Norsk Hydro To Lift Cash Flows, Returns; To Cut Emissions By Further 30% By 2030

(RTTNews) - Norwegian aluminium and renewable energy company Norsk Hydro (NHY, NHYDY.PK, NHYDY.PK) on Tuesday said it aims to lift cash flows and returns through improvement and restructuring efforts.

Further, the company is launching a new climate strategy aiming to reduce already competitive CO2 emissions in own production and processes by further 30 percent by 2030.

In its Hydro Investor Day 2019 update, Hydro said it will present its strategic direction, including new improvement efforts representing 6.4 billion Norwegian kroner in EBIT improvements over the next five years. This is in addition to 0.9 billion kroner targeted in Rolled Products over the same time period.

The company projects a capital returns target of 10% RoaCE over the cycle. Moreover, there will be an update on the Alunorte situation, Rolled Products restructuring and market outlook.

Hilde Merete Aasheim, President and CEO, said, "The improvements include the curtailment reversal of the Brazilian assets. The efforts also include simplification of staff functions and a revised operating model to support our profitability and sustainability agenda."

Hydro said its strategic priorities are to have cost-competitive assets.

Regarding ramping up production in Brazil, the company noted that the Federal Court lifted the embargo on Alunortes new bauxite residue disposal or DRS2 under the civil lawsuit on September 20. Alunorte is still subject to an embargo on DRS2 imposed by the same court in a parallel criminal lawsuit, but Alunorte is expecting an extension of the civil decision to the criminal case shortly.

Hydro will maintain shareholder focus with a dividend policy of returning 40% of net income over the cycle, with a dividend floor of NOK 1.25 per share.

Sustaining capex for 2019 and 2020 combined is estimated at around 12.5-13.5 billion kroner. Total capex for 2019-2020 is estimated at 19.5 billion kroner.

The company set out a target to release net operating capital by 4 billion kroner by end of 2020 compared to end of 2018, of which the majority will be released by end 2019.