Norsk Hydro: Solid upstream performance driving strong cash flow generation

Core Insights - Hydro's adjusted EBITDA for Q4 2025 was NOK 5,587 million, a decrease from NOK 7,701 million in Q4 2024, primarily due to lower alumina prices and a stronger NOK, partially offset by higher primary and alumina volumes and lower raw material costs [1][22] - The company generated NOK 4.6 billion in free cash flow and proposed a cash dividend of NOK 3.0 per share, representing 60% of the adjusted net income for 2025 [4][11] Financial Performance - Adjusted EBITDA for Bauxite & Alumina decreased to NOK 1,392 million from NOK 4,969 million year-on-year, mainly due to lower alumina sales prices and a stronger BRL against USD [12] - Adjusted EBITDA for Aluminium Metal increased to NOK 3,707 million from NOK 1,949 million year-on-year, driven by higher all-in metal prices and lower alumina costs [16] - Adjusted EBITDA for Energy decreased to NOK 1,075 million from NOK 1,151 million year-on-year, primarily due to lower price area gains [14] - Adjusted EBITDA for Metal Markets decreased to a negative NOK 56 million from NOK 319 million year-on-year, attributed to lower sourcing and trading results [17] - Adjusted EBITDA for Extrusions decreased to a loss of NOK 62 million from NOK 371 million year-on-year, driven by weaker sales margins [18] Operational Highlights - Alumina production at Alunorte exceeded nameplate capacity, supported by improved refinery flow and high equipment availability [3] - The ramp-up of previously curtailed capacity at Norwegian smelters continued, with quarterly production increasing by 2.5% year-on-year [3] - The strategic workforce reduction was completed, with around 850 employees leaving the company [8] Strategic Initiatives - Hydro signed two long-term power sourcing agreements covering 5.25 TWh for the period 2031 to 2040, crucial for its low-carbon aluminium strategy [5] - The company is investing NOK 1.2 billion in the Illvatn pumped storage plant project, its largest hydropower investment in over 20 years [6] - Hydro announced the consolidation of its Extrusions operations in Europe, confirming the closure of two plants in the UK scheduled for late 2026 [7] Market Conditions - Average Nordic power prices increased in Q4 2025 compared to both the previous quarter and the same quarter last year, driven by stronger seasonal demand and production outages [15] - Global primary aluminium consumption increased, with a 1.2% rise in world ex. China [16] - European extrusion demand was flat year-on-year but increased by 3% compared to Q3 2025, while North American extrusion demand was flat year-on-year but decreased by 8% compared to Q3 2025 [19][20]