Norsk Hydro ASA

Earnings Release • Oct 24, 2024

Norsk Hydro: Strong upstream results, building downstream robustness

Norsk Hydro: Strong upstream results, building downstream robustness

Hydro's adjusted EBITDA for the third quarter of 2024 was NOK 7,367 million, up

from NOK 3,899 million in the same quarter last year, positively impacted by

higher aluminium and alumina prices, lower raw material costs and positive

currency effects. This was partly offset by lower recycling margins, Extrusions

volumes and Energy prices resulting in an adjusted RoaCE of 8.5 percent over the

last twelve months and free cash flow of NOK 1.7 billion.

* Solid upstream results from increasing alumina and aluminium prices

* 2024 improvement programs on track, Extrusions building robustness in weaker

core markets

* Energy executing on renewable ambitions with Illvatn pumped storage project

* Reducing ownership from 30 to 19.9 percent and impairing NOK 956

million investments in Vianode

* Hydro and Mercedes-Benz extend partnership to foster socioeconomic

development in Brazilian Amazon

"The positive development in our upstream revenue drivers continued in the third

quarter, supporting strong results in our upstream business, countering the

overall effects of the challenging downstream market," says Eivind Kallevik,

President & CEO of Hydro.

Positive upstream revenue drivers continued into the third quarter, supporting

record results in Bauxite & Alumina. The Platts Alumina Index (PAX) gradually

increased to USD 562 per tonne by quarter's end as global alumina supply

tightened. Chinese alumina prices also rose due to bauxite sourcing constraints,

keeping the market balanced. Alunorte continued the fuel switch project,

producing alumina with natural gas during the third quarter, and is expected to

be fully implemented by the end of this year. The three-month aluminium price

rose from USD 2,515 to USD 2,612 per tonne during the third quarter, supporting

solid results in Aluminium Metal.

"The fuel switch at Alunorte exemplifies sustainability and profitability going

hand in hand, yielding significant savings in carbon intensity as well as costs.

Combined with the higher alumina price driven by the tight alumina market, the

investment impacts Bauxite & Alumina's result positively this quarter," says

Kallevik.

The downstream aluminium market continued to be challenged by weak demand and

recycling margins in Europe and North America. Automotive extrusion demand

remains weak due to low electrical vehicle sales in Europe, especially in

Germany. Building and construction, and industrial demand continues to be

moderate with potential 2025 support from lower interest rates. Low activity in

these markets limits aluminium scrap supply, squeezing recycling margins and

reducing remelt production in both Hydro Extrusions and Metal Markets.

"Hydro is responding with short and long-term actions to strengthen robustness

in Extrusions. While responding to the challenging market with firm mitigating

actions, we are continuing to invest in the long-term robustness of our

operations," says Kallevik.

Hydro Extrusions is actively navigating challenging markets to address weak

demand. By leveraging production flexibility and implementing cost-cutting

programs, Extrusions aims to maintain margins. The recent investment in an

automated press in Cressona in the U.S., replacing two old presses, exemplifies

the commitment in Extrusions to enhance efficiency and productivity. However,

achieving the NOK 8 billion EBITDA target for 2025 will require an extrusion

market recovery of more than 20 percent volume growth and a recovery of remelt

margins in line with historical averages, both in total representing NOK 2-3

billion improved EBITDA.

Weak markets are pressuring recycling margins, and active measures are taken to

boost profitability and secure competitive scrap sourcing. Critical to this

effort are enhanced capabilities in advanced scrap sorting. In the third

quarter, the Alusort joint venture launched commercial operations of HySort in

the U.S., enabling plants to process more post-consumer scrap. This expands

Hydro's HySort portfolio, to soon five machines in operation, including four

across Europe, reinforcing the company's leadership in recycling more post-

consumer scrap.

By leveraging a fully integrated, traceable value chain from mine to component,

Hydro is attracting strategic partnerships with industry frontrunners like

Mercedes-Benz. The collaboration advanced significantly during the third

quarter, as both companies committed to a long-term initiative aimed at driving

positive change in the Brazilian Amazon. The Corridor program focuses on

protecting human rights, generating income for local communities, restoring

nature and building low-carbon value chains, underscoring that sustainability in

aluminium solutions goes beyond just reducing carbon footprint.

"The agreement with Mercedes-Benz extends our partnership beyond low-carbon

product development to create positive social and environmental impact in the

state of Pará. Together, we aim to lift sustainability throughout our shared

value chain, from mine to end-consumer product," says Kallevik.

Securing renewable power is key to growth in low-carbon aluminium. Hydro made an

investment decision for the Illvatn pumped storage plant in Luster, Norway,

aiming to generate 84 GWh of renewable energy annually and improving flexibility

in its production system. This will strengthen Hydro Energy's portfolio,

powering industrial production in Norway.

On October 22, Hydro decided to reduce its ownership in the synthetic graphite

producer Vianode, based in Norway, from 30 to 19.9 percent. Hydro will step down

from the board and no longer provide capital to Vianode to focus on projects

supporting Hydro's strategic priorities towards 2030. Impairments of NOK 956

million of investments in Vianode are taken in the third quarter, with NOK 581

million impacting reported EBITDA and shareholder loan in Vianode of NOK 375

million is impacting Finance expense.

