Earnings call transcript: Norsk Hydro’s Q2 2025 Earnings Highlight Growth

Norsk Hydro ASA reported robust financial results for the second quarter of 2025, with a significant increase in adjusted net income and revenue, reflecting the company’s strategic focus on innovation and cost efficiency. The aluminum giant saw its revenue climb by 4% year-over-year to NOK 53 billion, while adjusted net income more than doubled to NOK 3,600 million from NOK 1,700 million in the same period last year. According to InvestingPro analysis, the company maintains a FAIR Financial Health score of 2.21, with current metrics suggesting the stock is undervalued compared to its Fair Value. Despite these positive results, the stock price remained stable, closing at 3.62, with no percentage change observed.

Key Takeaways

• Revenue rose by 4% year-over-year, reaching NOK 53 billion.
• Adjusted net income surged to NOK 3,600 million, a significant increase from the previous year.
• The company achieved a positive free cash flow of NOK 5,000 million.
• Automation in extrusions is expected to reduce over 100 full-time employees in 2025.
• Norsk Hydro signed its first HydroSacol sales contract with a North American auto manufacturer.

Company Performance

Norsk Hydro demonstrated strong performance in Q2 2025, driven by increased sales of greener products and strategic cost reductions. The company’s focus on low-carbon and recycled aluminum products has bolstered its competitive position in the market. Despite challenges in the wind and solar sectors, Norsk Hydro has maintained its strategic direction towards its 2030 decarbonization goals.

Financial Highlights

• Revenue: NOK 53 billion, up 4% year-over-year
• Adjusted EBITDA: NOK 7,800 million
• Adjusted Net Income: NOK 3,600 million, up from NOK 1,700 million in Q2 2024
• Adjusted EPS: NOK 1.68 per share
• Positive Free Cash Flow: NOK 5,000 million

Outlook & Guidance

Norsk Hydro remains committed to its 2030 strategic ambitions, with plans to continue focusing on efficiency improvements and cost reductions. The company expects a positive metal effect of NOK 200-300 million in Q3 from the Midwest premium and maintains its 2026 CapEx guidance at NOK 15 billion. The outlook for the global aluminum market remains balanced, with extrusion demand projected to increase slightly in Europe.

Executive Commentary

CEO Eivind Kalåvik emphasized the company’s dedication to safety and strategic goals, stating, "Safety remains our foremost priority." He also reiterated the company’s commitment to its long-term objectives: "We continue to commit to the strategic direction for 2030." Kalåvik highlighted the focus on driving the company forward: "We are concentrating our efforts on what is important to drive Hydro forward."

Risks and Challenges

For comprehensive risk analysis, InvestingPro research reports reveal that Norsk Hydro maintains a relatively low beta of 0.4, suggesting lower volatility compared to the broader market. The company’s extensive Pro Research Report, available to subscribers, provides detailed risk assessments and peer comparisons.

• Geopolitical tensions and trade disruptions could impact market dynamics.
• Continued challenges in the wind and solar markets may affect growth.
• Tight scrap market conditions in Europe could pressure margins.
• Automation and workforce reductions may pose internal challenges.
• Fluctuations in the Midwest premium could influence financial outcomes.

Norsk Hydro’s strategic initiatives and robust financial performance in Q2 2025 position the company well for future growth, despite facing several industry challenges.

Full transcript - Norsk Hydro ASA S (NHY) Q2 2025:

Martine, Moderator/Host, Hydro: Sorry for some technical trouble. We are back. Again, welcome to Hydro’s second quarter twenty twenty five presentation and Q and A. So we will start off with the presentation by our President and CEO, Eirin Kalawick, before our CFO, Tronula Kristofersen, will take us through the financial results.

So we will finish off with the Q and A session. If you would like to ask questions during the session, you can write your questions in the chat that you should see on the screen. After presentations, I will ask your questions directly to Eivin and to Ron Olaf. But before that, we have our presentation. And with that, I leave the word to you.

Eivin?

Eivind Kalåvik, President and CEO, Hydro: Thank you, Martine, and good morning, and welcome from me as well. Safety remains the most important part of our quarterly reporting as the well-being of our employees is fundamental for our success across all locations. And this quarter, I’m pleased to report a low number of injuries. Both the total recordable injuries and the number of high risk incidents have shown a downward trend over the past few years. And this quarter, we have successfully maintained these low numbers.

This positive development is a testament to the daily efforts at all our plants. Safety is an ongoing commitment because even though we can record good results today, we are mindful that conditions can quickly change if we lose focus. First and foremost, a strong safety culture demonstrates care for our employees, ensuring everybody returns home safely at the end of the day, and that is our most important responsibility as an employer. While employee well-being will always be our primary motivation, maintaining good safety performance also contributes positively to the stability and efficiency of our operations. Fewer incidents naturally lead to less downtime and lower costs, enabling us to better execute on targets and strengthen our long term value creation.

