Norsk Hydro ASA says the global economic recovery is supporting increased demand for aluminum and aluminum products, helping the company achieve record quarterly results for its Hydro Aluminum Metal and Hydro Extrusions business lines. Its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the second quarter of 2021 totaled nearly $ 744 million (NOK 6,598 million), compared to $ 315 million (NOK 2,794 million) in the same quarter. from 2020.
The company says higher all-inclusive metals prices and volumes in its Aluminum Metal business, improved margins and volumes in its Extrusions segment and better results from Hydro Energy positively contributed to its Adjusted EBITDA, although they were partly offset by higher raw material costs negative currency effects.
“Continued strong market sentiment and our strong performance contributed to the record results for the quarter,” said President and CEO Hilde Merete Aasheim. “Our goal of generating a return on capital greater than 10% over the cycle is progressing well and our improvement program is ahead of plan. In addition, we are actively positioning our products in the market, increasing our ability to meet the growing demand for low carbon products in line with our 2025 strategy to improve profitability and sustainability. “
The company notes that in the second quarter, the spot price of aluminum on the London Metal Exchange traded at its highest level in nearly a decade, with strong demand momentum pushing premiums up as well. . These factors contributed to a record EBITDA result in the Company’s Aluminum Metal business. Its Husnes, Norway aluminum plant also completed ramp-up in the second quarter, bringing it back to full capacity of 195,000 metric tonnes for the first time since the partial downsizing in 2009.
Extrusions achieved record results in the second quarter, surpassing the previous record set in the first quarter of 2021, according to Hydro. Results were driven by strong volume growth, improved margins and continued cost savings through improvement program initiatives. The quarter was marked by sustained momentum in the automotive industry in Europe and solid growth in the industrial segment and residential building and construction. To further improve performance and cash generation in extrusions, the company announces that it will invest in new press capacity in Cressona, PA, and Nenzing, Austria.
Hydro says it has a clear strategic direction towards 2025 and aims to strengthen its position in low carbon aluminum while exploring growth opportunities in new energies. On March 5, Hydro entered into an agreement to sell its Rolling business to KPS Capital Partners, and the sale was completed on June 1, 2021. The total enterprise value of Rolling, including the Bonn, Germany property, sold at Cube Real Estate, was 1,407 million euros, or $ 1,656 million.
“The circular economy and increased recycling are key elements in the transition to a low-carbon economy,” says Aasheim. “Our strategy is to double post-consumer aluminum recycling by 2025, and we announced several key investments this quarter. To further reduce emissions from our operations and take advantage of our unique position in the energy value chain, we continue to develop Hydro REIN (its company dedicated to the development of renewable energies) and our company Hydrogen, adding new projects to their portfolios. while preparing for their Capital augmentation process. “
The company also signed a letter of intent with Midwest Energy and Communications to build an aluminum recycling plant in Michigan that is expected to produce 120,000 metric tonnes of aluminum per year starting in 2023. Such a plant would mark the first Large-scale production of low Carbon Hydro Circal in North America, Hydro days. In addition, the company has decided to invest in a recycling capacity of 65,000 tonnes in Sjunnen in Sweden, in Navarre in Spain and in Rackwitz in Germany.
Compared to the first quarter of 2021, Hydro’s adjusted EBITDA increased in part due to higher prices for all-inclusive metals in aluminum metal, higher results in the metals markets and margins and volumes higher in extrusions contributed to the improvement, according to the company. This improvement was partially offset by higher upstream raw material costs, lower realized alumina prices and lower energy production.
Adjusted EBITDA for the first half of 2021 also increased compared to the same period in 2020.