Good morning, everyone. Welcome to the presentation of Hydro's financial results for the first quarter, and welcome also to all of you following us on webcast. As you know, due to the cyber attack, we previously presented the operational and market update for the first quarter. Today, we will focus on the financial results for the same quarter. The results will be presented by our new CEO, Hilde Merete Aasheim, then followed by a detailed financial overview by our CFO, still, Eivind Kallevik. Hilde will also use the opportunity to present her focus areas for Hydro going forward. As usual, we will have time for Q&A after the presentation, also from the webcast. With that, Hilde.
Good morning to all of you. Welcome to my first presentation of the quarter as the new CEO. I will come back a little bit to the details of the quarter, but I will start by giving you a walkthrough of my CEO agenda and my priorities going forward. I'm really excited to have the chance to lead Hydro into the next chapter, such a fine company with such a bright future. Leadership is about setting direction and being clear on expectation. My direction can be expressed very simply. It's about lifting profitability, and it's about driving sustainability. Lifting profitability, simply because our earnings has been too weak for too long a time. We have been heavily influenced by the Brazil situation, the cyber attack, but even beyond that, the earnings has been too low. That we need to address as a company.
We need to lift our ambitions, and we need to make sure that each part of the long value chain that we are invested in, they are competing in the world championship every day, and they need to be among the best in each part of their businesses. Sustainability is about producing our products and services in a sustainable way, in a responsible way. That is a requirement from our customers, but it's a requirement from the society at large. Here, we have a good position in Hydro, and I would like us to differentiate ourselves among our competitors in terms of bringing to the market green products. Before I continue on how we will work in order to lift profitability, driving sustainability, I will talk about something that will not change, which is our foundation going forward. We have a strong foundation in Hydro.
We have the Hydro Way, which is about our purpose. It's about creating viable societies, and it's about our values, care, courage, and collaboration. This is not only fine words, it's about who we are and what we believe in. We have cultivated a strong company culture over years, and that is something that we sustain also going forward. We have 36,000 people in the organization, top skilled, very competent, very engaged, and that's a fantastic asset for the company. One of our core strengths over all these years has been good operation. That value and that brand we should continue to cultivate. We have attractive assets across the whole value chain. We have a good position in the upstream part on the cost curve, but we also have efficient plants in the Extruded Solutions part, which are producing advanced products to advanced customers every day.
We have a leading position in sustainability in terms of our primary production based on renewables, we are producing more and more products based on post-consumer scrap, that we should continue to work on in order to differentiate ourselves in the market with green products. I would like the sustainability agenda to be very closely connected to the commercial agenda so that we can stand out and go to the customers and demonstrate that we can be a partner to them in terms of providing their material with a low carbon footprint. We believe in aluminum simply because of the characteristics of the product. Aluminum is the metal of choice. Aluminum is the metal that is growing the most.
We see that substitution also are improving the palette of products and solutions to the market in transportation and automotive, in packaging and recycling, in building and construction, in more and more applications for end user products. That is what I find interesting now that we have included Extruded Solutions in our company. I was in Vetlanda some few days ago. I was talking to designers working with IKEA. I was talking to designers working with the automakers. I was working with designers working on building solutions using aluminum. That's when we grow the palette of the application of aluminum when we work in the first end of the market. We need also to defend aluminum in the market, that is why the carbon footprint is so important. The low carbon footprint is important.
As I said, we have a good position here in terms of our low carbon products we should continue to work on that to have our green products becoming even greener. I believe that will defend and safeguard the metal also for the longer term. Coming back to the profitability challenge. We have had a severe financial effects of the Brazil situation. We have had financial effect of the cyber attack, extraordinary events, the profitability challenge go beyond these events. The earnings have simply been too low for long time, which is also an industry challenge. We have to face that. We have to face that towards our investors, towards people that invest in Hydro. It's a disappointment when we are not delivering decent returns. That we have to address. On the top of the situation is also the increasing political unpredictability.
We see the world around us has changed quite a lot. We see trade barriers, we see trade wars even, we see that is influencing the whole global economy. Aluminum is very closely connected to the global GDP. What we see now is that there is a dampening in the global economy. We see that in Europe, we see it in Asia, we see it even in China, we are following U.S. closely. That we also have to cater for and to prepare for in order to be robust. Because my ambition for Hydro is to be a robust, profitable industry leader based on innovation and sustainability. On my day one, I addressed some immediate actions.
We simply have to face the brutal facts of not having good enough earnings, on not having been able to deliver the profitability that we should, and to create a sense of urgency in the whole organization that we have to lift our ambitions. Obviously, safe and efficient operation is the sort of the base. That is the most cost-effective way to produce. That is the environment we would like to have in terms of an injury-free environment. It's also the best way to go to the market to demonstrate to the customers that we can deliver each time, on time, with the quality that the customer has asked for. When I was standing here on the 8th of May, I said that the Brazil situation is so severe for the company that this needs to be fixed.