Now let’s look at the key highlights this quarter, which we will dig deeper into in today’s presentation. Despite an unpredictable market environment, I’m pleased to report strong results this quarter with an adjusted EBITDA coming in at NOK 7,800,000,000.0, also yielding a free cash flow at NOK 5,000,000,000, giving us an adjusted ROACE of 12%, which is well above the target of 10% over the cycle. To respond proactively to market volatility, we are reducing our 2025 capital expenditure target by NOK1.5 billion, and we have implemented hiring freeze for white collar employees in the company. Both of these actions are designed to enhance our flexibility and resilience, and I will get back to these details and measures shortly. On the energy side, despite challenges in the wind and solar markets, both in Brazil and The Nordics, we have managed to stay well positioned in the volatile landscape with a robust sourcing portfolio.

And lastly, we can report that we are well on our track executing on our improvement targets for 2025. Geopolitical unpredictability has become the norm rather than exception, in particular, in the years following Russia’s invasion of Ukraine. And this is now well into its fourth year. Rivalry and rhetoric between great powers is becoming even more pronounced, and tensions in The Middle East have escalated beyond Gaza, including Lebanon, Syria and Iran in just the past few months. Countries are facing direct threats.

Global markets are under pressure, and this is weighing on consumer confidence. And in The U. S, the Trump administration has completed its first six months, and we’ve seen constant changes related to tariffs and to trade. As a global company operating in more than 40 countries, trade tensions, conflicts and rising geopolitical risks affect the entire value chain. We are closely monitoring these developments, both the direct impact on our locations and the potential ripple effects on the global economy, and that allows us to take proactive steps to mitigate these challenges.

On a more positive note, we continue to see strong regulatory momentum for sustainability and climate action in Europe. Most recently with the European Commission’s proposal for a 90% net reduction in greenhouse gas emissions by 02/1940. And despite different trends elsewhere, as well as more challenging markets, we continue to see strong demand for low carbon and recycled products in most of our important markets. Both the regulatory direction and the market pull reinforces our strategic direction towards 2030 of pioneering the green aluminum transition. However, to capture the long term opportunities, we also need to react to the challenges in the short term.

To effectively address the increasing volatility and unpredictability, we are taking decisive measures. First of all, we are reducing our full year 2025 CapEx guidance by 1,500,000,000. The current economic and geopolitical environment with trade disruptions, regulatory uncertainty and unpredictable markets requires enhanced flexibility in forecasting as well as our capacity planning. The revised investments will specifically target flexibility, robust risk management and rapid adaptability to economic and policy changes. This positions Hydro to maintain our strategic agility, ensuring that we remain one step ahead in navigating future uncertainties.

Secondly, we have implemented an external hiring freeze for all white collar positions across the group functions, business areas, global business services, and this is effective immediately. This freeze gives us necessary space and clarity to thoroughly review the current white collar workforce. The goal of this review is to ensure optimal alignment with our strategic priorities, operational efficiency and evolving business needs. This process has just begun, and we will share additional information as it becomes available. The markets for wind and solar are facing challenges.

Despite this, we can still report on a robust sourcing portfolio. As illustrated in the graph to the right, we have power purchase agreements that will cover our sourcing need at the Norwegian smelters beyond 02/1930. This ensures robustness in challenging markets. But as we can see on the left side of the slide, we have just recently decided to terminate the Nordic power purchase agreement due to undelivered volumes. Since November 2024, we have faced challenges with Swedish cloud Snorran Abe.

And in July, we agreed to voluntary terminate the power purchase agreement. This entitles Hydro to compensations of up to EUR 90,000,000 for the non delivered volumes and for the future power deliveries. The ultimate compensation will, of course, depend on the realized values from a future sales process and an agreed value sharing mechanism. This event reinforces the value of pursuing a diversified and robust sourcing portfolio. We are constantly exploring options and actively pursuing cost competitive renewable power sources to remain robust also for the future.

In Brazil, we continue to see challenges with the grid, ongoing constraints, transmission bottlenecks and some regulatory uncertainty. These factors continue to limit renewable energy deliveries and put pressure on both volumes and prices. Given these structural issues, Hydro has adjusted return requirements for our energy investments in Brazil. And as a consequence, we report roughly NOK 400,000,000 in impairments in our Brazilian energy assets. On the other side, the power deliveries to Albras and Alunorte continue in accordance with the PPAs entered into.

We can see from the graph below on the right hand side that the power sourcing situation in Brazil will continue to be stable over the next years. Halfway into 2025, I’m also very pleased to report on the status of our 2030 improvement program. Several initiatives have been implemented so far this year, and I’m really proud to say that we are ahead of target. Let me highlight a few concrete actions from the first half of twenty twenty five. First of all, we are expanding on our greener sales.

