Earnings Transcript for NHYDY - Q2 Fiscal Year 2024

Martine Hagen: Good morning, and welcome to Hydro's Second Quarter 2024 Presentation and Q&A. So we will start off with a presentation by our President and CEO, Eivind Kallevik before, our CFO, Trond Olaf Christophersen, will take you through a financial update. Lastly, we will run our Q&A session. [Operator Instructions] Later on, when we're finished off with the presentations, I will ask your questions directly to Eivind and Trond Olaf on your behalf. And with that, I leave the microphone over to you, Eivind.

Eivind Kallevik: Thank you, Martine, and good morning, and welcome from me as well. As you are reminded of every quarter, the safety and wellbeing of our people is the most important value at Hydro. It's something we work on every day, every hour and at every shift. As a company, we have an obligation to our people, to our customers and to our owners to uphold the highest standards for business practices. This begins with our people's and wellbeing. Over the past years, we have seen a steady improvement on all key indicators for safety with a consistent low numbers of incidents. But sadly, 2 weeks ago we suffered a major setback. A contractor performing maintenance on an electrolysis cell at Hydro's joint venture in Albras passed away following an accident, and I'm deeply saddened about this tragic event. And this is another painful reminder of how critical safety is in everything that we do. And our deepest condolences go out to the family and affected colleagues. For the second quarter, we reported an EBITDA of some NOK 5.8 billion. This gives us a free cash flow at roughly NOK 2.8 billion for the quarter. Despite the still slow aluminum market, we continued to see positive indicators supporting the long-term opportunities in aluminum. The upward trend for our key revenue drivers continued also in this quarter, and this supports solid results on the upstream side of the business. Slow demand as well as low recycling margins continued to results on the downstream side. On the Energy side, we are happy to report that closing of the partnership with Macquarie Asset Management on the Hydro Rein joint venture was finalized this quarter. And with this last piece of the puzzle in place, Rein is now set up to continue its growth journey on a self-financing basis going forward. Demand for Hydro's premium recycled product, Hydro CIRCAL, remained strong. This quarter has seen several new investment decisions supporting our growth strategy to meet the increased demand. Finally, we were happy to announce a milestone in our efforts to shape the market for greener aluminum with a game-changing agreement in the partnership with Porsche. I will talk more about this later. Today is my 71st day as the CEO of Hydro, and it's my first quarterly update in this role. And let me spend just a few minutes to reflect on where we stand and where we're heading. For me, this is an extremely exciting, but also unpredictable time to take over a company like Hydro. Our market is, whether we like it or not, in an environment where we are heavily influenced by external factors, all of which we cannot control. This inherent volatility is nothing new, but the past few years have marked the level of disruption, which has not been present for decades. This is clearly about geopolitics as perhaps the most visible high-paced changes around us. But it's also about topics such as climate and nature where expectations have shifted from delivering ambitions to delivering tangible proof points of real change. Last quarter, we did a deep dive on the influx of Chinese EVs to Europe. This is an example of how EVs also represents a new playbook for the automotive industry. On the one hand, representing exciting opportunities for material providers like Hydro. On the other hand, sparking a new and disruptive set of players into the game, challenging the establishment in the automotive industry and its supply chain. And if we look at AI, it has literally gone from a concept in sci-fi movies to a household item in a matter of months. I believe we can't possibly imagine how integrated this technology will become in our daily lives, the economy and in industry such as ours. So we really can't control what happens in the world around us. But for me, it is paramount that we understand what's going on around us that we are able to adapt swiftly, and most importantly, that we're able to seek out the opportunities behind these rapid transitions and turn seemingly challenging changes into commercial opportunities. This will be the defining force behind Hydro's continued success in the coming years

