Hydro's main ambition is to increase the return on equity through the campaign:
• & nbsp; Better: operational and commercial improvements.
• & nbsp; Larger: higher portfolio quality and selective growth to improve the company's relative position in the industry.
• & nbsp; Greener: lower energy consumption and a smaller footprint to gain competitive advantages by considering the climate
The operational and commercial improvements that are carried out in the entire value chain show clear results. The improvements made since 2011 * to date (until the third quarter of 2014, on an annual basis) are NOK 3.7 billion. A further NOK 1.5 billion is to be achieved through announced improvement programs (excluding the associated company Sapa). These include the $ 180 program per tonne in Primary Metals' joint ventures, the "From B to A" program at Bauxite & amp; Alumina, the “Climb” program at Rolled Products, the objectives at Energy and the improvement program at the company's headquarters. Sapa's restructuring and synergy program, which is expected to improve by NOK 1 billion by the end of 2016, is also proceeding according to plan.
"Compared to last year, the market conditions give cause for optimism, but we are continuing our improvement programs with undiminished strength and are increasing our potential for added value," says Svein Richard Brandtzæg, CEO of Hydro. "We are fully committed to finding and defining new tasks, and we want to maintain our benchmark position in the industry as far as operational improvements are concerned."
bauxite & amp; Alumina continues to increase production to its intended capacity, while reducing costs and increasing efficiency. After some operational problems in 2013, production is now at a record level. The “From B to A” program also shows results. The business unit continues to work with the strategic goal of aligning the price of bauxite and alumina with its own market situation, which has advantages compared to today's price structure.
Primary Metal has made improvements of NOK 2.3 billion since 2009 and is finding other ways to add value. The new measures, including a targeted capacity expansion of 100,000 tons per year in the existing furnaces of the company's smelters and work with improvements beyond the $ 300 program, show that the improvement work has become an integrated part of the corporate culture at Primary Metal . Because refined products can be sold at historically high prices compared to standard grades, the strategy to focus on high-premium products has generated significant revenue.
Due to the expected high demand for aluminum products in the automotive industry, Rolled Products continues to focus on differentiation through innovation, quality, service and delivery time. The company develops high quality alloys and products in close cooperation with customers. The investment of 130 million euros in new production capacity for the automotive industry enables a four-fold increase in deliveries to the bodywork market. This production is expected to start in the second half of 2016. In addition, the construction of a new beverage can recycling plant in 2015 should result in lower metal costs in the Rolled Products production chain. Recycling aluminum scrap will also reduce CO2 emissions, which will bring Hydro closer to climate neutral.
The objective of Energy includes operational and commercial improvements in addition to a competitive energy supply for the hydro companies. Energy was able to conclude power contracts over 2.7 TWh for Hydros Norwegian smelters for the period 2021 to 2030, at a price that enables competitive aluminum production in Norway. Energy is both a power generator and an integrated part of an electricity consumer's value chain, and the aim is to fully utilize the full value creation potential of this special combination of operational and commercial competence.
Hydro's stated goal is to contribute to the future viability of society. This gives the company its right to exist. Measures are therefore taken in the entire Hydro value chain so that the company can work in a climate-neutral manner by 2020. Hydro wants to further increase energy efficiency and thus be the primary aluminum manufacturer with the lowest average CO2 emissions in the entire aluminum industry. Low CO2 emissions are a competitive advantage, and this advantage increases in line with the will of global society to face the climate challenges.
Global demand for aluminum outside of China is expected to increase by 3 to 4 percent in 2014, as in 2015. Demand has grown over the past year and there is widespread growth in all segments and regions. This trend is supported by the exchange of materials in favor of aluminum in many areas, for example in the transport and electrical sectors.
“Improving the market balance for primary aluminum enables sustainable, profitable operation. Although large stocks are still available, there is still a certain degree of macroeconomic uncertainty in Europe and the export of semi-finished and finished products from China has increased. But the basic situation looks much better than a year ago, ”explains Brandtzæg. “Not only is the demand in the primary aluminum area growing faster than production, the market for bauxite and alumina is also currently tight. This offers interesting commercial opportunities and puts pressure on the cost base for the Chinese alumina and aluminum manufacturers. & Nbsp;
“After many years with low yields, the general conditions in the market now give a certain reason to be optimistic. Of course, we will use the current situation on the market and achieve our most important goal - an increase in the return on shares with the help of our campaign “Better, Bigger, Greener”, ”emphasizes Brandtzæg.
Due to an optimization of investments, the maintenance costs for 2014 are estimated at NOK 3.3 billion. This amount is less than previously announced because some investments in bauxite & amp; Alumina were postponed to 2015. There are also plans to build a red mud landfill near Alunorte in Brazil, a residual landfill near Paragominas, and above-average maintenance of furnace linings at Primary Metal, increasing maintenance investment to NOK 5.7 billion. Long-term maintenance investments are estimated at NOK 3.5 billion. Around NOK 0.8 billion will be invested in the expansion in 2015, including a new production facility for sheet metal in Grevenbroich, a recycling plant for beverage cans in Neuss and other smaller projects. This will increase total investment to NOK 6.5 billion in 2015, compared to NOK 3.5 billion in 2014.
* $ 300 program from 2009 included
Contact & nbsp; Pål Kildemo
Mobile & nbsp; & nbsp; + 47 970 96 711
E-mail & nbsp; & nbsp; & nbsp; Pal.Kildemo@hydro.com
Contact & nbsp; Halvor Molland
Mobile & nbsp; & nbsp; + 47 929 79 797
E-mail & nbsp; & nbsp; & nbsp; & nbsp; Halvor.Molland@hydro.com