Year to date 2025, we have increased sales of greener products by nearly 50% compared to 2024, measured in total Upt charge revenue. In this quarter, we also signed the first HydroSacol sales contract with a major auto manufacturer in North America. This milestone agreement, along with the strong growth in greener sales, supports the long term market assumptions behind the 2030 strategy. And just to illustrate how far the sustainability position we have now extends on a slightly lighter note, we were even named Sustainable Achievement of the Year by L Decoration International in April. Now of course, this is not exactly your standard metals and mining award, but it certainly speaks volumes about the strength of our brand.

Showing how Hydro’s position as the leading provider of low carbon and recycled aluminum is gaining recognition far beyond traditional industrial cycles. As well as a clear signal that our leadership and sustainability translates into premium value for our customers and for Hydro. Secondly, in Extrusions, we continue to pursue efficiency improvements. Through automation, we expect to reduce more than 100 FTEs in 2025, an additional NOK 200,000,000 to NOK $250,000,000 in 2026. This program has roughly a three year payback period and is expected to deliver close to 150,000,000 in annual cost reductions.

Standardization of automation equipment is a key enabler in this process. These projects help improve ergonomics, productivity, quality and safety, while also easing recruitment challenges in a tight labor market. Hydro Extrusions has faced a challenging market for some time, yet executing on a broad set of initiatives has yielded a more robust and competitive business. The improvement program continues to drive us steadily towards our 2030 target of NOK 6,500,000,000.0 in accumulated improvements. On the commercial side, we are making progress through various growth initiatives.

On the procurement side, we are delivering sourcing savings in line with the targets. And operationally, we remain focused on cost reductions and efficiency in support functions. So in short, we are continuing to push forward, and we remain on track to reach the 2030 goals. And with that, I hand the word over to Tronula for this quarter’s financial update.

Tronulla Kristofersen, CFO, Hydro: Thank you, Eivind, and good morning, and welcome from me as well. So starting with the Bauxite and Alumina. After an eventful 2024, dominated by refinery disruptions and bauxite supply challenges, the global alumina market has been stabilizing since the start of 2025. Around 10,000,000 tonnes of new alumina capacity is expected to come online from India, Indonesia and China this year, with full impact expected in 2026. After a fall in alumina prices we saw in Q1, prices have stabilized around USD $3.60 per tonne for most of Q2, with a small drop to USD $3.30 per tonne early in the quarter.

On the Bauxite side, the market witnessed some notable events in Guinea. After revoking several Bauxite mining licenses in the country, the government announced a package of measures aimed at increasing the government’s influence in the industry. The proposed reforms include, amongst others, the creation of a Guinean Bauxite Index and the use of ships with Guinean registrations to transport at least 50% of bauxite output. At the same time, China is becoming more and more dependent on Guinea as the main external source for bauxite. And the Guinean import share peaked at above 80% during the quarter.

Looking ahead to Q3 twenty twenty five, the alumina market outside China is expected to remain tight, but oversupply in China could meet any shortfall. According to CRU, a small surplus of around 700,000 tonnes is expected in 2025 in the 58,000,000 tonne world ex China market. Consequently, the market would remain sensitive to any production disruptions. On June 4, the rate increase for U. S.

Section two thirty two tariffs on aluminum came into effect, raising the tariffs from the initial 25% established in March to the new 50% level. This impacted both LME and premiums. Looking at the global primary aluminum balance, external estimates suggest that the market will remain roughly balanced in 2025. But in light of continued tariff developments, the global aluminum market outlook for 2025 could be revised towards lower demand for the year. The three month LME aluminum price dropped sharply early in the quarter towards US2300 dollars per tonne, following the U.

S. Administration’s Liberation Day announcements on tariffs. However, prices later recovered, and overall, the three month aluminum price increased over the quarter, starting at USD 2,507 per tonne and ending at USD 2,598 per tonne. This upward movement contrasts with a more stable price development seen in Q1, reflecting both speculative activity and shifting market sentiment. Regional premiums were materially impacted by tariffs during the quarter, further increasing the gap between different regions.

The U. S. Midwest premium surged from USD $8.44 to USD $14.32 per tonne during Q2, driven by the tariff hike and speculative activity reaching all time highs in early June. On the other hand, European duty paid standard ingot premiums declined from USD $2.00 5 to 185 per tonne, reflecting weak demand and concerns over redirected Canadian metal inflows into Europe. This divergence in regional premiums highlights a growing imbalance in how different regional markets are absorbing the effects of trade policy and geopolitical risks.

Rather than the tariffs’ direct impact on the company, Hydro’s main concern remains the broader risk of a global economic slowdown, which would weaken demand and challenge current price levels as a consequence. Furthermore, long lasting high Midwest premiums could pose a real risk of demand destruction in The US. Then moving downstream. Extrusion demand continued at moderate levels in both Europe and North America during Q2, with order intakes continuing to increase. In Europe, extrusion demand is estimated to have remained flat in Q2 ’twenty five compared to the same period last year, but increased by 4% from Q1.

