Global aluminium company Hydro remains committed to its strategy to improve and grow along the full aluminum value chain, underpinned by firm demand for the infinitely recyclable metal worldwide. Solving the situation at the Alunorte alumina refinery in Brazil is a top priority, and the process to resume full production will be a key topic at the Capital Markets Day 2018.
At this year’s event, Hydro will present its overall strategic direction and performance, including an update on the situation in Brazil and details on the market outlook for 2019 and the longer term.
“Following the acquisition and successful integration of Extruded Solutions, I am more confident than ever that the integrated value chain is our path to a Better, Bigger, Greener Hydro. We are encouraged by the positive long-term trend for increased use of aluminum in modern products and solutions globally,” says President and CEO Svein Richard Brandtzæg.
In the short-term, Hydro is working hard to resume full operations at Alunorte, following nine months of running at 50 percent production.
“We are aiming to establish a common platform with authorities and the court system to have an aligned way forward towards full production, utilizing the best available technology. We have what it takes: the right people, the right technology and the right spirit,” Brandtzæg says.
Positive long-term outlook for aluminium – and Hydro
Aluminium continues to be the world’s fastest growing base metal due to its strong inherent properties and high degree of versatility in use. Global demand for primary aluminium is expected to grow by 2-3% in 2019, with a continued deficit in the global primary market. Global demand is expected to grow by 2-3% per year over the next 10 years, with global semis demand estimated at 3% and recycling at 3-4% per year over the same period. Aluminium is light, strong and infinitely recyclable, gaining ground as an increasingly important building block with the move towards the low-carbon, circular economy.
“We see many examples of strong performance throughout the company, such as the Karmøy technology pilot in Norway, the new automotive line in Germany and the continuous improvements in the Extruded Solutions business area. The integration of Extruded Solutions is on track to deliver NOK 200 million in synergies, with NOK 100 million realized so far in 2018. Based on the industry’s most skilled and dedicated workforce and our industry-leading positions in innovation and sustainability, our long-term outlook remains positive,” Brandtzæg says.
Due to the Brazil-situation, Hydro will not be able to deliver on its Better program with improvements of a total NOK 3.0 billion over a four-year period until end-2019. Much because of the same reason, Hydro has not been able to stay on course for several of its mid-term goals.
“We are very disappointed with not being able to further improve our recordable injuries rate and are devastated of the recent fatality we experienced in Hungary, and are implementing company-wide actions focusing on additional competence and training,” Brandtzæg says.
Hydro is dedicated to ensuring capital discipline and a strong balance sheet, as well as delivering competitive returns to its shareholder. Shareholder returns continue to be a Hydro priority, with a dividend policy of returning 40 percent of net income over the cycle, and NOK 1.25 per share to be considered a floor. Sustaining capex is estimated at average NOK 6.5-7.0 billion 2018-21, including investments to improve robustness at Alunorte. The total capex estimate for 2019 is NOK 10-10.5 billion.