Norsk Hydro (Hold, TP: NOK80.00) - Mean-reverting aluminium prices
A mixed Q1 report saw weaker than expected EBITDA for the Primary Aluminium segment, while the downstream segment and power production were better than forecast. Aluminium spot prices have fallen below USD3,000/t as the market outlook has reversed and sees supply outgrowing demand from 2023e. We continue to assume aluminium prices will converge towards USD2,600/t, representing the marginal producer’s cost in a supply-driven market. We have made only modest estimate changes post-results and reiterate our HOLD and NOK80 target price.Norsk Hydro is an aluminium group based in Norway. Co. is engaged in the supply of aluminium and aluminium products. Co. supplies casthouse products, such as extrusion ingots, sheet ingots and foundry alloys. Co's customers are active in sectors such as the packaging, lithographic, building, automotive and transport sectors. In addition, Co. is engaged in the production of power in Norway. Its business is divided into six operating segments: Bauxite & Alumina, Primary Metal, Metal Markets, Rolled Products, and Energy and Other and Eliminations.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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