- Management of industry cyclicality through flexibility and financial strength;
- Strengthening competitiveness through improvements, updates, technology and innovation;
- Capitalization based on integration, adding value by combining skills.
“With Sapa becoming our new Extruded Products business area, Hydro is now an integrated company across the entire value chain - from mining to advanced products and solutions and with leading positions in most markets and regions, ”said Hydro President and CEO Svein Richard Brandtzæg.
“We have 35,000 dedicated, motivated and competent employees in more than 120 production facilities in approximately 40 countries and more than 30,000 customers worldwide, all benefiting from an even better offer and even stronger skills in the area of technology, Research & amp; Product development, innovation and development, ”said Brandtzæg.
Hydro remains committed to ensuring capital discipline and a strong balance sheet, and the inclusion of the new Extruded Products business area further strengthens the company's cash flow.
Positive long-term outlook
The long-term outlook for aluminum as a light, strong and infinitely recyclable metal remains positive, with an increase in global demand for primary aluminum estimated at 2-3% per year for the next 10 years. Globally, the increase in demand for semi-finished products is projected to 3% and recycling to 3-4% per year in the same period.
“We see that the global supply and demand for aluminum for 2017 and 2018 will be greatly balanced, with the global deficit accelerating, while in China, there is still an excess supply. Consequently, the greatest uncertainty in this scenario is related to the fact that it is not known to what extent China will act in accordance with its declared intention to reduce production over the winter, due to environmental issues ”, said Brandtzæg.
With regard to the continued demand and growth of aluminum, Hydro will continue to focus on advanced, high margin and downstream product innovation segments, while in operations, the focus remains on cost efficiency and process technology - according to the strategic direction Better, Bigger, Greener , now updated with even more ambitious goals.
A new chapter for Hydro
In 2017, Hydro achieved several of its ambitions, confirming its integrated model, increasing its competitiveness and improving its capabilities to keep growing. In addition to adding Extruded Products Solutions as a new business area in October, the company opened a new automotive line in Germany in May and is due to produce its first metal in the technology pilot project in Karmoy by the end of the year.
Hydro is also launching today two certified low carbon products - 4.0 and 75R - as part of its ambition to be the industry leader in climate and make carbon neutral from the point of view of the product's life cycle until 2020.
“We are succeeding in our high value generation strategy across our value chain, while remaining committed to our ambitious improvement plan, and we have even increased our overall ambition to NOK 3 billion for 2016- 2019, ”said Brandtzæg.
The adjustment that Hydro is making to its overall improvement target is the result of an increase of NOK 300 million in the goal of the Bauxite & amp; Alumina and the NOK 200 million reduction in the goal of Produtos Laminados, caused by operational challenges and the delay in the production of the new automotive line and the new recycling center for used soda cans, which are now being solved.
Hydro is committed to a disciplined allocation of capital throughout the aluminum business cycle, and its guidelines for long-term sustainable capital investments remain below the level of depreciation, even after adjusting to approximately NOK 5.5 - 6.0 billion per year, with the inclusion of Solutions in Extruded Products. Returning to shareholders remains one of the company's priorities, with a policy of 40% dividend return on net revenue throughout the cycle remains.