Demand for Building and Construction and Industrial segments has stabilized at moderate levels, with some uptick in order bookings throughout the quarter. Automotive demand has been negatively impacted by lower European light vehicle production in the quarter, partly offset by increased production of electrical vehicles. For Q3 twenty twenty five, CRU estimates that European demand for extruded products will remain will increase by 1% year over year. Overall, extrusion demand is estimated to increase by 1% in 2025 compared to 2024. In North America, extrusion demand is estimated to have continued its decline by 1% in Q2 ’twenty five compared to the same quarter last year, but increased 5% compared to Q1.

Extrusion demand has continued to be very weak in the Commercial Transport segment, driven by lower trailer builds. Automotive demand has also been weak. Demand has been positive in the Building and Construction and Industrial segments. While the impacts from the introduction of tariffs and duties are still uncertain at this stage, order bookings have started to develop better for domestic producers due to lower imports. In Q3 ’twenty five, North American extrusion demand is expected to further decrease by 1% year over year.

Overall, extrusion demand is estimated to decrease 2% in 2025 compared to 2024. Hydro extrusion sales volumes increased by 1% year over year in Q2 twenty twenty five. And similar to the previous quarter, transport volume developments were negative, but the downward trend seems to be slowing down. Shipments to The U. S.

Transport market were down 11% in Q2 versus 20% in Q1. Automotive sales in Q2 were still negative in Extrusion Europe, driven by continued moderate production at some car manufacturers. Automotive sales in North America were flat in Q2 as negative overall market development was offset by increasing volumes to key customers. Sales volume growth in the Industrial and Distribution segments continued to increase in Q2, still from a low base due to market headwinds over the past two years. Hydroextrusions continue to see a significant increase in volumes from HVAC and R segment, driven by copper substitution trends.

And for Q3, sales volumes in Hydro Extrusions are expected to be somewhat higher than the underlying market, especially in North America. Then moving to EBITDA. And when looking at the results Q2 versus Q1, we saw significant negative effects from Upstream prices. Of the total negative contribution on NOK 3,700,000,000.0, over 90% came from lower realized alumina prices. Upstream volumes positively impacted the results by around NOK 900,000,000.

This was largely driven by a normalization of Alunorte sales volumes in Q2 following delayed alumina shipments in Q1 from periods with heavy rain. Another positive driver in Q2 was lower raw material costs contributing with approximately 1,000,000,000. The main driver was the lower alumina costs in aluminum metal. Extrusions and Recycling results came in relatively flat Q2 versus Q1. In Energy, seasonally lower production and lower prices were partly offset by higher gain on price area differences, and the net effect was around negative 300,000,000.

Furthermore, fixed costs remained relatively stable compared to Q1. Currency effects negatively impacted results by around NOK 1,000,000,000, And the total impact was split approximately sixty-forty between aluminum metal and Bauxite and Alumina, partly driven by stronger NOK compared to U. S. Dollar. The final positive contribution of NOK 1,400,000,000.0 were driven by NOK 1,700,000,000.0 in realization of previously eliminated internal profit.

This was partly offset by somewhat lower CO2 compensation and other net other elements. And this concludes the adjusted EBITDA development from NOK 9,500,000,000.0 in Q1 to NOK 7,800,000,000.0 in Q2. If we then move to the key financials for the quarter. Comparing year over year, revenue increased by around 4% to NOK 53,000,000,000 for Q2. Compared with Q1, revenue decreased by around 7%.

For Q2, around NOK 900,000,000 negative effects were adjusted out of EBITDA. The largest items were net unrealized derivative effects of around negative NOK $480,000,000, mainly related to LME contracts. Also, impairment charges on equity accounted investments of around $390,000,000 due to increased return requirements after assessing risk of energy investments in Brazil. This results in an adjusted EBITDA of NOK 7,800,000,000.0. Depreciation were around NOK 2,500,000,000.0 in Q2, resulted in adjusted EBIT of NOK 5,400,000,000.0.

Net financial income for Q2 totaled at around negative 800,000,000. This was largely driven by an unrealized currency loss of around NOK 500,000,000, mainly reflecting a weaker NOK versus euro, affecting embedded euro currency exposures in energy contracts and other euro liabilities. This was partly offset by a stronger BRL versus U. S. Dollar, positively impacting U.

S. Dollar borrowing in our Brazilian entities. And these losses were further increased by net interest and other finance expense amounting to around negative NOK 300,000,000. Furthermore, we have an income tax expense amounting to NOK 1,100,000,000.0 for Q2. And the quarter was mainly impacted by high power surtax.

Overall, this provides a positive net income of around 2,500,000,000.0. Foreign exchange losses of approximately NOK 500,000,000 are adjusted for, together with the negative EBITDA adjustments mentioned earlier, and partly offset by negative income tax of around NOK 300,000,000, resulting in an adjusted net income of NOK 3,600,000,000.0 in Q2. Adjusted net income is up from NOK 1,700,000,000.0 in the same quarter last year and down from NOK 4,000,000,000 in Q1. Consequently, adjusted EPS was NOK 1.68 per share. And then let’s give an overview per business area, starting with Bauxite and Alumina.

