Amid COVID-19: Hydro’s primary aluminium production grows 5% YoY in Q2'20, underlying EBIT grows attributing to Alunorte production hike

Hydro has released its second-quarter results of 2020, wherein it has reported a year-on-year increase of 5 per cent in primary aluminium production. From 486,000 tonnes in Q2 2019, Hydro’s primary aluminium output in Q2 2020 surged to 509,000 tonnes. However, on a quarter-on-quarter comparison, the output in Q2 of this year stood down by 4 per cent from 528,000 tonnes. The company’s total primary aluminium production in the first half of 2020 came in at 1.04 million tonnes, 7 per cent higher than 971,000 tonnes during the same period last year.

Hydro, as per the report, generated NOK 30,931 million of revenue in Q2 2020, 19 per cent lower than NOK 38,124 million in Q1 2020 and 21 per cent from NOK 39,176 million in Q2 2019. The total revenue of Hydro in the first six months of the year amounted to NOK 69,055 million compared to NOK 76,759 million in H1 2019.

The decrease in revenue over the quarter and year could be partly attributed to the reduced realized prices of alumina and aluminium in addition to lower downstream sales volumes. While the realized alumina price in Q2 2020 was US$ 261 per tonne, down 6 per cent Q-o-Q and 29 per cent Y-o-Y, the realized aluminium price on LME was US$ 1,579 per tonne, lower 10 per cent Q-o-Q and 15 per cent Y-o-Y.

Hydro’s rolled product sales volumes to the external market in the second quarter of 2020 were 198,000 tonnes compared to 236,000 tonnes in Q1 2020 and 242,000 tonnes in Q2 2019. This means the company’s rolled product sales volumes in Q2 2020 stood by 16 per cent Q-o-Q and 18 per cent Y-o-Y. Sales volumes of extruded solutions also edged lower by 27 per cent Q-o-Q and 36 per cent Y-o-Y to 224,000 tonnes.

The underlying EBIT of Hydro, however, recorded a hike from NOK 875 million in Q2 2019 to NOK 949 million in Q2 2020, primarily attributing to the ramp-up of Alunorte alumina production and reduced costs.

“We are maneuvering through a very demanding period, and I’m pleased by our ability to protect people and operations, keeping the wheels turning while preserving cash. At the same time, we are positioning the company for the future,” says President and CEO Hilde Merete Aasheim.

She added, “We aim to strengthen Hydro’s position as a leading sustainable industrial company, through our low-carbon aluminium, represented by Hydro CIRCAL and Hydro REDUXA. We will also aim to grow and diversify our portfolio where Hydro’s capabilities match the megatrends, such as recycling, renewable energy and batteries.”

To mitigate the current uncertainty caused by the COVID-19 pandemic, Hydro has taken some forceful actions, such as strict precautionary actions to ensure health and safety, extensive social and community support, financial measures to protect liquidity, operational measures to adjust capacity, and curtail production and operation costs.

Hydro’s improvement efforts, targeting NOK 4.1 billion by 2020 and NOK 7.3 billion by 2023, are also moving forward with full speed, focusing on the cost levers Hydro can control in these uncertain times.