I'm very happy today that we got the embargo lifted on the May 20th. To return now, Alunorte, Paragominas, and Albras back to full production is of vital importance, and that's what we're working on right now, and I will come back to that in a few moments. As many of you know, that has followed us during many years, Rolled Products has simply had too weak performance over too long time. That is why I announced on my first day that we will take a strategic review, a full review of Rolled Products business area to explore all opportunities to see how this can become a better business for Hydro. It is simply not good enough, and that work has already started. It has started also inside Rolled Products.
We are now in the restructuring of part of Grevenbroich, simply to adjust to better market segments in order to improve our margins. As I said, we have to face the brutal fact, and throughout the whole company now come back to normal when it comes to Brazil. As you know, we have said for the last quarters that we are not on track on the improvement programs that we had for 2018 and 2019. We have to come back to that, and we have to even aggressively pursue new improvements effort in order to improve our cash and improve our earnings. Talking about cash, we will have a much more focus now on cash being more strict on capital discipline and also on capital allocation, simply because the earnings are too low.
In that, I would also like to comment that throughout the Brazil situation, we have built working capital. Also related to the result sanction last year, we were building working capital. We have resolved the Brazil situation in the fact that we're coming back to full production, and we will look very closely to bring down the working capital and to get that cash from an idle situation to cash in money. We will also evaluate the way we work. We see that we are a company invested in the long value chain of Hydro. We will look at how can we be a good owner of Hydro, of all the business areas at the top.
Also look at what kind of autonomy do we have to have in the business areas in order to cater for flexible business models in the long value chain of aluminum. It's very different to operate a mining operation than it is to operate an electrolysis, and an electrolysis is very different from an extruder. That we would like to look at to see that we have an operating model that fit our agenda, that builds on lifting profitability, driving sustainability. I know that many of you are very eager to know more about this agenda, and that is why we have invited for an Investor Day on September the 24th. That we can give you more details on this agenda in order to demonstrate that we are working on lifting profitability and driving sustainability. Let me then go to the first quarter.
I will give the highlights, and Eivind will come back to more details. The first quarter have an underlying EBIT of NOK 559 million. The first quarter result is heavily influenced by the fact that we have produced only at 50% capacity in Albras, in Alunorte and in Paragominas. We were very happy when we got the announcement from the federal court to lift the embargo on Alunorte, which means that we can now start to resume operation in the three plants. The financial results for first quarter is also influenced by the cyber attack. As you know, we got a very severe cyber attack on the 9th to 19th of March. We estimate that, or we have booked NOK 300 million-NOK 300 million, in Q1. In the early days, after the cyber attack, we guided on roughly NOK 400 million-NOK 450 million.
That has come down to NOK 300 million-NOK 350 million for the first quarter. This includes business interruption and cost related to recovery, and to come back in normal operation. The main hit or the business area that got the hardest hit on the cyber attack was Extruded Solutions. That is also where the main impact financially is in the first quarter. Other than the cost related to the cyber attack for Extruded Solutions, I would like to highlight for the first quarter that we have very strong performance in Extruded Solutions, and in particular in North America with much higher margins. Primary Metal is suffering from low LME as well as high raw material costs compared to Q1 last year. Energy has a strong result on high prices, similar to fourth quarter, but much higher than first quarter last year.
The global supply and demand balance we expect to be still in deficit if we look at the global supply demand. China is in balance, but the Western world is still in deficit. With the continued macro uncertainty, how the trade barriers plays out, how the trade wars comes out, we have to be cautious about the macro assumptions. We have taken down the global growth estimate from 2%-3% to 1%-3% for the global demand of aluminum. Coming back to Brazil. Very excited about the fact that the federal court lifted the embargo on the May the 15th and May the 20th. There were two embargoes to be lifted, one for the civil court and one for the criminal court, allowing the full value chain to come back to normal production.
We still have an embargo on to be able to use the new DRS2 red mud deposit. That we have to work on going forward. In terms of operation now and ramp up, we have started. We estimate to be between 75%-85% capacity utilization in Alunorte within the next two months. The timing of returning relies very much on how the press filters are working. Remember that when we got the embargoes, we have started on the commissioning of the new press filter technology. We did not get that learning curve. Now we are in the learning curve to bring the press filter technology up to full speed. That is why we cannot state when we are back to full capacity. We will bring in a ninth press filter in Q3. Then we will work on that to come back to full operation.
We are now using the old deposit, the DRS1. We estimate that we can use that for one year. Having said that, we have geotechnical studies ongoing right now to see how we can verify an extended lifetime. Having said that, what is our main focus is the DRS2. To get that embargo lifted simply because that is for the longer term to use the new press filter technology now to be able to have a long-term sustainable solution for Alunorte in the new DRS2. That was the plan back in 2014 when we invested in the press filter technology. That is what is our main objective. Obviously, when Alunorte now is ramping up, Paragominas is ramping up based on the schedule of Alunorte.
Also in Albras, which was curtailed 50%, we are now warming up the cells and expect to have a period now within the next three to four months to bring back Albras to full speed. Going forward, what is the main focus going forward? It is obviously safe ramp-up of Alunorte, Albras and Paragominas. That is our key priority.
