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  • Strong demand drives recovery
  • Record EBITDA results in Extrusions and Energy
  • Improvement program ahead of plan
  • Agreement to sell Rolling, closing expected Q2-Q3 2021
  • Investment decision for Alunorte fuel-switch project
  • Exploring hydrogen, other growth initiatives progressing

Higher all-in metal prices, improved results from Energy and improved margins and volumes in Extrusions contributed positively to the result. These positive elements were partly offset by higher raw material costs, negative currency effects and additional maintenance-related costs in the Bauxite & Alumina business area.

Hydro continues to address the effects of the Covid-19 pandemic on its operations and communities around the world. “Our top priority has been the health and safety of our people and the communities where we operate. Covid-19 initiatives have been implemented in our operations globally to support employees and prevent infections. In Brazil, Hydro has also provided support to the local communities in their efforts to handle the pandemic,” says President and CEO Hilde Merete Aasheim.

The first quarter saw a strong global recovery driven by the re-opening of economies and substantial fiscal stimulus. As a result, Hydro saw a decreasing oversupply in the primary aluminium market, and analysts now expect a largely balanced market for 2021. 

“I am pleased to see earnings and returns picking up across most of our operations on higher margins and volumes, but also on continued low costs, especially in Extrusions,” says Aasheim.

Hydro Extrusions achieved record results this quarter, driven by strong volume growth, improved margins, and continued cost savings from improvement program initiatives. The quarter saw a strong rebound in automotive in Europe and solid growth in the industrial segment, as well as residential building & construction. Hydro Energy also experienced a record quarter, driven by higher power prices, production volumes and the expiry of legacy power contracts.

Hydro has set out a clear strategic direction toward 2025 and aims to strengthen its position in low-carbon aluminium, while exploring new growth opportunities in renewable energy.

“The new growth initiatives in Hydro Energy are progressing well. We see a large potential for hydrogen replacing natural gas at our plants. We will therefore explore the potential for developing and operating hydrogen facilities to meet the large internal demand, as well as serving an external market, leveraging the company’s industrial and renewable power expertise,” says Aasheim.

Hydro has signed a Memorandum of Understanding (MoU) with New Fortress Energy (NFE) with the aim to replace a major part of its current fuel oil consumption at the Hydro Alunorte alumina refinery in Brazil with more environmentally friendly natural gas.

“We achieved an important milestone toward reaching our climate strategy and global commitment to reduce greenhouse gas emissions by 30 percent by 2030, as we have made the investment decision for the fuel switch project at the Alunorte refinery in Brazil,” says Aasheim.

The quarter also saw strong demand for Hydro’s low-carbon aluminium products, Hydro CIRCAL and Hydro REDUXA.  The volume of Hydro REDUXA sold in the first quarter was approximately 60 percent of the total Hydro REDUXA volume sold in 2020. 

On March 5, 2021, Hydro entered into an agreement to sell its Rolling business to KPS Capital Partners for EUR 1,380 million (around NOK 14.2 billion) on an enterprise value basis, resulting in EUR 435 million of cash proceeds. The sale of Rolling will strengthen our ability to deliver on the 2025 strategy. Completion of the transaction is expected to take place in the second or third quarter of 2021. 

Following the sale of the Rolling business, the revised 2025 improvement target is now NOK 7.4 billion. Of this, NOK 5.1 billion is targeted by end of 2021 compared to the baseline of 2018. In addition, Hydro is pursuing market and customer-driven opportunities in its current aluminium portfolio, aiming to realize NOK 1.5 billion in commercial ambitions by 2025. Based on progress in the first quarter, the improvement program is expected to exceed the year-end target. 

Compared to the fourth quarter 2020, Hydro’s adjusted EBITDA increased from NOK 3,403 million to 5,182. Higher realized alumina and aluminium prices, improved results from Energy, and higher sales from Extrusions were partly offset by higher raw material costs and negative currency effects.

Net income from continuing operations amounted to NOK 1,880 million in the first quarter. In addition to the factors described above, net income from continuing operations included a net foreign exchange gain, mainly unrealized, of NOK 653 million and a NOK 1,181 million unrealized loss on LME-related contracts.

Hydro’s net debt[1] position increased from NOK 7.8 billion to NOK 9.0 billion at the end of the quarter. Net cash provided by operating activities amounted to NOK 0.5 billion. Net cash used in investment activities, excluding short-term investments, amounted to NOK 1.3 billion.

Hydro held NOK 15.0 billion in cash and cash equivalents and NOK 2.5 billion in short-term bank deposits and NOK 0.5 billion in money market funds, included in short-term investments, at the end of the first quarter. Short-term bank deposits and money market funds are normally available at short notice. The revolving credit facility of USD 1.6 billion was fully available at the end of the quarter.

In addition to the factors discussed above, reported earnings before financial items and tax (EBIT) and net income include effects that are disclosed in the quarterly report. Adjustments to EBITDA, EBIT and net income (loss) are defined and described as part of the alternative performance measures (APM) section in the quarterly report.

[1] Net cash (debt) includes Cash and cash equivalents and Short-term investments less Bank loans and other interest bearing Short-term debt and Long-term debt.

The information is such that Hydro is required to disclose in accordance with the EU Market Abuse Regulation. The information was submitted for publication from Hydro Investor Relations and the contact persons set out above.

Cautionary note

Certain statements included in this announcement contain forward-looking information, including, without limitation, information relating to (a) forecasts, projections and estimates, (b) statements of Hydro management concerning plans, objectives and strategies, such as planned expansions, investments, divestments, curtailments or other projects, (c) targeted production volumes and costs, capacities or rates, start-up costs, cost reductions and profit objectives, (d) various expectations about future developments in Hydro's markets, particularly prices, supply and demand and  competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, and (i) qualified statements such as "expected", "scheduled", "targeted", "planned", "proposed", "intended" or similar.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. Factors that could cause these differences include, but are not limited to: our continued ability to reposition and restructure our upstream and downstream businesses; changes in availability and cost of energy and raw materials; global supply and demand for aluminium and aluminium products; world economic growth, including rates of inflation and industrial production; changes in the relative value of currencies and the value of commodity contracts; trends in Hydro's key markets and competition; and legislative, regulatory and political factors.

No assurance can be given that such expectations will prove to have been correct. Hydro disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



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