23-07-2025
Norsk Hydro ASA (NHYDY) Q2 2025 Earnings Call Highlights: Strong Financial Performance Amid ...
Adjusted EBITDA: NOK7.8 billion for Q2 2025.
Free Cash Flow: NOK5 billion in Q2 2025.
Adjusted RoaCE: 12%, above the target of 10% over the cycle.
Revenue: Increased by 4% year over year to NOK53 billion for Q2 2025.
Net Income: Positive net income of around NOK2.5 billion for Q2 2025.
Adjusted Net Income: NOK3.6 billion in Q2 2025.
Adjusted EPS: NOK1.68 per share for Q2 2025.
Net Debt: Increased by NOK400 million since Q1 2025, ending at NOK23 billion.
Capital Expenditure Guidance: Reduced by NOK1.5 billion for 2025.
Impairment Charges: NOK400 million in Brazilian energy assets.
Extrusion Sales Volumes: Increased by 1% year over year in Q2 2025.
Aluminum Prices: Three-month aluminum price increased from USD2,507 to USD2,598 per ton during Q2 2025.
US Midwest Premium: Increased from USD844 to USD1,432 per ton during Q2 2025.
Energy Adjusted EBITDA: Increased to NOK1.1 billion in Q2 2025 from NOK611 million in Q2 2024.
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Release Date: July 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Norsk Hydro ASA (NHYDY) reported a strong adjusted EBITDA of NOK7.8 billion for Q2 2025, with a free cash flow of NOK5 billion and an adjusted RoaCE of 12%, surpassing the target of 10%.
The company has successfully maintained a low number of injuries, demonstrating a strong safety culture that contributes to operational stability and efficiency.
Norsk Hydro ASA (NHYDY) is ahead of its 2030 improvement program targets, with significant progress in greener sales, including a 50% increase in sales of greener products compared to 2024.
The company has implemented a hiring freeze for white-collar positions to enhance flexibility and resilience in response to market volatility.
Norsk Hydro ASA (NHYDY) continues to see strong demand for low carbon and recycled products, supported by regulatory momentum for sustainability and climate action in Europe.
Negative Points
Geopolitical risks and trade tensions, particularly following Russia's invasion of Ukraine, are affecting Norsk Hydro ASA (NHYDY)'s entire value chain and global market conditions.
The company has faced challenges in the wind and solar markets, particularly in Brazil and the Nordics, due to grid constraints and regulatory uncertainty.
Norsk Hydro ASA (NHYDY) reported NOK400 million in impairments in its Brazilian energy assets due to adjusted return requirements amid ongoing challenges.
The extrusion market in North America is expected to decline by 2% in 2025 compared to 2024, driven by weak demand in the commercial transport and automotive segments.
Norsk Hydro ASA (NHYDY) has terminated a Nordic power purchase agreement due to undelivered volumes, resulting in potential compensations of up to EUR90 million.
Q & A Highlights
Q: 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? A: Eivind Kallevik, President and CEO: Most of the CapEx reductions are focused on the recycling and extrusion businesses. The 2026 guidance remains at NOK15 billion, and we will review this as the market develops, providing an update at the Investor Day later this year.
Q: Is the more than 100 FTE reduction within extrusion predominantly blue collar? And is the potential of 300 to 350 a mix of white and blue collar? A: Eivind Kallevik, President and CEO: The automation project in extrusions is predominantly focused on the blue-collar workforce and does not overlap with the white-collar review currently underway.
Q: Can you give a guidance on your expectations for eliminations in EBITDA into Q3? A: Trond Christophersen, CFO: We don't have specific guidance for eliminations next quarter, but we expect a significant portion of the remaining NOK400 million to NOK500 million to be realized in Q3.
Q: You have said IRR of more than 10% needed to deliver projects. Does [Turija and Karmy] deliver in the current environment? A: Eivind Kallevik, President and CEO: Yes, both the Spanish recycler and the wire rod investments at Karmy are solid projects, supported by long-term agreements with leading cable producers in Europe.
Q: What has changed on your return requirements that drove the impairment in Brazil? A: Eivind Kallevik, President and CEO: We updated the return requirements for energy investments due to grid constraints and potential regulatory challenges in Brazil, leading to a NOK400 million impairment.
Q: In alumina, prices are declining for Q3, and you are guiding for higher bauxite costs. Do you expect to avoid a loss-making quarter at the current price cost spread? A: Trond Christophersen, CFO: The realized alumina prices for Q3 are not expected to differ significantly from Q2, and the bauxite price increase is temporary due to maintenance at Paragominas.
Q: Your revenue from green products has increased by 50% year over year. Can you give us some more color on how volumes and premiums have developed? A: Eivind Kallevik, President and CEO: We see growth in both volume and premiums for green products, with positive developments in the US market following the European trend.
Q: Are you seeing an impact on scrap availability in Europe from higher US tariffs? A: Eivind Kallevik, President and CEO: The scrap market in Europe remains tight due to exports to Southeast Asia and the US, along with low economic activity in Europe, leading to elevated scrap prices.
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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