2023: The resilient year

On the last day of 2023, it is a good opportunity to reflect on the year that has been, and the year that is to come.

If I look back one year to the same time in 2022, I reflected on Norsk Hydro 's robust starting point, and strong relative industry position, to address both challenges, but even more interestingly, opportunities, that would come our way. I was careful to speculate on what the year would bring, other than that I would expect the demand for near-zero aluminium to continue growing at a high pace, and that I would do my part in ensuring that we maintain and increase the robustness of our position as the leading provider of low-carbon aluminum, increasing value to all our stakeholders.

Well, the year turned out differently than what analysts and our own models had predicted with respect to aluminium demand growth, interest rates, and other macroeconomic indicators.

I was not expecting war to erupt in the Middle-East, Yevgeny Prigozhin to march on Moscow and then fall out of the sky (although the latter I could have foreseen if I knew the former), for another mini banking crisis to emerge, or for Barbie to gross more at the box office than Oppenheimer.

I was however sadly expecting populism to continue to gain further foothold, as evidenced in Argentine, and the Netherlands, for the AI hype to grow, and American politics to continue being chaotic, but neither of the latter to the extent which actually took place.

Unfortunately, we continue to see the negative consequences of climate change, with records being set in all areas of climate measurements, which on the flipside supported the expectation of greener aluminum demand growth, which really materialized, and further strengthened our position in these more challenging markets.

For me, 2023 became the year which really shows the increased strategic resilience of Norsk Hydro, based on the actions taken over the latter years, including some currency tailwinds. While we worked on several strategic initiatives in 2022, many of them materialized in 2023, which also made 2023 a year of strategic execution.

I am in no doubt, that the latter year has further strengthened our relative position, further differentiating us from the industry in general, and increasing expected returns for all our stakeholders over the cycle,

Join me to reflect on my best memories from 2023, and please let me know your reflections, and how you believe this positions Norsk Hydro for the future.

January

The Hydro year of 2023 really kick started on January third, when we arrange our annual New Year's Seminar, with Norwegian politicians and press, where we stressed the importance for a roadmap for construction of renewable power until 2030, and both the Norwegian Prime Minister and the leader of the opposition party acknowledge the urgent need for development of more renewable energy in Norway. Some things are moving in the right direction here, but overall, it is going far too slow, which is a huge actual and opportunity loss for Norway if we do not increase speed here, because the rest of the world are. We still the have chance to ensure to this remains a competitive advantage for Norwegian industry, including aluminium, to provide greener products at premium pricing.

Our President and CEO, Hilde Merete Aasheim , also gave a very good interview on European Round Table for Industry - ERT on her journey, which is worth a listen.

And, while on the topic of ERT, I had the pleasure to participate in a meeting through the ERT CFO platform with Commissioner Mairead McGuinness on the topics of European Sustainability Reporting Standards (ESRS) as well as ESG ratings and ESG credit ratings. It is very important that companies interact on these topics, to make frameworks fit for purpose. Our positions and statements can be found here.

For me, 2023 was also a year, where Norsk Hydro 's Investor Relations function was significantly strengthened, and I will get back to my super Head of IR later, but I was happy to acknowledge that Quartr awarded us with their IR Clarity award for our exceptional work on our presentation slide decks - especially our explanatory graphs.

February

Stepping into February, we had a terrible backdrop with the powerful earthquake that hit Turkey on February 6th, with the following immense need for humanitarian assistance, where also we supported.

On the more local arena, then February is much about reporting, and this was our second year in a row of reporting fourth quarter results and Annual Report on the same day, one week earlier than last year, reflecting the impressive work by the finance organization to increase efficiency.

And we did not just report any results, we reported the best full year results on record for Norsk Hydro and included NOK 13.5 billion in proposed distribution to our shareholders, contributing to close to NOK 30 billion in distributions for the two last years combined. And while our results were the highest on record, our total recordable injury rate was the lowest on record at 2.4, however always with room for further improvement.

We delivered a RoaCE of 22%, more than double our over the cycle target of 10%, well supported by 9.6 billion of accumulated improvements, 0.3 billion above the annual target for 2022.

This was well supported by 470kt of greener product sales, up 60% from 2021, but with an ambition to grow further, well supported by the expected annual growth rate of 20% for greener products in the years to come. In total, our total shareholder return (TSR) for 2022 was 15.1%, supporting the 3-year TSR of 242,.3%.

It is a pleasure to represent Hydro following our reporting, with our reflections on CNBC here and Fastmarkets here.

There is barely a month that goes by without someone in my organization receiving external recognition for their talent, and February was no exception, as Henriette Borgund took home 3rd place in "Master of Cyber Security 2023". My team just continues to amaze me.

In February we also made progress on our environmental ambitions, as Hydro Alunorte and Wave Aluminium signed a contract to build a plant in Brazil to process bauxite residue, aiming to recover commercially valuable materials.

March

March started with some strong strategic deliveries, as our Extrusion and Building Systems operations completed the acquisition of HUECK Aluminium GmbH building systems and extrusion business. The acquisition strengthens Hydro’s presence in Germany and other European markets and creates a solid platform for further growth in Extrusions and Building Systems.

It continued with a new development stage for our HalZero production technology. To maintain the position as the global leading producer of greener aluminium, we need to make progress on our ambitions to deliver zero-carbon primary aluminium by 2030. Decarbonizing industrial sectors is one of the most important contributions to reducing global greenhouse gas emissions. We have been working on early phase development of the HalZero technology at our Technology Center in Porsgrunn, Norway for seven years, and in March the Norwegian government, via state enterprise Enova, granted NOK 141 million for the construction of a test facility.

And to drive forward the development of greener aluminium, greener product pricing is a key enabler. I started in Norsk Hydro in 2008, and for my entire period I have been a proud employee of a company that has believed that one day the world would see the benefit of producing aluminium based on renewable energy, with the lowest possible CO2 footprint, and also, at one point, pay a premium for a renewable product: renewable aluminium.

