Hydro’s adjusted EBITDA for the third quarter of 2023
was NOK 3,899 million, down from NOK 9,721 million for the same
quarter last year. This resulted in an adjusted RoaCE of 8.5
percent over the last twelve months.
- Weaker results in challenging and uncertain markets, firm
mitigating actions in place
- Delivering on strategic growth agenda in Extrusions and
recycling, capturing value from Alumetal
- Executing on decarbonization roadmap across the value chain,
delivered first Hydro REDUXA 3.0 to Mercedes-Benz
- EU regulatory framework supporting strategy, disappointing
Norwegian national budget
- Hydro Rein capital raise finalized, partnering with Macquarie
Asset Management for renewables growth
Lower aluminium and alumina sales prices, lower Extrusions and
recycling volumes, reduced CO2 compensation, and a provision for a
multi-year social donation in Brazil, negatively impacted results,
partly offset by lower raw material costs.
On October 15, a third party contractor was fatally injured
while deconstructing an old transformer in Hydro’s joint venture,
Qatalum, in Qatar. On October 18, a contractor passed away at
Hydro’s Alunorte alumina refinery in Brazil while performing a
maintenance operation.
“I am deeply saddened that two young men who came to work in our
plants did not come home safe to their families. Our heartfelt
condolences go to the family and the affected colleagues,” says
President and CEO, Hilde Merete Aasheim.
In the third quarter of 2023, economic growth faced challenges
due to rapid monetary tightening, pressuring household spending and
business investments. Demand for primary aluminium continued to
decline into the third quarter, while Chinese demand is stronger
than expected on strong demand in the renewables and EV segments.
Global demand has remained weak for residential building and
construction, and industrial segments, while demand for automotive
has been more stable. However, in North America, trailer and
automotive build rates have slowed, and could be further impacted
by the United Auto Workers (UAW) strike.
“Hydro is responding to declining markets with firm mitigating
measures. Within Hydro Extrusions and recycling, we are using our
production flexibility and adaption abilities to maneuver in weaker
markets,” says Aasheim.
Hydro continues the strong focus on cash release and working
capital reduction with a year-to-date release of more than NOK 4
billion. Hydro’s improvement program has progressed significantly
during the quarter and commercial ambitions are ahead of the target
for 2023. The strategic hedging program is further supporting
margins, with 440,000 tonnes currently hedged at an LME of USD
2,500 per tonne in 2024, and 300,000 tonnes hedged at an LME of USD
2,400 per tonne in 2025.
The 2024 Norwegian national budget proposal, revealed on October
6, surprised with significant changes to industrial and power
development conditions. The CO2 Compensation Scheme, designed to
safeguard European industrial competitiveness, may see the CO2
price floor rise from 200 to 375 NOK per tonne, impacting Hydro
negatively with NOK 1 billion annually. Additionally, a 35 percent
resource rent tax on wind power profits is proposed for 2024. This
tax could hinder investment in renewable capacity expansion. These
changes are being negotiated and await parliamentary approval.
“We are surprised and disappointed the government has once
again chosen to weaken the competitiveness of the industry by
cutting the established CO2 compensation scheme. This is
unfortunate and it undermines the predictability of Norwegian
industrial policy,” says Aasheim.
On October 24, Hydro signed an agreement with Macquarie Asset
Management who will acquire 49.9 percent of Hydro’s renewable
energy company, Hydro Rein. This transaction marks an important
milestone for the execution of Hydro’s strategic pillar of growing
in renewable energy, while keeping this capital light. Through this
partnership, Hydro and Macquarie will form a joint venture (JV)
where Hydro will own 50.1 percent of the company. Macquarie intends
to invest equity of USD 332 million to obtain a 49.9 percent
ownership of Hydro Rein. The transaction values Hydro Rein on a
debt free basis at USD 333 million, per June 30, 2023. Including
the capital provided by Macquarie, no further equity injections
from Hydro are planned for, and Hydro Rein has an ambition to be
self-funded for growth.
“Despite market volatility and geopolitical turmoil, the
long-term outlook for aluminium is promising. Toward 2030, Hydro
expects significant growth for aluminium, driven by electric
vehicles, energy effective buildings as well as aluminium in
infrastructure to support the energy transition,” says Aasheim.
