© Reuters. FILE PHOTO: A production line under construction at a casting house in the Norsk Hydro aluminium plant in Karmoey, Norway April 26, 2019. REUTERS/Gwladys Fouche
OSLO (Reuters) -Norwegian aluminium maker Hydro said on Wednesday it had raised its cost cutting and profit targets, setting new long-term goals driven by digitalisation of operations and growing demand for metals made from low-emission production.
However, the group also increased its projection for capital expenditure, blaming global inflation and hits from Norway’s currency, which has weakened this year against the euro and dollar.
The company said it was “shifting gears”, raising its earnings targets for the aluminium extrusions and recycling units.
“Towards 2030 we are stepping up growth ambitions in extrusions, recycling and renewable power generation aimed at capturing market opportunities emerging from the green transition,” CEO Hilde Merete Aasheim said in a statement.
The group, which recently secured a cash boost from a renewables venture with Macquarie Asset Management, forecast a “greener earnings uplift” of 2 billion Norwegian crowns ($188.46 million) per year by 2030.
The extrusions business, which turns slabs of aluminium into car parts and other products, will aim for earnings before interest, tax, depreciation and amortisation (EBITDA) of between 10 billion and 12 billion crowns in 2030, up from 7 billion in 2022, Hydro said.
The company said it now plans to reach annual cost reductions of 14 billion Norwegian crowns ($1.32 billion) in 2030, compared to its previous target of cutting 11 billion crowns by 2027.
Hydro also lifted its so-called commercial ambition from sales of low-emitting products to 6.1 billion per year by the end of this decade, up from a goal set last year of 3 billion annually by 2027.
It sees annual capital expenditure in 2024 and for the medium term of 15 billion crowns, up from the 12.5 billion it forecast a year ago for the 2024-2026 period.
The board said it plans to distribute 50%-60% of its 2023 adjusted net income to shareholders in the form of dividends and share buybacks, compared to a 62% cash dividend for 2022.
($1 = 10.6124 Norwegian crowns)