We have now reached a point in history where this is happening and has become a key element of Hydro’s value story. However, what is perhaps less well known, is how the market for greener aluminium became commercialized in the first place. To tell this story, we need to visit Hydro Building Systems, a Business Unit in Hydro Extrusions, which I had the pleasure of visiting in France in March.

In Norsk Hydro we have three pathways to near zero aluminium:

1. Recycling of 100% post-consumer scrap
2. Carbon capture and storage
3. Carbon free electrolysis technology, HalZero

All pathways are making progress every day, and in March we were happy to communicate that the first aluminium profiles made with 100 percent recycled post-consumer aluminium were delivered to the Innovationsbogen project in Augsburg Germany. This is the first in line of many announcements to come of carbon conscious customers demanding increasing amounts of near zero aluminium. And where, was it delivered from? You, guessed right, Hydro Buidling Systems.

And, on the topic of greener products, you know that you have really succeeded, when your customers make you core to their carbon reduction story. One of our key strategic partnerships is with Mercedes-Benz AG , and at their 2023 ESG conference, they showed how Hydro was instrumental in their target to reduce CO2 footprint by 90% by 2030.

A key part of our current financial framework that was established in 2019, and has been refined over the years, is our financial strength and flexibility and investment grade credit rating target. I was therefore pleased to see that Moody's Ratings changed our outlook from stable to positive,

"reflecting the company's ongoing strong financial profile with profitability, leverage and cash flow generation stronger than Moody's expectation for the Baa3 rating. Accordingly, the likelihood of an upgrade has increased. The solid performance also comes despite a backdrop of high cost and ongoing cost inflation, reduced aluminium prices from peaks and some demand weakening in the second half of 2022 indicating increased resilience to adverse market conditions"

Also here the word "resilience" comes up, a theme which has been central in our strategic execution over the latter years. Our investors like hearing about resilience, and I had the pleasure of participating at BNP Paribas 18th Basic Materials Conference Virtual day in March. Key focus was on low carbon aluminium portfolio, greener premiums, REIN capital raise, market development(s) and much more.

We also strengthened our position in sustainable battery materials through a 12% stake in Lithium de France , who develops technology and methods to extract heat and lithium from geothermal brines and produce lithium with significantly lower CO2 footprint than is currently commercially available. We believe that direct lithium extraction (DLE) is the most promising way for Europe to develop sustainable local production of lithium. Access to sustainably sourced raw materials to support the green transition is a key challenge for the European battery industry and Hydro is committed to play an active role in this transition.

On the people side, it was with great enthusiasm that I invited Martine Ramb?l Hagen into my Management Team as Head of IR. Martine is a top Finance talent, and I do not know many with her analytical and modelling capabilities, as well as general positive attitude, and she has really set her mark on the function.

April

Halfway through April, we experienced something that we have not experienced for a long time in Norway, a strike at both Hydro Karm?y and Hydro ?rdal. Following the breach in mediation between The Confederation of Norwegian Enterprise (NHO), the Confederation of the Vocational Unions (YS) and the Norwegian Labor Union (LO), employees organized in Industri Energi and FLT at Hydro Karm?y and Hydro ?rdal were taken out on strike Monday, April 17. Three days later, a solution to the labor dispute was agreed and the dispute ended, with limited financial consequences and delays to customers.

In Hydro we support and respects internationally recognized labor rights, including the freedom of association and the right to collective bargaining within national laws and regulations. For more information, please see our code of conduct.

The second half of April, was then characterized by two key strategic deliveries, leading up to our first quarter reporting.

The first one, was a new strategic partnership announced with Porsche AG to further reduce the carbon footprint of Porsche's car models. Porsche has long been at the forefront of automotive innovation. Their efforts in electric performance are no exception with the collaboration enabling them to further reduce the carbon footprint of their car models, by using low-carbon aluminium and extrusions from Hydro. In addition, we will collaborate on an innovative value chain concept for battery materials and its recycling. This is exciting on many levels, as we are delivering a product to Porsche which draws upon the expertise and quality from our full value chain: from the greener alumina in Bauxite and Alumina, supplied with Energy from our Hydro Rein business, to low-carbon aluminium from Aluminium Metal, based on renewable energy from our Energy operations, to advanced Extrusions from our Extrusions business, and finally working on battery materials and recycling from our Batteries business.

The communication of strategic partnerships on greener aluminium, builds upon the work since 2017, when we launched our greener aluminium products, Circal and Reduxa, and does not just happen overnight. The same can be said for the second large strategic announcement, which has also been in the making for quite some time, before finally being able to announce.

Lifting profitability, driving sustainability – At Hydro, and for me as CFO, this is more than a catchphrase. The two terms are increasingly interconnected and anchored as a differentiating factor in our Hydro 2025 strategy. As a key source of low-carbon alumina supply to our primary aluminium smelters, our alumina refinery in Brazil, Hydro Alunorte, is a core asset of our strategy.?The focus of many development efforts is to improve operations, reduce the environmental footprint and increase community engagement.

On the 27th of April, we announced a partnership with Glencore to further develop Alunorte. Glencore agreed to acquire 30 percent of our Brazilian alumina refinery, Alunorte, and our 5 percent ownership in the Brazilian bauxite producer Minerac?o Rio do Norte (MRN). The transactions had a total net enterprise value of USD 1.15 billion, adjusted for Alunorte’s net debt as of June 30, 2023. Net debt for 30 percent of Alunorte as of March 31, 2023, was USD 375 million. This transaction balanced our alumina position in relation to the demand from our aluminium smelter portfolio, and proceeds from the transaction has been redistributed for strategic growth and for shareholder distribution. In the future, Alunorte will remain a core strategic asset for us, and both Hydro and Glencore will continue efforts to reduce carbon emissions from Alunorte through the fuel switch project that aims to substitute fuel oil with LNG as well as the electrification of the coal boilers. This will bring Alunorte to the first decile on the global carbon curve already in 2025 and position it as the leading supplier of low-carbon alumina. This is something that excites me as it does not only feed back into our Hydro 2025 strategy of lifting profitability, driving sustainability, but also enables us to grow our portfolio of greener products and in turn supporting our carbon conscious customers like Porsche AG e to lower their material footprint.