We are fully committed to deliver on obligations that we have put in the technical and social agreements, both within the fence of the plant to make the plant robust. Also to continue to do good in the local society, to be a good force in the local society. Have a good dialogue with the local community as well as the government. What is the main focus in terms of the full coming back to normal is to continue the dialogue with SEMAS, which is the state environmental agency, together with Ministério Público on creating a common platform to go to the judge and document that we can operate the new DRS2 in a safe and good way. That was successful when we finally were able to lift the embargo, or got the lift of the embargo on Alunorte.
To join forces to work hard to make sure that everybody understand how we have put up this new DRS2, and that we can document that we can operate that in a safe way. That is our main priority, join forces and lift the embargo. The timing for that, as I know we will ask for, is uncertain. We do not have a specific timeline for when the judge will lift that embargo. A short update on the cyberattack. As I already stated, NOK 300 million to NOK 350 million has been booked in the first quarter, of which NOK 250 million to NOK 300 million is booked in Extruded Solutions. We are now almost back to normal production in Extruded Solutions, as well as the rest of the company. I have to say that I'm very impressed about how the organization has been able to handle such an attack.
In very impressive efforts, a lot of creativity related to how to find ways to operate without the normal systems in place, and also the extra work that we have done in order to have a good dialogue with the customers in order to limit the effect for the customer of the fact that we had this attack. Very important for the long term. To me, it's really encouraging to see the effort from the organization, which is a documentation also of the strength we have in the Hydro organization. When we mobilize, we mobilize with the full power. As I said, if I can use that on improving the profitability of the company, on making the company more robust, rather than working on handling incidents, that's the way we should work going forward.
Estimated financial effect of the cyberattack is NOK 200 million to NOK 250 million in the second quarter. That's what has been estimated, and also here, the most of the work is ongoing in Extruded Solutions. Having said that, there is still a lot of work in terms of bringing back the IT solutions back to normal. As we have told before, Hydro has a robust insurance policy in place with recognized insurance. We have not taken account of any insurance payments in the first quarter results, that will come when time is right and when the claims have been dealt with by the insurance companies. As I said, going forward, there's a lot of recovery works towards a normal IT operations. There are thousands of servers that needs to be recovered. They are following a plan, and they are recording to the plan.
While we are working on that, we are also increasing the robustness when it comes to further strengthening of IT infrastructure and cybersecurity. We know that attacks will come also in the future. With the extra work that we put in now, we hope to see that we are much more robust and that we don't take out the whole company as was the case on the 19th of March. Let me then move to the global supply-demand balance. As I said, China largely balanced. World outside China still in deficit. If we look at world ex-China, as I said, we have taken down the global demand growth to 1%-3%, primarily due to the fact that we see less demand in the world ex-China, in particular related to Europe and particularly related to Germany.
We also see that the demand growth is less in Asia, exposed to export from China. In terms of supply in the western world ex-China, we know that there are plans coming up. Also here we are taking down the growth projections from 3%-4% to 2%-3%. We know that Alba is coming up with a new line. We know that there are some restarts in the U.S., but we also know about disruptions in Venezuela as well as in the situation in Bécancour. When it comes to China, we stick to our growth estimate of 2%-4%. That is still in deficit. We are closely following the inventory levels. Some of the deficit is taken by the reduction of the world inventory levels.
We see the graph to the left, which is the total inventory levels have come down from the very high levels, but still higher than what it was pre-financial crisis level. We see now a level of 60-70 days inventories, and which are approaching the 50s, but still higher than the 50 days. We believe that will continue to take place to reduce the inventory levels going forward. We also have to keep a very close eye on China. We see to the right on this slide, the growth of semis export from China. There's not that much primary growth. With primary export, but semis is also dampening the need for primary when China export at the level they do. They have increased export with 14% from Q1 last year to Q1 this year. The last quarter, from fourth quarter to first quarter, was down 7%.
We now see that the Shanghai price has come down, the arbitrage is then also coming down, which makes it not so competitive to export from China than what it was when the Shanghai price was much lower than LME. This we need to focus on. China is an extremely important element in our industry, we have to closely follow that. Also with the macro uncertainty, with the trade barriers, I don't think any company can be very clear on how this will play out. This we need to follow going forward. Let me move to the upstream cost, which I know that you are interested in. We have talked about raw material costs coming down. We haven't seen it yet in the numbers, but now we see it in the first quarter numbers.
If I take primary to the right here, we see that the cost has come down, primarily due to lower alumina costs compared to fourth quarter, which was very high. The fact that LME is much lower than Q4, we see that the LME effect is offsetting the raw material effect of the lower alumina cost, which makes the margin more or less the same as we had in fourth quarter for primary. Compared to first quarter, we see that both LME is much lower than first quarter, and raw materials costs are still higher than what we saw in first quarter last year. Moving to alumina, we see that we do have lower alumina cost in first quarter than we had in fourth quarter.