Trond Olaf Christophersen: Thank you, Eivind, and good morning and welcome from me as well. So then let's start with the alumina market. And in the alumina market, we have seen quite some development in the recent months. The global alumina market balance is influenced by Chinese production challenges driving the Chinese alumina deficit up by 0.2 million tonnes from 2023 to a total of 0.8 million tonnes in 2024. In China, domestic bauxite sourcing has been a challenge and this is driving increased demand for imported bauxite mostly met by higher shipments from Guinea. In the world ex China, the full curtailment of the Kwinana refinery in Australia, together with production disruptions in Australia and India, has tightened the market and CRU estimates a surplus of 0.2 million tonnes for 2024 ex China. And this results in a net deficit for the global alumina market 0.6 million tonnes in 2024 according to CRU. Rebalancing is expected over time as new projects are in the development in India and Indonesia. Regarding prices, the tightness in the alumina market has led to a strong increase in PAX peaking at USD 510 per tonne in late June. The price has since eased and is currently trading between USD 475 and USD 480. Also, the Atlantic premium is still fundamentally supported by Iceland, Argentina and Canada's need to import alumina from the Pacific basin. Moving on to primary aluminum. In Q2 2024, the economic outlook continued to improve, reducing the risk of recessions and we saw the first rate cut by ECB amid easing inflation. Global primary aluminum demand was up 2% year-on-year during the second quarter, supporting a healthy global primary market with an estimated total growth of 3% year-on-year for 2024. Growth during the second quarter was driven by a 3% demand increase in China, which has remained robust on demand from renewables and electrical vehicles and expectations are placing primary consumption growth from China to be around 4% year-on-year. On the right-hand side of this slide, we can see the strong aluminum demand from solar photovoltaic, which has close to quadrupled since 2020. The demand is expected to continue to grow due to strong push from the Chinese government to decarbonize electricity production. The Chinese automobile sector is also experiencing demand growth where the EVs are dominating with battery electrical vehicles being the strongest driver. China's push for decarbonization and strong demand are placing it as the major driver behind the 3% expected growth overall in the world in 2024. However, primary aluminum demand outside China slowed further in the second quarter and it is currently expected to remain flat for the year, driven by the overall economic conditions. Interest rate cuts are likely needed to promote positive growth in sectors such as building and construction and other industrial activities. Moving downstream. Extrusion demand remained challenging in both Europe and North America during Q2. European extrusion demand is estimated to have decreased by 14% in Q2 '24 year-over-year, but increased 5% compared to the first quarter, partly driven by seasonality. Automotive extrusion demand has been challenged by lower growth in sales of electrical vehicles. Demand for residential building and construction and industrial segments have started to stabilize, but at a relatively weak levels. Extrusion demand has been relatively better in Southern Europe while demand in Germany continues to be weak. Looking into Q3 '24, CRU estimates that the European demand for extrusions will decrease 2% compared to the same quarter last year. And overall, European extrusion demand is estimated to decrease by 8% in 2024 compared to 2023. For North America, extrusion demand is estimated to have decreased by 5% in Q2 '24 compared to the same quarter last year, but increased 1% compared to Q1. The transport segment has been particularly weak, driven by lower trailer build rates. Automotive demand is facing headwinds due to weaker sales of electrical vehicles. Demand continues to be moderate in the residential building and construction and industrial segments, but expected to gradually improve with lower interest rates and improved industrial sentiment. In North America, extrusion demand is estimated to increase 3% in Q3 '24 compared to the same quarter last year. However, overall, North America extrusion demand is estimated to decrease 2% in 2024 compared to 2023. Looking to our volumes. Hydro Extrusion sales volumes declined 11% in Q2, '24 year-over-year. Transport volumes have been particularly negatively impacted by weaker shipments to the truck and trailer market in the U.S. In Q2, we also saw that our automotive sales further declined in both Europe and the U.S., driven by moderating production at some carmakers and weaker-than-expected sales of electrical vehicles. Growth for sales volumes in B&C and industrial segments is still negative, but overall volumes and orders have started to stabilize. Then moving to the financials. And when looking at results, Q2 versus Q1, we see the positive effects of the strong improvements in revenue drivers contributing with NOK 1.3 billion. Higher upstream volumes, partly due to seasonality, impacted the results positively by another NOK 500 million. Both B&A and aluminum metal contributed to the positive volume effects. There is one upstream raw material cost increase of approximately NOK 100 million. The major drivers behind the costs were higher alumina and higher energy costs, partly offset by lower carbon costs and positive fuel switch effect. The downstream segments experienced flat development with limited changes in volumes and margins in extrusions and recycling. Furthermore, we saw a negative effect of NOK 600 million quarter-on-quarter due to seasonally lower production volumes in Energy. The quarter was also impacted negatively by higher fixed costs of NOK 300 million, largely driven by B&A. Positive NOK 200 