Norsk Hydro Closes Plants to Address Weak EV Demand in 2024
By Jesus Calero
(Reuters) -Norsk Hydro has closed four extrusion plants in the United States, Britain, France and Lithuania to cut costs in the unit hit by weak electric vehicle sales, the Norwegian aluminium producer said after it posted a quarterly profit miss on Friday.
The closures, which were carried out over 2024 and led to a reduction of more than 900 full-time jobs, are not related to U.S. tariffs, CEO Eivind Kallevik told Reuters.
President Donald Trump's 25% tariffs on steel and aluminium are inflating U.S. prices and exposing the gap in domestic production, creating a potential cost surge for aluminium producers like Hydro who rely on imports to meet U.S. demand.
"As the U.S. is a major aluminium importer, tariffs will likely raise premiums and costs, with Midwest premiums already surging to the highest levels since April 2023," Hydro said in the earnings statement.
The U.S. aluminium premium over the global benchmark on the London Metal Exchange (LME) has surged by 60% since Trump was elected.
But the extrusions business is minimally impacted by those tariffs, Hydro said, as it relies mainly on domestic raw materials and typically passes higher LME prices and premiums on to customers.
The unit, which makes aluminium extrusions used in car production, is instead suffering due to the muted EV demand, especially in Germany.
Hydro's European aluminium volumes have fallen in recent years, partly due to weaker EV production amid Germany's subsidy cuts and EU tariffs on Chinese imports.
The company announced in November it would phase out its battery and green hydrogen businesses, while focusing on aluminium recycling and extrusion.
Its adjusted earnings before interest, taxes, depreciation and amortisation more than doubled to 7.70 billion Norwegian crowns ($690.5 million) in the final quarter of 2024, buoyed by strong alumina and aluminium prices, but missed analysts' consensus of 8.28 billion crowns.
It expects underlying demand for its products to gradually improve into 2025 thanks to lower interest rates.
Hydro continues to take and evaluate mitigation actions for exposed trade flows across the U.S. border, it said.
($1 = 11.1511 Norwegian crowns)
(Reporting by Jesus Calero in Gdansk; Editing by Milla Nissi)
