Good morning, everyone. Welcome to Hydro's presentation of fourth quarter results, 2019. They will be presented by our CEO, Hilde Aasheim, and CFO, Pål Kildemo. After the presentation, we will, as usual, have time for Q&As from you here in Oslo and also from the people following us on the webcast this morning. Hilde.
Thank you, Inger. Good morning to you here in Oslo, and also good morning to the ones that are following us on the webcast. As always, in Hydro, safety first. On December the 11th, we received the worst possible news from our joint venture, Qatalum. A contractor tragically lost his life at work for Qatalum. Safety of our people remains our top priority, always. Let me turn to the fourth quarter highlights. The underlying EBIT for the fourth quarter was NOK 560 million, more or less at the same level as we had in fourth quarter 2018. The EBIT for the whole year is NOK 3.4 billion. Challenging markets weighing heavily on our result this quarter, with lower prices for both aluminum and alumina, and also lower volumes.
Last autumn, at the Investor Day, we launched an ambitious improvement program. We targeted a result from this improvement program in 2019 of NOK 500 million. Today, we report NOK 1 billion from the improvement efforts during 2019. We also set ourselves a target of releasing cash from working capital of NOK 4 billion. We have released cash in 2019. From net operating capital, we have released NOK 5.6 billion. When it comes to CapEx, we have spent NOK 900 million less than what we guided on at the Investor Day. Despite the challenging market, we see increasing pull for our low carbon footprint products, and which I consider to be a highlight for the quarter.
The board has proposed a dividend for 2019 of NOK 1.25, which reflects a robust financial situation for the company, also taking into account that we have been through a demanding year in 2019 and the volatility of the aluminum industry. Yes, indeed, it is a volatile business environment. The macroeconomic uncertainty affects our market and affects the demand for aluminum. The ongoing trade war between U.S. and China has created a lot of uncertainty, has impacted global growth. Brexit is now a fact, there's still a lot of questions out there for how this will play out. Lately, the coronavirus has hit the world, it's a lot of insecurity out there for how this would develop. Let me add one positive development.
We believe that the Green Deal that EU announced in December will stimulate the development of low carbon products, and here I see an opportunity for Hydro. Back to the market sentiment. The industrial production in Europe has declined every month over the last 13 months, driven very much by Germany, which has reduced their industrial production by 4% compared to 2018. U.S. was positive at the start of the year, but we have now seen the last four months that also U.S. is in a decline in terms of industrial production. This development hits our main markets, where we have seen negative demand growth in 2019 compared to 2018 in our main markets, in the transport and automotive segment, in the building and construction, in the industrial segment, and the only segment that is holding up is in packaging.
This we see very clearly in the sales from Extruded Solutions in 2019. To the left, I show the sales in 2019 compared to 2018, a decline of 9%. The decline is in all market segments, and also both in U.S. as well as Europe. There might be some effect of the cyberattack, but the main impact is the lower demand for aluminum. It's even more extraordinary when you look at the Q4, the fourth quarter versus fourth quarter last year, where we see a decline of 14%. We did guide that we would see negative growth when we were standing here at the third quarter, but it has been more than that. The main drivers for this negative development is, as I said, it's the weak transport and automotive market.
Lower production of cars, but more and more we also see the decline in the commercial segment of the transport segment, the truck and trailers. Hydro and Extruded Solutions is heavily exposed in both of these market segments. On the top of that, we see a weak demand in the building and construction, particularly in Western Europe, in Germany, as well as in the U.S. Then general lower industrial activity impacting the demand. Looking into 2020, We have a speed out of 2019, where the demand has declined. We believe that the first part of 2020 will be affected by lower demand. Here I should make a cautionary note that the visibility in the extrusion segment is low. The contracts in Extruded Solutions are short term, only for a month or so.
The visibility is low, but that is how we see it at the moment. Moving to Rolled Products. The Rolled Products is not so cyclical. Here we see more a flat development compared to the year before. Here I also show the total sales from our Rolled Products business. For 2019, we see a change towards moving out of the low margin segment that we talked about at the Investor Day. That is part of the restructuring of Rolled Products, going out of the foil business and also the litho, and move our capacity towards more high growth segments, in automotive and cans, where we also see the substitution effect.
The same picture as for the whole year we saw in the Q4, even more so, to move volumes towards the can market, which has been very strong, while the automotive has been weaker in the last part of the year. The outlook for 2020 is more a fairly flat development. We see a light weighting of the automotives. We see the substitution effect, but still affected by the current economic development. We see solid growth in the packaging segment, driven also by substitution. We, at the same time, see continued soft demands in engineering, foil and litho. In the foil and litho, we are also exposed to fierce competition from China. Moving to the supply-demand balance when it comes to primary. Out of the year, our 2019 turned out to be in deficit.