million currency effect impacted Q2, mainly driven by weakening of the NOK and BRL versus U.S. dollar. The final negative effect for -- of NOK 500 million is mainly related to Other and eliminations. The eliminations this quarter itself amounted to approximately NOK 300 million on the strong improvement in B&A margins. CO2 compensation for Q2 was approximately NOK 800 million, which was at the same level as in Q1. And this concludes the adjusted EBITDA development from NOK 5.4 billion in Q1 to NOK 5.8 billion in Q2. If we then move to the key financials for the quarter. Comparing year-over-year, revenue decreased by approximately 5% to NOK 51 billion for Q2. Compared with Q1, revenue increased by approximately 7%. For Q2, there was around NOK 200 million effects adjusted out of EBITDA, which includes mainly unrealized derivative effects on LME contracts of NOK 570 million, partly offset by transaction-related effects of NOK 320 million and net foreign exchange gain of around NOK 150 million as well as other effects resulting in an adjusted EBITDA of NOK 5.8 billion. Moving on, we recorded depreciation expenses of around NOK 2.5 billion in Q2, resulting in adjusted EBIT of NOK 3.3 billion. Net financial expense of NOK 1.4 billion for Q2 includes NOK 780 million in foreign exchange loss, primarily related to a loss from weaker BRL versus U.S. dollar negatively impacting U.S. dollar borrowing in Brazilian entities, partly offset by a gain from a stronger NOK versus euro affecting euro-embedded energy contracts and other liabilities denominated in euros. In addition to that, we had interest expense of about NOK 935 million related to financial debt, partly offset by interest and other finance income of NOK 316 million. Then we have income tax expense amounting to NOK 739 million for Q2 '24 and the quarter was mainly impacted by a higher power surtax and losses in areas where deferred tax assets are not recognized. Overall, this provides a positive net income of NOK 1.4 billion, down from the positive of NOK 5 billion in the same quarter last year and up from NOK 400 million in Q1. Adjusted net income was NOK 1.7 billion, and consequently, adjusted earnings per share was NOK 0.97 per share. Let's then give an overview per business area, starting with B&A. Adjusted EBITDA for Bauxite & Alumina increased from NOK 817 million Q2 '23 to NOK 1.6 billion in Q2 '24. This was mainly driven by higher alumina price, lower raw material costs partly offset by higher sales volume from lower production. Compared to Q1 '24, the adjusted EBITDA increased from NOK 804 million, mainly driven by higher realized alumina price. Results were further lifted by lower raw material costs mainly driven by fuel switch implementation. This was, however, compensated by higher fixed costs of roughly NOK 280 million, driven by DRS2 operations and project development costs. And then Q3 outlook. For Q3, Alunorte output volume is expected to remain stable. In addition, the higher realized alumina price should continue to impact our results positively. We expect raw material costs release of NOK 350 million to NOK 450 million, which will continue to be driven by the further implementation of the fuel switch. Fixed and other costs are expected to increase NOK 100 million to NOK 150 million. Then moving to Aluminum Metal. Q2 adjusted EBITDA decreased from NOK 3.2 billion in Q2 '23 to NOK 2.5 billion this quarter. The decrease is mainly driven by a reduced contribution from power sales of NOK 650 million, increased alumina and energy costs and higher fixed costs, partly offset by reduced carbon costs. Compared to Q1 '24, adjusted EBITDA for Aluminum Metal increased from NOK 1.95 billion to NOK 2.5 billion, thanks to higher all-in metal prices, higher sales volumes and positive currency effects, partly offset by increased alumina and energy costs. The raw material cost increase we guided in Q1 ended higher than expected at NOK 450 million, driven by a combination of higher alumina costs and higher energy costs. The higher energy costs were due to LME-linked power contracts in Brazil and Canada. On the positive side, carbon costs continue to decline, partly offsetting the other negative elements. Fixed costs increased due to inflationary pressure as guided by NOK 100 million. And then the Q3 outlook, both the LME and premiums have increased since Q1 and are expected to continue to impact positively the revenue side in Aluminum Metal. For Q3, Aluminum Metal has booked 63% of primary production at USD 2,432 per tonne, including the effects of our strategic hedging program. Furthermore, we have booked 42% of premiums affecting Q3 book at USD 494 per tonne. And we expect realized premium in the range of USD 380 to USD 430 per tonne. On the negative side, we expect further increase in raw material costs, driven by alumina and partly offset by carbon of between NOK 400 million and NOK 500 million. We also expect the sales volume to return to normalized and be lower compared with Q2. Fixed costs are expected to remain stable. We continue to closely monitor the demand development, and we do not foresee any restarts of the curtailed primary volumes next quarter. On CO2 compensation, we expect flat quarter development going ahead. Adjusted EBITDA for Metal Markets decreased in Q2 from NOK 334 million in Q2 last year to NOK 309 million mainly due to lower results from recyclers and negative currency effects, partly offset by positive results from sourcing and trading activities. Recycling margins declined through the year, driven by unfavorable movements in both premiums and scrap prices. The results were also impacted by negative currency effects year-over-year. Furthermore, positive contribution from sourcing and trading activities partly offset the negatives. Excluding the currency and inventory valuation effects, the results for Q2 was NOK 357 million, up from NOK 265 million in Q2 '23. Compared to Q1 '24, adjusted EBITDA for Metal