Hydro does not reach its 3 billion improvement goals because of Brazil's problems – Norsk Hydro – Børs and Finans

LONDON (E24): Norsk Hydro met with investors and analysts on Thursday during Financial Markets Day in London, during which the aluminum company will submit particular plans and financial goals.

One target that has not been met is the improvement program, with a total of NOK 3.0 billion of planned improvements over a four-year period until the end of 2019.

The reason is the problems in Brazil, where the alumina refinery Alunorte requires Hydro to run at half capacity, writes Hydro in a press release.

Brazil's problems also contribute to the fact that the company has failed to maintain progress on many of its medium-term goals.

It is in March that Alunorte had to run halfway through its capacity on the part of environmental authorities and a regional court, following the rejection of rainwater from the factory following heavy rains in February.

Even Hydro has returned harmful emissions charges to the environment and the company has borrowed from internal and external reviews that freeze the company.

Read more: Lack 600 million per quarter: Brazil's bill is so big

Must invest at least ten billion in 2019

The company is still working to start producing at full capacity in Alunorte.

Hydro has enough alumina all year round

"We aim to establish a common platform with the authorities and the judiciary in order to define a common direction towards full production, using the best technologies available.We have what we need: the right people, the good technology and the right environment, "said Svein Richard Brandtzæg, general manager of Hydro.

The financial plans for Hydro include investments of NOK 6.5 to NOK 7 billion on average for the period 2018-2021. This includes investments that will make Alunorte more robust.

By 2019, the total investment is estimated at 10-10.5 billion dollars.

Last year, at the time of the capital market, long-term investment forecasts were 5.5 to 6 billion kroner a year.

At the same time, the company's dividend policy remains as follows: 40% of the company's net income will be paid.

Higher prices help Hydro

Waiting for deficit on the aluminum market

Hydro expects primary aluminum demand to increase by 2 to 3 percent by 2019. This will create a persistent deficit in the global primary aluminum market, according to the company.

The same growth rate is forecast for primary aluminum over the next decade, while demand for processed and recycled products is expected to increase by 3 and 3 to 4 percent respectively during this period.

"We are seeing many examples of good development in the company, such as the Karmøy technology pilot, the new AL3 production line in Germany and the continuous improvements in the extruded solutions sector" says Brandtzæg.

He points out that the integration of the latter is consistent with the goal of NOK 200 million synergies.

"Thanks to the most talented and dedicated employees in the industry and our leading position in innovation and sustainability, we have a positive long-term outlook," Brandtzæg said.