Norsk Hydro ASA (NHYDY) Q4 2024 Earnings Call Highlights: Strong Financial Performance Amid ...
Adjusted EBITDA: NOK7.7 billion for Q4 2024.
Free Cash Flow: NOK1.7 billion for Q4 2024.
Adjusted RoaCE: 8.5% for Q4 2024.
Revenue: Increased by 18% year-over-year to NOK55 billion for Q4 2024.
Net Income: NOK1.8 billion for Q4 2024.
Adjusted Net Income: NOK2.6 billion for Q4 2024.
Adjusted EPS: NOK1.11 per share for Q4 2024.
Dividend Proposal: NOK2.25 per share, representing 50% of adjusted net income.
Net Debt: Increased by NOK1.3 billion to NOK14.7 billion at the end of Q4 2024.
Alumina Market Deficit: 1.4 million tonnes in 2024.
Extrusion Sales Volume: Declined by 7% year-over-year in Q4 2024.
Aluminum Metal Adjusted EBITDA: NOK1.9 billion for Q4 2024.
Energy Adjusted EBITDA: NOK1.15 billion for Q4 2024.
CO2 Emission Reduction Target: Achieved 10% reduction one year ahead of schedule.
Full-Time Positions Reduced: 900 positions through divestments, plant closures, and cost-cutting measures.
Warning! GuruFocus has detected 3 Warning Signs with ETCMY.
Release Date: February 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Norsk Hydro ASA (NHYDY) achieved a record low TRI rate in Q4, indicating improved safety performance.
The company delivered an adjusted EBITDA of NOK7.7 billion and a free cash flow of NOK1.7 billion, reflecting strong financial performance.
Norsk Hydro ASA (NHYDY) achieved its 2025 CO2 emission reduction target of 10% one year ahead of schedule.
The company strengthened key partnerships to accelerate the green aluminum transition, including collaborations with Rio Tinto and Siemens Mobility.
A proposed cash dividend of 50% of adjusted net income, translating into NOK2.25 per share, demonstrates a commitment to shareholder value.
There was a slight increase in high-risk incidents, highlighting ongoing safety challenges.
Hydro extrusions faced weak market demand, necessitating significant restructuring measures.
The US reintroduced Section 232 tariffs, imposing a 25% duty on imported aluminum and steel, potentially impacting costs.
The extrusion market continues to face challenging conditions, particularly in Europe, with weak demand persisting.
In Brazil, capped energy deliveries and squeezed profits from solar and wind projects led to NOK0.4 billion in impairments.
Q: Historically, you have seen an escalation in fixed costs which now appears to be reversing with a large step down in fixed cost of NOK700 million to NOK800 million. Does this get up to a new normal for fixed cost or is it temporary? A: Trond Olaf Christophersen, CFO, explained that the reduction is due to a NOK300 million social provision in Q4 and seasonally higher project costs, which are not expected to recur in Q1. Long-term, no change in fixed cost level is anticipated.
Q: In the extrusion market, are there any green shoots you are seeing? Should we expect more restructuring costs in 2025 and how will Q1 '25 compare with Q1 '24? A: Eivind Kallevik, CEO, noted that the US market is expected to perform better than Europe, with growth potential in southern Europe. However, transportation and automotive sectors need to recover for significant improvement. Restructuring costs are not expected to impact long-term targets.
Q: Can you give a rough percentage on the share of domestic sourcing across scrap and ingots in the US extrusion market? A: Eivind Kallevik stated that most raw materials consumed in the US are locally sourced, with some ingots used as sweeteners in recyclers, which is a common practice across the industry.
Q: Do you see potential for buybacks in 2025? A: Eivind Kallevik mentioned that while a NOK4.5 billion dividend is proposed for 2024, it's too early to predict 2025 earnings and potential buybacks. However, current market conditions suggest a positive outlook.
Q: Do you reiterate the NOK4.5 billion to NOK5 billion EBITDA guide for 2025 for extrusions, and how will restructuring impact this? A: Trond Olaf Christophersen confirmed the guidance for 2025, noting a slow start is expected. Restructuring is not anticipated to affect long-term extrusion targets.
Q: How much of the NOK350 million restructuring cost in extrusion was charged in Q4? A: Eivind Kallevik reported that approximately NOK270 million to NOK280 million was charged in Q4, with NOK80 million impacting adjusted EBITDA.
Q: Could you provide guidance on minority dividends from BNA in 2025? A: Eivind Kallevik explained that Alunorte plans to continue debt repayment in 2025, having reduced debt from $1 billion to $800 million in 2024. Future earnings will be evaluated for dividend proposals.
Q: What would encourage the wide-scale deployment of hydrogen beyond the pilot stage? A: Eivind Kallevik emphasized the importance of proving industrial use of hydrogen as an energy carrier. Current energy costs make hydrogen a costly replacement, but industrial validation is the first step.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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