Markets increased from NOK 211 million, mainly due to increased results from the sourcing and trading activities, partly offset by negative currency effects. The outlook for Q3 continues to be challenging as we expect recycling margins continue to be squeezed on the lower scrap availability, keeping margins low. At the moment, the recycling margins are at an all-time low level and we expect those to return to normalized levels over time. However, as mentioned earlier, this is tied to the improvement in the industrial activity in our core markets. We expect some improvement in margins to impact the next quarter. However, those are expected to be partly offset by seasonally lower volumes and largely dependent on the scrap market development. For our commercial area, in Q3, we expect lower contribution from sourcing and trading activities, again, as always, reminding of the inherent volatility of the trading and currency effects. Following the latest developments, we have decided to adjust our guiding for 2024 full year adjusted EBITDA for commercial, excluding currency and inventory valuation effects, to a range of NOK 600 million to NOK 800 million. And then moving to Extrusions. In Extrusions, the adjusted EBITDA decreased year-over-year from NOK 2 billion to NOK 1.4 billion, driven by lower extrusion sales volumes, decreased margins from recyclers and negative currency effects. General inflation pressure on fixed and variable costs was partly offset by cost measures. As mentioned earlier, we saw 11% lower sales volume, which were partly compensated by high margins. Lower remelt margins negatively impacted the results with around NOK 380 million as recyclers continued to be pressured with low billet premiums versus elevated scrap prices. Compared to Q1 '24, adjusted EBITDA for Extrusions decreased only slightly due to lower sales volumes partly compensated by strong sales markets. Looking into Q3, we should look towards the same quarter last year to capture the seasonal developments in extrusions. Compared with last year, due to continued soft extrusion markets in both Europe and North America, we expect lower sales volumes. We also expect continued strong sales margins. However, we should keep in mind that the remelt margins continue to be under pressure. Combined with higher costs, we expect the negatives to be -- to more than offset the positives in Q3 when comparing year-over-year. And the final business area is Energy where the adjusted EBITDA for Q2 decreased to NOK 611 million compared to NOK 854 million Q2 '23. The main drivers behind the lower results were lower production, lower prices and lower gain on price area differences. Those were partly offset by a positive impact from the expiry of an internal fixed price purchase contract from Aluminum Metal at a significant loss in the same period last year. Finally, compared with last year, we saw lower trading and hedging results. Compared to the first quarter, adjusted EBITDA decreased by approximately NOK 450 million from NOK 1.15 billion, mainly due to lower production volumes. In the second quarter, external power sourcing volumes continued to be affected by disrupted volume deliveries from long-term power purchase in Markbygden, Sweden. The nondelivered volumes were 0.3 terawatt hours in Q2 '24 and 2.2 terawatt hours accumulated since the beginning of the disruptions. We continue to see compensation for the nondelivered volumes. Looking into Q3, as always, we should be aware of the inherent price and volume uncertainty in Energy. For next quarter, production volumes are expected to be on a similar level while prices are expected to be lower in July and then gradually increase towards next winter. Furthermore, we expect the price area difference results to be of a similar level as in Q2. Then let's move to the final financial slide this quarter. Net debt increased by NOK 2.3 billion since Q1. Based on the starting point of NOK 13.9 billion in net debt from Q1, the positive contribution for Q2 was a generation of NOK 5.8 billion in adjusted EBITDA. Due to increased upstream prices impacting account receivables and inventories, we saw an increase in net operating capital of NOK 900 million. Under other operating cash flow, we have a negative NOK 300 million mainly driven by cash outflow for taxes related to 2023 income and voluntary payment of expected residual tax, partly offset by reclassification of CO2 receivables from long term to short term. On the investment side, we have net cash effect -- effective investments of NOK 3.7 billion, offset by a cash inflow of NOK 1.8 billion related to repayment of shareholder loan from Hydro Rein. As a result, we had positive free cash flow of NOK 2.8 billion in Q2. Furthermore, we saw a cash outflow of NOK 5 billion related to 2023 dividends. In addition, we paid out NOK 700 million to the Norwegian state for share repurchase and deletion related to the 2022 share buyback program. With that, our 2022 share buyback program is completed. Finally, we also had some other positive effects of NOK 500 million. Those were mainly driven by positive foreign exchange effect and that's mainly explained by NOK-euro appreciation, partly offset by an opposite effect on cash denominated in U.S. dollar. In addition, we saw equity contributions from noncontrolling interest in Brazil. When moving on to adjusted net debt, we start by adjusting for the following items. Hedging collateral and other has increased since Q1 '24 with NOK 500 million due to an increase in collateral related to short-term operational hedging positions. Since Q1 '24, net pension assets has turned to a slightly negative net position of NOK 100 million. And finally, we have an increase in other liabilities of NOK 700 million since 2024. And with these adjustments, we end up with an adjusted net debt position of NOK 26.1 billion at the end of Q2. And with this, I end the financial update and give the word back to Eivind.