Primarily due to the disruption of several of the big plants in China, also due to the fact that both in the world ex-China and China, the demand was low. Looking into 2020, we expect a surplus. In the world ex-China, we still expect low demands, minus 1%, while we also see a supply growth in the Western world ex-China. Alba is coming up at full speed in the full year. We'll bring back Albras to full capacity, also Bécancour in Canada. In the world ex-China, we will see a supply growth of 2%-3% in surplus. When it comes to China, we estimate low growth, 1%-3%, slightly higher than what we saw last year. Here we see a higher supply of primary capacity.
We expect that the plants that was disrupted in 2009 will come back on stream. We also have heard of several new builds of new capacity in China. The timing for that is not precise. We expect that we will see a 46% growth, which will also make China in surplus. In total, we expect a surplus of 500,000 tons-1 million tons in the primary supply-demand balance for 2020. In tough times, headwinds from the market, what we can do is to focus on what we can influence. As I already mentioned at the Investor Day last autumn, we announced an ambition improvement program in the areas where we can influence. NOK 7.3 billion to be delivered by 2023. The program was front-loaded, NOK 2.7 billion of these should be delivered by the fact that we reverse the curtailment in the Brazilian assets.
Improvement initiatives throughout the whole company. We are expected to deliver NOK 500 million from this program, as I said, and we have delivered 1 billion NOK. One of the reasons for being ahead of the program is that we have had a successful and faster ramp-up of Alunorte during the course of the year. Which support the program this year in 2019, but also support the program for next year. As I said, all business areas have made progress towards the 2023 program, and I'm really encouraged to see all the good initiatives throughout the whole organization. Let me give you some more details into each business area in terms of the improvement programs. Before I do that, I will also talk about the target that we have in terms of the cash release.
As you know, we built quite a lot of inventories during the Alunorte embargo, simply because to make sure that we did have alumina for the plants. We also built quite a lot of inventories due to the Rusal sanction, where there was insecurity about delivery of metal. That was why we set ourselves the target of releasing that working capital of NOK 4 billion. We have had a lot of focus on cash during 2019, also for the fact that in a weak market, we have to make sure that we don't put the metal in inventory and that the cash stays idle in the inventories. We have had quite some efforts throughout all the business areas to really release cash. It has turned out that we have released NOK 5.6 billion by the end of 2019, particularly in the inventories.
There's also some seasonal effects in the fourth quarter. I should make the comment that we will perhaps see seasonal increases in net operating capital expected for Q1. Strict capital discipline we have enforced during the year. As I said, we came out with NOK 900 million less spent CapEx in 2019 that we guided on. It's still early days to see if that result in the same reduction in 2020. There might be postponement. We will scrutinize every CapEx going forward in the situation we have with low earnings and low cash generation. To each business area, let me start with the Bauxite & Alumina, which is a major contributor to the improvement program. NOK 2.7 billion to be delivered by 2023. NOK 2 billion relates to the reversal of the embargo.
I'm happy to stand here to tell you that in the fourth quarter, we were operating Alunorte at 90% capacity. Building that up during the half year, 83% in Q3. We have installed the ninth press filter, commissioned the ninth press filter, and that is in operation. We believe that we will be at a level of 90%-95% in total for 2020, but during 2020, we will be back in full speed. To bring back the capacity at Alunorte has also a lot to do with the cost position in terms of fully utilizing the plant at its capacity. We have seen that the implied alumina cost has come down compared to the pre-embargo level. We are at a level of NOK 255 at the end of Q4 versus NOK 265 in Q4 2017. There is still opportunities to get the cost down.
These numbers are also influenced by lower cost on raw materials and also a favorable currency. To get to the 100% will improve the cost position. When you are at the full speed, there are also possibilities to optimize the cost level and improve the stability of Alunorte as such. We are out of the crisis. We have come up to almost full speed. Now it's to optimize and to get costs down to really demonstrate the position that we have in Alunorte. We have also scrutinized investments in the Bauxite & Alumina area, and we have postponed some large investments, and I hope also that that will develop also into CapEx reduction as we go forward. Bauxite & Alumina has worked also on their cash positions and realized NOK 900 million of working capital during the course of the year.
To Primary Metal, which is also a major contributor to the improvement program. To deliver NOK 1.6 billion by 2023, NOK 700 million relates to the reversal of the embargo situation. Primary Metal was heavily affected by the embargo. Albras was closed down to 50%, also the fact that we had to source many different qualities of alumina from around the world, we saw how that affected the operation. The curve I show here is the current efficiency for the Norwegian smelters, where you see the efficiency going down as we had to mix different alumina qualities are now heading towards back to the level where we were in 2017. To operate smelters, it's very much about stability. Stability has a lot to do with being cost effective.
