- Managing cyclicality through financial strength and flexibility
- Strengthening competitiveness through continuous improvements and portfolio high-grading
- Differentiating through the integrated value chain
"For us, being integrated goes beyond the value-chain perspective. We do not distinguish between the financial and extra-financial dimension, but regard all aspects of our activities as part of our efforts to strengthen our competitive edge - be it operational improvements, commercial excellence or sustainability," Brandtzæg says.Hydro has continued its strong track record in delivering on promised improvements also in 2016. The company is on track with its NOK 2.9 billion Better improvement ambition by 2019 after reaching its 2016 target of a total NOK 1.1. billion, with stronger-than-expected improvement results in the Bauxite & Alumina business area compensating for slower-than-expected progress in both Primary Metal and Rolled Products. Hydro is also utilizing technology and innovation to differentiate in the highly competitive environment of global aluminium. The Karmøy technology pilot, expected to be 70% completed by end-2016, will not only verify the world's most energy and climate efficient smelter technology, but also serve as spin-off platform for technology-driven improvements throughout Hydro's production system for primary aluminium. Both Primary Metal and Rolled Products, as well as extrusion JV Sapa, are pursuing a strategy of high-grading and shifting the product portfolio towards higher-margin segments. In Rolled Products, this has resulted in a special focus on the high-growth automotive market, and trial production has now started at the new automotive line 3 in Grevenbroich, Germany, that will serve European-based car makers with premium products. Rolled Products also completed construction of the new recycling line for used beverage cans this year, which is expected to reach full capacity during 2017 after experiencing some difficulties during the ramp-up phase. "With the world moving towards a low-carbon, circular economy, we believe our integrated approach with value chain control, competence and technology transfer across our business areas, is the right model to ensure customer value and position us for further development and growth," Brandtzæg says.
Global primary aluminum demand is estimated to grow around 5 % in 2016 and 3-5% in 2017, as its inherent qualities as light, strong, highly formable, durable and infinitely recyclable continue to increase the metal's attractiveness across a wide range of products and applications. Supply and demand for primary aluminium is expected to be broadly balanced in 2016 and 2017.In the longer-term, global primary demand is expected to rise an average 2-3 % per year for the next decade, while semis demand is projected at 3-4 % and recycling 4-5 % a year over the same 10-year period. Hydro is highly committed to disciplined capital allocation throughout the business cycle of aluminium, and the long-term sustaining capex guidance remains below depreciation even with the adjustment to around NOK 4 billion from a previous estimate of NOK 3.5-4 billion. Sustainable shareholder returns continue to be a key priority for Hydro, with a dividend policy of returning 40 % of net income over the cycle. Investor contactContact Stian HasleCellular +47 97736022E-mail Stian.Hasle@hydro.comMedia contactContact Halvor MollandCellular +47 92979797E-mail Halvor.Molland@hydro.com Attachments: http://www.globenewswire.com/NewsRoom/AttachmentNg/ed3264b3-c0eb-4d74-b093-22869fb8b74c