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Norsk Hydro ASA posted fourth-quarter 2021 EBITDA of NOK 9,011 million, compared with NOK 3,403 million for the same quarter last year. Full-year 2021 EBITDA amounted to NOK 28,010 million, compared with NOK 13,106 million in 2020.
– Continued tight markets across aluminium value chain
– Record results upstream and in Hydro Energy for Q4
– 2021 improvement program target exceeded by 25%
– 2025 strategy execution progressing as planned
– 80% cash dividend payment on strong financials
Higher all-in metal and alumina prices, improved volumes upstream, and record-high quarterly results from Hydro Energy contributed positively to adjusted EBITDA in the fourth quarter. These positive elements were partly offset by higher fixed and raw material costs upstream and negative currency effects .
Adjusted EBITDA for the full year 2021 increased by NOK 14.9 billion compared to 2020. For 2021, higher all-in metal and alumina prices, improved volumes upstream, improved margins and volumes in Hydro Extrusions, and better results from Hydro Energy contributed positively to adjusted EBITDA. These positive elements were partly offset by higher raw material and fixed costs upstream and negative currency effects. The improvement program reached NOK 6.3 billion in 2021, exceeding the original annual improvement target of NOK 5.1 billion. On the back of the strong markets, Hydro also delivered NOK 1.5 billion of commercial improvements by the end of 2021.
“Our customers are becoming increasingly focused on the actual footprint of the products they use and are asking for more low-carbon aluminium. We see this in our order books, where sales of Hydro CIRCAL – produced with 75 % post-consumer scrap – have doubled over the last year. This year, we are pioneering near-zero aluminium with 100% post-consumer aluminium, and we are in a dialogue with customers to supply aluminium with a near-zero carbon footprint already this year,” says President and CEO Hilde Merete Aasheim.
“Hydro’s 2025 strategy aims at increasing production of low-carbon aluminium and growing in renewable energy. I am satisfied that Hydro REIN is maturing its portfolio in the Nordics and Brazil in a timely way. This is in line with our ambition of delivering new volumes of renewable energy and hydrogen to drive down embedded emissions in our own production, and helping other industries decarbonize, too,” says Aasheim.
Hydro achieved an adjusted return on average capital employed of 18.6 percent in 2021, significantly higher than the 3.7 percent achieved in 2020, and above the ambition to deliver 10 percent over the cycle. The main driver was the strong aluminium demand and pricing environment, following strong macroeconomic conditions due to the Covid-19 rebound.
“In addition to a strong market, we have continued our improvement effort throughout the whole company. I am very pleased that we exceeded the 2021 improvement target by 25%. This is truly a combined effort from our 31,000 employees who have stayed dedicated and focused on results during a challenging Covid year, and is a strong demonstration of our culture of continuous improvement. Hydro’s top priority remains the health and safety of our people and the communities where we operate,” says Aasheim.
The global economy has rebounded to pre-crisis levels; however, the pace of growth slowed in the fourth quarter amid the emergence of the Omicron variant, continued global supply-chain shortages, high energy prices, and concerns about inflation. There is increasing uncertainty about the outlook, as post-recovery demand and policy supports continue to have an impact, driving supply chain shortages and inflationary pressures on key inputs, including energy, raw materials, and transportation costs.
Rising gas and power prices have led to an increase in production costs in Europe, followed by the curtailment of several European smelters, including Hydro’s primary aluminium plant Slovalco in Slovakia. Capacity at Slovalco was reduced from 80% to 60% by mid-February 2022 , which constitutes an annual reduction of 35,000 tonnes of production.
“While Hydro Energy on the one hand is benefitting from high energy prices and Norwegian price area differences, Aluminium Metal was forced to curtail parts of production in the Slovalco primary plant due to high electricity prices with no signs of improvement in the short term. The current energy situation in Europe demonstrates the need to increase the pace and determination of the energy transition to secure a stable supply of affordable renewable energy for society and industry going forward,”…
Full story available on Benzinga.com
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