Business area outlook for Q3 2024 as provided in the Q2 2024 presentation:

Bauxite & Alumina

• Stable production volume 
• Higher alumina price 
• Lower raw material costs

Important takeaways from the Q2 2024 Earnings Call:

“We expect raw material costs release of NOK 350-450 million, which will continue to be driven by further implementation of the fuel switch. Fixed and other costs are expected to increase NOK 100-150 million.”

Aluminium Metal

• ~63% of primary production for Q3 2024 priced at USD 2 432 per mt. 
• ~42% of premiums affecting Q3 2024 booked at USD ~ 494 per mt. Q3 realized premium expected in the range of USD 380 and 430 per mt. 
• Higher raw material cost 
• Lower sales volumes

Important takeaways from the Q2 2024 Earnings Call:

“Both the LME and the premiums have increased since Q1 and are expected to impact positively the revenue side in AM.

For Q3, AM has booked 63% of primary production at 2,432 USD per ton including the effect of our strategic hedging program. Furthermore, we have booked ~42% of premiums affecting Q32 booked at 494 USD per ton, and we expect realized premium in the range of 380 - 430 USD per ton. 

On the negative side we expect further increase in raw material costs, driven by alumina, and partly offset by carbon, of between NOK 400 and 500 million.  We also expect sales volume to return to normalized and be lower compared with Q21. Fixed costs are expected to remain stable. 

We continue to closely monitor the demand developments and we do not foresee any restarts of the curtailed primary volumes next quarter.  

On CO2 compensation, we expect flat quarterly development going ahead.”

Metal Markets

• Seasonally lower volumes and continued margin pressure in the recyclers
• Lower results from sourcing and trading activities
• Continued volatile trading and currency effects
• Guidance for YE Commercial Adjusted EBITDA excl. currency and inventory of 600 - 800 MNOK

Important takeaways from the Q2 2024 Earnings Call:

“The outlook for Q3 continues to be challenging as we expect recycling margins continued to be squeezed on the lower scrap availability keeping margins low.  

At the moment, the recycling margins are at an all-time low level, and we expect those to return to normalized levels over time. However, as mentioned earlier, this is tied to the improvement in the industrial activity in our core markets. We expect some improvement in margins to impact the next quarter. However, those are expected to be partly offset by seasonally lower volumes and largely dependent on the scrap market development. 

For our Commercial area, in Q3 we expect lower contribution from sourcing and trading activities. Again, as always reminding of the inherent volatility of the trading and currency effects. Following the latest developments, we have decided to adjust our guiding for 2024 full year Adjusted EBITDA for Commercial excl. currency and inventory valuation effects to a range of NOK 600 million to NOK 800 million.”

Extrusions

• Continued strong margins
• Lower sales volumes and recycling margins
• Higher variable costs
• Continued soft extrusions markets 

Important takeaways from the Q2 2024 Earnings Call:

“Looking into Q3 we should look towards the same quarter last year to capture the seasonal developments in extrusions. Compared with last year, due to continued soft extrusions markets in both Europe and North America, we expect lower sales volumes. 

We also expect continued strong sales margins, however, we should keep in mind that the remelt margins continues to be under pressure. Combined with higher costs, we expect the negatives to more than offset the positives in Q3 when comparing year-over-year."

Energy 

• Stable production 
• Somewhat lower Nordic power prices 
• Price and volume uncertainty

Important takeaways from the Q2 2024 Earnings Call:

“Looking into Q3, as always, we should be aware of the inherent price and volume uncertainty in Energy. For next quarter, production volumes are expected to be on a similar level while prices are expected to be lower in July and then gradually increase going towards next winter. Furthermore, we expect the price area difference results to be of a similar level as in Q2"

Additional information

• The latest available price and currency sensitivities for earnings (as well as information on the price time lags for revenues and costs), are included in the NHY Presentation Q2 2024.

Publicly available information regarding the market prices and currency developments in Q2

 

	Q2-24	Q1-24	QoQ	YoY
Average LME 3M market rate1)	2,565	2,241	14%	12%
Average PAX fob Australia (USD/t) 2)	433	367	18%	26%
Energy prices3)
Nordic system NOK/MWh	416	667	-38%	-36%
NO5 NOK/MWh	478	728	-34%	-46%
NO2 NOK/MWh	529	689	-23%	-45%
NO3 NOK/MWh	362	570	-37%	-13%
SE1 NOK/MWh	315	720	-56%	-36%
SE2 NOK/MWh	316	550	-42%	-36%
NO2 vs NO3 NOK/MWh	167	119	41%	-69%
Currencies4)
Average NOK/USD	10.74	10.51	2%	0%
Average NOK/BRL	2.06	2.12	-3%	-5%
Average NOK/EUR	11.57	11.41	1%	-1%
Average BRL/USD	5.21	4.95	5%	5%

1) Realized price in AM lags LME market rate with 1-2 months
2) Alumina prices in B&A are realized with approx. one month lag, in AM with 2-3 months lag
3) Source: Nordpool
4) Source: Norges Bank