Eivind Kallevik: Thank you, Trond Olaf. So let me round off today's presentation with some reflections on our priorities going forward. Obviously, the health and safety of our people always comes first. This month, we were painfully reminded about the worst possible consequences. And as we set out on our agenda towards 2030, we will be accelerating that this must, however, be done with the highest regard for safety and wellbeing of our people. Nothing is more important than that. Hydro is today in a good position. Despite experiencing a challenging market, we are not in a crisis mode. On the contrary, we are maneuvering mixed markets while continuing to focus on the long-term opportunities for Hydro for aluminum and for greener aluminum. Hence, we are determined to continue to push forward on the ambitious agenda we have for growth in recycling, extrusions and within renewable energy. We do this in order to position ourselves for the long-term value creation opportunities we see in the market. We believe Hydro is uniquely positioned to capture the value from this. We are continuing to push forward on the agenda for decarbonization with a high focus on executing on the decarbonization and technology road map. Succeeding on the decarbonization agenda is crucial to maintain and even to enlarging the gap between Hydro and the competitors in the growing market for low-carbon aluminum. And that will finally enable us to continue to seize opportunities in the emerging market for greener aluminum at premium pricing, creating long-term value for shareholders, society and for our employees. And thank you so much for the attention, and then I will hand the word over to you, Martine.