Still, there are room for improvements in Primary Metal, but the cost has come down, as you see, to the all implied primary cost curve. Very much also driven by reduced raw material costs and a favorable currency, the cost has come down to below the Q4 2017 level. Primary Metal has also experienced a tough market. Here, Primary Metal has managed the market situation by using the flexibility that we have in the cast houses. We have taken out cold metal from the cast houses. We have had longer stops in the remelters. As you also probably saw, we announced the 20% curtailment of Slovalco just before Christmas. We have taken out 30,000 tons by the curtailment of 20% at Slovalco.
To avoid to put metal in the inventories, because it was also evident that Primary Metal had to release inventories, and they have released NOK 2.8 billion of working capital. To Rolled Products. As you know, we put Rolled Products under strategic review last year, and we also have performed a full potential review of Rolled Products simply because the performance had been too low. The full potential review came out with an improvement ambition of NOK 900 million and also a target of releasing NOK 900 million in working capital.
The fact that we, at last autumn, saw that it could be difficult to realize effects from this program in 2019, we did not target any effect from 2019, but we have really worked on the initiatives in terms of improving and turning around the Rolled Products business. The restructuring in Grevenbroich, the German cluster we have, is well underway. We have announced that we would close down one foil line before Christmas, and we did that, and we are now about to close the second foil line during 2020. We have announced quite substantial manning reductions, and we are executing on that manning reduction as we speak. In Grevenbroich, 35% of the manning reduction are already signed up. We have a good dialogue union.
The works council in Germany has accepted the framework for the voluntary packages and in the total 735 FTEs that we announced to be released, 25% have signed up. We have significant improvements initiatives relating to procurement maturing the implementation, and first saving has been confirmed. We are also looking into the share of recycling within Rolled Products, which could reduce the hot metal cost quite substantially, and that is ongoing and planning as we speak. I'm also happy to talk about the used beverage can plant, which has been lagging for quite some time, that we see now good improvements in this plant. Shifting volumes from foil and litho, I already talked about, to more attractive markets has been an important part of the restructuring of the Grevenbroich activities, and that is also why we have started to close down the foil lines.
All these initiatives will be supporting to start to take out the full potential. The first target is NOK 150 million in 2020. In terms of cash release, also Rolled Products has worked hard to release cash from inventories and has released NOK 600 million during the course of the year. The strategic review is ongoing. The restructuring is no regrets. It is to really demonstrate the potential of this business area. We do continue the strategic review looking for more value-creating opportunities, including also alternative ownership. I will report back on that when I have something to tell on that particular subject. To Extruded Solutions. Extruded Solutions had a net EBIT improvement target. Extruded Solutions already last autumn realized that that would be tough in a weak market.
That was why the management of Extruded Solutions started to look for alternative measures in order to support the NOK 1 billion improvement program. The business area has had a number of initiatives in terms of improving the robustness of the portfolio, as well as improving the effect on the bottom line. We have seen closures, planned closures, both in the U.K., in Spain, and in the U.S. We have closed down warehouses, we have closed down offices, and we have done considerable simplification and demanning in plants in Europe, in plants in the U.S. We have also divested three plants, one in Spain, one in Vietnam, and one in Romania. The effect of all these initiatives is around NOK 150 million in 2019, but will give a full effect of NOK 300 million in 2020.
As we speak, Extruded Solutions are working on additional restructuring and improvement initiatives to support the 1 billion program. Cash release has also taken place in Extruded Solutions. They have realized NOK 2.1 billion of working capital, and the sale proceeds from the three plants is NOK 300 million. They will come in in 2020. As I said, the board has proposed a dividend of NOK 1.25. The proposed payment demonstrates our commitment to provide competitive shareholder return compared to comparable companies, and it also represents a dividend yield well ahead of our peer group. When we pay out this dividend, we will have an average five-year payout ratio of 68%, which is well above the target of 40% over the cycle. It represents NOK 2.6 billion in payout, which will be done after the general assembly this spring.
At the Capital Markets Day or the Investor Day, we set a clear direction for the company, lifting profitability, driving sustainability. This slide shows some of the targets that we have set ourselves within the area of sustainability, and we will continue to report on these areas going forward. It's about safe operation. It's about being a good force in the local community, bringing prosperity, bringing education, bringing people out of poverty. It's about our footprint in terms of biodiversity and climate footprint. It's about recycling and producing low carbon products. Here we are very excited about our two new brands, the REDUXA and the CIRCAL. The CIRCAL is really getting traction in the market these days. You probably remember that CIRCAL is produced based on minimum 75% post-consumer scrap. It's interesting to see how these products get traction and grow in demand.
