Norsk Hydro Launches Restructuring Effort to Boost Earnings

   By Dominic Chopping

Norsk Hydro ASA (NHY.OS) said Tuesday that it aims to lift cash flows and returns with extensive improvement and restructuring efforts across the group.

In a statement ahead of an investor day, the Norwegian aluminum producer said it is launching new initiatives to boost earnings before interest and tax by 6.4 billion Norwegian kroner ($706 million) over the next five years. The earnings target comes in addition to a NOK900 million improvement forecast in its Rolled Products unit over the same time period.

"The improvements include the curtailment reversal of the Brazilian assets," said Chief Executive Hilde Merete Aasheim.

"The efforts also include simplification of staff functions and a revised operating model to support our profitability and sustainability agenda."

Norsk Hydro has been hit by production restrictions following environmental concerns at one of its sites in Brazil, and a recent cyberattack.

The company set out a target of 10% return on average capital employed over the cycle, as well as plans to reduce CO2 emissions in own production and processes by a further 30% by 2030.

Norsk Hydro said that it has started a strategic review and restructuring of its Rolled Products business to mitigate declining profitability, aiming to increase organizational and operational efficiency and shift the product portfolio away from declining markets and towards growth markets. The move targets NOK900 million in improvements by 2023.

The company said its dividend policy targets returning 40% of net income over the cycle, with a dividend floor of NOK1.25 a share, and total capital expenditure for 2019 and 2020 is estimated at NOK19.5 billion.

The company set out a target to release net operating capital of NOK4 billion by the end of 2020.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

September 24, 2019 04:51 ET (08:51 GMT)

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