Adjusted EBITDA for Bauxite and Alumina decreased from NOK 1,600,000,000.0 in Q2 ’twenty four to NOK 1,500,000,000.0 in Q2 ’twenty five. This was mainly driven by higher raw material costs and fixed costs and lower alumina prices, partly offset by currency effects and positive year on year effects from fuel switch to natural gas being fully implemented. Compared to Q1 twenty twenty five, the adjusted EBITDA decreased from NOK5.1 billion to NOK1.5 billion in Q2 twenty twenty five, mainly driven by lower alumina price, partly offset by increasing sales volumes. Raw material cost was relatively stable Q2 versus Q1, and fixed costs increased by around 200,000,000 in the lower end of the guiding we provided in our Q1 presentation. For Q3, we expect a production volume at nameplate capacity.

Compared to Q2, we expect higher bauxite costs in the range of NOK 50,000,000 to 100,000,000, driven by changed bauxite mix due to maintenance at Parcominas. Raw material prices are expected to be relatively stable based on current market prices. Lastly, fixed and other costs are expected to be relatively stable. Moving to Aluminum metal. Adjusted EBITDA decreased from 2,500,000,000.0 in Q2 twenty twenty four to NOK 2,400,000,000.0 this quarter.

The main driver year on year were higher alumina costs, lower sales volumes and negative currency effects, partly offset by higher all in metal prices and lower energy costs. Compared to Q1 twenty twenty five, adjusted EBITDA for aluminum metal decreased from NOK 2,500,000,000.0, driven by lower all in metal prices and negative currency effects, partly offset by lower alumina costs. The raw material cost decreased by around NOK 800,000,000, which was less than our guiding for Q2 given our Q1 reporting. Reduction was mainly driven by lower alumina price, partly offset by higher carbon costs and reversal of extra CO2 compensation received in Q1. Increase in fixed cost was slightly below our guidance at around 40,000,000.

And this brings me over to the guiding for the next quarter. For Q3, Alumina Metal has booked 67% of the primary production at USD 2,482 per tonne. This includes the effect of our strategic hedging program. Premiums in Europe have continued to soften into Q3, and we have booked 58% of the premiums affecting Q3 at US392 dollars per tonne. And we expect realized premiums in the range of USD $3.30 and USD $3.80 per tonne.

On the positive side, we expect a net decrease in raw material costs of between NOK 1,000,000,000 and NOK 1,200,000,000.0, mainly driven by lower alumina price. This number includes the effect of our internal alumina hedge with B and A. We expect seasonally lower fixed costs between NOK 50,000,000 and NOK 100,000,000. And sales volumes are expected to remain stable. Adjusted EBITDA for Metal Markets decreased in Q2 from NOK $3.00 9,000,000 in Q2 last year to NOK $276,000,000 due to exceptionally high results from sourcing and trading activities in Q2 last year.

Those were partly offset by increased results from recyclers. Excluding the currency and inventory valuation effect, the results for Q2 was NOK $3.00 8,000,000, down from NOK $357,000,000 in Q2 twenty twenty four. Compared to Q1, adjusted EBITDA for Metal Markets increased from negative 14,000,000, thanks to increased results from recyclers and from sourcing and trading activities. Recycling results ended higher at NOK 136,000,000, up from NOK 63,000,000 last quarter. The increase was mainly due to improved margins and volumes in Europe, while scrap prices remained stable.

Higher production in The U. S. Also contributed to the positive development. For Q3, we expect lower recycling results driven by seasonally lower recycling volumes. In our Commercial segment, we anticipate a lower contribution from sourcing and trading activities in Q3, partly offset by positive currency effects.

As always, we emphasize the inherent volatility of trading and currency fluctuations. Given the speed into the year, we have adjusted the guidance for the commercial adjusted EBITDA, excluding currency and inventory valuation effects, for the full year 2025 to NOK 300,000,000 to NOK 500,000,000. In Extrusions, the adjusted EBITDA decreased year over year from NOK 1,400,000,000.0 to NOK 1,300,000,000.0, driven by lower sales margins, partly offset by higher sales volumes and lower fixed costs. We saw 1% higher sales volumes as well as somewhat weakened sales margins, primarily in Europe. Furthermore, lower recycling margins negatively impacted the results with around 200,000,000 as recycling margins continued to be under pressure with scrap shortage leading to elevated prices.

Compared to Q1 twenty twenty five, adjusted EBITDA for Extrusions increased from NOK1.2 billion, thanks to seasonally higher sales volumes and lower fixed costs, partly offset by lower sales margins. Looking into Q3, as always, we should look towards the same quarter last year to capture the seasonal developments in Extrusions. External market estimates suggest positive volume development year over year of 1% for Europe and a negative development of 1% for North America. In Q2, we outperformed market expectations, and we anticipate this positive trend to continue into the next quarter, with sales volumes expected to exceed market forecast in both Europe and North America. We also expect a positive metal effect of approximately NOK 200,000,000 to NOK 300,000,000 in the Midwest premium, if the Midwest premium stays elevated.

