Norsk Hydro ASA — Earnings Release 2021

Apr 27, 2021

Norsk Hydro: First quarter 2021 - Stronger markets and record results for Energy and Extrusions

Norsk Hydro: First quarter 2021 - Stronger markets and record results for Energy and Extrusions

Norwegian energy and aluminum company Norsk Hydro ASA posted first-quarter

underlying EBITDA of NOK 5,182 million, up from NOK 3,810 million in the same

quarter last year. Strong global economic recovery boosted demand for renewable

energy, aluminium and aluminium products. Hydro Energy and Hydro Extrusions

business areas reported record quarterly results.

* Strong demand drives recovery

* Record EBITDA results in Extrusions and Energy

* Improvement program ahead of plan

* Agreement to sell Rolling, closing expected Q2-Q3 2021

* Investment decision for Alunorte fuel-switch project

* Exploring hydrogen, other growth initiatives progressing

Higher all-in metal prices, improved results from Energy and improved margins

and volumes in Extrusions contributed positively to the result. These positive

elements were partly offset by higher raw material costs, negative currency

effects and additional maintenance-related costs in the Bauxite & Alumina

business area.

Hydro continues to address the effects of the Covid-19 pandemic on its

operations and communities around the world. "Our top priority has been the

health and safety of our people and the communities where we operate. Covid-19

initiatives have been implemented in our operations globally to support

employees and prevent infections. In Brazil, Hydro has also provided support to

the local communities in their efforts to handle the pandemic," says President

and CEO Hilde Merete Aasheim.

The first quarter saw a strong global recovery driven by the re-opening of

economies and substantial fiscal stimulus. As a result, Hydro saw a decreasing

oversupply in the primary aluminium market, and analysts now expect a largely

balanced market for 2021.

"I am pleased to see earnings and returns picking up across most of our

operations on higher margins and volumes, but also on continued low costs,

especially in Extrusions," says Aasheim.

Hydro Extrusions achieved record results this quarter, driven by strong volume

growth, improved margins, and continued cost savings from improvement program

initiatives. The quarter saw a strong rebound in automotive in Europe and solid

growth in the industrial segment, as well as residential building &

construction. Hydro Energy also experienced a record quarter, driven by higher

power prices, production volumes and the expiry of legacy power contracts.

Hydro has set out a clear strategic direction toward 2025 and aims to

strengthen its position in low-carbon aluminium, while exploring new growth

opportunities in renewable energy.

"The new growth initiatives in Hydro Energy are progressing well. We see a

large potential for hydrogen replacing natural gas at our plants. We will

therefore explore the potential for developing and operating hydrogen facilities

to meet the large internal demand, as well as serving an external market,

leveraging the company's industrial and renewable power expertise," says

Aasheim.

Hydro has signed a Memorandum of Understanding (MoU) with New Fortress Energy

(NFE) with the aim to replace a major part of its current fuel oil consumption

at the Hydro Alunorte alumina refinery in Brazil with more environmentally

friendly natural gas.

"We achieved an important milestone toward reaching our climate strategy and

global commitment to reduce greenhouse gas emissions by 30 percent by 2030, as

we have made the investment decision for the fuel switch project at the Alunorte

refinery in Brazil," says Aasheim.

The quarter also saw strong demand for Hydro's low-carbon aluminium products,

Hydro CIRCAL and Hydro REDUXA.  The volume of Hydro REDUXA sold in the first

quarter was approximately 60 percent of the total Hydro REDUXA volume sold in

On March 5, 2021, Hydro entered into an agreement to sell its Rolling business

to KPS Capital Partners for EUR 1,380 million (around NOK 14.2 billion) on an

enterprise value basis, resulting in EUR 435 million of cash proceeds. The sale

of Rolling will strengthen our ability to deliver on the 2025 strategy.

Completion of the transaction is expected to take place in the second or third

quarter of 2021.

Following the sale of the Rolling business, the revised 2025 improvement target

is now NOK 7.4 billion. Of this, NOK 5.1 billion is targeted by end of 2021

compared to the baseline of 2018. In addition, Hydro is pursuing market and

customer-driven opportunities in its current aluminium portfolio, aiming to

realize NOK 1.5 billion in commercial ambitions by 2025. Based on progress in

the first quarter, the improvement program is expected to exceed the year-end

target.

Compared to the fourth quarter 2020, Hydro's adjusted EBITDA increased from NOK

3,403 million to 5,182. Higher realized alumina and aluminium prices, improved

results from Energy, and higher sales from Extrusions were partly offset by

higher raw material costs and negative currency effects.

Net income from continuing operations amounted to NOK 1,880 million in the first

quarter. In addition to the factors described above, net income from continuing

operations included a net foreign exchange gain, mainly unrealized, of NOK 653

million and a NOK 1,181 million unrealized loss on LME-related contracts.

Hydro's net debt position increased from NOK 7.8 billion to NOK 9.0 billion at

the end of the quarter. Net cash provided by operating activities amounted to

NOK 0.5 billion. Net cash used in investment activities, excluding short-term

investments, amounted to NOK 1.3 billion.

Hydro held NOK 15.0 billion in cash and cash equivalents and NOK 2.5 billion in

short-term bank deposits and NOK 0.5 billion in money market funds, included in

short-term investments, at the end of the first quarter. Short-term bank

deposits and money market funds are normally available at short notice. The

revolving credit facility of USD 1.6 billion was fully available at the end of

the quarter.

In addition to the factors discussed above, reported earnings before financial

items and tax (EBIT) and net income include effects that are disclosed in the

quarterly report. Adjustments to EBITDA, EBIT and net income (loss) are defined

and described as part of the alternative performance measures (APM) section in

the quarterly report.

Investor contact

Line Haugetraa

+47 41406376

Line.Haugetraa@hydro.com

Press contact

Halvor Molland

+47 92979797

Halvor.Molland@hydro.com

The information is such that Hydro is required to disclose in accordance with

the EU Market Abuse Regulation. The information was submitted for publication

from Hydro Investor Relations and the contact persons set out above.

Certain statements included in this announcement contain forward-looking

information, including, without limitation, information relating to (a)

forecasts, projections and estimates, (b) statements of Hydro management

concerning plans, objectives and strategies, such as planned expansions,

investments, divestments, curtailments or other projects, (c) targeted

production volumes and costs, capacities or rates, start-up costs, cost

reductions and profit objectives, (d) various expectations about future

developments in Hydro's markets, particularly prices, supply and demand and

competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk

management, and (i) qualified statements such as "expected", "scheduled",

"targeted", "planned", "proposed", "intended" or similar. Although we believe

that the expectations reflected in such forward-looking statements are

reasonable, these forward-looking statements are based on a number of

assumptions and forecasts that, by their nature, involve risk and uncertainty.

Various factors could cause our actual results to differ materially from those

projected in a forward-looking statement or affect the extent to which a

particular projection is realized. Factors that could cause these differences

include, but are not limited to: our continued ability to reposition and

restructure our upstream and downstream businesses; changes in availability and

cost of energy and raw materials; global supply and demand for aluminium and

aluminium products; world economic growth, including rates of inflation and

industrial production; changes in the relative value of currencies and the value

of commodity contracts; trends in Hydro's key markets and competition; and

legislative, regulatory and political factors. No assurance can be given that

such expectations will prove to have been correct. Hydro disclaims any

obligation to update or revise any forward-looking statements, whether as a

result of new information, future events or otherwise.

This information is subject to the disclosure requirements pursuant to Section

5-12 the Norwegian Securities Trading Act