In the fourth quarter, we were sourcing a lot of external alumina, simply to make sure that we did have alumina for the smelters and also for the third parties. Sourcing alumina at a very high cost. That we see now has come down. We have not sourced so much as we did in fourth quarter, and the prices of alumina has come down. That's why the cost has come down in Q1. We see that prices was also much higher in fourth quarter. When we were outsourcing in the alumina market, prices picked up. That is not the case in Q1. Prices are more now close to normal, and that is what makes the change from Q4 to Q1. Compared to Q1 last year, it's still higher raw material prices than what we had in Q1 last year. Let's move to the downstream and Rolled Products.
We see a flat development when it comes to sales compared to Q1 last year. Lower demand, lower sales related to foil. We see also some de-stocking effect in foil, but the foil demand is low. The automotive segment is better, despite the fact that car production is down in Europe. We see the substitution effect in terms of bringing more aluminum into the cars. It's good news also that we have a better performance on this new automotive line three. We have sold 35% more to body-in-white segment compared to first quarter last year. That's good news for the new plant in Grevenbroich. When it comes to first quarter, it's more seasonal effects. I would like to say that we should expect a lower demand in the next quarters relating to Rolled Products. We see a lower demand in foil.
We see that car production is down, and we see also fierce competition of imports into Europe from China, from Turkey, and from the Middle East. Extruded Solutions. As you know, Extruded Solutions are following the value over volume strategy and are continuously working on net added value per kilo of produced extruded products. They're very much focused on the value creation after the press. Here we see a good development in all business units in terms of net added value per kilo, positive development in all business units except for Precision Tubing, which is affected by the new acquisition in Brazil, which still are lower than expected, but expected to improve, obviously. All in all, we are very happy with the performance and the development in Extruded Solutions.
As I said to start with, Extruded Solutions had a very good first quarter, and we are encouraging Extruded Solutions to continue that good development. That's what I had planned to say in details for the first quarter. I leave the floor to Eivind to talk more about the more details of the numbers. Thank you.
Thank you, Hilde. Good morning, everyone, and welcome from me as well. I will take you through the financial results for the quarter. If we start with the high-level result development for the quarter. In Q1 this year, we did deliver an underlying earnings before financial items and tax of roughly NOK 0.6 billion. This is significantly down from the NOK 3.1 billion we delivered in the same quarter last year. In this period, we've seen a continuous increase in raw material costs, which combined with somewhat higher fixed cost, taken the results down by roughly NOK 1.2 billion. Higher alumina costs in Primary Metal accounts for roughly a quarter of this, with energy, carbon, and bauxite cost adding another NOK half a billion to the cost picture.
The increase in fixed costs of NOK 0.4 billion is partly personnel-related cost throughout the business areas of Hydro, but also partly related to the cyber attack. The realized alumina prices have remained relatively flat over this period, but we have seen an 11% decrease in realized aluminum prices, taking the results down some NOK 900 million. We also saw negative effects on the volume side, roughly NOK 0.6 billion, primarily driven by the curtailment situation in Brazil, but also partly related to the cyber attack we experienced in March this year. On the positive side, we also have currency effects. The stronger dollar against most of our currencies supported results with roughly NOK 0.6 billion. Finally, the other nets out to a negative NOK 0.5 billion.
This is a combination of a positive effect in energy, and improved results, and then offset by a negative variation in other eliminations, as well as loss on power sales in Brazil due to the curtailment situation. If we compare the results to the previous quarter, development is relatively flat. The decline in the upstream results is driven by lower realized prices as both the LME as well as the PAX index has decreased in this period, reducing the results with about NOK 600 million on the LME side and roughly NOK 400 million on the PAX side. This negative effect was partly offset by the reduction in raw material costs, with a total effect of NOK 0.6 billion. We saw a significant reduction in the alumina costs for Primary Metal, adding up to roughly NOK 500 million in cost relief for this period. Carbon, caustic, and coal makes up the rest.
At the same time, we see that in our downstream divisions, Extruded and Rolled, we see a good improvement of NOK 0.6 billion, NOK 600 million, which we can mostly attribute to the normal seasonality variations we see between Q4 and Q1. Remember that this also is then including the additional cyber costs, in particular for Extruded Solutions. Finally, the other item is a combination of smaller items, mainly changes in eliminations. Again, loss on power sales due to the Albras curtailment in Brazil and some cyber-related costs, all netting out NOK 2.3 billion negative. We turn quickly to the key financials for the quarter. We do see revenues down some NOK 2.4 billion versus first quarter of 2018. This is primarily driven by lower volumes on the back of the curtailments in Brazil, as well as some lower volumes due to the cyber attack.