April finally cumulated with the announcement of our robust first quarter of 2023 results, which also included the announcement to initiate a renewed tender offer process for the Polish recycler Alumetal SA , a year after a tender offer was first announced, but which later expired during the European Commission's extended merger review.

In addition to the larger strategic announcements, the quarter included highlights such as, a further improvement in the TRI ratio to 2.3 and a 18% 12 month rolling RoaCE.

April also saw a strengthening of our portfolio within emerging battery technologies and anode materials, through the investment in emerging Dutch emerging battery technology company E-magy . E-magy is a promising technology company that addresses both issues by developing an innovative solution for the next generation batteries. Their specialty silicon will increase the availability of battery materials in Europe and strengthen the energy capacity in batteries

May

The month of May started with more strategic good news, as the European Commission cleared our acquisition of Alumetal, a key milestone towards completing the proposed acquisition.

Growing in new energy and thereby accelerating the green transition is a key pillar of our Hydro 2025 strategy and in May, Hydro’s renewable energy company?Hydro Rein announced the signing of agreements with GreenGo Energy for the acquisition of two solar projects in Sweden, a market segment that is forecasted to grow rapidly in the coming years. Together with an already existing significant pipeline of wind projects in Sweden, Hydro Rein is making a real difference in the decarbonization of the Swedish industry.

Hydro's Annual General Meeting approved the proposal of the Board of Directors of a distribution to shareholders of NOK 13.5 billion, equal to 61.6% percent of adjusted net income from continuing operations and a split between an ordinary dividend of NOK 5.65 per share and a share buyback program of NOK 2 billion. The dividend represents a 53% cash distribution, a year-end yield of around 8% and a five-year average payout ratio of 78%.

Hydro's Building systems showed us how innovation in materials makes a real impact with the announced collaboration with Saint-Gobain Glass. Jointly, we aim to push the boundaries of sustainability in the building sector by leveraging our unique technologies, offering low-carbon, smart design products, and by investing in urban mining across Europe to accelerate the industry’s shift to a circular economy. The integration of Hydro’s unique low-carbon aluminium, CIRCAL, containing a minimum of 75% recycled, post-consumer aluminium scrap, and Saint-Gobain Glass’ low-carbon glass products, produced with a high level of recycled material and renewable energy, can lead to a reduction of 50% in carbon footprint of building facades.

When we introduced our Hydro 2025 strategy three years ago, we made the conscious decision to strongly interlink sustainability and profitability across our entire value chain as our strategic foundation to accelerate the green transition. Our sustainability linked financing framework, which we introduced in the summer of 2022, is one of the key financial tools supporting our ambitions. It guides our capital allocation to greener projects, supports transparent reporting of financial and extra-financial performance, and drives a cost of capital advantage. Another top talent from my managment team, Katrine Bar? Talg? was invited to the CRU World Aluminium Conference to talk about Sustainability-linked financing for the aluminium sector. Did I mention that I am proud of my team?

Personally, I had the pleasure of participating at investor meetings at Bank of America Merrill Lynch 's Global Metals, Mining & Steel Conference, where Hilde Merete Aasheim presented our story, hosted by the excellent Jason Fairclough . This is an impressive conference, one of the largest in our industry.

June

The month of June continued with active Investor conference participation, including 德意志银行 's Decarb deep dive series, hosted by the excellent Liam Fitzpatrick , 摩根士丹利 's Virtual Metals & Mining Cannonball Run Field Trip, hosted by the excellent Ioannis Masvoulas, CFA , and ABG Sundal Collier 's Nordic Materials Seminar in London.

One of the key enablers of long-term value creation for Hydro, is the continued sourcing of globally competitive long-term renewable power contracts, and we were pleased to sign a 0.44 TWh 15-year contract with Statkraft .

I also had the great pleasure to bring my global management team to Luxembourg, or more precisely, Clervaux, where we produced 16kt of 75R in 2022, but now also 100R, which is recycled aluminium produced based on 100% post-consumer scrap, scrap which has been in use, true recycling (compared to remelting of process scrap). Recycling is one of our strategic growth areas, where we are allocating our hard-earned capital towards future growth.

To further grow in Recycling, we also signed an agreement to purchase land in Torija, Spain, with the aim of building a state-of-the-art aluminium recycling plant that will allow us to dig deeper into the European scrap pile. Once operational, this plant will have an annual capacity of 120,000 tonnes – much of this utilizing low value scrap, ensuring that more scrap remains in Europe, strengthening its economic resilience and supporting circular economy ambitions.

After rigorous preparation and testing, we also produced the first successful batch of aluminium using green hydrogen as an energy source at our extrusion plant in Navarra, Spain. This is exciting on several levels as it is the first known successful industrial scale test for using hydrogen as a viable commercial fuel switch solution in industries where electricity as an energy form is not an alternative and demonstrates that hydrogen can be used in the production of aluminium. Paired with our recycling capability of turning post-consumer scrap into new products, this is also an important step towards carbon-free aluminium.

June also saw several smaller and larger customer contracts being established, including.;

• signing a letter of intent with SolarDuck , an offshore floating solar energy technology developer, to collaborate on a project that will advance offshore floating solar energy solutions in Malaysia and Southeast Asia
• joining forces with CAKE and Vattenfall for their pioneer project ‘Cleanest Dirt Bike Ever,’ aiming to inspire the industry to minimize its carbon footprint. We will contribute with low-carbon aluminium, Hydro CIRCAL 100R, and EcoDesign expertise to adapt the motorbike to new aluminium alloys.
• signing a letter of intent with Brompton Bicycle , the UK based bicycle company, to deliver low-carbon aluminium that will reduce both the weight and carbon footprint in Brompton’s range of iconic folding bicycles.

In 1989, Norsk Hydro was one of the first companies in the world to publish a sustainability report. Through 2023, we continue to push the boundaries, closely interlinking sustainability and profitability, creating more viable societies and industries that matter – with greener products for our customers, the climate, the circular economy and society at large.

