Norsk Hydro Provides Positive Long-term Outlook

(RTTNews) - Norwegian aluminium producer Norsk Hydro AS (NHY, NHYDY.PK, NHYDY.PK) said that long-term outlook for aluminium as a light, strong and infinitely recyclable material continues to be positive, with global demand growth for primary aluminium estimated at 2-3 percent per year for the next 10 years. Global semis demand growth is projected at 3 percent and recycling at 3-4 percent per year over the same period.

"We see the global aluminium supply and demand for 2017 and 2018 to be fairly balanced, with the deficit in the world outside China accelerating while China continues to be in oversupply. Consequently, a main uncertainty in this scenario relates to what extent China will act on its stated intention to reduce output over the winter due to environmental concerns," said President and CEO Svein Richard Brandtzæg.

Hydro noted that it is also launching today two new certified low-carbon products - 4.0 and 75R - as an extension to its industry-leading climate ambition of becoming carbon neutral from a life-cycle perspective by 2020.

"We are delivering on our strategy for high value creation across our long value chain, while at the same time remaining committed to our ambitious improvements drive, where we are increasing our overall improvement ambition for the period 2016-2019 to NOK 3 billion," Brandtzæg said.

The upwards adjustment of Hydro's overall improvement target is a result of Bauxite & Alumina lifting its ambition level by NOK 300 million while Rolled Products is lowering its 2019 target by NOK 200 million, caused by operational challenges and delayed ramp-up of the new automotive line and recycling facility for used beverage cans that are now being corrected.

Hydro is committed to disciplined capital allocation throughout the business cycle of aluminium, and the long-term sustaining capex guidance remains below depreciation even after being adjusted to around NOK 5.5-6.0 billion per year, with the inclusion of Extruded Solutions.