We have, during the last year, made 60 contracts to prestige buildings around the world in 16 different countries, in the U.S., in the Middle East and in Europe. The key to the demand from the builders is the fact that potential tenants increasingly factor in the carbon footprint in their location sites. We expect this to grow significantly in coming years. The speed will be dependent on how quickly authorities set new standards when it comes to the buildings, also incentivized to buy greener products. Of course, also the public opinion, willing to pay for greener products. We expect to double our sales next year and also further in 2021. We have increased our production capacity relating to the CIRCAL, both in our Spain remelters as well as in our Luxembourg Clervaux remelter.
Then by that, I give the word to you, Pål, and then I'll make the summary at the end. Thank you.
Good morning, everybody, and welcome from me as well. In my presentation today, I will walk you through our Q4 2019 results, but also our full year 2019 results. Let me first start with a high-level result overview. Comparing to the same quarter last year, the results were fairly stable. On the positive side, we have ramped up our operations in Brazil, contributing with NOK 1.2 billion higher of upstream volumes. We also saw a significant decline in raw material costs of around NOK 2 billion , with lower alumina costs, lifting smelter results with NOK 1.6 billion , and the rest coming mainly from lower carbon prices, but also lower caustic soda prices in B&A. In addition, currency developments have been positive, NOK 0.4 billion , mainly due to a stronger dollar compared to our main cost currencies, BRL and the NOK.
These positive developments were, however, offset by significantly lower sales prices. Lower alumina price took the B&A result down NOK 1.9 billion , while lower LME and premiums reduced PM earnings with a further NOK 1.7 billion . Downstream results between these two periods, if you look at both our downstream operations, were overall stable. Earnings in energy decreased, but were largely offset by several positive effects compared to negatives in the Q4 last year. Examples of these include less embargo-related costs, less special items in B&A, and no loss on sales of excess power at Albras for this quarter.
If we then compare to the previous quarter, which is more relevant and more to market for our upstream part of our operations, then the results declined by around NOK 0.8 billion , from NOK 1.4 billion in the third quarter to NOK 0.6 billion in the fourth quarter of 2019. If we start with the upstream first, we again see a negative effect of declining aluminum and alumina prices of NOK 0.7 billion in total. These declining raw material prices, especially alumina also help on the cost side for Primary Metal, and together with other cost reliefs, somewhat offset by higher fixed costs, which we typically see in the fourth quarter due to maintenance. We lifted results due to costs by around NOK 0.3 billion .
Upstream production was up in both Bauxite & Alumina and Primary Metal, sales volumes were fairly stable, we are not seeing the full result of increased production in this quarter. When it comes to downstream earnings, Q4 is nearly always weaker than Q3 due to seasonal weaker demand, customer de-stocking, and maintenance activities. This was also the case this year. However, we saw a steeper than usual decline, especially in Extruded Solutions, reflecting the weaker markets that we see in the world around us. Overall, downstream results decreased with NOK 0.6 billion from Q3 to Q4.
Finally, we have some other items which netted out to a positive NOK 0.2 billion, including mainly a positive deviation in eliminations of NOK 0.4 billion, offset by weaker results in metal markets of around NOK 0.2 billion. If you also briefly look at the full year result development, then underlying EBIT in 2019 of NOK 3.4 billion is nearly three times lower than the NOK 9.1 billion we achieved in 2018. If we start with the right-hand side of the bridge, then this shows the results of the improvement initiatives of NOK 1.0 billion that we delivered in 2019.
This is mainly Bauxite & Alumina, is partly offset by negative effects in Extruded Solutions, which have been more hit by the market, impacting the net EBIT program. Half of the NOK 1 billion is related to faster than planned ramp-up at Alunorte, the other half reflects cost savings, primarily Bauxite & Alumina, also cost savings in the other business areas, as well as our above-plan cost ambitions. Our results were affected by significant market movements during the year. Lower prices took earnings down by NOK 10 billion, with about NOK 6 billion of these coming from lower LME and premiums. Lower alumina sales prices for Bauxite & Alumina reduced the results with NOK 4 billion. Again, the flip side of this is lower alumina costs, lifting smelter earnings with almost NOK 2 billion.
Decline in other raw material prices, mainly caustic soda and carbon, added an additional NOK 0.4 billion. Currency has also moved in our favor on a full year basis, lifting earnings with NOK 2 billion as a result of the stronger dollar. Further, we had several negative effects, taking the results down with NOK 1.3 billion. Lower volumes in energy account for around NOK 0.7 billion of this. Other effects of NOK 0.6 billion include significantly lower gains on sales of our power from Albras, significant negative eliminations, mainly on increased internal volumes. As you all know, our earnings were also negatively impacted by the cyber attack, with total estimated negative effects of NOK 650 million-NOK 750 million for the full year. This was mainly incurred in the first half of the year, and the majority of this hits our Extruded Solutions results.
