Hydro earned DKK 5.4 billion from operations in the first quarter – E24

The aluminum producer delivers weaker figures for the first quarter than at the same time last year.

Aluminum producer Norsk Hydro delivers an adjusted gross operating profit (ebitda) of NOK 5.41 billion in the first quarter, compared to NOK 7.53 billion in the same period last year.

In advance, adjusted ebitda of NOK 5.54 billion was expected, according to an average of estimates from 12 analysts that Hydro has published on its website.

The decrease is due to lower demand and recycling margins, according to Norsk Hydro.

Turnover was NOK 47.5 billion in the quarter, from NOK 48.5 billion in the same quarter last year. The analysts had expected a turnover of NOK 46.3 billion.

The company’s profit after tax was NOK 428 million in the first quarter, down from NOK 1.14 billion in the first quarter last year.

Last quarterly figures before the change of manager

This is Hydro’s last quarter with Hilde Merete Aasheim as manager. She has managed the company for five years and worked there for 17 years. From 13 May, Eivind Kallevik will take over.

– Despite the fact that weaker market conditions affect the results, we see signs of positive development in the macroeconomic picture and income drivers towards the end of the year. Hydro is well positioned to capitalize on an expected increase in demand for aluminum products, says Aasheim in a message.

The company has previously introduced a program to cut costs, and states that it is still on track to deliver further improvements of NOK 8.5 billion by 2030.

Hydro’s adjusted net debt increased from NOK 18 billion to NOK 22.5 billion. This is mainly due to an increase in net debt of 5.7 billion, partially offset by lower pension obligations and financial obligations.

Weaker housing and electric car subsidy cuts

Hydro reports low demand within residential construction and industry in the first quarter, particularly in Europe. This puts pressure on several of the company’s units.

When little is built and few old buildings are demolished, there is less scrap and higher prices for scrap. This puts pressure on margins for Hydro’s extrusion operations and in the metal market unit.

There is still growth in the demand for electric cars, but Hydro says that the forecasts have been adjusted downwards following increased competition from China and cuts in German subsidies. This affects the extrusion business.

“Demand in the car segment has been affected by lower production of electric cars, which has had a negative effect on order intake”, writes Hydro.

Stronger numbers in energy

Among the units that delivered progress in the quarter was Energy, which represents Hydro’s power production. Falling prices were more than offset by the expiry of an internal twelve-month fixed price contract with Hydro Aluminum Metal, which produced a significant loss in the first quarter of last year.

Hydro’s aluminum operations, on the other hand, had significantly weaker results in the first quarter than at the same time last year, following reduced metal prices, a reduced contribution from power sales and increased fixed costs. This was partially offset by lower carbon costs and positive effects linked to currency movements.

The extrusion business, which, among other things, supplies profiles for doors and windows and for car production, also had a weaker result than last year. The reason is lower sales volumes and lower margins at the recycling facilities.

“It is estimated that the European demand for extruded products has decreased by 10 percent in the first quarter of 2024, compared to the same quarter last year,” writes Hydro.

“In North America, demand for extruded products is estimated to have decreased by nine percent during the first quarter of 2024, compared to the same quarter last year, but to have increased by 10 percent compared to the fourth quarter of 2023, partly due to of seasonal effects”, writes the company.