This quarter, we did exclude from a reported EBIT of NOK 20 million, NOK 539 million in items excluded. This is primarily relating to the normal timing effects that we exclude every quarter. In addition, we have some smaller one-time effects. This quarter, we had a marginal financial income as the interest expense was offset by the net foreign exchange gain of NOK 0.2 billion. This mainly reflects the stronger NOK versus the euro impacting the embedded derivatives we have on our Norwegian power contracts. As a result, the income before tax was also marginal, NOK 26 million, and significantly down then from the NOK 2.8 billion we delivered in the same quarter last year. We have income taxes of NOK 150 million this quarter. That reflects the high proportion of energy earnings, and then subject to the power surtax, which gives this relatively high number.
This gives us a negative net income of NOK -124 million, down from positive NOK 2.1 billion last year. Consequently, also, the underlying EPS is down this quarter and is roughly NOK 0.13 per share. We then turn to the business areas and start with Bauxite & Alumina. The underlying EBIT for the business area decreased from NOK 741 million Q1 2018 to NOK 153 million in the first quarter of 2019. The results are obviously negatively impacted by the 50% curtailment at Alunorte and consequently 50% production at Paragominas. Has a negative effect of roughly half a billion for the quarter. In this quarter, the curtailment effect was not compensated with higher realized prices as we've seen in previous periods, and price effects were then relatively stable between Q1 2018 and Q1 2019. At the same time, we have seen raw material costs continuing to increase, impacting results, as we've seen.
Caustic and soda has started to come down, but these have been offset by higher energy costs for Alunorte in Brazil. On the positive side, we've seen a 16% weaker BRL, giving us a earnings lift of some NOK 300 million between the quarters. If you look into second quarter, we are, as Hilde has already said, very happy to see the ramp-up schedule or ramp-up of Alunorte and Paragominas already moving ahead. We do estimate that we will get to 75%-85% production within the next two months, and Paragominas will ramp up at the same speed as we do in Alunorte. When it comes to costs related to this, we will see somewhat higher material and service costs in the second quarter during the ramp-up stage, meaning that the absolute numbers will increase somewhat.
As we do get capacities up, this will of course be diluted by the increased production, so cost per ton will come down. Let me also remind you that the fixed cost in Alunorte is roughly 15%-20% of total cost. In Paragominas it's much higher at 65%-70%. On the raw material outlook into second quarter, it is relatively flat overall between the quarters. We do see some alleviation on the caustic side, which we do expect to come down as a cost in Q2. We at the same time expect to see somewhat higher energy costs netting that benefit out.
We look at the market prices for Q2, both PAX as well as the LME, impacting the LME related contracts or linked contracts, have come somewhat down compared to the Q1 levels. We do now expect to realize alumina prices of just north of $360 per ton. We turn to Primary Metal, the underlying EBIT here decreased significantly by approximately $1.6 billion from $823 million in Q1 2018 to $737 million negative this quarter. This is largely explained by two elements. One is, of course, the 11% decrease in LME, taking down the results roughly $900 million. In addition, we have seen significant raw material cost increases in this period, primarily on the alumina side, but also on energy and carbon costs, altogether adding up to roughly $700 million in this period. Production is somewhat down compared to the first quarter last year.
It is primarily driven by Albras, but it is partly offset by the production we have at the Karmøy Technology pilot. We also had losses on the power sales or higher losses on the power sales this quarter in Brazil, as prices, as we guided on before, are typically very low in the midst of the rainy season. The stronger dollar had a net positive effect of some $150 million for the business area in this period. We look into the second quarter, we have started the ramp-up process in Albras. This is expected to take 3-4 months. When it comes to ramp-up costs for Albras, that is mostly related to the first fill. That cost, of course, is capitalized. In terms of EBIT impact, you should not see a significant consequence for the second quarter.
We have sold approximately 85% of the primary alumina production at the end of April, at some $1,875 per metric ton. Of course, that you have seen that LME prices in May have been below that level. Realized prices should be no surprise that that will be below $1,875 when we close the second quarter. On the premium side, we have booked 75% of the premiums, around $360 per ton. The estimate then for the complete quarter is in the range of $300-$350 per ton. You look at the raw material side for Primary Metal in the second quarter, we do expect to see a continued alleviation on raw material costs, again, in particular on the alumina side.
It should give us a good benefit. Also there will be some cost reduction when it comes to energy and carbon cost in the second quarter. Also worth noting, as Alunorte is now ramping up, the need for us to go to the external market to source more alumina has that ended. We are well covered in the quarters to come. Turning to metal markets. The metal markets area delivered a underlying EBIT of $190 million versus $178 million same quarter last year. Again, we have seen very strong performance and results out of the remelters, both in Europe as well as in the U.S., driven by good and strong margins. This is despite somewhat lower production on the back of the Henderson incident we had earlier this year.
Henderson is now back in full production as we speak. In addition, we've also seen good and positive contributions from the sourcing and trading activities in this period. If we exclude NOK 40 million in negative currency effects, the result is NOK 230 million, which is up from NOK 139 million last year, and double compared to what we had guided on as normal running profits of NOK 125 million per quarter, or NOK 500 million per year. If we look into the second quarter, we continue to see very good market conditions for the remelters, and we do expect strong contributions also here in the second quarter. Again, as always, let me remind you that the currency and trading results in metal markets are, of course, volatile by nature. In Rolled Products, we've delivered an underlying result of NOK 138 million, down from NOK 232 million in the same quarter last year.
