OSLO (dpa-AFX) - Norwegian aluminium producer Norsk Hydro ASA (NHY, NHYDY.PK, NHYDY.PK) Thursday said tight global aluminium markets are expected to continue, translating into higher all-in metal prices and stronger earnings for aluminium producers.
World aluminum demand outside China is estimated to grow 3-4 percent in 2014, as well as in 2015. Demand has increased over the last year, with broad-based aluminium demand growth across segments and regions. Demand also benefited from substitution in many segments, including transport and electrical.
Demand exceeded production in the primary market, and the firm saw a tightening of the raw material markets, in bauxite and alumina, which presents commercial opportunities.
Hydro, which is holding its Capital Markets Day, said it is focused on creating value in a tightening aluminium market through its aspiration to become better, bigger and greener.
The company intends to increase shareholder returns through better operational and commercial improvement drive as well as high-grading and selective growth to improve relative industry position.
It plans to lower energy consumption and footprint to strengthen future competitive climate advantage.
Hydro said its operational and commercial improvement efforts are showing clear effects. Delivered improvement efforts from 2011 to the third quarter of 2014 annualized, amount to 3.7 billion Norwegian kroner, with 1.5 billion kroner left to be delivered, from the communicated improvement programs.
Hydro President and CEO Svein Richard Brandtzæg said, 'Market conditions are looking significantly better than a year ago, but we are not losing focus on improvement efforts, which are all on target, further increasing our value creation potential.'
Brandtzæg said the firm is doing its utmost to find and define new initiatives as it strives to remain the industry benchmark in operational improvements.
Bauxite & Alumina continues to lift production towards nameplate capacity, at the same time further reducing costs and increasing efficiency. Following operational issues in 2013, production is now back at record levels.
Primary Metal has delivered 2.3 billion kroner in improvements since 2009. It continues to find new levers to pull in order to get more value out of the asset base.
'After years of depressed earnings, market fundamentals are now providing us some reason for optimism. We will be sure to take advantage of current market conditions and deliver on our number one ambition of increasing shareholder returns, through our aspiration of becoming better, bigger and greener', Brandtzæg added.
Sustaining capital expenditures or capex for 2014 is estimated to be 3.3 billion kroner, which is lower than initially guided due to some projects in Bauxite & Alumina being postponed to 2015.
Further, the construction of a red mud disposal area at Alunorte in Brazil, a tailing dam at Paragominas, and above average relining in Primary Metal, is expected to lift sustaining capex to 5.7 billion kroner. Long-term sustaining capex is estimated at 3.5 billion kroner.
Growth capex for 2015 is expected to amount to 0.8 billion kroner, and total capex at 6.5 billion kroner, compared to 3.5 billion kroner for 2014.
In a separate press release, the firm said the Corporate Assembly has elected Terje Venold as chair and Susanne Munch Tore as deputy chair of the Corporate Assembly for its remaining period until the Annual General Meeting of May 2016.
The stock closed modestly higher in Oslo on Wednesday at 41.35 kroner.
Copyright RTT News/dpa-AFX