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Hydro will write down the value of:
- Goodwill in Bauxite & Alumina (B&A), Brazil
- Property, plant and equipment related to the Alunorte alumina refinery and
Paragominas bauxite mine
- Deferred tax assets in Alunorte
- Property, plants and equipment related to the Tomago aluminium plant,
Australia
The impairments are regarded as adjusting items in Hydro’s Alternative
Performance Measure Adjusted Net Income and will not reduce the dividend for
2023.
“The bauxite and alumina operations are a key enabler for Hydro to pioneer the
green aluminium transition by significantly reducing the upstream carbon
footprint. In the short and medium term, we see challenging alumina markets and
weak cash flow generation in B&A coming from market volatility in times of
geopolitical turmoil, impacting the current valuation of the assets,” says
President and CEO Hilde Merete Aasheim.
“Longer term, we expect a higher share of greener earnings in B&A, as we reduce
the carbon emissions from our operations, while growing our greener product
portfolio sold at premium pricing. These expected earnings are not included in
current valuation for impairment testing purposes, in line with accounting
rules,” says Aasheim.
Bauxite & Alumina
The estimated impairment loss in the B&A segment is approximately NOK 3.8
billion.
The impaired cash generating unit consists of the Alunorte alumina refinery, the
Paragominas bauxite mine and related activities. The weaker alumina market with
lower margins and higher fixed costs is expected to remain over a longer period
than what was expected when the unit was tested for impairment at the end of
2022. In the end 2022 test, the value in use was deemed equal to the unit’s
carrying amount.
The impairment will mainly affect the carrying value of goodwill and property,
plant, and equipment. For Alunorte, the impairment is related to fair value
adjustments from Hydro’s acquisition of the company.
Related deferred tax assets previously recognized have also been reviewed. Hydro
has concluded that the unused tax positions may not be recoverable for deduction
in future results and will therefore impair tax assets of about NOK 1.4 billion
in the fourth quarter.
Aluminium Metal
The estimated impairment loss in the Aluminium Metal segment is approximately
NOK 0.6 billion.
The impaired cash generating unit is the partly owned Tomago aluminium plant in
Australia, where Hydro owns 12.4 percent, whose current power price agreement
expires in 2028. The value in use is deemed lower than the carrying amount due
to insecurity about future power price agreements in combination with a weaker
aluminium market.
The impairment will mainly affect the carrying value of property, plant and
equipment.
This is information that Norsk Hydro ASA is obliged to make public pursuant to
the EU Market Abuse Regulation and subject to the disclosure requirements
pursuant to Section 5-12 of the Norwegian Securities Trading Act.
Investor contact:
Elitsa Boyadzhieva
+47 91775472
Elitsa.Boyadzhieva@hydro.com
Media contact:
Halvor Molland
+47 92979797
Halvor.Molland@hydro.com
Kilde
