Sustainable high dividends and investments

Norsk Hydro (Sell, TP: NOK55.00) - Q1 shipments delayed to Q2

Norsk Hydro’s Q1 results fell somewhat short of market expectations (EBITDA 4% below consensus) and it cut its Extrusions guidance. A large share of the miss appears to reflect late shipments in the bauxite and alumina (B&A) segment following heavy rainfall, which should mean higher volumes in Q2. We have made only minor changes (-1–0%) to our 2026–2027e EPS. We continue to see downside risk to aluminium prices, and reiterate our SELL and NOK55 target price.

Muted estimate changes

Weak deliveries and higher cost

Heads-up for Q1 report 29 April

Muted 2025 growth expectations

Following Q1 earnings calls by some of the oil service companies, 2025 outlooks appear more challenging than previously. Baker Hughes expects international upstream spending to decline by mid- to high-single digits, while Halliburton sees its international revenues flat to slightly down. Furthermore, Weatherford expects 2025 international revenue to decline by low double- to mid-double digits. Precision Drilling flagged additional rig suspensions by Saudi Aramco, and SLB highlighted a slow start...

ENI capex cut but maintains shareholder returns

Driven by macro headwinds and uncertainty around trade tariffs, ENI was the first large oil company to introduce capex cuts for 2025, contributing to a more challenging business environment for oil services. Over the past five years, we estimate ENI to have been the oil major with strongest offshore spending growth, and it has been considered active and opportunistic while others have been more conservative. Hence, we see its reduction as a soft datapoint for oil services. ENI has optimised its ...

Entering 2025 with a strong portfolio

Mixed upside potential, despite market recovery expectations

Pent-up demand and falling interest rates remain the backbone for newbuild recovery expectations. However, as the recovery has not yet started, property developers screen as the most attractive long-term, but visibility remains mixed. Diversified construction companies are more attractive on near-term P/Es, although many seem to be fully valued on solid share-price performance over the past six months. We maintain a neutral sector view; NCC and Skanska are our top picks.

Trade war will hurt demand

E&P spending sensitivity explored

With an oil price at the mid-USD60s/bbl level, focus on the oil major overspending situation, and resulting impact on the outlook for offshore-focused oil services, is set to increase further. While oil companies would likely cut, or even eliminate, buyback programmes first, we expect increased focus on spending reductions and efficiencies, creating a more challenging business environment for oil services. Hence, we see a risk of oil companies taking a more cautious approach, resulting in projec...

Veidekke (Hold, TP: NOK160.00) - Seasonal low despite mild winter

Q1 is typically the low season for Veidekke on Nordic winter effects and a seasonal EBIT margin decline in the Infrastructure division (including asphalt). Despite the mild winter in the Nordics in Q1, we expect the positive impact to be limited as weather effects tend to affect Q4 more than Q1. We expect zero EPS for Q1. We reiterate our HOLD and NOK160 target price.

Norsk Hydro (Sell, TP: NOK55.00) - Aluminium defying fundamentals

We reiterate our SELL and NOK55 target price, as we believe consensus EPS and aluminium price expectations are too high. We have seen aluminium prices outperform coal prices by 40% since the summer, defying the fundamental relationship where aluminium prices have been set by its cost of production for the past 15 years. We do not believe a balanced global supply/demand situation is likely to break this correlation. We have reduced our 2026–2027e EPS by 3% due to a stronger NOK versus USD. We est...

In a mid-cycle plateau

Following recent updates from E&P companies, we have reduced our 2025 offshore spending estimate to 0.5% (from c3% earlier this year). This is driven by a combination of actual 2024 spending being higher than expected (8% versus 4% previously), creating tougher comparables and a reduction in spending plans from Pemex in 2025. Despite growth flattening out, we still see the cycle building in duration, with execution of deepwater developments remaining on the agenda, albeit with a delayed executio...

Norway: Best ideas Q1'25

Estimates up, share down — for how long?

Norsk Hydro (Sell, TP: NOK55.00) - Soft result in strong market

The Q4 headline results were weaker than consensus and our forecasts, and the proposed 2024 DPS of NOK2.25 was down 10% YOY despite record-strong alumina markets, with aluminium prices at cUSD2,600/t. We still expect aluminium prices to fall towards USD2,200/t as markets remain balanced while input energy costs decline globally, together with weak demand for downstream products. We have raised our 2025e EPS by 7% on high alumina and aluminium prices going into 2025 and 2026e by 1%. We reiterate ...

Veidekke (Hold, TP: NOK160.00) - DPS beat, but valuation getting fair

The reported Q4 EPS was 5% below our forecast, but 3% above when adjusted for a Swedish goodwill write-down. The company proposed a NOK9 DPS for 2024, given its strong net cash position. We have made minor forecast changes, but as we publish 2027 estimates, we have rolled forward our valuation, and raised our target price to NOK160 (155) but downgraded to HOLD (BUY).

Underlying inline and cost coming down

Better orders