NHYKF - Norsk Hydro Earnings Have Fallen But The Share Price Has Not Yet Dropped

2024-05-21 22:31:29 ET

Summary

• Norsk Hydro reported lower adjusted EBITDA in Q1, with reduced sales volumes, lower prices, and compressed margins.
• The company's cash position may be reduced if negative cash flow continues.
• Its share price has increased lately due to higher aluminum prices in Q2 and a more positive confidence by investors.
• China's recent phenomenal growth in the export of EVs may hamper Norsk Hydro's sales of "green aluminum" to the European auto industry.

Investment Thesis

In January this year, we decided to downgrade Norsk Hydro ASA ( NHYDY ) ( NHYKF ) based on lower earnings, higher expected Capex, and competition from lower-cost producers, such as those in China.

When writing our last thesis, the ADR was trading at $5.90 and the share price went down during the first quarter....

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