I was therefore especially pleased to see our efforts being externally recognized by Morningstar Sustainalytics. Since our Capital Markets Day in December of 2022, we have been able to further lower our scoring from 19.7 to 17.5 points, indicating a low risk of experiencing material financial impacts from ESG factors. We are noted for a strong corporate governance performance, above average policies and programs as well as a strong management of material environmental, societal and governance issues in our day-to-day operations.

July

On April 29th, 2022, we made a bid for the Polish Recycler, Alumetal SA .

July started with some long-awaited news, as more than one year later, following a phase II review by the European Commission, we proceeded with the purchase of all Alumetal shares and delisting Alumetal S.A. from the WSE. Alumetal has a strong strategic fit for delivering on our Recyling agenda, and developing an even better offering of low-carbon recycled aluminium to our customers. Some key facts, include:

• Second largest producer of aluminium secondary foundry alloys in Europe
• Production capacity of 275,000 tonnes per year with three plants in Poland and one in Hungary, and 640 employees
• The company sells its products primarily within Europe and to the automotive sector, which represents 90% of customer base
• Alumetal is also experienced in sorting of post-consumer scrap and recently commenced operations on a new, state-of-the art sorting line

One of the reasons July is one of my favorite months in the office, apart from preparing Q2 reporting, is that the average age in the Norsk Hydro office is significantly reduced, as we welcome talented summer interns into our organization.

I had the great pleasure of having lunch with the summer interns working in the Finance and IT organization. I always come back from meetings with the youngest parts of our organization significantly engaged and educated. Many of the interns were working on improving our processes through coding, dashboarding, and similar. The hunger for learning, and the appetite for using new ways of working always inspires me. I am a great believer in giving young talent large responsibility at an early stage (as I was given in my time), and I was very happy to hear that all of the interns were working on solving real business challenges.

As in earlier years, I expect to see their legacy remain with us for many years to come. I hope you enjoyed your time at Hydro, Hans-J?rgen Wagelid, Halvard Bustnes, Ida Ingstad, Lise Ertsvik, Martine Brotke, Ole Martin Hidle, Peder M?land, and Theo Griffin Halvorsen, and hopefully some of you will come back for a longer engagement next time.

One of the areas we saw some headwind in 2023, was on regulatory developments, which I will also get back to in later months.

In Norsk Hydro we provide products with low emissions, where our primary aluminium produced on renewable energy has 4-6 times lower emissions than the world global primary average, and our recycled aluminium 75R has more than 7 times lower emissions and our 100R product has more than 33 times lower emissions.

In order to achieve these emission reductions, recycled aluminium needs to be based on post-consumer scrap, which is scrap from products that has come from a product that has reached the end of life, like beverage cans, scrapped cars, demolished buildings. etc.

A lot of pre-consumer scrap is also recycled (or remelted), however the footprint of this material reflects the footprint of the primary production process, as this scrap has not been out in use, and is just the cut off from the production process.

This is not a complicated difference to grasp, and it would be clear example of greenwashing if pre-consumed or process scrap could be sold as low-carbon recycled aluminium. Basically, a coal based aluminium producer could then produce aluminium with high carbon footprint, cut it up in pieces, throw it into a remelter, and then have low-carbon recycled aluminium, and sell at premium pricing.... which does clearly not make a lot of sense from my perspective and is obviously greenwashing.

It is therefore very unfortunate that under the EU's proposed carbon boarder tax, post-consumer scrap and pre-consumer scrap is treated similarly, allowing such greenwashing to take place, if implemented. This need to addressed and updated before the CBAM is finally introduced, to ensure the CBAM does not cause the problem it seeks to address, but rather solve it.

A key part of the Finance agenda is strategic capital allocation, and just as important as allocating capital to the projects with the best risk/reward is knowing when to step aside from a portfolio perspective. After careful consideration and based on an overall assessment of the opportunities in its portfolio and capital allocation priorities, Hydro Rein decided not to participate in the competition for the S?rlige Nordsj? II, phase 1 project.

However, where some projects are deemed less attractive, others can take their place, and in the same month Hydro Rein and GreenGo Energy Group expanded their existing partnership to develop two new early phase solar projects in Denmark, with a combined capacity of 410 MW.

July culminated in the reporting of our Q2 23 results, where we reported an EBITDA of NOK 7.1 billion, robust results, but slightly down from the first quarter, as lower realized prices and volumes were partly offset by lower raw material costs and higher extrusion margins.

We continued the strong focus on margin management and cash release, with free cash flow coming in at NOK 3.7 billion, and we were also pleased that despite lower prices and volumes, we reported a 12-month rolling RoaCE of around 14 %, which continues to be well above our overall profitability goal of 10% over the cycle. In challenging markets, we continued to deliver solid results and mitigate risks by improving margins, operational excellence and reducing costs. Continuous improvements strengthen our position on cost curves and ensure robustness.

One example that highlighted the significance of continuous improvement efforts is Hydro Extrusions. During the second quarter, European and North American demand for extrusions decreased significantly compared to the same quarter last year. CRU indicated continued weak extrusion markets in Europe in the second half of 2023 and into 2024, and an updated forecast for North American demand signaled moderate expectations for the second half of this year. Despite falling markets, Hydro Extrusions continued to deliver margin robustness through dedicated improvement efforts, by proactively adjusting costs and gaining market share, margin uplift, and benefiting from the greener product offering. These efforts showed strong results compared to our peers and strengthened the roadmap to deliver NOK 8.0 billion adjusted EBITDA for Hydro Extrusions in 2025. Did I mention resilince?

Also this quarter, I had the pleasure to spend time with CNBC , discussing the growing percentage of Russian metal on the London Metal Exchange, and why this is causing concern. Russian metal stocks of aluminium had grown to around 80% of LME inventories, a concern we addressed in LME's hearing on the last topic when the comparable percentage was 41%.