The results from the rolling mills are relatively stable. Shipments were flat. We did see a somewhat improved margin picture in Q1, but that's been offset by inflationary pressures on the personnel cost of salaries in Germany. At the same time, we've seen that the Neuss remelter results did decline as a result of the lower realized aluminum price, as well as higher raw material costs. That basically explains the variations between the quarter. We look into the second quarter, we still see a positive demand growth in Europe, but we do notice some softening in some of the key areas where we operate, like foil as well as general engineering. We also see increased margin pressure going into the second quarter, and probably also a somewhat less fortunate product mix when we now look at result expectations for the second quarter.
In that one, from a shipment perspective, you should also expect that to be relatively flat between Q1 and Q2, and not necessarily expect a normal seasonal uptick in volumes. When it comes to the Neuss remelter for the second quarter, remember that this is driven, as I've said, with metal prices and raw material costs. We do expect to get some raw material relief also on the Neuss remelter, but that will principally be offset by the lower metal price as we observe it. Turning to Extruded Solutions, the result did decline from NOK 734 million last year to NOK 593 million this quarter. As explained before, Extruded Solutions were clearly hit hardest in Hydro by the cyber attack. We do estimate that the impact here is NOK 200 million to NOK 250 million.
If we hadn't had this unfortunate incident, we would have seen a continued improvement year-over-year in Extruded Solutions. Also happy to see that the net added value per kilo, the value over volume strategy within Extruded Solutions do continue, and we do see a year-on-year improvement. In particular, happy to see the very strong results in North America, delivering better results, even if they've had a cyber attack, better results than what they delivered in Q1 2018. If we look into the second quarter, still some effects of the cyber attack in the second quarter. We are basically back to normal operations in terms of production and deliveries in Extruded Solutions now, which is a good speed out of the second quarter. We should be at the tail end of the effects.
On the market side, we do expect to see still good positive growth both in Europe as well as in North America, albeit probably at a slightly slower pace than what we saw in 2018, but still good markets. On the energy side, we saw a significant increase in the results from NOK 278 million last year to NOK 517 million this quarter. The main driver for this is price-driven. We saw a 30% increase in power spot prices, increasing from 361 NOK per megawatt hour last year to 468 NOK per megawatt hour in the NO2 pricing area this year. The price effect alone lifted the results with roughly NOK 100 million. The second big contributor is very strong results within the trading and hedging area of energy, again, lifting the results with close to NOK 100 million. Production somewhat up to 2.6 terawatt hours, up from 2.4 last year.
Net spot sales is not up to the same extent, that is because we consume more of the power internally in the company in Primary Metal. Important when we look forward and look into Q2, we see relatively low levels in Hydro's reservoir systems, both in terms of snow as well as in water, there has been relatively low inflows so far in Q2. You should expect production to come significantly down in the second quarter compared to similar periods in 2018 and forward. Also with the way we look at this today, also relatively low production levels for the year as such. On a pricing scheme or pricing set, so far in Q2, in NO2, prices have gone down and averaged around 397 NOK per megawatt hour. Quickly turning to other eliminations.
Net to negative NOK 261 this quarter compared to a positive NOK 161 same quarter last year. The other line mainly comprises corporate costs, in addition to other elements like software integration costs, as well as results out of the industrial insurance area of Hydro. This quarter, this was NOK 307 million, NOK 100 million higher than what we had last year. Certainly somewhat above the guidance that we give of NOK 175 million-NOK 200 million per quarter. Partly reflecting some cost relating to the cyber attack, but also lower results in the industrial insurance company within Hydro. Also, in the second quarter, we do expect the cyber costs to come in on the corporate line, again, giving us an elevated cost level for the quarter compared to the NOK 175 million-NOK 200 million. Turning to debt.
First of all, the net debt position that we reported at the end of Q4 of NOK 8.7 billion has now been restated to reflect the implementation of the IFRS 16 standard on leases. This has increased as we've guided the net debt with NOK 3.1 billion up to NOK 11.7 billion. Outside this effect, the net debt between the quarters have remained relatively stable or up NOK 0.4 billion. We've generated an EBITDA of NOK 2.6 billion. There is a flat development on net operating capital. What we see here is that we have started to realize a bit of the access inventory we built in 2019 and 2018. We will continue to deliver that improvement during the year, that offsets the normal seasonal increase that we see in Q1. Taxes and other, negative NOK 1.9 billion. This amongst others include a large tax payment of NOK 1.1 billion.
We have investments this quarter of NOK 1.6 billion. We still maintain the guidance of CapEx for the year of roughly NOK 10 billion-NOK 10.5 billion. Finally on the adjusted net debt. Here we see an increase of adjusted net debt of NOK 1.4 billion, and this is mainly driven by the changes in net debt that I've just been through and the changes in IFRS 16. The NOK 3.1 billion increase we saw in net debt is partly alleviated by changes we see in what we call other adjustments, where we previously have included the lease obligations. The net effect is then much smaller on NOK 1.4 billion. This is also in line with what we've guided on before. Let me also just comment quickly on P&L impacts on IFRS 16. In Q1, we have then seen as a consequence an increase in depreciation of NOK 160 million.
