Vis børsmeldingen
-
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,” says Aasheim.
Nordic power prices were significantly higher in the fourth quarter compared to
the previous quarter. The high prices were due to colder than normal weather
conditions and high and increasing continental power prices. Higher production
and increased gains from price area differences significantly increased adjusted
EBITDA for Hydro Energy for the quarter. The higher production resulted in net
spot sales in the fourth quarter compared to a net spot purchase in the
third quarter. Significant price area differences in the Nordic region continued
during the fourth quarter and have prevailed into early 2022.
At Hydro’s Capital Markets Day in December 2021, the company announced new
improvement targets and new sustainability ambitions to strengthen profitability
and sustainability. Hydro continues to deliver on its 2025 strategy, including
further strengthening its low-carbon aluminium position and maturing business
opportunities within new energy solutions. The company increased its improvement
program target from NOK 7.4 billion to NOK 8.5 billion and commercial ambition
from NOK 1.5 billion to NOK 2.5 billion.
Hydro has long been recognized as a leader in sustainability, and the new
sustainability ambitions launched at Capital Markets Day will be a key driver
for Hydro’s competitive positioning. Hydro has the ambition of achieving net-
zero carbon emissions by 2050 or earlier and is pursuing three decarbonization
paths to reduce the carbon footprint of aluminium to net zero. Hydro will have
the first commercial volumes of near-zero carbon products (defined as less than
0.5kg CO2 per kg aluminium) available in 2022 based on using 100% complex post-
consumer scrap.
The decarbonization path for existing primary smelters is based on carbon
capture and storage technology. In the fourth quarter, Hydro invested in the
carbon capture company Verdox, which will deliver cost-efficient aluminum carbon
capture technology and direct air capture technology for piloting from 2025, and
with the aim of achieving industrial-scale production by 2030. Hydro
invested USD 20 million and will have a minority ownership position.
Hydro has also made a final build decision to invest BRL 1.3 billion at the
Alunorte alumina refinery, Brazil, to carry out a fuel-switch project to replace
heavy fuel oil with natural gas. The project is expected to be in operation in
2023. The fuel switch will reduce the refinery’s annual CO2 emissions by
700,000 tonnes and is a key enabler to reach Hydro’s climate ambition to reduce
emissions by 30% by 2030.
In addition to the climate targets, Hydro has strengthened its ambitions to
protect biodiversity and reduce its environmental footprint, while seeking to
improve the lives and livelihoods where the company operates. In the fourth
quarter, The Global Child Forum ranked Hydro at the top of global metals &
mining companies on children’s rights.
Recycling is one of Hydro’s main growth areas, and in the fourth quarter several
investment decisions were announced supporting the strategic ambition to grow
the current recycling business substantially across the recycling value chain,
and to double post-consumer scrap usage.
In Michigan, U.S., Hydro will invest in the construction of a new aluminium
recycling plant producing 120,000 tonnes of aluminium extrusion ingot per year.
In Norway, Hydro will invest NOK 105 million to establish Høyanger Recycling, a
dedicated aluminium recycling facility located by the Hydro Høyanger primary
aluminium smelter. In Hungary, Hydro will build a new aluminium remelt facility,
and the new facility will be built at Hydro’s aluminium extrusion plant in
Szekesfehervar with an annual capacity of 90,000 tonnes. Lastly, Hydro decided
to further invest in the Deeside recycling plant in the UK to increase the
plant’s aluminium recycling capacity to 70,000 tonnes per year, providing UK
customers with low-carbon aluminium such as Hydro CIRCAL.
Over the next five years, Hydro expects another doubling of sales volumes for
greener products, Hydro CIRCAL and Hydro REDUXA. In 2022, volumes for Hydro
CIRCAL are expected to increase 25% compared to 2021. Additionally, Hydro is
positioning its smelter portfolio to meet expected demand for Hydro REDUXA. In
2022, Hydro REDUXA volumes are expected to increase 30% compared to 2021. In
Norway, Hydro will invest NOK 750 million in Hydro Sunndal to strengthen its
robustness and position as Europe’s largest aluminium plant and supplier of low-
carbon aluminium. Hydro Sunndal will continue to be a leading producer of Hydro
REDUXA low-carbon aluminium to the automotive and building & construction
segments.
Hydro Extrusions continues its efforts to restructure, optimize and commercially
position its portfolio. In the fourth quarter, Hydro announced the divestment of
its general extrusion operations in Kuppam, India, to Hindalco Industries
Limited for USD 33 million on a cash-free and debt-free basis. The sale was
completed in early February 2022. Hydro Extrusions is also investing NOK 390
million in a new extrusion press at its aluminium manufacturing plant in Suzhou,
China, which will serve China’s growing automotive and electric vehicle market.
