Hydro benefits from recovery in key markets

Norsk Hydro ASA, the aluminum and energy company headquartered in Oslo, Norway, has announced that its underlying earnings before interest and taxes for the fourth quarter of 2020, ended Dec. 31, were 1,449 million Norwegian krones (roughly $172.6 million) up from 560 million Norwegian krones ($66.7 million) in the same quarter of 2019. The company says improved margins and volumes downstream and lower raw material costs upstream contributed positively to the result.

“The pandemic made 2020 a challenging year for all,” Hydro President and CEO Hilde Merete Aasheim says in a news release accompanying the company’s earnings. “Health and safety of our people and the communities where we operate is top priority. Hydro is following recommendations from local and international health authorities, updating contingency plans to avoid disruptions and securing deliveries to customers.”

During the fourth quarter of 2020, global industrial production continued to recover from its contraction earlier in the year, though gross domestic product (GDP) remained largely flat. Hydro says the aluminum market ended 2020 with a surplus of roughly 3 million metric tons, which was lower than estimates of 5 million metric tons forecasted earlier in 2020.

Aasheim says, “Hydro’s volume growth outpaced the market development in both Rolling and Extrusions in the fourth quarter 2020, driven by the recovery in key segments such as automotive, can, building and construction.”

Hydro Chief Financial Officer Pål Kildemo says the company’s mix of value-added aluminum products versus standard products recovered to “historic” levels of around 70 percent.

“Hydro’s operations have been operating largely as normal during the quarter. The COVID-19 situation, however, continues to cause market uncertainty,” he adds.

Hydro restarted aluminum production at line B at its Husnes primary plant in Norway in November 2020 after running the plant for more than a decade at half capacity. The 1.5 billion Norwegian krones ($179 million) upgrade project will add 95,000 metric tons of electrolysis capacity. The decision to restart line B at Hydro Husnes is based on market improvements, combined with expectations that Norway will continue to use the EU’s emissions trading system through 2030, the company says.

Hydro announced during its Capital Markets Day 2020 that recycling, renewables and batteries would be key growth areas for the company, representing larger shifts in Hydro’s portfolio toward 2025. In recycling, Hydro says it plans to more than double postconsumer scrap use and to generate an earnings increase that ranges from $114 million to $171 million. To do so, the company says it potentially will $416 million to $596 million.