Hydro Reports Strong Q2 2024 Results Amid Market Challenges

Norsk Hydro ASA, a leading global aluminum producer, announced impressive financial outcomes for the second quarter of 2024, reporting an EBITDA of NOK 5.8 billion and a free cash flow of NOK 2.8 billion, despite encountering difficulties in the aluminum sector.

CEO Eivind Kallevik emphasized the company’s dedication to sustainability and growth during the green aluminum transition, along with a renewed focus on safety prompted by a recent contractor fatality at the Albras joint venture. Strategic collaborations, such as with Porsche and the expansion of the Hydro CIRCAL product line, are important contributors to Hydro’s optimistic outlook, in spite of weak demand for extrusions and rising net debt.

### Key Highlights
– Hydro achieved an EBITDA of NOK 5.8 billion and free cash flow of NOK 2.8 billion for Q2 2024.
– The company expressed condolences for a contractor’s death at Albras and reiterated its commitment to safety and high operational standards.
– Positive indicators in the upstream aluminum market contrast with sluggish demand and low recycling profit margins downstream.
– Hydro’s ongoing strategy prioritizes recycling, extrusions, renewable energy, decarbonization, and sustainability.
– A new joint venture, Hydro Rein, was established with Macquarie Asset Management to drive profitable growth in renewable energy.
– Hydro CIRCAL is seeing increasing adoption in European and U.S. markets, bolstered by new partnerships, such as supplying Brompton bikes.
– The company is on track to reach its 2030 objectives for post-consumer scrap utilization and EBITDA targets, despite current challenges in extrusion demand.
– Hydro distributed NOK 700 million for share repurchases and paid out NOK 5 billion in dividends.
– There has been no impact from a recently announced force majeure, and operations of the gas pipeline are expected to restore by year-end.

### Company Perspective
– Hydro is not entering crisis mode but is instead focusing on long-term growth opportunities in recycling, extrusions, and renewable energy.
– The company’s decarbonization strategy aims to maintain competitiveness in the low-carbon aluminum sector.
– Predictions for Q3 include stable output at Alunorte alongside higher raw material costs.

### Challenges
– There is weak extrusion demand linked to a slowdown in construction in Europe and North America.
– The alumina market faces issues due to problems with Chinese production and a constrained global market.
– Hydro’s net debt rose by NOK 2.3 billion, totaling NOK 13.9 billion.

### Positive Outlook
– Increased demand for renewables and electric vehicles in China is projected to boost primary aluminum demand.
– Hydro’s partnership with Porsche to procure low-carbon and recycled aluminum enhances earnings potential.
– The Hydro Rein joint venture is positioned to exploit renewable energy market growth prospects.

### Concerns
– Shipments to the truck and trailer segments in the U.S. have been adversely affected.
– Automotive sales have seen a downturn in both Europe and the U.S.
– Adjusted EBITDA has declined for Aluminum Metal, Metal Markets, and Extrusions.

### Q&A Insights
– Hydro has not noticed any disruptions due to the force majeure notice and anticipates running at full capacity by year-end.
– Expected contributions from fuel switching are set to rise significantly later in the year.
– The company is maintaining a balanced alumina portfolio to avoid significant fallout from trading losses.
– No specific timeline has been established for the forthcoming share buyback initiative, and the potential impacts of production adjustments by Porsche are not expected to significantly affect Hydro’s extrusions.

The financial outcomes for Hydro in Q2 2024 underscore its resilience and strategic emphasis on sustainable practices amid a challenging market. The company’s dedication to safety, key partnerships, and innovations in green aluminum solutions position it favorably for future growth. As global aluminum demand continues to transform, Hydro’s proactive strategies and financial management will be vital in navigating the evolving market landscape and sustaining its competitive advantage.