BofA-Norsk Hydro CMD Revising path to 2030. We are bullish aluminium. -20251127

Hydro CMD: Revising Extrusions, cost and capex cuts

Norsk Hydro hosted its Capital Markets Day (CMD). Company is focusing on Recyclingand Extrusions while revising its path to 2030 targets. Key takeaways: 1) Extrusionsdownsizing, announced yesterday. 2) Cost improvement programme on track to deliverNOK6.5 bn/year. NOK1.2 bn in 2025. 3) Capex cut for 2025/ 2026 to NOK13.5 bn downfrom NOK 15 bn. Medium term target still NOK15 bn. 4) Extrusions LT EBITDA targetreduced to NOK8-10 bn (we cut yesterday to NOK5 bn LT, taking a "show me" approach).5) Recycling, 2030 guide cut to NOK5-6 bn EBITDA. Lower end unchanged, droppedupper end. 6) Maintain dividend policy and capital structure targets. Small changes tomodel as we update capex. PO still NOK90 based on 5.5x average 25-27E EBITDA.

Death by 1000 cuts: Capacity closures in Extrusions.

Ahead of its Capital Markets Day Hydro announced yesterday that, due to poor Europeandemand, it will close five (5) European Extrusion plants and retrench 730 employees.Total restructuring cost is NOK1.9 bn (NOK 460 mn impairment). Hydro is one of the lastfully vertically integrated aluminium companies operating from bauxite mines to aluminarefineries to smelters to downstream fabrication (extrusions in this case). NHYpreviously exited its rolled products business as it was unable to sustainably hit its costof capital. Bottom line, overall returns and business performance in extruded productsremain challenging despite some interesting pockets of demand. (See report: NHY)