Hydro reports Y-o-Y growth of 34.65% in adjusted EBIDTA due to higher metal prices

The Norwegian aluminium and renewable energy giant Norsk Hydro reported an adjusted EBIDTA of NOK9,721 million in 3Q2022, a growth of 34.65 per cent from NOK7,219 million recorded for the same period last year, resulting in a 12-month rolling Adjusted RoaCE of 27 per cent.

Earnings were positively affected by higher all-in metal and alumina prices, CO2 compensation, and favourable currency effects but were partially offset by advanced upstream fixed and raw material costs. However, on a Q-o-Q calculation, Hydro's adjusted EBIDTA recorded a decline of 16.15 per cent from NOK11,594 million in 2Q2022.

"Hydro is delivering strong financial results, while continuing to make good progress on our strategic agenda. This, combined with our long-term stable access to raw materials and energy, forms a solid foundation to maneuver in a more volatile economic environment," said Hilde Merete Aasheim, President and CEO of Hydro.

In the third quarter (3Q2022), ongoing activities generated a net income of NOK 6,676 million. As a result of continuing operations, net income included a net foreign exchange gain of NOK 572 million and an unrealised loss of NOK1,243 million on contracts for raw materials and power. It also had an unrealised gain of NOK1,241 million on London Metal Exchange contracts.

For 3Q2022, Hydro commenced a partial curtailment of the two Norwegian aluminium smelters, Hydro Husnes and Hydro Karmøy, by 110,000 to 130,000 tonnes of primary aluminium in response to a decreased market demand for aluminium billets in Europe. Once the curtailment is fully implemented, anticipated by the end of 2022, there will be a reduction in power use somewhere between 170-200 MW overall.

"While responding to the short-term issues, we are also dedicated to executing on our long-term strategic ambitions. This quarter we have progressed our target of doubling recycling of post-consumer scrap in addition to maturing of new renewable energy projects," added Aasheim.

A crucial component of the green transition is aluminium, with a smaller carbon footprint, and Hydro CIRCAL and Hydro REDUXA saw increased demand in the third quarter. Sales of 2022 increased by 45 per cent year over year during the quarter, supporting Hydro's goal of doubling sales of greener goods by 2025. Hydro invested 12,000 tonnes of extra capacity in its extrusions factory in Rackwitz, Germany in the third quarter. Extrusions remain a significant growth area in Hydro's 2025 strategy.

Hydro also decided to halt primary production at its majority-owned Slovalco aluminium complex in Slovakia during the third quarter due to unfavourable regulatory framework circumstances and high power prices. The casthouse in Slovalco keeps up its recycling business, providing 75,000 tonnes of recycled aluminium annually to consumers in the area.

At the conclusion of the quarter, Hydro's net debt climbed from NOK 1.7 billion to NOK 3.1 billion. A reduction in collateral needs of NOK0.6 billion was reflected in the net cash supplied by operational operations of NOK6 billion. Except for short-term investments, net cash in investment operations totalled NOK3.4 billion.