Norsk Hydro: Strong upstream results, navigating global trade uncertainty

Financial Performance - Hydro's adjusted EBITDA for Q1 2025 was NOK 9,516 million, a significant increase from NOK 5,411 million in the same quarter last year, driven by higher alumina and aluminium prices, along with positive currency effects [1][17] - The net income for Q1 2025 amounted to NOK 5,861 million, which included a NOK 1,324 million unrealized derivative gain and impairment charges of NOK 282 million [18] - Adjusted EBITDA for Bauxite & Alumina rose from NOK 804 million to NOK 5,135 million, primarily due to higher alumina prices and lower raw material costs [12] - Adjusted EBITDA for Aluminium Metal increased from NOK 1,965 million to NOK 2,546 million, supported by higher all-in metal prices and lower carbon and energy costs [14] Market Dynamics - Global primary aluminium consumption increased by 1.5 percent year-over-year in Q1 2025, with a 1.7 percent rise in demand outside China [4][14] - The automotive sector faced challenges with lower light vehicle production in Europe, impacting aluminium demand, although this was somewhat offset by increased production of electric vehicles [4][16] - The U.S. trade policy has expanded Section 232 tariffs, but Hydro's exposure to aluminium tariffs is limited due to domestic sourcing and pass-through pricing [3][4] Strategic Initiatives - Hydro is revising down its 2025 annual adjusted EBITDA outlook due to uncertain markets, with estimates ranging from NOK 3.5 billion to NOK 4.5 billion [5] - The company is implementing firm measures to optimize its portfolio and cut costs, including restructuring efforts and the closure of certain facilities [5][6] - Hydro is investing NOK 1.65 billion in a new wire rod casthouse at its Karmøy smelter, expected to begin production in 2028, alongside a long-term offtake agreement with NKT valued at approximately EUR 1 billion [10][11] Recycling and Sustainability - Hydro is committed to cutting hot metal costs by USD 20–30 per tonne by 2030 in its recycling segment, with one-third of the targeted reductions expected to be realized in 2025 [8] - A new EUR 180 million recycling plant is under construction in Torija, Spain, which will enhance the company's capacity to recycle post-consumer scrap [8] - Hydro is accelerating the commercialization of low-carbon and recycled aluminium, collaborating with customers to integrate these materials into their products [9]