Hydro's Fourth Quarter Results 2024: A Tale of Resilience and Growth

Norsk Hydro, a leading global aluminium and renewable energy company, has released its fourth quarter results for 2024, showcasing resilience and growth amidst challenging market conditions. The company's upstream revenue drivers, such as alumina and aluminium prices, contributed positively to its results, while the downstream aluminium market faced several challenges that Hydro addressed with strategic responses.

Upstream Revenue Drivers

Hydro's upstream revenue drivers, such as alumina and aluminium prices, contributed positively to its fourth quarter results in 2024. The Platts Alumina Index (PAX) gradually increased to USD 562 per tonne by quarter's end as global alumina supply tightened, supporting record results in Bauxite & Alumina. Additionally, the three-month aluminium price rose from USD 2,515 to USD 2,612 per tonne during the third quarter, supporting solid results in Aluminium Metal. The fuel switch project at Alunorte, which produces alumina with natural gas, also yielded significant savings in carbon intensity as well as costs, further impacting Bauxite & Alumina's result positively this quarter.



Downstream Challenges and Responses

In the fourth quarter of 2024, Hydro's downstream aluminium market faced several challenges, primarily weak demand and recycling margins in Europe and North America. Here are the key challenges and Hydro's responses:

1. Weak demand in key markets:
- Automotive extrusion demand remained weak due to low electrical vehicle (EV) sales in Europe, particularly in Germany.
- Building and construction, and industrial demand were moderate, with potential support from lower interest rates in 2025.
- Low activity in these markets limited aluminium scrap supply, squeezing recycling margins and reducing remelt production in both Hydro Extrusions and Metal Markets.

2. Hydro's responses:
- The company is responding with short and long-term actions to strengthen robustness in Extrusions, while continuing to invest in the long-term robustness of its operations.
- Hydro Extrusions is actively navigating challenging markets by leveraging production flexibility and implementing cost-cutting programs to maintain margins. An example of this commitment is the recent investment in an automated press in Cressona, U.S., replacing two old presses to enhance efficiency and productivity.
- To achieve the NOK 8 billion EBITDA target for 2025, Hydro aims for an extrusion market recovery of more than 20 percent volume growth and a recovery of remelt margins in line with historical averages, representing NOK 2-3 billion improved EBITDA.

3. Weak markets pressuring recycling margins:
- Hydro is taking active measures to boost profitability and secure competitive scrap sourcing, with a focus on enhanced capabilities in advanced scrap sorting.
- In the third quarter, the Alusort joint venture launched commercial operations of HySort in the U.S., enabling plants to process more post-consumer scrap. This expands Hydro's HySort portfolio to five machines in operation, including four across Europe, reinforcing the company's leadership in recycling more post-consumer scrap.

Investment in Renewable Energy

Hydro's investment in renewable energy, such as the Illvatn pumped storage project, had a positive impact on its overall results and sustainability efforts in the fourth quarter of 2024. The Illvatn project, which aims to generate 84 GWh of renewable energy annually, strengthens Hydro Energy's portfolio and improves the flexibility of its production system. This investment aligns with Hydro's commitment to reducing its carbon footprint and transitioning to low-carbon aluminium production.

In conclusion, Norsk Hydro's fourth quarter results for 2024 demonstrate the company's resilience and growth amidst challenging market conditions. By leveraging its upstream revenue drivers, addressing downstream challenges, and investing in renewable energy, Hydro is well-positioned to continue its success in the aluminium and renewable energy sectors.