aluminum extrusion
Photo courtesy of Norsk Hydro

Norsk Hydro: Global economic recovery supports aluminum demand

The company says it plans to double its use of postconsumer aluminum by 2025 as it’s key to the low-carbon transition.


Norsk Hydro ASA says the global economic recovery is supporting increased demand for aluminum and aluminum products, helping the company to see record quarterly results for its Hydro Aluminum Metal and Hydro Extrusions business areas. Its second-quarter 2021 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled of nearly $744 million (NOK 6,598 million), up from $315 million (NOK 2,794 million) in the same quarter of 2020.

The company says higher all-in metal prices and volumes in its Aluminum Metal business, improved margins and volumes in its Extrusions segment and better results from Hydro Energy contributed positively to its adjusted EBITDA, though they were partly offset by higher raw material costs upstream and negative currency effects.

“The continued strong market sentiment and our strong performance are contributing to the record results in the quarter,” says President and CEO Hilde Merete Aasheim. “Our target to deliver return on capital above 10 percent over the cycle is progressing well, and our improvement program is running ahead of plan. In addition, we are actively positioning our products in the market, lifting our capacity to meet the increasing 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 London Metal Exchange cash price for aluminum traded at its highest level in close to a decade, with strong demand dynamics also lifting premiums. These factors have contributed to record-high result EBITDA in the company’s Aluminium Metal business. Its Husnes, Norway, aluminum plant also completed ramp-up during the second quarter, bringing it back to full capacity of 195,000 metric tons for the first time since the partial curtailment in 2009.

Extrusions achieved record results in the second quarter, topping the previous record set in the first quarter of 2021, Hydro says. The results were driven by strong volume growth, improved margins, and continued cost savings from improvement program initiatives. The quarter saw sustained momentum in automotive 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 says it will invest in new press capacity in Cressona, Pennsylvania, and in Nenzing, Austria.

Hydro says it has a clear strategic direction toward 2025 and aims to strengthen its position in low-carbon aluminum while exploring growth opportunities in new energy. 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 for Rolling, including the Bonn, Germany, property sold to Cube Real Estate, was 1,407 million euros, or $1,656 million.

“Circular economy and increased recycling are key elements in the transition towards a low-carbon economy,” Aasheim says. “Our strategy is to double recycling of postconsumer aluminum by 2025, and we have announced several key investments this quarter. To further reduce emissions from our operations and leveraging our unique position in the energy value chain, we are continuing to grow Hydro REIN (its dedicated renewables development company) and our Hydrogen company, adding new projects to their portfolios while preparing for their process to raise capital.”

The company also signed a letter of intent with Midwest Energy and Communications to build an aluminum recycling plant in Michigan that is projected to produce 120,000 metric tons of aluminum annually beginning 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 65,000 metric tons of recycling capacity in Sjunnen in Sweden, Navarra in Spain and Rackwitz in Germany.

Compared to the first quarter 2021, Hydro’s adjusted EBITDA increased in part because of higher all-in metal prices in Aluminum Metal, higher results in Metal Markets and higher margins and volumes in Extrusions contributed to the improvement, according to the company. This improvement was partly offset by higher raw material costs upstream, lower realized alumina prices and lower Energy production.  

Adjusted EBITDA for the first half of 2021 also increased relative to the same period in 2020.