Hydro Reports Strong 3Q Earnings Boosted by Aluminium Price Gains

Hydro

Norwegian aluminium producer Hydro recorded a sharp increase in third-quarter earnings, driven by robust performance in its upstream operations and aluminium metal division. Higher aluminium and alumina prices offset weak demand in downstream markets, contributing to strong results for the company.

Financial Highlights

• Ebitda: Reached NKr 7.37 billion ($672 million), up 89% year-on-year and 26% quarter-on-quarter.
• Revenues: Increased by 12% year-on-year to NKr 50.09 billion.
• Year-to-Date Results: January-September Ebitda rose slightly to NKr 18.62 billion, while revenues climbed 1.17% to NKr 148.58 billion.

Upstream Strength Drives Growth

Hydro’s upstream operations outperformed significantly:

• Bauxite and Alumina Division: Ebitda surged to NKr 3.41 billion from NKr 93 million in the same quarter last year. This improvement was fueled by tightening global alumina supplies caused by disruptions in Australia and bauxite constraints in China.
• Aluminium Metal Division: Ebitda more than doubled to NKr 3.23 billion from NKr 1.38 billion a year earlier, supported by higher aluminium prices, lower carbon costs, favorable CO2 compensation, and positive currency effects.

Downstream Challenges

Hydro’s downstream businesses faced pressure due to weak market conditions:

• Extrusions Division: Ebitda dropped 33% to NKr 879 million as demand from the automotive extrusion sector remained sluggish, particularly in Europe. Low sales of electric vehicles in Germany compounded the downturn.
• Metal Markets Division: Ebitda fell 51% year-on-year to NKr 277 million, with squeezed recycling margins and reduced remelt production from limited aluminium scrap availability.

Hydro noted that building, construction, and industrial demand remained moderate but could see a recovery in 2025 if interest rates decline.

Outlook

Hydro's strong performance in upstream operations highlights its resilience amidst market volatility. However, downstream challenges reflect broader demand issues, particularly in Europe’s automotive and construction sectors. Continued alumina price strength and strategic cost management could help Hydro maintain its competitive edge in the aluminium market.