Results and market development per business area

Adjusted EBITDA for Bauxite & Alumina increased compared to the third quarter of

last year, from NOK 93 million to NOK 3,410 million, mainly driven by higher

alumina sales prices, lower cost of raw materials and positive currency effects,

partly offset by increased alumina sourcing costs and decreased sales volume.

PAX started the quarter at USD 505 per mt, traded down to USD 478 per mt in

July, before increasing gradually to USD 562 per mt at the end of the quarter as

the World ex-China alumina market continued tightening.

Adjusted EBITDA for Energy in the third quarter decreased compared to the same

period last year, from NOK 762 million to NOK 626 million. Lower prices and

lower gain on price area differences were partly offset by the expiry of a 12-

month internal fixed price purchase contract from Aluminium Metal at a loss in

the same period last year. Average Nordic power prices in the third quarter

2024 decreased, both compared to the same quarter last year and the previous

quarter. The decrease compared to the second quarter in 2024 was primarily a

result of strengthened hydrological balance and seasonally reduced consumption.

Price area differences between the south and the north of the Nordic market

region decreased compared to the same quarter last year and increased compared

to the previous quarter.

Adjusted EBITDA for Aluminium Metal increased in the third quarter of 2024, from

NOK 1,379 million to NOK 3,234 million compared to the third quarter of 2023,

mainly due to higher all-in metal prices, reduced carbon cost, higher level in

CO2 compensation and positive currency effects, partly offset by increased

alumina cost and higher fixed cost. Global primary aluminium consumption was up

1.6 percent compared to the third quarter of 2023, driven by a 2.3 percent

increase in China. The three-month aluminium price increased throughout the

third quarter of 2024, starting the quarter at USD 2,515 per mt and ending at

USD 2,612 per mt.

Adjusted EBITDA for Metal Markets decreased in the third quarter compared to the

same period last year, from NOK 568 million to NOK 277 million, due to lower

results from recyclers and negative currency effects, partly offset by strong

results from sourcing and trading activities. Lower results from recyclers are

due to reduced sales prices in a weakening market and additional margin pressure

in a tightening scrap market.

Extrusions adjusted EBITDA for the third quarter of 2024 decreased compared to

the same quarter last year, from NOK 1,322 million to NOK 879 million driven by

lower sales volumes and decreased margins from recycling. General inflation

pressured fixed and variable costs, partly offset by cost measures. European

extrusion demand is estimated to have decreased 7 percent in the third quarter

of 2024 compared to the same quarter last year, and 21 percent compared to the

second quarter partly driven by seasonality. Automotive extrusion demand

continues to be challenged by weak sales of electric vehicles across Europe,

particularly in Germany. Demand for building and construction, and industrial

segments has remained moderate after summer with no clear signs of improvement

over the coming months, although lower interest rates may support demand into

2025. North American extrusion demand is estimated to have decreased 4 percent

during the third quarter of 2024 compared to the same quarter last year and 7

percent compared to the second quarter. The transport segment has been

particularly weak, driven by lower trailer build rates. Automotive demand is

facing headwinds due to weaker sales of electric vehicles. Demand continues to

be soft in the building and construction, and industrial segments, however,

underlying demand is expected to gradually improve into 2025 driven by lower

interest rates.

Other key financials

Compared to the second quarter 2024, Hydro's adjusted EBITDA increased from NOK

5,839 million to NOK 7,367 million in the third quarter 2024. Higher realized

aluminium and alumina prices combined with lower fixed costs were partly offset

by lower Extrusions and recycling volume.

Net income (loss) amounted to NOK 1,409 million in the third quarter of 2024.

Net income (loss) included a NOK 907 million unrealized derivative loss on LME

related contracts and a net foreign exchange gain of NOK 139 million. The result

also includes the impairment of the equity accounted battery investment Vianode

of NOK 581 million and NOK 129 million in rationalization charges and closure

costs. Further, foreign exchange losses of NOK 1,092 and losses on a loan to

Vianode of NOK 375 million are adjusted for. The tax effect on these adjustments

reflects a standardized tax rate for taxable gains and tax deductible losses.

Hydro's net debt decreased from NOK 16.2 billion to NOK 14.8 billion during the

third quarter of 2024. The net debt decrease was mainly driven by EBITDA

contributions, partly offset by investments and other operating cash flows.

Adjusted net debt decreased from NOK 26.1 billion to NOK 25.0 billion, largely

due to the decrease in net debt of NOK 1.5 billion, partly offset by increased

net pension liabilities of NOK 0.3 billion and increased collateral of NOK 0.2

billion.

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:

Martine Rambøl Hagen

+47 91708918

Martine.Rambol.Hagen@hydro.com

Media contact:

Halvor Molland

+47 92979797

Halvor.Molland@hydro.com

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. Except where required by law,

Hydro disclaims any obligation to update or revise any