Hydro reports strong Q3 results with 12% revenue growth while navigating a weaker downstream market

Norsk Hydro, a Norwegian aluminium and renewable energy company, has released its third quarter and nine-month results, reporting a satisfactory fiscal performance driven by increased alumina and aluminium prices. Meanwhile, the downstream sectors are navigating challenging core markets, offering a glimmer of hope for improvement to Hydro.

Sneaking into the results, revenue appears at NOK 50,089 million for the third quarter, reflecting a year-on-year increase of 12.05 per cent from NOK 44,702 million, while it edged a slight fall quarter-on-year by 2 per cent from NOK 50,944 million. Total revenue in nine months has exceeded the past year's record, reaching NOK 148,579 million compared to NOK 146,865 million.

The company's adjusted EBITDA has inflated by 89 per cent through the third quarter, reaching NOK 7,367 million versus NOK 3,899 million in Q3 2023, underpinning the fact that increased alumina and aluminium prices and favourable currency trend in the volatile market bolstered Hydro's year-to-date financial growth. On a quarter-on-quarter basis, Hydro's adjusted EBITDA in Q3 marked an increase of 26 per cent from NOK 5,839 million.

In nine months, Hydro's adjusted EBITDA totalled NOK 18,617 million, up by 0.52 per cent from NOK 18,522 million during the corresponding period of the previous year.

Net income (loss) amounted to NOK 1,409 million in the third quarter of 2024, including an unrealised derivate loss of NOK 907 million 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 rationalisation charges and closure costs. Thus, the company's year-to-date net debt increased from NOK 13,843 million to NOK 14,747 million.

The upstream sector remains the driving force:

From the product structure, the upstream aluminium sector continued yielding positive results through the third quarter of 2024, with bauxite and alumina generating adjusted EBITDA of NOK 3,410 million compared to NOK 93 million a year ago and NOK 1,616 million in Q2 2023, and primary aluminium business yielding NOK 3,234 million in adjusted EBITDA during Q3 in contrast to NOK 1,379 million in Q3 2023 and NOK 2,520 million in Q2 2024. The global alumina prices reached US$562 per tonne by the quarter-end as global alumina supply tightened. Chinese alumina prices also rose to a peak due to bauxite sourcing constraints from Guinea, bolstering Hydro's Q3 revenue. Aluminium price rise to US$2,612 per tonne during the period also supported solid results in aluminium metal.

Meanwhile, adjusted EBITDA from the extrusion sector decreased by 33 per cent Y-o-Y and 36 per cent Q-o-Q to NOK 879 million, suggesting a continued sluggish market in the downstream sector facing challenges by weak demand, particularly from the automotive industry due to low electric vehicles sales in Europe, especially in Germany. The prevailing bearish market in the building & construction sector also impacted Hydro's revenue from the extrusion sector, offsetting the company's overall earnings.

Reiterating the Q3 financial results, Eivind Kallevik, President & CEO of Hydro, stated: "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." 

Showing faith in the downstream sector, he also said, "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."