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Introduction & Market Context
Norsk Hydro ASA (OTC:NHYDY) (OTC:NHY) presented its first quarter 2025 results on April 29, showcasing strong upstream performance while navigating global trade uncertainties and softening demand in key markets. The Norwegian aluminum and renewable energy company reported solid financial results driven primarily by its Bauxite & Alumina (OTC:AWCMY) segment, which achieved record quarterly performance.
The presentation, delivered by President and CEO Eivind Kallevik, highlighted how geopolitical tensions and shifting trade policies are reshaping the global aluminum market, while also emphasizing the company’s strategic initiatives in low-carbon aluminum production and European power grid infrastructure.
Quarterly Performance Highlights
Hydro reported adjusted EBITDA of NOK 9.5 billion for Q1 2025, up from NOK 7.7 billion in the previous quarter. Free cash flow reached NOK 1.3 billion, with an adjusted return on average capital employed (RoaCE) of 10.7%.
As shown in the following chart of key financial metrics, the company delivered strong results across most segments:
The increase in adjusted EBITDA was primarily driven by realized aluminum and alumina prices, upstream volumes, and improved performance in Extrusions and recycling margins. This was partially offset by higher raw material costs, fixed costs, and lower CO2 compensation.
The following waterfall chart illustrates the factors contributing to the quarter-over-quarter EBITDA growth:
Net debt decreased by NOK 0.9 billion during the quarter, reflecting positive free cash flow that was partially offset by share buybacks and other effects.
Segment Performance Analysis
The Bauxite & Alumina segment delivered exceptional results, achieving a record quarter with adjusted EBITDA of NOK 5,135 million. This strong performance was driven by higher alumina prices and lower raw material costs, partially offset by higher fixed costs and lower sales volumes.
The segment reported alumina production of 1,465 kmt and total alumina sales of 2,560 kmt, with a realized alumina price of USD 587/mt and implied alumina cost of USD 407/mt, as shown in the following segment breakdown:
The Aluminium Metal segment also performed well, with adjusted EBITDA of NOK 2,546 million and an adjusted RoaCE of 13.0%. The segment benefited from higher all-in metal prices and reduced carbon costs, though these gains were partially offset by increased alumina costs.
The Extrusions segment faced more challenging conditions, with adjusted EBITDA of NOK 1,174 million and external sales volumes of 255 kmt. Results were impacted by lower sales volumes and reduced recycling margins, though the company implemented strong cost measures to mitigate these effects.
The Energy segment reported adjusted EBITDA of NOK 1,180 million, with power production of 2,743 GWh and net spot sales of 641 GWh. Results improved due to higher prices and price area gains, partially offset by lower production and reduced trading and hedging volumes.
Strategic Initiatives
Hydro outlined several strategic initiatives aimed at positioning the company for future growth while navigating current market uncertainties. A key focus is shaping the low-carbon aluminum market, with the company highlighting partnerships with Vode Lighting in the U.S. and an automotive collaboration with Nemak to develop low-carbon aluminum casting products.
The company is also investing NOK 1.65 billion in a new wire rod casthouse at Hydro Karmøy, Norway, scheduled to start production in 2028. This investment is complemented by an offtake agreement with European cable producer NKT for 274,000 tonnes of wire rod from 2026-2033, positioning Hydro to supply Europe’s growing power grid infrastructure needs.
As illustrated in the following chart, Hydro has implemented a comprehensive hedging strategy to manage price volatility, with aluminum hedges in place for 2025-2027:
The company is also executing on its recycling strategy, with approximately one-third of its targeted 2030 hot metal cost reductions expected to be realized in 2025, just one year into the program. The goal is to achieve a USD 30/mt reduction in hot metal costs by 2030.
Forward-Looking Statements
Looking ahead, Hydro expects continued pressure on the Extrusions segment due to market uncertainty, with the 2025 outlook revised downward. The company presented several scenarios for Hydro Extrusions’ adjusted EBITDA, ranging from NOK 3.5 billion (assuming no recovery in H2 2025) to NOK 4.5 billion (based on the Capital Markets Day 2024 forecast).
For the aluminum market, Hydro expects an estimated global balance of 1.7 million tonnes in 2025, with geopolitical factors continuing to shape market dynamics. The company anticipates the global alumina balance to ease due to capacity expansion in 2025.
The following key performance metrics highlight Hydro’s current position and improvement targets:
Hydro’s priorities for the remainder of 2025 include maintaining health and safety as a top priority, preserving robustness while navigating uncertain markets, delivering on recycling and extrusions growth ambitions, executing on decarbonization initiatives, and seizing opportunities in greener aluminum at premium pricing.
For Q2 2025, the company expects lower alumina prices and higher fixed costs for the Bauxite & Alumina segment, with realized premiums for Aluminium Metal expected in the range of USD 370-420 per mt. The Energy segment anticipates lower production and seasonally lower prices compared to Q1.
Full presentation:
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