25,368 73,980 50,630 107,164 Corporate 1,017 1,020 1,946 2,012 3,959 Eliminations (2,539) (1,901) (4,995) (3,992) (8,690) Total 36,539 24,487 70,931 48,650 102,433

External revenues

NOK million 2000 1999 2000 1999 1999

Exploration and Production 2,666 552 5,282 1,391 6,996

Energy 7,543 2,865 14,715 5,258 13,865

Oil Marketing 956 566 1,831 1,119 2,648

Hydro Oil and Energy 11,165 3,983 21,828 7,768 23,509 Aluminium Metal Products 4,863 2,828 8,892 5,685 12,072 Aluminium Extrusion 4,282 3,027 7,964 6,042 11,974 Other Light Metals 2,108 1,963 4,214 3,911 7,442 Hydro Light Metals 11,253 7,818 21,070 15,638 31,488 Plant Nutrition 7,738 6,840 15,935 14,053 24,776 Gas and Chemicals 1,164 1,099 2,289 2,200 4,521

KFK 2,771 2,705 4,964 4,802 9,558 Hydro Agri 11,673 10,644 23,188 21,055 38,855 Petrochemicals 1,493 1,165 3,051 2,341 5,221 Other Activities 877 728 1,633 1,528 2,793 Segments 36,461 24,338 70,770 48,330 101,866 Corporate 78 149 161 320 567 Total 36,539 24,487 70,931 48,650 102,433

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Internal revenues

NOK million 2000 1999 2000 1999 1999

Energy 1,687 930 3,542 1,823 4,237

Oil Marketing 1 - 4 1 4

Eliminations (6,320) (2,526) (12,508) (4,424) (12,068) Hydro Oil and Energy 1,101 546 2,179 1,129 2,583 Aluminium Metal Products 1,657 1,196 3,333 2,473 5,209

Aluminium Extrusion 3 29 4 54 107

Other Light Metals 96 63 184 128 274

Eliminations (1,671) (1,197) (3,312) (2,422) (4,857)

Hydro Light Metals 85 91 209 233 733

Plant Nutrition 610 363 1,056 921 2,023

Gas and Chemicals 58 57 99 117 197

KFK 56 38 88 70 198 Eliminations (594) (378) (996) (885) (1,615) Hydro Agri 130 80 247 223 803 Petrochemicals 9 38 19 70 125 Other Activities 275 275 556 645 1,054 Segments 1,600 1,030 3,210 2,300 5,298 Corporate 939 871 1,785 1,692 3,392 Eliminations (2,539) (1,901) (4,995) (3,992) (8,690) Total - - - -

-Operating income (loss)

Second Quarter First half Year

NOK million 2000 1999 2000 1999 1999

Energy 544 182 986 383 944

Oil Marketing 11 50 59 62 169

Eliminations (1) - (1) 9 9

Hydro Oil and Energy 5,417 1,233 10,137 2,169 6,962 Aluminium Metal Products 800 177 1,886 307 1,357

Aluminium Extrusion 190 166 378 309 649

Other Light Metals 39 111 64 156 216

Eliminations - (7) (13) (18) (43)

Hydro Light Metals 1,029 447 2,315 754 2,179

Plant Nutrition 376 36 735 (26) (2,239)

Gas and Chemicals 101 108 207 205 349

KFK 9 66 1 34 233 Eliminations 23 23 43 4 (14) Hydro Agri 509 233 986 217 (1,671) Petrochemicals 78 (96) 263 (165) 113 Other Activities 139 82 231 123 246 Segments 7,172 1,899 13,932 3,098 7,829 Corporate (137) (151) (164) (231) (101) Eliminations (3) 2 (7) (3) 7 Total 7,032 1,750 13,761 2,864 7,735

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EBITDA

NOK million 2000 1999 2000 1999 1999

Energy 579 246 1,058 557 1,148

Oil Marketing 76 108 173 183 451

Eliminations 1 (1) 1 8 9

Hydro Oil and Energy 7,697 2,228 14,679 4,190 13,579 Aluminium Metal Products 1,085 334 2,427 633 2,016 Aluminium Extrusion 392 271 703 524 1,071

Other Light Metals 181 250 345 482 717

Eliminations 1 (6) (13) (17) (44)

Hydro Light Metals 1,659 849 3,462 1,622 3,760

Plant Nutrition 861 414 1,628 737 (119)