We see an increase in finance cost of roughly NOK 20 million, and this should be a recurring item as we go through the year. Net pension liabilities decreased by NOK 0.4 billion. It's partly due to the strengthening of the NOK versus EUR, as well as increased returns on the plan assets, and also somewhat offsetting the low interest rates that we see in Germany. We have fairly stable debt in Qatalum equity accounted investments, and that leaves us with net adjusted debt at the end of the quarter with at NOK 13.1 billion. Hilde, I will leave it up to you to summarize.
Thank you. We have presented the first quarter results, heavily influenced by the Brazil situation, influenced by the cyber attack, and low prices. The good thing is that we are now resuming operation in Brazil, and we hope that with the mitigating measures we are taking now that we will not be hit by a cyber attack as we did this year. Our focus now is what we can influence. That is very much along with the immediate measures that I talked about earlier. It's about safe and efficient operation. It's to get the Brazil assets up in a safe way, and to lift the embargo on the DRS2. That will be a high priority for us.
To continue now with the strategic review of Rolled Products, and then create a new momentum for an improvement drive throughout the whole company, raising the ambitions, facing the brutal fact of a situation which we need to turn into a better profitability, and really focusing on cash in the short term. That is the agenda that we will work on, and I hope to see as many of you as on the Investor Day on the 24th of September that we can go through more in details about the measures that we are now taking in order to improve profitability, but also to drive sustainability. Thank you very much.
Thank you very much. We open for questions from the audience for Hilde or Eivind. There's a question in the back. Please introduce yourselves.
Good morning. Eirik Melle, DNB Markets. Two questions, one on Rolled and one on B&A. You mentioned that you started restructuring in Grevenbroich. Can you elaborate on what exactly you are doing and what you expect of results financially, also on a timeline? Further, Bauxite & Alumina, can you help us understand the ongoing discussions with authorities on DRS2? What's keeping the embargo from being lifted? Thank you.
Should I start with the Rolled Products? Well, we have started a strategic review of Rolled Products. I hope that we can come back to that on the Investor Day on the 24th of September, what that means. When I mentioned the restructuring, it has already been taken a decision to take down one line related to foil production in order to take into effect the lower demand and the fierce competition in a market segment or a product segment that are more a commodity product.
That is ongoing right now.
On the B&A side, in terms of DRS2, I think what we've learnt over this last year, Eivind, is that it is very important to get this resolution in place and to have, in a way, a solid resolution that we can live with for some time. It is important to find a common foothold or common ground together with Ministério Público before we go to the court system. In the same way we worked on lifting the production embargo, we're working on lifting the embargo on DRS2. There is good dialogue on this and good confidence between the parties, but the time it will take to get there is absolutely not certain, which is why it's important for us to finish the geotechnical studies on DRS1 to ensure that we have capacities beyond this one-year lifetime that we talk about today.
Yes, in the front. Elisabeth in the front here to Hans-Erik. Welcome.
Hans-Erik Jacobsen, Nordea. Given reduced demand growth for aluminum and pressure we are seeing on aluminum prices, did you consider not to restart Albras?
Albras is very closely connected to the nucleus in Brazil. When we closed it down, we said that it was due to a shortage of alumina or the fact that we couldn't storage alumina. It was obvious that we, also in the dialogue with the authorities, that it was about ramping up the three plants.
On the downstream activities, you're guiding on continuous strong development for extrusions, while rolled products seems like we are going to see a further margin pressure. I understand it's two quite different businesses, but could you understand why the margin pressure continues within one area and continues to increase in the other area?
Eivind?
I'll try to answer. I think it's different business. When we talk about the margin pressure and the weaknesses coming into second quarter, we, in particular, talk about foil and the general engineering market. The foil market is subject to increased pressures from exports also out of China and to a certain extent, Turkey, putting a dampening on both the demand for European produced products but also a dampening on the price development. Extruded Solutions, of course, is much more protected against the Chinese imports due to the uniqueness of the products that you produce, which is one profile, one customer, small volumes. There is very different market dynamics, and that is one of the big drivers behind it.
Thanks.
Morten Normann, Carnegie. Two questions, one simple one for Eivind and maybe a nasty one for Hilde.
Is it changed?
IFRS 16 EBITDA effect in Q1?
Sorry, what?
EBITDA, IFRS 16 effect in Q1.
In 2016?
Yeah.
For 2016?
Yeah.
Roughly 200 million.
200?
Yeah.
Okay, the one for Hilde. You mentioned a bright future. The capital employed is very low. The capital intensity is very high. Hydro is trading at 70% of its book values. No one really understand why the aluminum price is so low, despite two years with a huge deficit. The cost curve has never been flatter as long as I have studied this aluminum market, about 30 years. Where do you see the brightness?