However, we also foresee continued pressure in both Extrusions margins and Recycling margins, which is expected to be partly offset by decreased fixed costs. Despite pressured margins slightly offsetting the higher expected volumes, we expect for the positive to more than offset the negative in Q3 when comparing year over year. Moving then to the final business area, Energy. The adjusted EBITDA for Q2 increased from NOK 1,100,000,000.0 compared to $611,000,000 in Q2 twenty twenty four. Higher net spot sales led to higher results year on year, driven by higher prices, higher production and higher price area gains.

Compared to Q1, adjusted EBITDA decreased slightly from NOK 1,200,000,000.0, mainly due to lower production and prices, offset by higher price area gain and commercial results. The price area gain was NOK $350,000,000 in Q2, an increase from Q1, driven by higher price differences and volumes. Looking into Q3, as always, we should be aware of the inherent price and volume uncertainty in Energy. For the next quarter, production volumes and prices are expected to decrease mainly due to seasonally lower consumption. Furthermore, price area differences could stay at a similar level as in Q2.

And then let’s move to the final financial slide this quarter. Net debt decreased by NOK increased by NOK 400,000,000 since Q1. Based on the starting point of NOK 15,000,000,000 in net debt from Q4, we have a positive contribution in adjusted EBITDA of 7,800,000,000.0. During Q2, we saw a net operating capital release of NOK 2,900,000,000.0, mainly driven by reduced receivables, which includes the effect from received indirect CO2 compensation as well as reduced inventories. Under other operating cash flow, we have a negative NOK 2,900,000,000.0 impact, mainly driven by settlement of tax payables of NOK 2,700,000,000.0 in Norway and Brazil and a negative NOK 800,000,000.0 of mark to market reversals, partly offset by reclassification of NOK 900,000,000.0 for CO2 receivables for long term to short term receivables.

On the investment side, we have a net cash effective investments of NOK 2,700,000,000.0. As a result, we had positive free cash flow of NOK 5,000,000,000 in Q2. Furthermore, we had a total cash outflow of NOK 5,100,000,000.0 related to shareholder distributions, of which NOK 4,400,000,000.0 relates to the twenty twenty four dividends and NOK 700,000,000 paid to the Norwegian Ministry of Trade, Industry and Fisheries related to the conclusion of the twenty twenty four-twenty twenty five share buyback program. Finally, we have also had negative other effects of NOK 300,000,000, and this was mainly driven by negative net FX effects on cash debt and new leases. As we move to the adjustments related to adjusted net debt, hedging collateral has remained unchanged at NOK 1,600,000,000.0 since the end of Q1.

Furthermore, during Q2, the net positive pension position decreased by 500,000,000, turning into a net liability position of NOK 100,000,000. And finally, we have an increase in other liabilities in Q2 of NOK 300,000,000, mainly driven by increased adjustments for captive portfolio assets. And with those effects taken into account, we end up with an adjusted net debt position at the end of Q2 of NOK23 billion. And with this, I end the financial update and give the word back to Eib.

Eivind Kalåvik, President and CEO, Hydro: Thank you, Tonnoll. As we conclude today’s session, I’d like to summarize our key priorities. At Hydro, safety remains our foremost priority. We are unwavering in our commitment to maintain the highest safety standards and ensure our performance metrics reflects this dedication. In recent years, we’ve faced increasing global instability with risks accelerating over the past few months.

This unpredictability represent challenges for the world and for our markets. Despite this volatility, we continue to commit to the strategic direction for 02/1930. The market for our low carbon products continues to grow, and our climate targets are unchanged as we advance on our decarbonization agenda. And it is encouraging to see that our customers also value these efforts. At Hydro, we do understand that steady operations require constant adoption.

Then to navigate instability and to ensure our relevance now and in the future, we must balance long term perspectives with short term adjustments. The uncertainty and changes in our business landscape underscore the importance of our initiatives to increase efficiency and reduce costs in the short term. As such, we have reduced our CapEx guiding for 2025 with NOK 1,500,000,000.0. The improvement program is progressing well, and we report progress on our cost cutting initiatives. Extrusions, in particular, has experienced challenges over the past few years and remains focused on profitability and cash flow.

In response to challenging markets, we have launched a project review to review the number of white collar workers, which is crucial for maintaining structure and setting priorities as we move Hydro forward in the right direction. We are concentrating our efforts on what is important to drive Hydro forward and to ensure that we stay relevant also in the future. As we move ahead, we are committed to our decarbonization strategy, and we will continue to pursue our 2030 ambitions with unwavering determination. Thank you for your attention. And with that, I will turn it back over to you, Martina.

Martine, Moderator/Host, Hydro: Well, thank you, Eivind and Ron Olaf. We will then have a Q and A session. Just reminding, if you would like to ask questions, you need to write your questions in the chat, and then I will read your questions to Ivan and Ronola. So we already have a couple of questions in the chat, so let’s get started. Starting with the question from Liam.