Gas and Chemicals 217 190 402 371 760

KFK 175 147 244 188 515 Eliminations 23 25 43 4 (15) Hydro Agri 1,276 776 2,317 1,300 1,141 Petrochemicals 173 (30) 448 152 855 Other Activities 186 1,175 333 1,474 2,029 Segments 10,991 4,998 21,239 8,738 21,364 Corporate 78 27 187 97 566 Eliminations (73) 4 (81) 5 14 Total 10,996 5,029 21,345 8,840 21,944

Depreciation, depletion and amortization

Second Quarter First half Year

NOK million 2000 1999 2000 1999 1999

Exploration and Production 2,128 872 4,272 1,713 6,072

Energy 32 58 64 163 214

Oil Marketing 32 31 51 64 140

Hydro Oil and Energy 2,192 961 4,387 1,940 6,426 Aluminium Metal Products 153 132 299 266 537

Aluminium Extrusion 148 100 267 204 391

Other Light Metals 122 127 244 289 576

Hydro Light Metals 423 359 810 759 1,504

Plant Nutrition 354 287 643 575 1,246

Gas and Chemicals 76 79 154 159 396

KFK 64 64 127 120 211 Hydro Agri 494 430 924 854 1,853 Petrochemicals 96 99 189 198 383 Other Activities 45 57 88 110 204 Segments 3,250 1,906 6,398 3,861 10,370 Corporate 35 31 60 59 129 Eliminations (3) (2) (3) (1) (5) Total 3,282 1,935 6,455 3,919 10,494

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Additions property, plant & equipment and intangible assets

First quarter Second quarter First half

NOK million 2000 2000 2000

Exploration and Production 1,909 1,904 3,813

Energy 16 33 49

Oil Marketing 11 18 29

Hydro Oil and Energy 1,936 1,955 3,891

Aluminium Metal Products 772 139 911

Aluminium Extrusion 1,313 155 1,468

Other Light Metals 77 110 187

Hydro Light Metals 2,162 404 2,566

Plant Nutrition 55 114 169

Gas and Chemicals 43 52 95

KFK 74 77 151 Hydro Agri 172 243 415 Petrochemicals 123 146 269 Other Activities 101 90 191 Segments 4,494 2,838 7,332 Corporate 36 37 73 Hydro Group 4,530 2,875 7,405

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Operating income - EBIT

1)

_{- EBITDA}

2)

_{Second quarter 2000}

NOK million Operating Non-cons. Interest Selected Other Depr.

income investees income financial income EBIT and EBITDA

items Amort.

Exploration and Production 4,863 8 36 6 - 4,913 2,128 7,041

Energy 544 - 3 - - 547 32 579

Oil Marketing 11 27 6 - - 44 32 76

Eliminations (1) - - - - (1) 2 1

Hydro Oil and Energy 5,417 35 45 6 5,503 2,194 7,697

Aluminium Metal Products 800 67 4 59 - 930 155 1,085

Aluminium Extrusion 190 - 5 - 50 245 147 392

Other Light Metals 39 10 - (5) - 44 137 181

Eliminations - - - - - - 1 1

Hydro Light Metals 1,029 77 9 54 50 1,219 440 1,659

Plant Nutrition 376 66 62 2 - 506 355 861

Gas and Chemicals 101 38 2 (1) - 140 77 217

KFK 9 - 21 (8) 89 111 64 175 Eliminations 23 - - - - 23 - 23 Hydro Agri 509 104 85 (7) 89 780 496 1,276 Petrochemicals 78 (1) 1 - - 78 95 173 Other Activities 139 4 31 (34) - 140 46 186 Segments 7,172 219 171 19 139 7,720 3,271 10,991 Corporate (137) 10 160 11 - 44 34 78 Eliminations (3) - (10) (59) - (72) (1) (73) Total 7,032 229 321 (29) 139 7,692 3,304 10,996

Operating income - EBIT

1)

_{- EBITDA}

2)

_{First half 2000}

NOK million Operating Non-cons. Interest Selected Other Depr.

income investees income financial income EBIT and EBITDA

items Amort.