In the metal. We believe that we have the capabilities to be the best in the industry, there is still a lot of opportunities, Morten, to make this brighter than it is today. I agree with you, that is why on my first day stating that we have to lift the profitability, we have to lift our ambitions in order to be in the robust situation in the industry. The situation is the same in the whole industry, why shouldn't Hydro stand out? That's my belief that we can do that based on the capabilities we have, based on the products we have, based on the position we have. We have to do much better.
If I can add just one comment, Morten, of course, you're correct that from a production demand perspective, we've been in a deficit for the last three years. We've still had, or the industry or the world still had ample inventory sitting around, which has come in to fill that gap. What we're seeing now and have seen for the last few years is that that inventory is coming down. It's trailing down towards, probably at the end of this year, beginning of next, towards the 50 days, which were viewed at least before the financial crisis as tight. When we get there, then let's see what the market acts like.
Good question. Any other questions from the audience? No. We have questions from the webcast that Stian will present.
Question from Liam Fitzpatrick in Deutsche. Could you give some guidance on alumina and primary cash costs towards the end of 2019 when volumes normalize and current input costs are fully reflected?
I leave that to you.
Can you repeat it, Stian? I'd like to answer.
The question on the alumina and primary cash costs going into Q2, Q3, towards the end of this year. Could you talk a bit about how they would develop?
Yeah. On the alumina, if you think about the alumina production cash cost, let me start in a different way. We have roughly 15%-20% of the cost base in Alunorte is fixed cost base. As we've said, we haven't really taken out a lot of people in this period, keeping them around, keeping the lines warm so we can ramp up as quickly as possible when we do get production back. That cost is, of course, scalable. You should see quite a bit of an effect on the fixed cost per ton basis as we get towards the end of the year or when we get to 75%-85% in a couple of months' time. I will be careful in giving a number. We can talk more about that at the Investor Day, I think, when we have clarity on the ramp-up speed.
Can you say something about the extension options at the DRS1 and guidance on how long life could potentially be extended?
Well, that's what the geotechnical assessments will give us guidance on for how we can extend the lifetime about one year. That's to see, I say, exactly what that is and the timeline for that. Perhaps you have more details, Eivind.
Yeah. Well, first of all, we are conducting some of these geotechnical studies as we speak. Some of them will be concluded in the near term, and some will take a little bit longer time. We see several years of product or deposit capacity at the DRS1 when we get the approvals in place. But as Hilde said, the most important part and the only long-term viable solution is to get the embargo on DRS2 lifted.
A question from Menno Sanders, Morgan Stanley. The biggest lever in general to earnings and cash flow is the metal price. The metal price suggests the market is materially oversupplied. What will Hydro do to help balance that market?
Right now, we are focusing on bringing Brazil back to normal, that we can normalize the situation also in primary. We have good assets in primary. We are well positioned on the cost curve, and at this point, we have not discussed capacity adjustment. That we always will have to review based on the development in the market and on the price levels.
From Menno, what measures can Hydro take to improve cash generation?
That's what I've been talking about during this presentation, that we lift cash as one of the main objectives. We will implement stricter capital discipline, which is about CapEx, and it's about working capital, and then the improvement programs to bring them back into cash. That is one of our main focuses.
A question from Daniel Major, UBS. Can you give any detail on timing amount of the insurance claim from the cyber attack?
When it comes to amounts, we are not allowed to talk about the amounts. It's actually prohibited in the insurance agreement. What we have said is that we have a robust insurance in place with reputable and good insurance companies. As far as timing is concerned, to use the proper accounting phrase, we will recognize this in the books when we are virtually certain, which means that probably very little is going to come in Q2, and I think most likely we'll start to see this coming into Q3 as the most realistic option.
Last question from Daniel Major. Can you give an indication of what proportion of smelters are EBITDA negative, and how long would you keep EBITDA negative smelters running for?
I think on a portfolio basis, we are well-placed in the second quarter. We're quite comfortable with the portfolio of assets we have today. When it comes to shutting down smelters, it's not something that we do on a short-term margin squeeze. That very much depends. Do you have a very negative outlook for an extended period of time? It costs money to take smelters down, and it is costly to take them back up. You need to do that on long-term decisions. I think what we partly see, at least on our own results in Q4 and to a certain extent in Q1, is that you see a time squeeze on raw material cost you carry old inventories of alumina at high prices while you've seen a decline at the LME price at the same time. We do believe that this will normalize over time.
It's the question again, what you believe that LME prices is going to be over time, which we, of course, never speculate in. There is a fundamental deficit in the market between production and demand. The inventories are coming down, both reported and unreported, which should mean at some point, if the world behaves normally, at the end of this year, beginning of 2020, that you will have a much more balanced situation, both when it comes to production and when it comes to inventory situations.
Okay. Thank you very much. Any other questions from Oslo? No. I would like to thank you all for joining us this morning, and have a nice day.
Thank you.