HYDRO: Market developments for bauxite, alumina and aluminium metal
Adjusted EBITDA for Bauxite & Alumina increased compared to the third quarter of last year, from NOK 93 million to NOK 3,410 million, mainly driven by higher alumina sales prices, lower cost of raw materials and positive currency effects, partly offset by increased alumina sourcing costs and decreased sales volume. PAX started the quarter at USD 505 per mt, traded down to USD 478 per mt in July, before increasing gradually to USD 562 per mt at the end of the quarter as the World ex-China alumina market continued tightening.
Adjusted EBITDA for Energy in the third quarter decreased compared to the same period last year, from NOK 762 million to NOK 626 million. Lower prices and lower gain on price area differences were partly offset by the expiry of a 12-month internal fixed price purchase contract from Aluminium Metal at a loss in the same period last year. Average Nordic power prices in the third quarter 2024 decreased, both compared to the same quarter last year and the previous quarter. The decrease compared to the second quarter in 2024 was primarily a result of strengthened hydrological balance and seasonally reduced consumption. Price area differences between the south and the north of the Nordic market region decreased compared to the same quarter last year and increased compared to the previous quarter.
Adjusted EBITDA for Aluminium Metal increased in the third quarter of 2024, from NOK 1,379 million to NOK 3,234 million compared to the third quarter of 2023, mainly due to higher all-in metal prices, reduced carbon cost, higher level in CO2 compensation and positive currency effects, partly offset by increased alumina cost and higher fixed cost. Global primary aluminium consumption was up 1.6 percent compared to the third quarter of 2023, driven by a 2.3 percent increase in China. The three-month aluminium price increased throughout the third quarter of 2024, starting the quarter at USD 2,515 per mt and ending at USD 2,612 per mt.
Adjusted EBITDA for Metal Markets decreased in the third quarter compared to the same period last year, from NOK 568 million to NOK 277 million, due to lower results from recyclers and negative currency effects, partly offset by strong results from sourcing and trading activities. Lower results from recyclers are due to reduced sales prices in a weakening market and additional margin pressure in a tightening scrap market.
Extrusions adjusted EBITDA for the third quarter of 2024 decreased compared to the same quarter last year, from NOK 1,322 million to NOK 879 million driven by lower sales volumes and decreased margins from recycling. General inflation pressured fixed and variable costs, partly offset by cost measures. European extrusion demand is estimated to have decreased 7 percent in the third quarter of 2024 compared to the same quarter last year, and 21 percent compared to the second quarter partly driven by seasonality. Automotive extrusion demand continues to be challenged by weak sales of electric vehicles across Europe, particularly in Germany. Demand for building and construction, and industrial segments has remained moderate after summer with no clear signs of improvement over the coming months, although lower interest rates may support demand into 2025. North American extrusion demand is estimated to have decreased 4 percent during the third quarter of 2024 compared to the same quarter last year and 7 percent compared to the second quarter. The transport segment has been particularly weak, driven by lower trailer build rates. Automotive demand is facing headwinds due to weaker sales of electric vehicles. Demand continues to be soft in the building and construction, and industrial segments, however, underlying demand is expected to gradually improve into 2025 driven by lower interest rates.
Other key financials
Compared to the second quarter 2024, Hydro’s adjusted EBITDA increased from NOK 5,839 million to NOK 7,367 million in the third quarter 2024. Higher realized aluminium and alumina prices combined with lower fixed costs were partly offset by lower Extrusions and recycling volume.
Net income (loss) amounted to NOK 1,409 million in the third quarter of 2024. Net income (loss) included a NOK 907 million unrealized derivative loss on LME related contracts and a net foreign exchange gain of NOK 139 million. The result also includes the impairment of the equity accounted battery investment Vianode of NOK 581 million and NOK 129 million in rationalization charges and closure costs. Further, foreign exchange losses of NOK 1,092 and losses on a loan to Vianode of NOK 375 million are adjusted for. The tax effect on these adjustments reflects a standardized tax rate for taxable gains and tax deductible losses.
Hydro’s net debt decreased from NOK 16.2 billion to NOK 14.8 billion during the third quarter of 2024. The net debt decrease was mainly driven by EBITDA contributions, partly offset by investments and other operating cash flows.
Adjusted net debt decreased from NOK 26.1 billion to NOK 25.0 billion, largely due to the decrease in net debt of NOK 1.5 billion, partly offset by increased net pension liabilities of NOK 0.3 billion and increased collateral of NOK 0.2 billion.
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.
