Hydro’s Underlying EBIT in Q42020 increases to NOK 1,449 million on improved downstream aluminium market

Hydro’s underlying EBIT in the fourth quarter of 2020 increased to NOK 1,449 million from NOK 560 million during the same period last year, driven by improved margins and volumes in downstream business and lower raw material costs in upstream but slightly offset by additional maintenance-related costs in bauxite and alumina.

Hydro found global industrial production during the fourth quarter of 2020 bounced back from its contraction earlier this year, resulting in the year ended with an aluminium surplus of around 3 million tonnes in comparison with 5 million tonnes in early 2020.

“Hydro’s volume growth outpaced the market development in both Rolling and Extrusions in the fourth quarter 2020, driven by recovery in key segments such as automotive, can, building and construction. Within Aluminium Metal, Hydro’s mix of value-added versus standard products recovered to historic levels of around 70 percent value-added. Hydro’s operations have been operating largely as normal during the quarter. The Covid-19 situation, however, continues to cause market uncertainty,” said Pål Kildemo, Chief Financial Officer of Hydro.

“I am impressed by our organization managing to keep the wheels turning in a year marked by the pandemic, at the same time delivering on our improvement targets. We exceeded our cost improvement target and achieved savings of NOK 4.2 billion for 2020, amounting to about half of the overall 2025 ambition and supporting the positive cash flow generation in the fourth quarter,” said Hilde Merete Aasheim.

Hydro’s net debt position in Q4 decreased from NOK 9.9 billion to NOK 7.8 billion at the end of the December quarter. Net cash generated from operating activities amounted to NOK 5.4 billion, while net cash used in investment activities, excluding short-term investments, stood at NOK 1.9 billion.

Net income in Q42020 totalled NOK 7,277 million, mainly due to a gain of NOK 5,308 million on the Lyse transaction. On December 31, 2020, Hydro and Lyse merged parts of their respective hydropower production assets to create a new hydropower company - Lyse Kraft DA, which has an annual power production capacity of 9.5 TWh, of which Hydro will own 25.6 per cent and Lyse 74.4 per cent.

Hydro in the Q4 results also announced new ambitions within the key strategic growth areas of recycling, renewables, and batteries, representing larger shifts in portfolio towards 2025. While in recycling, Hydro aims at doubling the post-consumer scrap utilisation and generating an EBITDA uplift to NOK 1.5 billion, the company in batteries targets to generate an EBITDA uplift to NOK 700 million. In renewables, the aim is to invest into more than 1 GW of renewable power projects in 2021.