Norsk Hydro Reports Lower Q1 2024 Earnings Amid Weak Aluminum Market

Norsk Hydro ASA, a Norwegian aluminum and renewable energy company, reported a significant decline in its first-quarter 2024 financial results. The company's adjusted EBITDA fell to NOK 5,411 million, down from NOK 7,525 million in the same quarter last year, primarily due to lower aluminum prices, volumes, and recycling margins. "The decrease was due to lower aluminium sales prices, Extrusions volumes and recycling margins, and higher fixed costs, partly offset by lower raw material costs," Hydro stated.

Despite the challenging market conditions, Hydro made progress on its decarbonization and recycling initiatives during the quarter. The company successfully commissioned new renewable energy projects in Brazil and transitioned to LNG-fueled alumina production at its Alunorte refinery. "The company has made progress on its decarbonization agenda, including bringing new renewable energy projects into commercial operation and producing alumina fueled by LNG with significant CO2 reduction," according to Hydro. The fuel switch at Alunorte is expected to reduce emissions by 700,000 tonnes of CO2 annually and yield substantial cost savings.

Hydro remains focused on reinforcing its robustness through ongoing improvement programs and commercial initiatives. The company is on track to deliver additional improvements of NOK 8.5 billion by 2030. Hydro Extrusions, the company's extrusion business, is committed to expanding its market presence through strategic investments and new OEM contracts worth EUR 1.9-2.0 billion signed since the beginning of 2023. "Hydro Extrusions is committed to expanding its market presence through strategic investments and has signed new OEM contracts worth EUR 1.9-2.0 billion since the beginning of 2023," the company reported.

Why this matters: Norsk Hydro's financial results highlight the challenges faced by the aluminum industry amid weak demand and tight recycling margins. However, the company's progress in decarbonization and recycling initiatives showcases its commitment to sustainability and positioning for the anticipated recovery in the low-carbon and recycled aluminum market.

Looking ahead, Norsk Hydro maintains a positive long-term outlook, expecting market recovery in the latter half of 2024 and into 2025, particularly for low-carbon and recycled aluminum. The company anticipates achieving its EBITDA target of NOK 8 billion in the extrusion segment by 2025, contingent on market recovery and operational improvements. "Norsk Hydro's long-term outlook remains positive, with expectations of market recovery in the latter half of 2024 and into 2025, particularly for low-carbon and recycled aluminum," the company stated. Despite the current market challenges, Norsk Hydro remains committed to its strategic direction and long-term financial goals, focusing on sustainable practices that may position it well for the anticipated recovery in the aluminum market.

Key Takeaways

• Norsk Hydro's Q1 2024 adjusted EBITDA fell 28% due to lower aluminum prices, volumes, and recycling margins.
• Hydro made progress on decarbonization, including new renewable energy projects and LNG-fueled alumina production.
• Hydro Extrusions is expanding its market presence through strategic investments and new OEM contracts worth €1.9-2.0 billion.
• Norsk Hydro expects market recovery in H2 2024 and 2025, particularly for low-carbon and recycled aluminum.
• Despite current challenges, Norsk Hydro remains committed to its strategic direction and long-term financial goals.