Norsk Hydro Exceeds Expectations, Cuts Investment Plan, and Imposes Hiring Freeze.

Norsk Hydro reported Q2 revenue of NOK 53,116m, surpassing analyst forecasts. Adjusted EBITDA reached NOK 7,790m, above the expected NOK 7,298m. The company's net profit after tax totaled NOK 2,450m. Due to ongoing market uncertainty, Hydro reduced its 2025 investment plan by NOK 1.5bn and implemented an external hiring freeze for salaried employees.

Norsk Hydro ASA (OTC:NHYDY) (OB:NHY) reported robust financial performance for the second quarter of 2025, with revenue reaching NOK 53,116 million, surpassing analyst forecasts. Adjusted EBITDA reached NOK 7,790 million, significantly above the expected NOK 7,298 million. The company's net profit after tax totaled NOK 2,450 million.

The quarter's strong performance was driven by higher aluminum and energy prices, as well as the realization of previously eliminated internal profits. These factors were partially offset by negative currency effects and higher raw material costs, particularly higher alumina prices. Despite these challenges, the company generated NOK 5 billion in free cash flow, with a twelve-month adjusted return on average capital employed (RoaCE) of 12%.

In response to ongoing market uncertainty, Norsk Hydro implemented several cost-cutting measures. The company reduced its 2025 capital expenditure target by NOK 1.5 billion, from NOK 15.0 billion to NOK 13.5 billion. Additionally, an external hiring freeze was implemented for white-collar positions, pending a review of current and future manning needs.

The company's strategic initiatives include a focus on greener products, with an approximately 50% increase in greener products sales year-to-date 2025 compared to 2024. Norsk Hydro is also targeting a manning reduction of 300-350 full-time equivalents (FTEs) from approved automation projects.

Looking ahead, Norsk Hydro outlined several priorities for navigating the uncertain market environment, including maintaining health and safety as the top priority, preserving robustness while maneuvering uncertain markets, delivering on recycling, extrusions, and renewable growth ambitions, executing on decarbonization and technology roadmap, and seizing opportunities in greener aluminum at premium pricing.

The company's exposure to commodity and currency fluctuations remains significant, as illustrated in the following sensitivity analysis. For Q3 2025, Norsk Hydro expects Alunorte production to remain at nameplate capacity with stable raw material costs. The company anticipates seasonally lower recycling volumes, lower results from sourcing and trading activities, and continued volatile trading and currency effects. In the Energy segment, lower production, net spot sales, and prices are expected compared to Q2 2025.

The company’s net debt increased by NOK 0.4 billion during Q2, as shareholder distributions offset positive free cash flow. This more cautious outlook represents a shift from the robust performance reported in Q1 2025, when the company saw a 20% year-over-year increase in revenue to NOK 57 billion and strong adjusted net income of NOK 4 billion.

References:
[1] https://www.investing.com/news/company-news/norsk-hydro-q2-2025-slides-ebitda-falls-as-company-implements-costcutting-measures-93CH-4144953
[2] https://www.stocktitan.net/news/NHYDY/norsk-hydro-performance-and-capital-discipline-supporting-strong-4zorjus9his0.html