Norsk Hydro Navigates Market Challenges with Strategic Moves and Environmental Focus
Norsk Hydro, a key player in the aluminium industry, reported an adjusted EBITDA of $351.08 million for the fourth quarter of 2023, a decrease from $675.10 million in the same period the previous year. The company's full-year 2023 adjusted EBITDA stood at $2.09 billion, down from $3.73 billion in 2022. Factors such as lower sales prices for aluminium and alumina, reduced volumes in Extrusions and recycling, and increased fixed costs negatively influenced the results, though these were partially offset by reduced raw material costs, improved Extrusions margins, and currency impacts.
Despite the downturn, Norsk Hydro has exceeded its 2023 improvement targets and commercial ambitions, expanded its recycling capacity, and made strides in upscaling post-consumer scrap. The company is also advancing its decarbonization efforts across the value chain with initiatives like Hydro CIRCAL, reinforcing its commitment to sustainability.
A proposed cash dividend reflecting 59 percent of adjusted net income, amounting to $0.24 per share, alongside a $188.56 million share buyback program, underscores the company's confidence in its financial health and long-term strategy.
The company also reported a total impairment loss of approximately $460.66 million in the fourth quarter, primarily due to the alumina market's short to medium-term challenges and long-term power price uncertainty for the partly owned Tomago aluminium plant in Australia. However, recent alumina market tightening and increased PAX prices have provided some positive momentum.
In response to these market fluctuations, Norsk Hydro has implemented measures to mitigate short-term volatility, leveraging production flexibility and inventory reductions to free up cash. This strategy resulted in a working capital release of $282.12 million in the fourth quarter and a cash-effective release of $658.76 million for the full year.