Far, we progressed a bit further on insurance compensation, we have received NOK 200 million in 2019 on external company basis. These negatives were partly offset by positive contributions from metal markets and less embargo-related costs and other special effects in B&A. It's also important to me to highlight that there are no major recurring negative cost elements included in the other category that will go against the effects of our improvement programs. If we took a look at the key financials for the quarter, revenues were down by around NOK 3 billion compared to the fourth quarter of 2018, driven by declining prices and lower volumes in Extruded Solutions, partly offset by a positive currency development as well as higher upstream volumes.
This quarter, we excluded a loss of NOK 1 billion from the reported EBIT of negative NOK 399 million, and I will get back to that on the next slide. This resulted in an underlying EBIT of NOK 560 million. With depreciation of NOK 2.2 billion in the fourth quarter, underlying EBITDA amounted to NOK 2.8 billion. The financial income of NOK 0.2 billion is due to a net foreign exchange gain, mainly unrealized, of NOK 0.4 billion, which offsets the net interest expense. The currency gain mainly reflects a stronger NOK versus euro rate, affecting the embedded derivative in our Norwegian power contracts, which are denominated in euro. Despite the negative income before tax of NOK 0.2 billion, the tax expense in the quarter amounted to NOK 0.5 billion, reflecting the power surtax in energy as well as a write-down of deferred tax assets, mainly in Germany.
This gives us a negative net income of NOK 0.7 billion, slightly up from NOK 0.8 billion in the same quarter of last year. Adjusting mainly for the net foreign exchange gain, underlying net income was negative NOK 303 million compared to the negative NOK 175 million of last year. Consequently, underlying EPS was reduced to minus NOK 0.12 per share from minus NOK 0.6 per share in Q4 of 2018. If we get back to the loss of around NOK 1 billion that we excluded from underlying EBIT this quarter, as usual, we exclude some timing effects of a limited amount in Q4. For this quarter, we also had several one-off items. The major of these one-off items are impairment charges of NOK 783 million.
Most of this is around NOK 500 million write-down of the Slovalco smelter in Primary Metal, which reflects the relative high position on the cost curve, uncertainty regarding a new power contract after 2021, and the newly decided curtailment decision reflecting the current weak market conditions. As a reminder, Slovalco JV is fully consolidated in Hydro's financials, with Hydro's ownership of 55%. In addition, we wrote down an undeveloped mining area in Paragominas, Brazil, which we will not be developing. We also had further NOK 267 million in impairments, rationalization charges, and closure costs, which are related to the ongoing portfolio optimization in Extruded Solutions. For the full year of 2019, these charges amounted to around NOK 650 million . Finally, we also have other effects of NOK 125 million , which includes an environmental provision related to a closed legacy site.
If we move over to the more detailed business area explanations, I will start with Bauxite & Alumina. Underlying EBIT for Bauxite & Alumina decreased from NOK 493 million in Q4 2018 to a negative result of NOK 75 million in Q4 2019. By far, the main reason behind the lower result is a significantly 40% lower realized alumina price, driven by both lower PAX but also lower LME. The negative price effect between the periods was around NOK 2 billion. At the same time, as the ramp-up is progressing faster than planned, there was a positive volume effect due to higher alumina and bauxite productions, which lifts results with around NOK 0.8 billion. Production costs per ton at Alunorte also decreased significantly by positive scale effects on fixed costs, as well as by declining raw material prices.
Caustic soda and coal prices also came down into the fourth quarter. The positive effect from cost relief compared to the fourth quarter last year was around NOK 400 million. There was also a positive currency effect due to stronger USD against the BRL. We had one special effect, as communicated earlier. Paragominas experienced a power outage in late December for about 10 days. This negatively affected our results due to the additional costs and temporary production disruption in both Paragominas and Alunorte of around NOK 70 million, which only affects Q4 without a continued impact into the first quarter. If we look into the next quarter, now that the 9th press filter is in place, we will continue to optimize production capacity at Alunorte. We are expecting it to run at a rate of around 90%-95% in the first quarter.
It should gradually reach full capacity of 6.3 million tons towards the end of the year. Bauxite production will also ramp up accordingly, and we should also recover from the power outage in the fourth quarter. Overall, we expect a fairly flat cost per ton development compared to the fourth quarter, partly due to higher fuel oil prices, which are offsetting other decline in cost elements, which have just been mentioned. If we move to Primary Metal, underlying results for Primary Metal improved by around NOK 0.8 billion from a loss of NOK 677 million in the fourth quarter of 2018, to a positive result of NOK 155 million in Q4 2019.