A - Martine Hagen: Thank you, Eivind, and thank you, Trond Olaf. Then we are ready for Q&A. [Operator Instructions] And Eivind, we already have quite some -- many questions in the chat. So let's get started. First questions are from Liam, Deutsche Bank. Two questions. First, on Extrusions. How are the second half '24 margin conditions shaping up compared to the same half in 2023? Similar, down or slightly materially? And second question, smelter restarts in Norway. Given the margin environment for primary is already quite healthy, what will drive your decision to restart? And can you provide any guidance on potential timing?

Eivind Kallevik: Yes. So two good questions. When it comes to Extrusions, as we have seen, the margin management in Extrusion is really good and really strong. And I think here we do have a good strategy in terms of keeping margins up even in a very competitive landscape as we see. We saw a slight margin deterioration in the second quarter. And of the 3 options that you chose, stable, materially or slight, you may still see some slight challenges into Q3 and Q4, but it shouldn't be materially. On the restart of smelters of sales on the West Coast, we are obviously monitoring the market closely when it comes to extrusion ingot premiums and metal premiums. And it's something that we are continuously evaluating and we will come back and update the market when we make a decision to do so.

Martine Hagen: And then we have a question from Marina. You have guided for continued soft extrusion market. Do you still see your 2025 EBITDA target of NOK 8 billion achievable?

Eivind Kallevik: I think what we have said for some time if and when we will reach the NOK 8 billion, it needs to be a market recovery to support that number. I think with the speed we see out of the second quarter this year and probably less of a market rebound in the second half of 2024 than what was expected just a quarter or 2 ago, the NOK 8 billion for 2025 will be challenged. We still think it's achievable, very much so, but probably not at a speed out of 2025.

Martine Hagen: And then we have a question from Ioannis on the B&A costs. You have guided of NOK 350 million to NOK 450 million lower raw material costs. Can you break down the moving parts? And secondly, the EC has introduced tariffs on Chinese BEVs, do you see this as a clear positive development? Or are there risks related to European EV exports to China that may outweigh any benefits?

Eivind Kallevik: You want to start with the B&A cost?

Trond Olaf Christophersen: I can start on the B&A cost. So the NOK 350 million to NOK 450 million is mainly related to the fuel switch on the guiding. Other important raw material costs in B&A is caustic soda and coal and also now gas with the fuel switch, but the main driver behind that decrease is the fuel switch.

Eivind Kallevik: I think when it comes to the tariffs and the auto sales, it's still too early to call. We see Chinese EVs hovering around 30%, 35% of the European EV market at the moment and it seems to be stabilizing at that level. But again, we still need to see the full impact of the tariffs. The concern, in particular, for some of the German OEMs that, of course, is -- that there will be retaliation from the Chinese government, and as such, there will be a limit -- or more expensive to import European cars into China. How effectively this will work out, I think we will have a clearer picture for as we get towards the tail end of 2024.

Martine Hagen: And then we have a question from Magnus. Higher elimination seems to drive a miss on consensus today. Do you see the current level of eliminations continuing into the coming quarter assuming that alumina prices remain relatively constant?

Eivind Kallevik: So I think I'll put my old CFO hat on. So when we see an increase in eliminations like we see in this quarter, it's actually a pretty good story in the sense that we see continued or increasing margins in the B&A side, which is not realized until we sell the metal out of the company. Now if we see margin levels staying at the same level as we see today, you will see relatively flat development in the period going forward. So we follow the development on PAX. Going forward, we'll give you an indication on how this develops.

Martine Hagen: And then the other question from Amos, can you reorient Extrusions automotive sales book towards China to offset weakness in Europe, which could be structural?