In the new energy area, Hydro continued to mature business opportunities. In the
fourth quarter, Hydro REIN and Eolus entered into a partnership to jointly
develop up to 672 MW of Swedish wind power. As part of the transaction, Hydro
REIN will acquire 50% of the portfolio from Eolus, which will retain the
remaining 50%.
Hydro Havrand, Hydro’s green hydrogen company, and Shell New Energies Holding
Europe B.V. have agreed to explore the potential for joint projects producing
hydrogen from renewable electricity. The ambition is to use hydrogen to help
decarbonize Hydro’s and Shell’s own operations, and to supply customers in heavy
industries, the maritime sector and road transport.
In Batteries, Hydro became the largest owner of the maritime battery company,
Corvus Energy, through a private placement, increasing its ownership share to
22.7%.
Net income from continuing operations amounted to NOK 8,525 million in the
fourth quarter. In addition to the factors described above, net income from
continuing operations included a net foreign exchange gain of NOK 823 million, a
NOK 2,744 million unrealized gain on power and raw material contracts and a NOK
744 million unrealized gain on LME-related contracts.
Hydro’s net debt position decreased from NOK 1.2 billion to a net cash position
of NOK 3.2 billion at the end of the quarter. Net cash provided by operating
activities excluding changes in short-term and long-term collateral and
excluding purchases of money market funds amounted to NOK 7.5 billion. Net cash
used in investment activities, excluding short-term investments, amounted to NOK
2.8 billion.
Adjusted net debt decreased from NOK 10.5 billion to NOK 7.0 billion, largely
driven by an improvement in the net cash position and a decrease in collateral
requirements. The collateral requirements amounted to NOK 5.3 billion at the end
of the quarter, mainly relating to strategic and operational hedging positions.
Hydro held NOK 22.9 billion in cash and cash equivalents, NOK 1.0 billion in
time deposits and NOK 1.4 billion in money market funds, included in short-term
investments, at the end of the fourth quarter. Time deposits and money market
funds are normally available at short notice. The revolving credit facility of
USD 1.6 billion was fully available at the end of the quarter.
The 2021 Financial statements and Annual report is available in Norwegian and
English on our webpage.
In addition to the factors discussed above, reported earnings before financial
items and tax (EBIT) and net income include effects that are disclosed in the
quarterly report. Adjustments to EBITDA, EBIT and net income (loss) are defined
and described as part of the alternative performance measures (APM) section in
the quarterly report.
Investor contact:
Line Haugetraa
+47 41406376
Line.Haugetraa@hydro.com
Media contact:
Halvor Molland
+47 92979797
Halvor.molland@hydro.com
This information is disclosed in accordance with requirements set out in the EU
Market Abuse Regulation. The information was submitted for publication from
Hydro Investor Relations and the contact persons set out above.
Cautionary note
Certain statements included in this announcement contain forward-looking
information, including, without limitation, information relating to (a)
forecasts, projections and estimates, (b) statements of Hydro management
concerning plans, objectives and strategies, such as planned expansions,
investments, divestments, curtailments or other projects, (c) targeted
production volumes and costs, capacities or rates, start-up costs, cost
reductions and profit objectives, (d) various expectations about future
developments in Hydro’s markets, particularly prices, supply and demand and
competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk
management, and (i) qualified statements such as “expected”, “scheduled”,
“targeted”, “planned”, “proposed”, “intended” or similar.
Although we believe that the expectations reflected in such forward-looking
statements are reasonable, these forward-looking statements are based on a
number of assumptions and forecasts that, by their nature, involve risk and
uncertainty. Various factors could cause our actual results to differ materially
from those projected in a forward-looking statement or affect the extent to
which a particular projection is realized. Factors that could cause these
differences include, but are not limited to: our continued ability to reposition
and restructure our upstream and downstream businesses; changes in availability
and cost of energy and raw materials; global supply and demand for aluminium and
aluminium products; world economic growth, including rates of inflation and
industrial production; changes in the relative value of currencies and the value
of commodity contracts; trends in Hydro’s key markets and competition; and
legislative, regulatory and political factors.
No assurance can be given that such expectations will prove to have been
correct. Hydro disclaims any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
This information is subject to the disclosure requirements pursuant to Section
5-12 the Norwegian Securities Trading Act
Kilde