By far, the main reason behind the improved results were significantly lower raw material costs. These contributed with NOK 1.6 billion between the quarters, with NOK 1.4 billion of these coming from alumina and the rest from lower carbon costs. The positive effects were entirely offset by 14% lower realized alumina prices, as well as 29% lower realized premiums, which take the results down by NOK 1.6 billion. On the other hand, higher volumes on successful completed ramp-up at Albras lifted our earnings with around NOK 300 million. In addition, the stronger USD against our main cost currency in Primary Metal contributed positively.
When it comes to the outlook for the first quarter in Primary Metal, we have, by the end of December, sold around 50% of our primary aluminum production at a price level of around USD 750 per ton, which is similar to where the market is currently trading. On the premium side, we have secured around 55% at around USD 260 per ton. As a consequence, we expect a further decline in realized premiums in Q1 towards the range of USD 200-USD 250 per ton. The decline in extrusion ingot has continued through the year of 2019, impacting our Q1 bookings also.
As we have eaten up most of the high-cost alumina inventories and alumina costs in Primary Metal are returning towards a normal two to three-month lag to the market, we expect to see a significant cost relief compared to last year. If you compare it to Q4, the decrease is moderating as alumina market prices have been fairly stable as of lately, hovering around the $270-$280 per ton level. Overall, we estimate around NOK 100 million lower costs in Primary Metal in Q1 compared to Q4 on the back of movement in alumina and carbon prices. When it comes to portfolio changes, as I announced earlier, the 20% Slovalco curtailment started in January and will reduce production by around 30,000 tons on an annual basis.
At the same time, we are ramping up the Husnes projects, which sits better on the cost curve, which will be completed with first metal expected in the first half of 2020, adding 95,000 tons of primary metal production at Husnes. This quarter, metal markets delivered an underlying EBIT of NOK 132 million, about half compared to the NOK 275 million in the fourth quarter last year, in line with our guidance of around NOK 125 million per quarter. Results from remelters decreased due to weak market demand and planned curtailments in December, which resulted in lower sales volumes in both Europe and in North America. In addition, the spread between extrusion ingot and standard ingot premiums, as well as scrap discounts, has tightened further in Q4, which impacts our remelt margins, both in primary metal markets, as well as in Extruded Solutions.
Currency effects were negative NOK 51 million compared to positive NOK 58 million, reflecting opposite movements in currency rates and leading to a negative deviation of around NOK 110 million from currency movements between the two periods. If we exclude the currency and inventory valuation effects, the result was around NOK 184 million, somewhat below NOK 217 million in Q4 last year. If we look into the next quarter, we continue to see declining market demand, putting pressure on product premiums and negatively impacting our remelt operations. As such, we expect metal market results to be more in line with our usual guidance of around NOK 125 million per quarter, excluding currency and ingot inventory valuation effects.
As always, remember that trading results and currency effects in metal markets are by nature volatile and move with the prices in the market. For Rolled Products, results improved to NOK 34 million in Q4 2019, compared to negative NOK 113 million in Q4 2018. The improvement was driven by the Neuss smelter results that have increased despite lower aluminum prices, also here, mainly due to the lower alumina costs. In addition, Rolled Products received further insurance compensation of about NOK 35 million related to the exhaust duct incident that we had at Neuss earlier this year. The results from our rolling mill operations were stable on flat volumes as lower margins were largely offset by positive currency effects. If we look into the first quarter, we are expecting negative demand growth across segments, as well as increasing competition from Chinese imports.
While the market developments will be partly compensated by the strategic shift to higher growth segments, auto and especially can, which is going well now, they will also be mitigated by somewhat lower contract duration. Rolled Products sales in Q1 are still likely to be negatively affected compared to what we saw in Q1 2019. When it comes to the Neuss smelter, remember that as always, the results are driven by metal prices and raw material price development. As in Primary Metal, we expect further relief from lower raw material costs, mainly alumina, in the first quarter. While the market LME prices so far in the quarter have been trading around NOK 1,700 mark. For Extruded Solutions, underlying EBIT decreased from NOK 202 million in the fourth quarter of 2018 to NOK 85 million in the fourth quarter of 2019.
Please note that these results include almost NOK 100 million in cyber insurance compensation allocated mainly to our Extrusion Europe operations. If you adjust for that, underlying EBIT was negative NOK 100 million, significantly worse than what we experienced last year. The main reason for this decline is 14% lower volumes due to significantly weaker market demand affecting all our business units in extrusion. At the same time though, margins improved further, driven by the continued value over volume strategy that we have, which partly offsets the volume decline. If we look into the next quarter, we expect to see quite challenging markets with shrinking demand across segments and regions. This will be reflected in our next quarterly results through the expected continued decline in sales volumes compared to the first quarter of 2019.