Exploration and Production 9,093 8 65 9 - 9,175 4,272 13,447

Energy 986 3 5 - - 994 64 1,058

Oil Marketing 59 52 11 - - 122 51 173

Eliminations (1) - - - - (1) 2 1

Hydro Oil and Energy 10,137 63 81 9 - 10,290 4,389 14,679

Aluminium Metal Products 1,886 148 7 83 - 2,124 303 2,427

Aluminium Extrusion 378 - 8 - 50 436 267 703

Other Light Metals 64 13 1 (5) - 73 272 345

Eliminations (13) - - - - (13) - (13)

Hydro Light Metals 2,315 161 16 78 50 2,620 842 3,462

Plant Nutrition 735 119 124 3 - 981 647 1,628

Gas and Chemicals 207 37 4 (1) - 247 155 402

KFK 1 - 35 (8) 89 117 127 244 Eliminations 43 - - - - 43 - 43 Hydro Agri 986 156 163 (6) 89 1,388 929 2,317 Petrochemicals 263 (5) 1 - - 259 189 448 Other Activities 231 16 60 (63) - 244 89 333 Segments 13,932 391 321 18 139 14,801 6,438 21,239 Corporate (164) 4 271 18 - 129 58 187 Eliminations (7) - - (72) - (79) (2) (81) Total 13,761 395 592 (36) 139 14,851 6,494 21,345

1)_{EBIT: Earning Before Interest and Tax.}

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SAGA TRANSACTION

On 10 June, 1999, Hydro and Statoil jointly commenced a joint voluntary offer under Norwegian law to acquire all of the outstanding ordinary shares of Saga other than those shares held by U.S. Persons (as defined in Regulation S under the Securities Act of 1933). The consideration offered consisted of one Hydro share for each three Saga shares with an additional cash payment in NOK in an amount which ensured that the aggregate consideration per Saga share had a value of NOK 135. All of Saga’s ordinary shares were acquired representing a total value of NOK 20.2 billion. An agreement between Hydro and Statoil required the transfer of interests in certain of Saga’s oil and gas production licenses with a total market value of NOK 8.4 billion to Statoil with effect from 1 July, 1999. The consideration received in exchange for such interests consisted of Statoil’s shares in Saga together with a cash payment of NOK 4.5 billion, which was paid in December 1999.

Hydro’s acquisition of the Saga ordinary shares, amounting to NOK 16.3 billion, was financed by a share issue of NOK 11.6 billion and a cash payment of NOK 4.6 billion. The acquisition resulted in a total excess value for Hydro of NOK 12.6 billion and this was allocated to oil and gas production licenses to be depreciated by the unit of production method. The excess value could be adjusted when a final decision is taken by the Norwegian authorities regarding Saga’s tax position. Saga’s activities were consolidated in Hydro’s accounts with effect from 1 July, 1999.

Unaudited Pro Forma Combined Financial Information

The following unaudited pro forma combined financial information combines Hydro’s and Saga’s results for the six months ended 30 June, 1999 giving effect to the transaction as if it had occurred on 1 January, 1999. The pro forma infor-mation is presented according to the purchase method of accounting. The accounting policies of Hydro and Saga are sub-stantially comparable, and consequently, no adjustments to the unaudited pro forma financial information were made to conform the accounting policies of the combining companies. The information presented below should be read in conjunction with the other related Saga transaction information presented in this report.

Unaudited Pro Forma Combined Financial Information For the Six Months Ended 30 June, 1999

30 June, 1999 Pro Forma

in NOK millions, except per share data Combined (3)

Operating revenues (1) _51,184

Operating income (2) _2,036

Income before cumulative effect of

change in accounting principle 962

Net income 932

Earnings per share

Before cumulative effect of

change in accounting principle 3.60

Cumulative effect of

change in accounting principle (0.10)

Earnings per share 3.50

Average number of outstanding shares 266,596,650 The unaudited pro forma combined financial information for the six months ended 30 June, 1999 is prepared using the same methodology as in the Offer to Purchase dated 10 June, 1999. Amortization of excess value of PP&E of NOK 901 million is included in operating income.

(1) Certain of Saga income statement amounts have been reclassified to conform with the financial statement presentation of Hydro. (2) According to the Hydro-Statoil Agreement, certain of Saga’s oil and gas production licenses were transferred to Statoil. Operating

income reflects the estimated revenues and expenses for the six months ended 30 June, 1999, after production licenses have been transferred to Statoil.

(3) Reflects the adjustments to revalue the assets and liabilities of Saga to fair value. The total consideration has been allocated to the assets and liabilities of Saga based on management’s best estimates. The figures reflect the adjustments for the amortization of excess value of PP&E and income tax expense for thesix months ended 30 June, 1999.