On the CapEx, can you elaborate on which projects expansion plans you have cut or delayed in 2025? And also, can we assume a similar cut to 2026 if downstream demand remains weak?

Eivind Kalåvik, President and CEO, Hydro: Thanks, Liam. As you will know, most of the CapEx or growth CapEx and return seeking CapEx that we have is guided towards the recycling as well as the extrusion businesses. So without going into any specific projects, that’s also where you should expect then the reduction to come for 2025. And for me, it’s important to say that this also reflects the flexibility that we have in the capital plans going forward. When it comes to 2026 guidance, the guidance currently stands at NOK 15,000,000,000 as it has in the past, and then we will review that as we go through the second half of this year, how the market develops, and then we will give an update at the Investor Day towards the tail end of the year.

Martine, Moderator/Host, Hydro: And then we have a question from Markus Pareto. Is the more than 100 FTE reduction within extrusion predominantly blue collar? And is the potential of 300 to three fifty a mix of white and blue collar? And is that a part of the white collar review?

Eivind Kalåvik, President and CEO, Hydro: So the automation project in Extrusions is predominantly around the blue collar workforce. So it does not have any overlap with the white collar review that we’re currently doing.

Martine, Moderator/Host, Hydro: And then we have a question from Amos. Can you give a guidance on your expectations for eliminations in EBITDA into Q3?

Tronulla Kristofersen, CFO, Hydro: Well, we don’t have a pure guidance on the eliminations for the next quarter. But if you look at the accumulated negative eliminations since we saw the alumina price spike And if you deduct what we now realized this quarter, roughly NOK 4 to 500,000,000 is remaining, and we expect quite a lot of that to come in Q3.

Martine, Moderator/Host, Hydro: And then we have a question from Matt. You have said IRR of more than 10% needed to deliver projects. Does Toriga and Karma deliver in the current environment?

Eivind Kalåvik, President and CEO, Hydro: Yes, we still believe that these are good projects and good and solid projects, both the Spanish recycler as well as the wire rod investments at Kame. And do remember that the wire rod project at Kame is also backed with a long term offtake agreement with one of the leading cable producers in Europe, NKT. So still solid projects in our portfolio.

Martine, Moderator/Host, Hydro: And then we have a question from Janis on Extrusions. You provided good color for But if we look at the full year EBITDA range, how are you tracking relative to the guiding range of 3.5%, 4.5% that was provided at the Q1 results?

Tronulla Kristofersen, CFO, Hydro: Well, we gave this outlook for the extrusion for the full year, and this is still the outlook we have, 3.5% to 4.5%. I mean, there’s still quite a lot of uncertainty going into second half, really driven by the demand uncertainty and the economic development uncertainty into second half. So this is still the best outlook and guiding we have for the full year.

Martine, Moderator/Host, Hydro: And then another question from Matt. What has changed on your return requirements that drove the impairment in Brazil?

Eivind Kalåvik, President and CEO, Hydro: So from time to time, we look at the return requirements and cost of capital requirements for the different business areas and different businesses that we have in Hydro. We did this for Energy, needed an update on wind and renewable projects. And with the risk situation as we covered when it comes to grid constraints, when it comes to potential regulatory challenges in Brazil, the conclusion was that we would lift the return requirements somewhat. And thus, that leads to the impairment of roughly 400,000,000, which we booked in the second quarter.

Martine, Moderator/Host, Hydro: And then we have a question from Christian. In alumina, prices are declining for Q3, and you’re guiding for higher bauxite cost. Do you expect to avoid a loss making quarter at the current price cost spread?

Tronulla Kristofersen, CFO, Hydro: I mean, you have to look at the full guiding for the quarter. But I don’t think that the realized alumina prices is very different for Q2 versus Q3, if you use the current spot price as an estimate for the full quarter. So this bauxite price increase is more a temporary situation due to maintenance at the Parvamina mine.

Martine, Moderator/Host, Hydro: And then we have another question from Janis. On Extrusions, you have guided to a positive metal effect of NOK 200,000,000 to NOK 300,000,000. Is this driven by the difference between billet and standard ingot premium?

Eivind Kalåvik, President and CEO, Hydro: So this is really driven by the development that we see in the Midwest premium in The U. S. If you then carry a lower priced inventory when tariffs was 25%, tariffs goes up to 50%. We’ve seen increase in standard ingot premiums, which again lifts the value of the inventory that we carry, which will be realized back to the NOK 200 to NOK 300,000,000 that Thuroul had mentioned. So assuming that Pillar premiums or Standard Ingredient premiums, Midwest premiums stays where they are, that’s what we will realize in the third quarter.

Martine, Moderator/Host, Hydro: And then we have a question from Marina. Your revenue from greener products has increased by 50% year over year. Can you give us some more color on how volumes and premiums have developed?