We are concerned about the orderly functioning of the market, as a number of global customers reject Russian metal as a consequence of “self sanctioning”, and then this metal finds its way to inventories instead. We are therefore concerned that the further acceptance of Russian aluminium on LME may put the global aluminium index set by LME at risk. We are both a producer and buyer in the aluminium market and we are highly dependent on a well-functioning market for price discovery. We are a significant participant in the market, especially for hedging purposes, and a fair aluminium price on the exchange is vital to our business. We remain concerned that a continued situation where some market participants may take advantage of buying discounted Russian metal can lead to misrepresentation in the overall price discovery, and in defining a fair price for all participants.?As long as Russian metal can be warranted on LME, there will be a risk that LME warehouses represent a market of last resort for Russian aluminium. We therefore believe that it might be appropriate also for?LME to revisit its position in light of the market developments and sent them a letter and met with them, stating exactly this.

Following our Q2 results, we spent some time in North America on roadshow, including opening the OTCQX at OTC Markets Group , and speaking to them about our Q2 results, strategy, and Hydro in the US.

I also wrote two articles on recycling policy and markets:

1. To scrap or not to scrap: why words matter from a policy perspective
2. To scrap or not to scrap: why words matter from a market perspective

August

Every August, the small town of Arendal in Southern Norway transforms into a hot spot, where policy makers, NGO’s, research institutions and industry players meet to discuss the future of the Norwegian economy.

This year, I participated in two debates on topics which are particularly high on my CFO agenda:

CSRD and the new reporting requirements: Firstly, I sat down with Jeanett Bergan, Anette Br?to Nereng, Marta Nev?y Bj?rkestrand, and Karoline Bakka Hjert?, to discuss the implications of new reporting requirements coming out of the European Union as part of the Green Deal. While we at Norsk Hydro welcome the strengthening of ESG reporting regulations and have been advocating for radical transparency down to the asset level to create comparability, it is precisely the latter that I see being made difficult through the new set of regulations. If the purpose of ESG reporting is indeed to create comparability to peers, enabling investors and other stakeholders to make informed decisions about a company, ultimately accelerating the green shift, the amount and pace of new reporting requirements paired with a lack of clarity on terminologies and definitions can lead to companies applying their own interpretation to the requirements, often to the competitive disadvantage of those companies following the requirements more conservatively.

The great circularity debate Later, I joined opinion leaders, including Tove Andersen , Reynir Indahl , Kristin R. Vaag , Marianne Groth , Frithjof Norman Lund , Alfred Bj?rlo , Bj?rn Arve Ofstad , and Peter Markovski , to discuss Norway’s potential to be leading in the field of circularity – a key enabler of viable green economies of the future. To achieve this, however, we need to apply a strict and reliable framework that calculates the true circularity of material. Policy makers and industry must work together to increase the demand of circular material, e.g., through regulations in the building and constructions industry and innovation to accelerate the decarbonization of industries through sorting technologies for recycling, and secure the supply of recycling material in Europe.

Hydro continues to be committed to the sustainable development of the Norwegian economy. The growing electricity consumption in power-intensive industry sectors paired with ambitions for the electrification of the oil and gas sector and data centers are calling for an increase of renewable power in the Norwegian market.

That is why Hydro Rein joined forces with Opplysningsvesenets fond, one of Norway's oldest and largest landowners. In close dialogue with local communities and municipalities, the newly established solar power company, Geisli Energi AS, will work on seven solar energy projects ranging from 20 MW to 100 MW totaling 655 MW and with an annual production estimated to be 330 GWh with a potential for an additional 400 GWh per year.

With the Green Deal and ambitions to decouple economic growth from resource use and environmental degradation, the European Union has assumed a leadership positioning in the fight against climate change. One of the key pillars under the Green Deal to drive corporate accountability in this context is the definition of a large body of reporting requirements, with the amount, complexity, and speed of such increasingly exponentially over the last years.

While we at Hydro strongly welcome these legislative and regulatory efforts and firmly believe in transparency being a catalyst for the green transition, we also see some implications in the implementation of the reporting regulations, potentially undermining their efficacy. I had the pleasure to sit down with Kiran Aziz from KLP, Kristian R Andersen from Position Green, Thor Gi?ver from Yara International, Lars Aasulv L?ddes?l from Storebrand and Magnus Young from Norsk Hydro to discuss some of the key challenges that we foresee from an industry perspective. We produced a series of X chapters on the topic:

1. Chapter 1
2. Chapter 2
3. Chapter 3
4. Chapter 4
5. Chapter 5

I also had the pleasure to present at SEB Nordic Large Cap Seminar in Stockholm. Good interactions, with a lot of focus on our Recycling growth ambitions, competitive advantages, and other aspects of our unique position in this new reality! We have many investors in Sweden who have known us for decades, and was great spending time with them, giving them the latest update on the Hydro story. Was hosted by the excellent Magnus Melv?r Rasmussen .

At Hydro, we are investing significant resources to decarbonize our production as well as our products. By replacing fossil fuel with bioenergy from manure and fish waste at our Sunndal aluminium plant, we will be able to cut emissions by 20,000 tonnes of CO2 per year and gain important knowledge in terms of scalability and applicability to other aluminium plants across our markets. This is an important step towards net-zero, adding to our efforts to reduce the CO2 emissions per kilogram of our aluminium product by increasing the amount of post-consumer scrap and utilizing renewable energy sources in our production.

And, on my team, I had the pleasure of welcoming new talent into my Management Team, as Karen-Elise Berg Christoffersen joined the Hydro Group CFO Team. Karen-Elise comes from Gjensidige , with an impressive track record as Chief Accountant the last 18 years.

September

When we defined our 2025 strategy, we did so with the ambition to accelerate the profitable transition to emission-free aluminium, closely interlinking sustainability, profitability, and a true competitive advantage. To achieve this, we continuously invest in measures to decarbonize our own production, our products and increase our energy efficiency – something which is particularly material in aluminium production, which is an energy intensive process.

With a project currently spanning across Norsk Hydro’s five aluminium smelters in Norway, where we focus on switching to LED lighting and motion activation as a first step, we targeted up to 90% of energy savings, equating to 100 GWh of electricity annually. To put this in perspective: this corresponds to the energy consumption of 6,000 households. Since 1990, Hydro has reduced its own CO2 emissions in Norway by 55%. At the same time, we have cut the electricity consumption per tonne of aluminium produced. Combined, these serve as important milestones on our path to emission-free alumimium,

We also signed a three-year contract with Shell Energy to help decarbonize our UK operations. The agreement covers a yearly supply of 56 GWh electricity and 144 GWh gas to our plants in the UK. With this contract, we reduce our Scope 2 emissions in the UK by 11,000 tons of CO2 per year.

