Correction is made to the quarterly results release made on
October 24, 2024. The correction is related to adjusted RoaCE
wrongly stated as 8.5 percent. The correct number is 7.2
percent.
Hydro’s adjusted EBITDA for the third quarter of 2024 was NOK
7,367 million, up from NOK 3,899 million in the same quarter last
year, positively impacted by higher aluminium and alumina prices,
lower raw material costs and positive currency effects. This was
partly offset by lower recycling margins, Extrusions volumes and
Energy prices resulting in an adjusted RoaCE of 7.2 percent over
the last twelve months and free cash flow of NOK 1.7 billion.
- Solid upstream results from increasing alumina and aluminium
prices
- 2024 improvement programs on track, Extrusions building
robustness in weaker core markets
- Energy executing on renewable ambitions with Illvatn pumped
storage project
- Reducing ownership from 30 to 19.9 percent and impairing NOK
956 million investments in Vianode
- Hydro and Mercedes-Benz extend partnership to foster
socioeconomic development in Brazilian Amazon
"The positive development in our upstream revenue drivers
continued in the third quarter, supporting strong results in our
upstream business, countering the overall effects of the
challenging downstream market,” says Eivind Kallevik, President
& CEO of Hydro.
Positive upstream revenue drivers continued into the third
quarter, supporting record results in Bauxite & Alumina. The
Platts Alumina Index (PAX) gradually increased to USD 562 per tonne
by quarter's end as global alumina supply tightened. Chinese
alumina prices also rose due to bauxite sourcing constraints,
keeping the market balanced. Alunorte continued the fuel switch
project, producing alumina with natural gas during the third
quarter, and is expected to be fully implemented by the end of this
year. The three-month aluminium price rose from USD 2,515 to USD
2,612 per tonne during the third quarter, supporting solid results
in Aluminium Metal.
“The fuel switch at Alunorte exemplifies sustainability and
profitability going hand in hand, yielding significant savings in
carbon intensity as well as costs. Combined with the higher alumina
price driven by the tight alumina market, the investment impacts
Bauxite & Alumina’s result positively this quarter,” says
Kallevik.
The downstream aluminium market continued to be challenged by
weak demand and recycling margins in Europe and North America.
Automotive extrusion demand remains weak due to low electrical
vehicle sales in Europe, especially in Germany. Building and
construction, and industrial demand continues to be moderate with
potential 2025 support from lower interest rates. Low activity in
these markets limits aluminium scrap supply, squeezing recycling
margins and reducing remelt production in both Hydro Extrusions and
Metal Markets.
“Hydro is responding with short and long-term actions to
strengthen robustness in Extrusions. While responding to the
challenging market with firm mitigating actions, we are continuing
to invest in the long-term robustness of our operations,” says
Kallevik.
Hydro Extrusions is actively navigating challenging markets to
address weak demand. By leveraging production flexibility and
implementing cost-cutting programs, Extrusions aims to maintain
margins. The recent investment in an automated press in Cressona in
the U.S., replacing two old presses, exemplifies the commitment in
Extrusions to enhance efficiency and productivity. However,
achieving the NOK 8 billion EBITDA target for 2025 will require an
extrusion market recovery of more than 20 percent volume growth and
a recovery of remelt margins in line with historical averages, both
in total representing NOK 2-3 billion improved EBITDA.
Weak markets are pressuring recycling margins, and active
measures are taken to boost profitability and secure competitive
scrap sourcing. Critical to this effort are enhanced capabilities
in advanced scrap sorting. In the third quarter, the Alusort joint
venture launched commercial operations of HySort in the U.S.,
enabling plants to process more post-consumer scrap. This expands
Hydro's HySort portfolio, to soon five machines in operation,
including four across Europe, reinforcing the company's leadership
in recycling more post-consumer scrap.
By leveraging a fully integrated, traceable value chain from
mine to component, Hydro is attracting strategic partnerships with
industry frontrunners like Mercedes-Benz. The collaboration
advanced significantly during the third quarter, as both companies
committed to a long-term initiative aimed at driving positive
change in the Brazilian Amazon. The Corridor program focuses on
protecting human rights, generating income for local communities,
restoring nature and building low-carbon value chains, underscoring
that sustainability in aluminium solutions goes beyond just
reducing carbon footprint.
“The agreement with Mercedes-Benz extends our partnership beyond
low-carbon product development to create positive social and
environmental impact in the state of Pará. Together, we aim to lift
sustainability throughout our shared value chain, from mine to
end-consumer product,” says Kallevik.
Securing renewable power is key to growth in low-carbon
aluminium. Hydro made an investment decision for the Illvatn pumped
storage plant in Luster, Norway, aiming to generate 84 GWh of
renewable energy annually and improving flexibility in its
production system. This will strengthen Hydro Energy’s portfolio,
powering industrial production in Norway.
