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Norsk Hydro aims to boost EBIT by 6.4B kroner within 5 years

Norsk Hydro ASA President and CEO Hilde Merete Aasheim said the company aims to boost EBIT by 6.4 billion Norwegian kroner over the next five years through improvements and restructuring across its businesses.

The company said Sept. 23 that it plans to cut costs by reversing the curtailment of its Brazilian assets, simplifying staff functions and revising its operating model to support its profitability and sustainability agenda.

The Federal Court in Belém recently lifted an embargo on the DRS2 bauxite residue deposit area of Norsk Hydro's Alunorte alumina refinery in Brazil under a civil lawsuit. The company expects the civil decision to be extended to another embargo related to a parallel criminal lawsuit.

Norsk Hydro said the ramp-up of Alunorte and Paragominas is progressing well, and it is targeting production at 75% to 85% of capacity for the rest of 2019 and full capacity in 2021.

The company is launching a new climate strategy, aiming to cut its emissions by 30% by 2030, along with a new companywide target of a 10% return on capital to increase the focus on profitability.

Norsk Hydro is cutting the total estimated sustaining capital expenditure for 2019 and 2020 by 1 billion kroner compared to its previous guidance to between 12.5 billion and 13.5 billion kroner. It said the reduction represents short-term optimization, and it is working on further measures for the long term. Total capex for 2019-2020 is estimated at 19.5 billion kroner.

Additionally, the company is doing a strategic review of its rolled products business, targeting an improvement of 900 million kroner by 2023 through restructuring.

Earlier in September, Norsk Hydro flagged the dismissal of up to 735 employees through 2024 as it launched a restructuring of its rolling business, which has been struggling with high costs and strong competition in recent years.

As of Sept. 23, US$1 was equivalent to 9.06 Norwegian kroner.