Norsk Hydro

Changing the aluminium game - Strengthening position in challenging markets

Hydro’s adjusted EBITDA for the fourth quarter of 2023 was NOK 3,737 million, down from NOK 7,184 million for the same quarter last year.

Full year 2023 adjusted EBITDA amounted to NOK 22,258 million, compared with NOK 39,664 million in 2022. Lower aluminium and alumina sales prices, lower Extrusions and recycling volumes, higher fixed costs, and lower contributions from sale of power negatively impacted results, partly offset by lower raw material costs, higher Extrusions margins and currency.

• Weaker results in challenging markets, managing short term volatility and freeing up cash
• Exceeding 2023 improvement targets and commercial ambitions
• Growing in recycling by increasing capacity and post-consumer scrap upscaling
• Delivering on decarbonization roadmap across the value chain, pushing boundaries with Hydro CIRCAL
• Proposed cash dividend of 59 percent of adjusted net income (NOK 2.5 per share) and NOK 2 billion share buyback program

“Challenging markets led to a weaker result in the fourth quarter of 2023. We are managing the short-term volatility through continued execution on our improvement programs and commercial ambitions. This enables us to continue our positioning in pursuit of the long-term value creation opportunities for aluminium,” says President and CEO, Hilde Merete Aasheim.

All business areas, except Bauxite & Alumina, delivered returns above their cost of capital in challenging markets during 2023. The adjusted RoaCE for 2023 ended at 7.1 percent, heavily influenced by challenging alumina market conditions, as well as high growth and return-seeking investments in the year. Over the last 5 years, the adjusted RoacE has been 11 percent, above Hydro’s target of 10 percent over the cycle.

Due to expected challenging alumina markets in the short and medium term, as well as long-term power price insecurity for the partly owned Tomago aluminium plant in Australia, Hydro reported a total impairment loss of approximately NOK 4.9 billion in the fourth quarter results. However, during the last couple of months the alumina market has tightened, and PAX price increased on the back of refinery curtailments and concerns around bauxite shipments from Guinea.

In the aluminium market, demand growth for residential building and construction, and industrial segments has continued to remain negative due to macro-economic headwinds, while demand for automotive has been performing better as the share of electric vehicle registrations over total auto registrations has increased. At the same time, lower trailer build rates in North America have started to negatively impact demand in the transport segment. A weakening extrusion ingot market is further putting pressure on product premiums and several remelters are faced with negative margins, consequently.