In June of this year, we were finally able to complete the acquisition of Alumetal SA . Combining forces, the acquisition was an important strategic step to increase circularity in the aluminium value chain and the offer of low-carbon aluminium products based on post-consumer scrap. In September, we undertook the first steps to strengthen Alumetal’s capacity to address the growing aluminium demand in the automotive market, by investing NOK 200 million in the modernization and expansion of the Alumetal S.A. recycling plant in K?ty, Poland, and thereby increase the plant’s capacity by approximately 30,000 tonnes of foundry alloys

And, ever since we signed our first contract with a major car manufacturer, we have been continuously working to ensure that we can deliver on the ambitious goals of decarbonizing the automotive industry. And we have been delivering. Following the significant milestone of passing rigorous validation testing for low-carbon aluminum use in demanding structural cast components, which we accomplished in May at our ?rdal plant, we then inaugurated a new HyForge casting line at our aluminum recycling plant in Rackwitz, Germany.

Ideally positioned to cater to Germany’s demanding automotive industry, the €40 million investment adds a capacity of 25,000 tonnes per year to the current annual production of 95,000 tonnes of extrusion ingots at Norsk Hydro's Rackwitz plant. HyForge represents one of the most effective ways to enhance the energy efficiency of vehicles without compromising safety, and it comes with a certified low-carbon footprint in accordance with the Hydro REDUXA 4.0 certificate.

We often discuss how material selection influences a product's carbon footprint, and this is indeed true. The recycling of post-consumer scrap, for example, has become a significant game changer in decarbonizing industries such as automotive and building & construction.

But what also matters is the type of energy source used in production, as the production of materials accounts for 25% of the world's energy consumption. To ensure access to renewable power, Hydro entered into a long-term power purchase agreement with Alpiq for the delivery of 1.18 TWH from 2024 to 2032. Having a secure and competitively priced energy supply is a key enabler of Hydro's production of low-carbon aluminum with a footprint of at least 75% lower than the global average.

One of the absolute highlights of my year came in September.

Once a year, Hydro’s Board of Directors and Corporate Management Board visits a Hydro site to get a better understanding of Hydro’s businesses, its global leadership, opportunities and challenges. For 2023 the visit went to Hydro’s automotive extrusion flagship, Szekesfehervar in Hungary. However, right next to the plant, one of our Global Business Services global hubs is located. And of course, I could not let the opportunity to present our amazing Hungarian organization pass by!

GBS operates as an internal service provider and delivers relevant IT, Financial and HR business services to all business areas, and Hydro corporate. As a partner to the business, GBS are continuously working towards their mission, by utilizing their global footprint, scale, business partners and competence:

• Deliver reliable and competitive end-to-end services
• Drive sustainable change to boost profitability or minimize risk.

The vision is delivered through 4 strategic goals:

• Run stable, sustainable, and secure operations.
• Develop competences for a performance-driven organization
• Extend services through selected growth
• Drive improvements to increase efficiency, sustainability and deliver added value in business

GBS operates across 25 countries, with 5 major hubs, in Hungary, India, Brazil, the US and Norway. 97% of Hydro’s Enterprise IT, 75% of Finance, and 60% of HR is covered. This includes supporting 20,500 PCs, 49,000 pay-slips per month, and 24,500 balance sheet accounts per month. This has allowed significant improvements delivered over the last 5 years, contributing around 40 MEUR to Hydro’s overall improvement program, including infrastructure consolidation, efficiency improvements and automation. As a result, the cost level is now at digital world class level.

However, being a world-class shared service organization, is about more than just cost, but also quality and user perception, both which have improved significantly over the latter years.

These are strong results, and to deliver such strong results, it is important with the best people. And that is why I am proud, or Büske, because Hydro’s GBS really have the best people. We also have around 1,400 engaged people, working in Hydro’s most diverse organization, with 15 + languages, and a healthy 45% female to male colleagues ratio.

I am also proud because, as the chair of the GBS, I work with an excellent management team, which presented their organization’s deliveries over the latter years, but maybe more interestingly, what GBS is working on for the future.

Another thing I am proud of, is our strong relative distribution to shareholders, and in September we initiated a new share buyback program, in line with the authorization granted to our Board of Directors by the Annual General Meeting in May. The buyback program can purchase shares up to maximum value of NOK 2 billion, inclusive the proportional redemption of shares owned by the Norwegian State. This is a central part of our financial framework, and we are happy to continue supplementing shareholders above our 50% of adjusted net income ordinary payout ratio.

With the war in Ukraine having surpassed the 18-month mark, inflation and high energy prices triggered by the shock of war are slowly coming down. Some industries, however, remain disproportionately impacted by the sanctions, potentially causing market distortions. I wrote an article on high Russian aluminium export volumes and the threat of market distortion.

Closing off October I had the great pleasure of presenting at Carnegie Investment Bank's Enviro and Profitability Seminar, hosted by the excellent Morten Normann .

This is one of my favorite topics to speak about, namely all the good projects we are undertaking to improve our climate, environment, and social footprint across our value chain. It is a great joy to work in company where sustainability is the business case, realized through premium pricing. This caters for many exciting projects including, amongst others:

• A large portfolio of recycling growth projects
• Decarbonizing the world’s largest alumina refinery through fuel switch-
• Reducing our mining footprint and saving capex through the tailings dry backfill project
• Getting to zero aluminium, through new process technology (HalZero), carbon capture and storage and recycling 100% post consumer scrap
• And a whole array of efficiency projects in Aluminium Metal and Extrusion

All these projects have strong returns, well above, and for many, several times our cost of capital.

Finally in October, I was very pleased that Norsk Hydro has been rated A+ by Position Green ESG100, ranking us as one of the top 5% of the evaluated 300 companies in terms of ESG reporting.