Eivind Kalåvik, President and CEO, Hydro: Yes. So we see positive developments on in a way, both sides of that equation. So both from a volume perspective, we continue to see growth year to date in 2025 compared to year to date same period 2024. And we also continue to see somewhat positive development on premiums per tonne. So again, development in the market.

And I would like to sort of name say once more, the fact that we’ve now sold our first coal contract to an OEM in The U. S. It’s also a sign that The U. S. Is following the European market, although trailing a couple of years, we still see then more positive developments in The U.

S. For low carbon materials.

Martine, Moderator/Host, Hydro: And then we have another question from Efraim. Can you isolate the impact of the higher Midwest premium alone at spot prices on your business?

Tronulla Kristofersen, CFO, Hydro: I think the biggest effect we will see in the next quarter is this metal effect we talked about. If you look at our business in The U. S, it’s mostly a pass through effect of the Midwest premium. So we are buying metal scrap, and we are buying standard ingots, typically correlated with the Midwest premium. And then we are using that metal and producing the products we sell to the customers.

So it’s mainly a pass through. Where you could get some positive gains is that if scrap prices do not follow Midwest completely, then we can have a positive a slightly positive additional margin in Hydro. But the main effect is that it’s a pass through the company.

Martine, Moderator/Host, Hydro: And then there seems to be no more questions, but just giving it a couple of seconds. I have one hello here, so it might come an additional question. There we have it. Sorry. So can you from Benght, can you explain the reason behind the increase in hedging price for 2026 for aluminum metal to 2,700 per tonne from $2,600 per tonne?

Tronulla Kristofersen, CFO, Hydro: So this comes from the strategic hedging program. And we do this typically hedging roughly 25 of the volumes quarterly two years ahead. So the volumes for 2026 is basically hedged one year later than the 2025 volumes, and that explains then the price differences.

Martine, Moderator/Host, Hydro: And then we have a question from Andreas. What was the metal effect in Extrusions in Q2? Will it be fully taken out after Q3?

Eivind Kalåvik, President and CEO, Hydro: So in the second quarter, there was a marginal metal effect in Extrusions in North America. Most of the metal effect we expect will come in Q3, again assuming that the Midwest premium stays at the level where it is today.

Martine, Moderator/Host, Hydro: And then another question from Jannes on Extrusions. There is a significant revision of North America outlook for 2025 from plus 3% to minus 2%. Can you provide some color on which end markets drive this revision? And by how much can you outperform the market?

Tronulla Kristofersen, CFO, Hydro: So when it comes to the revision down, it’s really driven by the reduced economic outlook for second half in The U. S. And where we do see lower demand and continued drop in demand is in the Transportation segment and also the Automotive segment. For the other segments, we actually saw some growth in last quarter, so mostly should be explained by Automotive and Transportation. We do not really guide on how much we outperform, but at least the starting point is what we saw in Q2 compared to the overall market decline, where we had a growth of 1%.

Martine, Moderator/Host, Hydro: And then, Behndt is revisiting the hedging question from earlier. In the Q1 presentation, the hedging price for 2026 was SEK 2,600. In the deck today, it is SEK 2,750. What explains the change?

Tronulla Kristofersen, CFO, Hydro: Okay. Then we can come back on this, Benkton, and see if there’s something missing in the presentation.

Martine, Moderator/Host, Hydro: And then we have a question from Ames. Are you seeing any impact on scrap availability in Europe from higher U. S. Tariffs?

Eivind Kalåvik, President and CEO, Hydro: So we continue to see a tight scrap market in Europe, both in terms of what goes to Southeast Asia, but also certain volumes going to The U. S. The third element of that is, of course, the relatively low economic activity in Europe, which leads to less scrap generation. So we do continue to see elevated scrap prices, if you like, compared to history and a very tight market.

Tronulla Kristofersen, CFO, Hydro: If I just may add one comment to Benk’s earlier question. So just a reminder, when it comes to our hedging program, so we what we actually do in the hedging program is that we lock in margins in Norwegian kroner for a significant share of the volume. So we actually hedge LME prices in NOK, some volumes in euro and some in U. S. Dollar.

So you will see fluctuations in these numbers depending on the currency development. So at least part of that change you are seeing from Q1 to Q2 is really driven by the strong NOK versus U. S. Dollar. But we will look further into and come back to you.

Martine, Moderator/Host, Hydro: And then Liam has a follow-up question on scrap. Any latest thoughts on European policy on scrap?

Eivind Kalåvik, President and CEO, Hydro: Thanks, Liam. So this is still being discussed, and it’s being discussed within several of the GGs in Europe, and they are looking at it. Obviously, they have not made any decisions yet. But it is if not top on the agenda in Brussels, it’s certainly something that they are looking at continuously.

Martine, Moderator/Host, Hydro: And then there seems to be no more questions. So I think we will round it off. Thank you so much for joining us today. And please reach out to us in Investor Relations if you have any further questions. I wish you all a very nice day.

Thank you.

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