President and CEO Eivind Reiten described the company’s direction at a meeting with 200 of Hydro’s top leaders in Molde, Norway, on Thursday.
He emphasized that the strategic consideration of the activities in downstream activities in now complete. Hydro is about to exit Automotive Components, but will continue to focus on the sectors Rolled Products, Extrusion Europe, Extrusion Overseas, and Precision Tubing. These areas have considerable deliveries to, among others, the automotive, building and packaging industries.
After completion of the planned merger of Hydro’s oil and gas activities with Statoil later this year, Hydro will consist of aluminum production, downstream aluminum products and considerable production of hydropower as core areas.
Aggressive growth
It has long been clear that the company was preparing for aggressive growth in aluminum production in coming years. First is the construction of a large aluminum plant in Qatar and further increases in alumina production in Brazil. A number of other projects to increase aluminum production have been evaluated. The company’s strong technological position and competence in completing large projects are important considerations in evaluating these opportunities.
“We have completed a wide-ranging restructuring of our aluminum activities in recent years, both in our smelters and in downstream operations. This has produced good results. We will continue our efforts to improve operations and profitability in those areas that still are delivering low profitability,” Reiten said.
“Hydro is a strong, world-class aluminum company. The market demand for aluminum and aluminum products is like never before. We have great ambitions for growth, and a good position to strengthen our position in an exciting industry.”
Hydro announced a year ago a new strategic direction, with increased emphasis on production of aluminum and alumina, as well as an extensive restructuring in downstream aluminum operations. In recent months, Hydro has exited production and fabrication of magnesium. In addition, Hydro has entered into agreements to sell the partly-owned Meridian Technologies, which produces magnesium automotive components, as well as wholly- and partly-owned production of engine blocks and cylinder heads for the automotive industry. The Automotive Structures business is also to be sold, as will be other smaller units.
“Cash flow from Rolled Products is strong and our position in Europe is solid, with interesting leadership positions in important focus areas. We have concluded that Hydro will be the best owner for this activity going forward,” said Svein Richard Brandtzæg, head of Aluminum Products.
He emphasized that the company is a global leader in high-margin products like lithographic plates and aluminum foil, as well as strong European positions in heat transfer applications.
Author: Ole Johan Sagafos