October

October is always among the most hectic months for me through the year, with Q3 reporting, Business Plan, and Capital Markets Day preparations. 2023 was no exception, and following an announced investment of EUR 3 million in a new water treatment plant at our Schwandorf legacy site in Germany, and the singning of a new long-term powrr contract with Fortum, we were served some bad regulatory news.

The proposal for the national budget, presented by the Norwegian government on Friday, October 6, included several elements that affect Hydro's operations in Norway. The most significant impact is on the CO2 compensation scheme. We were surprised and disappointed that the scheme was further weakened. And although there was some improvements in the final version, we are concerned about the negative signaling effect the government's constant changes have on the predictability of Norwegian industry

The purpose of the CO2 compensation scheme is to create a level playing field with other countries and prevent carbon leakage, which means energy intensive industries move production to countries with higher CO2 emissions.

Sadly, October had more very sad news, and unfortunately of the very worst kind, worse than anything else that can happen to the organization. Two young men who came to work in our plants did not come home safe to their families. On October 15th, a worker contracted by a third party passed away following an accident that occurred at our joint venture Qatalum in Qatar. Then on October 18th, a contractor passed away at our Alunorte alumina refinery in Brazil, while performing a maintenance operation. Our heartfelt condolences go to the family and the affected colleagues.

This is the worst possible reminder of how important health and safety is in all operations and activities, and we can never rest until 0 is reality.

On the positive side, we delivered another key strategic milestone, long in the making, partnering with Macquarie Asset Management (MAM) for the continued growth journey of Hydro REIN. With strong positive market reception, and a new partner with shared values, this was one of these days where you really feel the positive energy when summing up at the end of the day.

MAM will buy 49.9 percent of the company, and invest USD 332 million in equity the coming years, and no further equity injections from Norsk Hydro are planned for, as the ambition for Hydro REIN is to be self-funding going forward. We were excited to launch a new chapter in Hydro’s renewables journey together with Macquarie Asset Management. With this partnership, we will grow and execute on Rein’s ambitious renewables pipeline going forward– with strong projects and leads under construction and development. Together, we aim to be the preferred energy partner for industrial customers on their path to net zero carbon emissions.

I try to not share sell-side views here on LinkedIn , which is difficult, because there is so much high-quality analysis of Norsk Hydro. However, I really appreciate good wordplay, and when Barclays and Amos Fletcher produced such a legendary title, related to our new Hydro REIN capital raise, I cannot resist!

We also delivered our third quarter results for 2023, another quarter with firm measures being taken to address the short-term market volatility, including being ahead of plan on our improvement program, and freeing up NOK 2.3 billion in cash.

While on the other side, we made good progress on our strategic agenda, through:

• Completing the capital raise for Hydro REIN
• Growing in Extrusion and Recycling and capturing value from Alumetal S.A.
• Executing on decarbonization roadmap across the value chain, delivered first Hydro REDUXA 3.0 to Mercedes-Benz AG-Benz
• And much more

I had the pleasure to join Dani Burger on The Pulse on 彭博资讯 to talk about our exciting new partnership with Macquarie Asset Management in Hydro Rein .

Finally, Moody's Analytics increased Hydro’s overall ESG score from 71% in 2021 to 73% in 2023. The analysis looks at the performance across environment, social and governance pillars as well as six separate domains, which include business behavior, human rights and community involvement. Hydro ranked above the sector zone average in all pillars and domains.

November

November is our large strategic external month, with our Capital Markets Day towards the end of the month. However, there was a lot of ground to cover before getting there.

With the Green Deal, the European Union's ambitious goal is to reduce greenhouse gas emissions by a substantial 55% by 2030 compared to 1990 levels, with a further aspiration to become the world's first climate-neutral continent by 2050.

To succeed, however, Europe must increase its independency in the supply of clean energy and critical raw materials. Aluminium has the potential to play a pivotal role in Europe's transition towards a greener future. But it matters where and how aluminium is produced. In our video series on the role of aluminium in Europe’s green transition Trond O Christophersen, EVP of Corporate development at Norsk Hydro, Jostein R?ynesdal, Head of EU Affairs at Hydro, and myself sit down to discuss the primary growth areas for aluminium to drive the decarbonization industries that matter:

• Chapter 1
• Chapter 2
• Chapter 3
• Chapter 4

Often, when we discuss ESG, the "E" takes precedence, overshadowing other aspects of the paradigm. However, to effectively address the challenges of climate change and promote environmental sustainability, we must also foster social equity. To succeed, the green transition must, therefore, be a fair transition.

I am proud that our efforts received external recognition, with Norsk Hydro being recognized as a leader in children's rights by the Global Child Forum and the Boston Consulting Group (BCG) in their latest report, "The State of Children's Rights & Business 2023."

This report highlights Hydro's social initiatives in Brazil, where we have made significant investments in recent years to create employment and educational opportunities for local communities and reduce violent crimes through the establishment of peace houses. As a company, we firmly believe that we cannot succeed in societies that fail and recognize the importance of being a good neighbor as a crucial part of our license to operate.

Was also great to join SpareBank 1 Markets AS morning meeting to talk about Hydro's position, strategy. and short and long-term markets outlook. As usual these days, we spent a lot of time on greener aluminium, and how this will differentiate Norsk Hydro going forward. Hosted by the excellent Ole-Petter Sj?vold.

It was also a pleasure to participate in Oslo Business Forum Executive Roundtable discussion on "New reporting requirements pushing us to be greener - how can we still remain profitable?"

I love this topic, as it allows me to share the Norsk Hydro story, where we have been able to really connect sustainability and profitability through selling greener products at a premium price.

This is what drives our company, e.g. how can we work across the value chain to reduce our footprint, and at the same time strengthen our resilience and profitability.

In October, week 41, Norsk Hydro arranged their Mental Health week for employees. Unfortunately, this is quite a challenging time for Finance employees to prioritize due to Q3 reporting and business planning. So, we had our own mini mental session on November 15th.

Mental health is a topic that I spend a lot of time on, also my own. When mental health is not where it should be, we are not present. We are able to work, but often not able to contribute at a level which caters for mastery and further self-development. Presence allows for performance excellence, collaboration, innovation, and not at least, fun. Which are all important for a thriving organization and engaged employees.