That said, also please remember that in our Q1 2018 results, we were affected by the cyber attack with an estimated financial impact of NOK 150 million-NOK 200 million in Extruded Solutions for Q1 2019. At the same time, Extruded Solutions are working hard to support their earnings in challenging markets with the ongoing portfolio optimization, fixed cost reduction initiatives, and procurement optimization. Finishing off the business areas with Energy. Underlying EBIT for Energy decreased by 40% from NOK 500 million in Q4 2018 to NOK 296 million in the fourth quarter of 2019. 55% lower net spot sales due to lower production as well as higher concession sales explains around NOK 300 million of this decline. In addition, power prices also declined by 14% between these two quarters. On the other hand, contributions from Energy's commercial activities supported the quarterly results in Q4 2019.
When it comes to the outlook, keep in mind that the prices and production volumes can change fairly quickly in response to hydrological developments. Based on what we are seeing today, spot prices in our main pricing area, NO2, have declined from the average Q4 levels of around NOK 392 per megawatt hour to NOK 244 per megawatt hour as average in January, and currently are trading between NOK 150-NOK 200 per megawatt hour. At the same time, due to the wet weather and production optimization, our reservoir levels are quite full, indicating higher volumes into the first quarter. Other eliminations netted out to negative NOK 67 million in Q4, reduced from negative NOK 145 million in Q4 last year and NOK 417 million in the last quarter. The underlying mainly contains corporate costs in addition to costs in holding companies and industrial insurance.
This quarter, we have NOK 223 million, down from NOK 299 million in the same quarter last year. We have positive eliminations of NOK 156 million, mainly reflecting lower margins on internal alumina sales between Bauxite & Alumina and Primary Metal. If we move over to my favorite slide this quarter, it is the debt development compared to the third quarter. Overall, our net debt position has decreased by NOK 2.7 billion on higher cash generation and release of cash. We started Q4 with NOK 14.5 billion in net debt. We generated underlying EBITDA of NOK 2.8 billion, we had a significant release of net operating capital of NOK 3.3 billion in the quarter. This release is partly due to lower prices and seasonal de-stocking at the end of the year.
At the same time, we have worked structurally to reduce inventory in all business areas to take out the safety stock we built in 2018, in addition to new improvement initiatives to further reduce stocks in the challenging markets that we are facing. It is tough to reduce stocks into weaker markets, and I'm very pleased with the achievements underlying our high cash focus for the quarter. Taxes and other adjustments of negative NOK 0.4 billion includes reversal of several non-cash effects from EBITDA, as well as cash effects on provisions and net interest payments. As a result, we generated net cash flow from operations of a positive NOK 5.7 billion in the fourth quarter. Finally, investment comes in at around NOK 2.9 billion for this quarter, below our guidance of around NOK 4 billion in remaining CapEx. With that, we ended Q4 with NOK 11.8 billion in net debt.
For the full year, we started the year with NOK 11.7 billion at the end of 2018. If we adjust for the 3.1 increase related to the new IFRS 16 standards on leases, net debt position was stable at the end of 2019. Underlying EBITDA for the full year was NOK 11.8 billion . We released NOK 5.6 billion in net operating capital during the year. Taxes and other adjustments of a negative NOK 4.9 billion included tax payments of NOK 2.4 billion , as well as a reversal of several non-cash elements in the EBITDA. In addition, cash effects on provisions of NOK 1.41 billion for the year, and net interest payments of NOK 0.7 billion are also included in this line. We spent NOK 9.1 billion in investments when we net off divestment leases, asset retirement obligations, and other non-cash effects.
We paid NOK 2.6 billion in dividends to our shareholders. Finally, the other NOK 0.8 billion is related to new lease agreements and the currency translation effects on cash and debt. If you also look at the adjusted net debt at the end of 2019, then it decreased by nearly NOK 5 billion compared to NOK 35 billion in Q3 2019. Net debt decreased by NOK 2.7 billion, as I've just explained, and net pension liabilities also decreased by NOK 1.7 billion as a result of higher discount rates in both Germany and Norway, as well as high return on plan assets in Q4. Other adjustments increased somewhat with higher asset retirement obligation, and this line also contains the downstream restructuring provisions that we have booked after tax.
Our net debt in Qatalum decreased by NOK 0.7 billion , mainly due to improved cash generation, but also positive currency translation effects from USD to NOK. With that, the total adjusted debt, including equity accounted investments at the end of 2019, amounted to NOK 31.1 billion , stable compared to the end of 2018. Let me finish the financial highlights with an update on our capital return dashboards, which summarizes our key financial targets and priorities. We have a somewhat reduced capital employed of NOK 96 billion at the end of 2019, and we have delivered a poor underlying ROACE of 1.3%. This reflects the low earnings in the period on the back of the Alunorte situation, the cyberattack, but also the weakening markets and high macro uncertainty.
