Norsk Hydro - ADR

Q3 performance: strong profitability, weak-ish cash conversion (investor “watch item”) - Adjusted EBITDA: NOK 9.1bn (vs NOK 8.9bn Q2; up ~3% YoY on revenue NOK 52.1bn). - Free cash flow (FCF): NOK 1.4bn, but cash conversion deteriorated due to net operating capital build (NOK 3.7bn) (notably inventory build and gas prepayments for Alunorte, plus CO₂ compensation receivable). - Updated balance sheet/capital discipline: Adjusted net debt: NOK 21.9bn; net debt decreased quarter-on-quarter (from NOK 16.3bn to 15.4bn, but “adjusted net debt” higher due to collateral/pension and other items).

Alunorte gas disruption: biggest near-term financial risk + clear management response - What happened: temporary gas supply disruption in August (supply constraints; forced production reduction to ~50%). - Response: secured regulatory approval to import gas directly and access to LNG terminal; ramped back toward capacity. - Cost impact: ~$85m in Q3 from spot LNG higher than contracted; Q4 estimate: $90m–$110m negative (based on TTF forward curves, subject to changes). - Outlook/challenge: priority is a long-term competitive gas contract; until then, spot purchases remain a volatility driver.

Operational highlights + decarbonisation progress (good surprises, long-term optionality) - Norwegian smelters: record liquid metal production, +6% YoY. - HalZero milestone: produced first aluminum at the test facility—core technology proven beyond lab scale. - Still not fully emission-free yet (testing of CO₂/split-CO ongoing later); several years of piloting remain before industrial scale. - Commercial momentum for low-carbon/recycled: new agreements + customer partnerships (e.g., CHANEL, GM/Cadillac, Mercedes). This supports premium positioning and longer-term demand stability. - PPAs: signed 2 power purchase agreements (Statkraft, Valborg Energy) securing +8.9 TWh toward 2040, strengthening long-term power position.