On October 22, Hydro decided to reduce its ownership in the
synthetic graphite producer Vianode, based in Norway, from 30 to
19.9 percent. Hydro will step down from the board and no longer
provide capital to Vianode to focus on projects supporting Hydro's
strategic priorities towards 2030. Impairments of NOK 956 million
of investments in Vianode are taken in the third quarter, with NOK
581 million impacting reported EBITDA and shareholder loan in
Vianode of NOK 375 million is impacting Finance expense.
Results and market development per business
area
Adjusted EBITDA for Bauxite & Alumina increased compared to
the third quarter of last year, from NOK 93 million to NOK 3,410
million, mainly driven by higher alumina sales prices, lower cost
of raw materials and positive currency effects, partly offset by
increased alumina sourcing costs and decreased sales volume. PAX
started the quarter at USD 505 per mt, traded down to USD 478 per
mt in July, before increasing gradually to USD 562 per mt at the
end of the quarter as the World ex-China alumina market continued
tightening.
Adjusted EBITDA for Energy in the third quarter decreased
compared to the same period last year, from NOK 762 million to NOK
626 million. Lower prices and lower gain on price area differences
were partly offset by the expiry of a 12-month internal fixed price
purchase contract from Aluminium Metal at a loss in the same period
last year. Average Nordic power prices in the third quarter 2024
decreased, both compared to the same quarter last year and the
previous quarter. The decrease compared to the second quarter in
2024 was primarily a result of strengthened hydrological balance
and seasonally reduced consumption. Price area differences between
the south and the north of the Nordic market region decreased
compared to the same quarter last year and increased compared to
the previous quarter.
Adjusted EBITDA for Aluminium Metal increased in the third
quarter of 2024, from NOK 1,379 million to NOK 3,234 million
compared to the third quarter of 2023, mainly due to higher all-in
metal prices, reduced carbon cost, higher level in CO2 compensation
and positive currency effects, partly offset by increased alumina
cost and higher fixed cost. Global primary aluminium consumption
was up 1.6 percent compared to the third quarter of 2023, driven by
a 2.3 percent increase in China. The three-month aluminium price
increased throughout the third quarter of 2024, starting the
quarter at USD 2,515 per mt and ending at USD 2,612 per mt.
Adjusted EBITDA for Metal Markets decreased in the third quarter
compared to the same period last year, from NOK 568 million to NOK
277 million, due to lower results from recyclers and negative
currency effects, partly offset by strong results from sourcing and
trading activities. Lower results from recyclers are due to reduced
sales prices in a weakening market and additional margin pressure
in a tightening scrap market.
Extrusions adjusted EBITDA for the third quarter of 2024
decreased compared to the same quarter last year, from NOK 1,322
million to NOK 879 million driven by lower sales volumes and
decreased margins from recycling. General inflation pressured fixed
and variable costs, partly offset by cost measures. European
extrusion demand is estimated to have decreased 7 percent in the
third quarter of 2024 compared to the same quarter last year, and
21 percent compared to the second quarter partly driven by
seasonality. Automotive extrusion demand continues to be challenged
by weak sales of electric vehicles across Europe, particularly in
Germany. Demand for building and construction, and industrial
segments has remained moderate after summer with no clear signs of
improvement over the coming months, although lower interest rates
may support demand into 2025. North American extrusion demand is
estimated to have decreased 4 percent during the third quarter of
2024 compared to the same quarter last year and 7 percent compared
to the second quarter. The transport segment has been particularly
weak, driven by lower trailer build rates. Automotive demand is
facing headwinds due to weaker sales of electric vehicles. Demand
continues to be soft in the building and construction, and
industrial segments, however, underlying demand is expected to
gradually improve into 2025 driven by lower interest rates.
Other key financials
Compared to the second quarter 2024, Hydro’s adjusted EBITDA
increased from NOK 5,839 million to NOK 7,367 million in the third
quarter 2024. Higher realized aluminium and alumina prices combined
with lower fixed costs were partly offset by lower Extrusions and
recycling volume.
Net income (loss) amounted to NOK 1,409 million in the third
quarter of 2024. Net income (loss) included a NOK 907 million
unrealized derivative loss on LME related contracts and a net
foreign exchange gain of NOK 139 million. The result also includes
the impairment of the equity accounted battery investment Vianode
of NOK 581 million and NOK 129 million in rationalization charges
and closure costs. Further, foreign exchange losses of NOK 1,092
and losses on a loan to Vianode of NOK 375 million are adjusted
for. The tax effect on these adjustments reflects a standardized
tax rate for taxable gains and tax deductible losses.
Hydro’s net debt decreased from NOK 16.2 billion to NOK 14.7
billion during the third quarter of 2024. The net debt decrease was
mainly driven by EBITDA contributions, partly offset by investments
and other operating cash flows.
Adjusted net debt decreased from NOK 26.1 billion to NOK 25.0
billion, largely due to the decrease in net debt of NOK 1.5
billion, partly offset by increased net pension liabilities of NOK
0.3 billion and increased collateral of NOK 0.2 billion.
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
- NHY Presentation Q3 2024
- NHY Report Q3 2024
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