We are of course not satisfied with the performance given that we have a target of 10% ROACE over the cycle. We will continue to work on our roadmaps to profitability for Hydro and for each business area to improve our returns on capital. If you look at our balance sheet and key ratio of funds from operations to net adjusted debt, then we have seen 27% in the last 12 months compared to our target of 40% over the cycle. This again reflects our poor cash generation. If we look at the 2020 ratio using spot prices and adjusted for the targeted improvements as well as other special effects we had in 2019, such as cyberattack, loss on Alvø Power sales, then we are at around 40% according to target on our balance sheet metrics.
Our second balance sheet ratio, adjusted net debt to equity, is well within the target of below 55%. As we have said many times before, maintaining a strong balance sheet and strong liquidity is key in our volatile industry. To ensure liquidity, we have renewed the expiring revolving credit facility with a new $1.6 billion facility, which expires in 2025. This facility also highlights a link between our sustainability and profitability agenda, as the margin is linked to our CO2 emissions reduction target, thereby reducing our financing costs if we are able to deliver on our main climate ambition of reducing CO2 emissions by 30%. In 2019, we generated NOK 3.4 billion in free cash flow, and this was all returned to the shareholders via dividends when you also subtract the currency translation effects.
If we then turn to the measures that will turn this around, I'm happy that on the improvement program, as Hilde has mentioned, we have realized NOK 1 billion, delivering faster than our original target of 0.5. On operating capital, we delivered NOK 5.6 billion by the end of 2019, strengthening our cash flow generation. On the CapEx side, we have spent NOK 9.6 billion, almost NOK 1 billion below our original 2019 guidance of NOK 10.5 billion. Behind the CapEx figure, sustaining CapEx ended up at NOK 6.2 billion, around NOK half a billion lower than planned, and well below our underlying depreciation of NOK 8.4 billion. Far, we have reallocated CapEx to 2020, adjusting our guidance for 2020 from NOK 9 to NOK 9.5 to NOK 10.
In line with our new capital allocation framework, we are continuously reviewing projects and reallocating capital and looking for ways to reduce the sustaining CapEx for the longer term. On that, I would like to give the word back to Hilde for a summary.
Thank you, Pål. Well, as Pål also said, the financial result is weak, and we are not happy about that. We have taken firm measures in the weak market, and we have delivered on our improvement target for 2019. Our improvements have to continue with full force in order to lift the profitability of the company and drive our sustainability agenda. The 2020 priorities will then be safe and efficient operation. That's the fundament. We will engage the whole organization to deliver on the improvement progress for 2020, which is about NOK 3 billion effect. We will continue our strong cash focus and capital throughout the year, and we will proactively implement measures to adapt for further challenging markets. We will also continue to commercialize on our low-carbon position, but also on the new EU climate policy and Green Deal that I just mentioned. Thank you very much.
Thank you, Hilde and Pål. We open for questions from the audience here in Oslo and also from the webcast. Any questions? Stian, do we have any questions from the webcast?
From Conor Rowley in Credit Suisse. With B&A production expected higher in Q1, do you expect costs to reduce as well in Q1 versus Q4?
I guess we said we expect largely stable cost development into the first quarter, excluding one-off items that we had in the fourth quarter. We've seen somewhat increase in fuel oil prices, which eats up some of the declines we should expect from higher production.
From Liam Fitzpatrick in Deutsche. Can you provide a guiding range on volumes for Extruded Solutions in Q1 2019, given the weaker markets?
Well, as I said, the visibility is rather low, and we have very short-term contracts. That is hard to say. As I said, with the declining demand that we had in fourth quarter, we will also see that in the first quarter.
If you compare those figures to fourth quarter, of course you have a seasonality effect into the first quarter.
From Daniel Major, UBS. The weakness in Extruded Solutions in Q4 was concerning. Can you give any more detail on the outlook? Do you still believe in the improvement targets? Will demand weakness cause you to move to more drastic restructuring?
Well, I think there is quite a lot of restructuring ongoing, and I think with the initiatives that have been taken, there is a substantial effect from that going into 2020, which will support the NOK 1 billion program.
A question from Jason Fairclough, Bank of America Merrill Lynch. Your earnings in Q4 were much worse than the Street was expecting. Do you think that the market is fundamentally overvaluing the business, or was this a one-off bad quarter?
Well, I think what we have explained is the weak markets and how that have evolved, and I think the fourth quarter was extraordinary in the sense of lower demand than what we anticipated after Q3.
Okay. Any more questions from here? No? That's great. I would like to say thank you very much for coming, and have a great day.