Hydro’s Adjusted EBITDA slumps 33% in 1QCY2023 due to sluggish aluminium demand

Norsk Hydro announced the first quarter results of 2023 ended March 31, revealing a 4.11 per cent year-on-year rise in revenue from NOK 46,616 million to NOK 48,534 million, driven by the stable LME aluminium price starting the quarter at US$2,378 per tonne and ending at US$2,413 per tonne.

But higher raw material costs and lower demand negatively affected the company’s adjusted EBITDA, resulting in a plunge of 33 per cent from NOK 11,165 million in 1QCY2022 to NOK 7,525 million 1QCY2023. However, on a quarter-on-quarter calculation, it increased by 4.75 per cent from NOK 7,184 million.

Hydro’s adjusted EBITDA from its bauxite & alumina business slumped 66 per cent Y-o-Y from NOK 1,270 million to NOK 437 million, driven by the sluggish sales volume of alumina and the realized price of the ore. As per the data revealed by Hydro, the realized alumina price in Q1 was US$367 per tonne versus US$391 per tonne a year earlier. Sales volume totalled 2.17 million during the said quarter versus 2.25 million in the last year.

From the primary aluminium and aluminium extrusions, the company’s adjusted EBITDA fell 17 per cent and 5 per cent, respectively, totalling NOK 3,972 million and NOK 2,223 million, contributed by the yearly decline in extrusion sales volume to the external market by 13 per cent from 347,000 tonnes to 301,000 tonnes. But on a quarterly basis, the extrusion sales volume reflected a 14 per cent growth from 265,000 tonnes.

Net income from continuing operations amounted to NOK 1,144 million in 1QCY2023 after plummeting by 82 per cent from NOK 6,411 million a year ago. Hydro’s net cash at the end of the quarter was NOK 1,749 million, compared to NOK 5,149 million during the same period of the previous year.

Hydro’s bauxite output remained consistent year-on-year at 2.65 million tonnes in the first quarter of 2023 compared to 2.64 million tonnes but registered a fall on a quarter from 2.82 million tonnes. Alumina production rose annually from 1.52 million tonnes to 1.55 million tonnes in Q1 2023.

Primary aluminium production, on the other hand, decreased 8 per cent Y-o-Y from 540,000 tonnes to 499,000 tonnes.

The overseas demand displayed a sluggish trend compared to the last year but improved than the quarter ago. For instance, the extruded production consumption in Europe fell Y-o-Y from 1.013 million tonnes to 833,000 tonnes but increased 9 per cent on a Q-o-Q basis from 757,000 tonnes. Similarly, extruded products consumption in the US & Canada dwindled 8 per cent on the year from 667,000 tonnes to 601,000 tonnes but hiked 14 per cent sequentially from 553,000 tonnes.

Hydro President and CEO, Hilde Merete Aasheim, commented: “Hydro is delivering robust financial results and executing on our strategic objectives, despite volatile markets and weaker demand. Looking forward, growing demand for our greener offerings combined with long-term, stable access to raw materials and energy gives confidence as we continue targeted investments to strengthen our position for the long-term where demand for greener aluminium is expected to be in high demand.”