Eivind Kallevik: I think some of the weakness Hydro experienced in the automotive sales is really directed towards the EVs, if you like. And there we see some postponement or delays of the new platforms that we expect that will start up. So for me, it's more a timing question than a structural change. But fundamentally, on the extrusion side, when you do these automotive platforms, you do also invest in specific tooling for those specific products and they will not be possible to send directly to China. Then of course, you also have the transportation cost, which will add to the complexity of competing in China with the European based or U.S. based, if you like. So I think for now, the European stays -- European production stays in Europe. The U.S. production stays in North America.

Martine Hagen: And then we have a question from Duncan. Could you please provide some color on how the Rio force majeure is impacting your business from a logistical and financial perspective?

Eivind Kallevik: Yes. So far, we have not really seen any impact of the force majeure. So we have received it, but it was the force majeure notice, but it was not clear as to what kind of volumes it would impact and the timing for it. So from the time that we received a force majeure, we also received the alumina that we expected originally. So as of this point, there is no consequence for Hydro. And then, of course, as we get closer to the end of the year, then we also expect the gas pipeline to be back up and operating and the plant to be back at 100%.

Martine Hagen: And then a follow-up on the same topic received on e-mail. Can you remind us of the price structure of [Tofte]? And could Hydro have to buy in the market to fulfill the sale contracts? Does this create a risk for trading loss?

Trond Olaf Christophersen: I mean, we have alumina portfolio that we're operating with our own equity production in Alunorte and then balancing other sources with supply to both the smelters in Atlantic Brazil, but also smelters like [indiscernible], et cetera. So this is sort of a balancing. So of course, if we have nondeliveries in certain contracts, then that could be a risk in the portfolio. But as Eivind said, currently, we do not see any consequences for us.

Martine Hagen: And then we have a question from Ioannis. When do you expect to launch the new buyback program?

Trond Olaf Christophersen: So this is something we are looking into, and we announced the share buyback program at -- or decided at the general assembly. So we will come back to that when we will start execution.

Martine Hagen: And then a couple of questions from Bengt. B&A, what was the impact from fuel switch this quarter? And secondly, fixed cost seems to continue to grow. How much of the increase is activity based and will be reversed. And also on Aluminum Metal, what was EBITDA contribution from net long on Energy? How do you see that playing out in Q3?

Eivind Kallevik: So if we think -- if I start from Aluminum, if you like. If we think about the fuel switch contribution, that was slightly less than $20 million in the second quarter and then we expect that to increase to, give or take, $40 million in the third and up to $60 million in the fourth quarter. So that gives us a good run rate at the end of the year. And as I said during the presentation, that conversion to LNG is moving according to plan.

Trond Olaf Christophersen: Yes. On the fixed cost in B&A, I mean, there are some special effects related to preparation for project execution and also linked to the bauxite residue storage area. But we also guided for the Q3 when it comes to fixed cost in the B&A, although fixed and other costs are expected to increase by NOK 150 million in Q3.

Eivind Kallevik: Then when it comes to the long position in Energy in Aluminum Metal, we do have a long position given the fact that we have curtailed some capacity on the West Coast of Norway. That's a fixed price contract for power coming in and then we offload that into the spot market. So I will not speculate on what the spot prices for energy will be in oil price regions in the third quarter. But if you follow that, that will give you an idea of the impact.

Martine Hagen: And also a follow-up on the same latter topic over e-mail. What was the power sale impact in Aluminum Metal in Q2?

Trond Olaf Christophersen: I think we need to come back on that number. I don't have the number...

Martine Hagen: Roughly NOK 200 million.

Trond Olaf Christophersen: NOK 200 million? Yes, okay.

Martine Hagen: And then we have a question from Matt. And do you expect the cut production cited by Porsche today to impact second half '24 extrusions?

Eivind Kallevik: I don't expect that to be any significant impact from Hydro's perspective, no.

Martine Hagen: And then it doesn't seem to be any further questions. Not online, just checking e-mails as well. No, no further questions. So then I think we end it there. So thank you all for joining us today. And if you have any further questions, please reach out to Investor Relations and we will support them back. And I wish you all a continuous nice day.