According to its 2025 strategy, Hydro continues to strengthen
the position in low-carbon aluminium and to grow in attractive
market segments. Hydro Extrusions has inaugurated three new presses
in Suzhou, China, Trzcianka, Poland, and Nenzing, Austria. These
new facilities strengthen the portfolio of cutting edge extrusion
capacity aimed at industries like automotive, electric vehicles,
and building and construction. The growth strategy of Hydro
Extrusions is aimed at expanding with the market, particularly
focusing on segments where Hydro has a competitive edge. The
expansion of production capacity, in combination with ongoing
sustainability efforts, enhances resilience and contributes to
Extrusions NOK 8 billion EBITDA target.
Hydro aims to add 1 million tonnes of new recycling capacity to
the portfolio by 2027, primarily in Europe and North America, to
meet the growing demand for recycled aluminium. Hydro announced the
opening of the HyForge casting line in Rackwitz on September 14,
expanding capacity to supply the automotive industry with
low-carbon recycled aluminium from post-consumer scrap. This
investment directly responds to the automotive sector's increasing
need for low-carbon, lightweight aluminium parts. Additionally, the
greenfield recycling plant in Cassopolis, Michigan, is progressing
as planned. Equipment is currently being commissioned and the first
metal is expected to be produced by November. The plant is expected
to be in full operation by the second quarter next year after a
gradual ramp-up during the first quarter.
On July 7, the share purchase for the Polish recycler Alumetal
S.A was settled, resulting in 275,000 additional tonnes of annual
recycling capacity, a solid recycling position in Europe, as well
as advanced sorting and casting capabilities. During the third
quarter, a NOK 200 million investment was announced to modernize
and expand the Alumetal recycling plant in Kęty, Poland, expanding
the capacity with approximately 30,000 tonnes of foundry alloys for
the automotive market. In addition to the Kęty investments, several
synergy potentials are identified, with an identified potential
EBITDA uplift ranging from EUR 10 to 15 million by 2027.
Hydro is determined to contribute to economic and social
development in the communities where the company operates. The
TerPaz program in the state of Pará, Brazil, where Hydro has made a
commitment to contribute to build six peace houses, will nurture
social inclusion and opportunities in cultural, educational,
economic, and human rights areas. TerPaz is an important initiative
to reduce lethal violent crimes, and a commitment to donate
approximately NOK 500 million for the next three years is
recognized during the third quarter to support this agenda.
For shareholders, Hydro initiated a new share buyback program on
September 22, 2023. The program covers a purchase of up to
100,000,000 shares with a maximum value of NOK 2,000 million,
inclusive of the proportional redemption of shares owned by the
Norwegian State. As of October 17, 2023, Hydro has purchased
3,719,484 own shares and owns a total of 18,816,362 shares,
corresponding to 0.92 percent of Hydro’s share capital.
Results and market development
Third quarter 2023 adjusted EBITDA for Bauxite & Alumina
decreased compared to the third quarter of last year. Lower alumina
sales prices, currency, and the TerPaz peace house expenses were
partly offset by lower raw material prices. The average Platts
alumina index (PAX) traded in a narrow range between USD 325 per mt
and USD 345 per mt throughout the quarter, ending the quarter at
USD 338 per mt. In China, alumina prices rose throughout the
quarter driven by smelter capacity restarts in the Yunnan province
and lower alumina production due to domestic bauxite shortages.
Compared to the third quarter of 2022, the average Platts alumina
index was stable.
Adjusted EBITDA for Aluminium Metal decreased in the third
quarter of 2023 compared to the third quarter of 2022, mainly due
to lower all-in metal prices, reduced CO2 compensation, and lower
contribution from power sales, partly offset by positive currency
effects, and reduced alumina and carbon cost. Global primary
aluminium consumption was up 2 percent compared to the third
quarter of 2022, driven by a 3 percent increase in China. The
three-month aluminium price increased throughout the third quarter
of 2023, starting the quarter at USD 2,158 per mt and ending at USD
2,347 per mt.
Adjusted EBITDA for Metal Markets increased in the third quarter
compared to the same quarter last year. Strong results from
sourcing and trading activities were partly offset by lower results
from recyclers, and negative inventory valuation and currency
effects.
Extrusions adjusted EBITDA for the third quarter of 2023 is
slightly lower than the same quarter last year, driven by lower
sales volumes, and higher fixed and variable costs, positively
offset by increased sales margin and currency effects. European
demand for extrusions in the third quarter of 2023 is estimated to
have decreased 20 percent compared to the same quarter last year
and 21 percent compared to the second quarter of 2023, driven by
seasonality. Demand for residential building, and construction and
industrial segments has remained weak in the third quarter, while
demand for automotive has been more stable, supported by increased
share of electric vehicle registrations over total auto
registrations. The solar segment has been negatively impacted by
supply chain bottlenecks and lower installations. North American
extrusion demand is estimated to have decreased 17 percent during
the third quarter of 2023 compared to the same quarter last year
and 6 percent compared to the second quarter of 2023. Demand
continues to be weak in residential building, and construction and
industrial sectors. In the transport segment, lower trailer build
rates have started to negatively impact demand. Automotive build
rates have also recently slowed and could be impacted by the UAW
strike against the three unionized US automakers.
