The Norwegian aluminum giant Norsk Hydro recently released its second-quarter financial data. Driven by rising aluminum prices, increased product premiums, and improved recycling operations, the company's core profit increased year-on-year, indicating that the global aluminum market still maintains strong profitability despite supply constraints and cost pressures.
The data shows that Hydro's adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the second quarter reached 8.92 billion Norwegian kroner, higher than the same period last year; the adjusted earnings per share rose to 2.2 Norwegian kroner, compared to 1.7 Norwegian kroner in the same period last year. The company's net profit reached 5.97 billion Norwegian kroner, and its overall performance met market expectations.
Hydro stated that the main factors driving the growth in performance were the increase in the overall aluminum price and the expansion of the aluminum product premium. With global energy costs, supply chain risks, and capacity constraints in certain regions, the supply pattern in the aluminum market has tightened, supporting the spot price and processing profits. At the same time, the company's aluminum recycling business in the North American market performed strongly, with an increase in recycling profit margins and an increase in sales volume, providing additional support for overall profitability.
In terms of operations, some of the Norwegian smelting facilities of Hydro that had previously reduced production are gradually resuming operations, driving an increase in aluminum output. The company announced that it plans to restart the 75,000-ton-per-year capacity of the Slovalco aluminum plant in Slovakia in the second half of 2026 to further enhance production capacity. The resumption of this project will help the company expand its aluminum supply in Europe and improve its long-term production capacity layout.
Energy security is also a crucial support for Hydro's future development. The company stated that it has secured approximately 85% of Norway's electricity supply demand for the 2030s. As aluminum production is highly dependent on electricity, a stable and low-cost energy source has become the key for European aluminum enterprises to maintain their competitiveness.
However, the global aluminum industry still faces multiple challenges. Recently, international aluminum production has declined, and changes in trade policies as well as US tariff measures have increased market uncertainty. Analysts believe that the future trend of aluminum prices will depend on global economic growth, energy costs, changes in Chinese supply, and demand from the new energy industry.
In the capital market, investors are rather cautious about the rating of Hydro's stocks. Currently, the average rating from institutions is "hold". The company's stock price recently corresponds to a price-earnings ratio of approximately 9 times for the next 12 months, which is lower than 15 times three months ago. The market believes that the valuation pressure has eased. The average target price set by analysts is around 95 Norwegian kroner, and there is still some room for growth compared to the current level.
Overall, Hydro's second-quarter results show that the recovery in aluminum prices, the development of circular economy, and energy advantages are becoming new profit growth points for traditional aluminum enterprises. Against the backdrop of global energy transition and the continuous growth of electrification demand, the importance of aluminum as a key industrial metal will continue to increase.
