Norsk Hydro ASA, a Norwegian aluminium and renewable energy company, reports estimated impairment losses of NOK 5.9 billion for the fourth quarter of 2023 to be ended on December 31. Challenging alumina market condition coupled with Australian power price insecurity caused this loss to Hydro.
“The bauxite and alumina operations are a key enabler for Hydro to pioneer the green aluminium transition by significantly reducing the upstream carbon footprint. In the short and medium term, we see challenging alumina markets and weak cash flow generation in B&A coming from market volatility in times of geopolitical turmoil, impacting the current valuation of the assets,” says President and CEO Hilde Merete Aasheim.
She added, “Longer term, we expect a higher share of greener earnings in B&A, as we reduce the carbon emissions from our operations, while growing our greener product portfolio sold at premium pricing. These expected earnings are not included in current valuation for impairment testing purposes, in line with accounting rules.”
In the bauxite & alumina sector, Hydro calculates an impairment loss of approximately NOK 3.8 billion for the said period. Alunorte alumina refinery, the Paragominas bauxite mine and related activities have generated impaired cash for the quarter. Weak alumina market is likely to continue, with lower margins and higher fixed costs, for a longer period than expected.
The impairment will mainly affect the carrying value of goodwill and property, plant, and equipment. For Alunorte, the impairment is related to fair value adjustments from Hydro’s acquisition of the company.
Responses
