Aluminium producer Norsk Hydro to raise capex, cut more costs

Aluminium-maker Norsk Hydro will cut more costs and raise its capital expenditure next year, while distributing a smaller portion of its earnings as dividend, it said on Thursday, as it contends with rising inflation.

Aluminium-maker Norsk Hydro will cut more costs and raise its capital expenditure next year, while distributing a smaller portion of its earnings as dividend, it said on Thursday, as it contends with rising inflation. Hydro said it aimed to cut its annual costs by a further 3.5 billion crowns ($358.7 million) to a total of 11 billion crowns by 2027, compared to its previous target of cutting by an accumulated 8.5 billion crowns between the years 2019 and 2025.

The group expects capital expenditure of 13.5 billion crowns in 2023, including a 2.1 billion carry-over from 2022, and 1.7 billion in currency and inflation effects, having forecast 11 billion in capex for 2022 a year ago. It is also reducing returns to shareholders, with the company's board proposing to distribute 50-70% of the 2022 adjusted net income to shareholders in form of dividends and share buy-backs, compared to the 80% cash dividend for 2021.

Like other industrial companies in Europe, the Norwegian company has been struggling with higher costs. It has cut output in Europe, including permanently closing production at its Slovalco plant in Slovakia in September. About half of Europe's aluminium production, which requires large amounts of power to produce, has been shut down as a result of a surge in energy costs since Russia's invasion of Ukraine.

($1 = 9.7584 Norwegian crowns)