Norsk Hydro (Sell, TP: NOK55.00) - A more transparent dividend path
Q2 EBITDA was in line with consensus. We are positive on the announced NOK2.5/share extraordinary dividend and share buybacks based on the 2021 results, and the updated shareholder distribution policy, with an adjusted net debt target of NOK25bn. We have raised our 2022e dividend and buybacks to NOK8/share (NOK6), and our 2023–2024e EPS by 1%, primarily on a lower share count due to the share buyback programme. We continue to expect aluminium prices to fall and reiterate our SELL and NOK55 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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