Adjusted EBITDA for Hydro Energy in the third quarter is higher
than the same period last year. Higher production and lower
recognized tax cost in Hydro’s equity accounted investment company
Lyse Kraft DA, as a result of the legal restructuring in 2022, were
partly offset by lower gain on price area differences, lower
prices, and loss on a 12-month internal fixed price purchase
contract from Aluminium Metal from early October 2022. Nordic power
prices in the third quarter were on average lower than the previous
quarter and significantly lower than in the same quarter last year.
The lower prices can primarily be explained by an improved Nordic
hydrological balance and declining fuel prices. Price area
differences between the south and north of the Nordic market region
declined somewhat from the previous quarter and were significantly
lower than the same quarter last year.
Other key financials
Compared to the second quarter, Hydro’s adjusted EBITDA
decreased from NOK 7,098 million to NOK 3,899 million in the third
quarter 2023. Lower realized aluminium and alumina prices combined
with lower Extrusions and recycling volumes were partly offset by
lower raw material costs.
Net loss from continuing operations amounted to NOK 625 million
in the third quarter of 2023. In addition to the factors described
above, net income from continuing operations included a NOK 2,000
million unrealized derivative loss on LME related contracts, a net
foreign exchange gain of NOK 214 million, and a NOK 110 million
loss from unrealized derivative power and raw material
contracts.
Hydro’s net debt increased from NOK 11.3 billion to NOK 13.8
billion during the third quarter of 2023. The net debt increase was
mainly driven by NOK 7.5 billion investments, partly offset by
EBITDA contribution and net operating capital release.
Adjusted net debt increased from NOK 15.9 billion to NOK 20.4
billion, primarily due to the increase in net debt of NOK 2.5
billion, and an increase in collateral for hedging contracts and
investments commitments.
Reported earnings before financial items and tax (EBIT), and net
income include effects that are disclosed in the quarterly report.
Adjustments to EBITDA, EBIT and net income (loss) are defined and
described as part of the alternative performance measures (APM)
section in the quarterly report.
Investor contact:Martine Rambøl Hagen +47
91708918Martine.Rambol.Hagen@hydro.com
Media contact: Halvor Molland +47
92979797Halvor.Molland@hydro.com
The information was submitted for publication from Hydro
Investor Relations and the contact persons set out above. Certain
statements included in this announcement contain forward-looking
information, including, without limitation, information relating to
(a) forecasts, projections and estimates, (b) statements of Hydro
management concerning plans, objectives and strategies, such as
planned expansions, investments, divestments, curtailments or other
projects, (c) targeted production volumes and costs, capacities or
rates, start-up costs, cost reductions and profit objectives, (d)
various expectations about future developments in Hydro's markets,
particularly prices, supply and demand and competition, (e) results
of operations, (f) margins, (g) growth rates, (h) risk management,
and (i) qualified statements such as "expected", "scheduled",
"targeted", "planned", "proposed", "intended" or similar. Although
we believe that the expectations reflected in such forward-looking
statements are reasonable, these forward-looking statements are
based on a number of assumptions and forecasts that, by their
nature, involve risk and uncertainty.
Various factors could cause our actual results to differ
materially from those projected in a forward-looking statement or
affect the extent to which a particular projection is realized.
Factors that could cause these differences include, but are not
limited to: our continued ability to reposition and restructure our
upstream and downstream businesses; changes in availability and
cost of energy and raw materials; global supply and demand for
aluminium and aluminium products; world economic growth, including
rates of inflation and industrial production; changes in the
relative value of currencies and the value of commodity contracts;
trends in Hydro's key markets and competition; and legislative,
regulatory and political factors. No assurance can be given that
such expectations will prove to have been correct. Except where
required by law, Hydro disclaims any obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise. This information is
considered to be inside information pursuant to the EU Market Abuse
Regulation and is subject to the disclosure requirements pursuant
to Section 5-12 the Norwegian Securities Trading Act.
- NHY presentation Q3 2023
- NHY report Q3 2023
Lucapa Diamond (TG:NHY)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Lucapa Diamond (TG:NHY)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024