I spend a lot of time on my own mental health, and the obvious elements, like training, sleep and healthy eating. But also on learning, and self-development. I believe greatly in self-development as a catalyst for mental health, one of several reasons why we have competence development as a key pillar of our Finance strategy.

Reshoring efforts to counteract supply chain vulnerabilities and increased policy support incentivizing domestic production have ignited a manufacturing renaissance in the US in recent years, after decades marked by decline and outsourcing. Accelerating this upturn could have truly transformative effects, with the manufacturing industry contributing disproportionately to the country's economic resilience and growth.

However, if we produce more, we must also produce more sustainably to ensure that we are building industries that matter today and in the future. 18 months after breaking ground and a USD 150 million investment, we opened our Cassopolis plant in the state of Michigan. Designed to produce Hydro CIRCAL, Hydro’s brand of premium, low-carbon aluminum containing at least 75 percent post-consumer scrap with a market-leading CO2 footprint of 2.3 kg CO2 emissions per kg of aluminum, the plant will continuously increase its delivery to the US automotive industry once qualification trials are complete.

To create more recycled material, we also need access to more scrap – something that we are now driving with PADNOS.

Together, Hydro and the Michigan-based leader in recycling and scrap management established a 50/50 joint venture, Alusort LLC, to dig deeper into the scrap pile and return more aluminium to the cycle. With our state-of-the-art sorting technology, the joint venture can handle most mixed and challenging scrap types that otherwise would have ended up in landfills and will supply Hydro’s plants in Cassopolis, Michigan and Henderson, Kentucky with up to 20,000 tonnes of alumnium scrap a year, where it will then be upcycled into products for the automotive and building & construction sectors

We also delivered several other smaller and larger achievements, like:

• Hydro Extrusions entering into an agreement with the UK start-up automotive company Watt Electric Vehicles (WEVC) to deliver recycled, low-carbon aluminium extrusions for their coming electric commercial vehicle.
• Hydro and Sanvira Tech LLC signing an agreement in Oslo on November 27, for the supply of carbon anodes from Oman to Hydro’s aluminium smelters in Norway.
• Hydro receiving competition clearing for Alunorte partnership with Glencore
• Irizar e-mobility, a Spanish customer of Hydro Extrusions, being the first company to use recycled aluminium produced with green hydrogen in their products. The aluminium profiles made with recycled aluminium will be used for bodywork in their electric vehicles.

However, the highlight of the month, was of course our Capital Markets Day 2023. This was the fifth year I had the pleasure of presenting Norsk Hydro’s financials at our Capital Markets Day, but I was as excited as I was the first time, to translate all the presentations of the day into figures.

But I was especially excited, as we see clear evidence that all our efforts over the latter years are now really coming through in strengthened resilience and increased greener value creation.

In 2019 we introduced a financial framework which has guided us through the very volatile market environments we have experience the last years, and although it has been consistently developed, it still resides on the same fundamental pillars.

Last year I used the analogy of playing defense and offense at the same time, and this year I can say we continue to display our ability to combine the short- and medium-term mitigating actions with delivering on and stretching our strategic growth ambition, ensuring we take full advantage of the ability to strengthen our competitive advantages and further differentiating from our peer group.

On the defense side we continue to ensure financial strength and flexibility by further stretching our improvement and commercial ambition to 2030 by an additional 6.1 BNOK and securing 25% of our margins for 2024 and 2025 through our integrated hedging program, at levels accretive to our return ambitions.

A large part of my job is to ensure we have robust profitability roadmaps for Hydro, but also for each business area. Over the last five years, we have delivered a RoaCE of around 11%, above our over the cycle target. And, looking forward, we are also there on a Hydro level, with a 17% RoaCE potential in 2030, in the external market forecast scenario.

We also strive to continue to optimize the working capital we have on hand by delivering over 4 BNOK in reduction year to date, and targeting another NOK 2 billion reduction in 2024, bringing us back to our Q4 2020 levels, adjusting for price and portfolio changes.

On the offense side, we continue to follow the clear principles for capital allocation with 45% of our CAPEX allocated to growth and return seeking projects for the period 2024-2028, aiming at capturing the above 20% annual demand growth expected for greener aluminium and ensuring that we continue to grow the company at attractive returns. And, as in 2023, we will continue to look at re-allocation opportunities to support this.

These ambitions do not deter us from healthy shareholder distributions, in total NOK 30.7 billion has been distributed since 2019 through both dividends and buybacks in accordance with our 25 BNOK debt target, which we continue to steer according to, as you can see from our proposed 2023 allocation.

We require sustainable practices to extract raw materials, emission-free production processes, and circularity to close the loop, upcycling end-of-life materials into new products.

At Norsk Hydro, we firmly believe that the green transition starts with us. Through our fully integrated value chain, we are in a unique position to pioneer the green aluminum transition by decarbonizing our own value chain and supplying our customers with greener aluminum for the decarbonization of their products. However, we also recognize that, along with aviation, chemicals, concrete, shipping, steel, and trucking, aluminum is one of the industries with the hardest-to-abate emissions. To achieve our own net-zero ambitions and maintain the critical climate pathway of 1.5°C outlined in the Paris Agreement, we must collaborate across different sectors to build industries that matter, and create new markets for clean technology that are integral to all processes of the value chain —something that is often not yet competitive with carbon-intensive solutions.

I was therefore, very proud that Hydro joined the First mover's coalition, the leading global public-private partnership to scale new technologies for decarbonizing the long-range transport and materials sector just ahead of this year’s COP.

By joining, we commit to ensuring that at least 10% of all primary aluminum procured externally by 2030 is near-zero emissions primary aluminum. Additionally, Hydro has the ambition to serve as a First Movers Coalition supplier with a strong commitment to our roadmap, solely producing net-zero aluminum by 2050.

December

We had a lot of merry news in December, especially related to our participation at COP28 in Dubai.

It is always a true honor when our efforts are externally recognized as leading the way towards a more sustainable future. It is even better when this recognition is tied to a project milestone in our ambitions to change the game for aluminium and build industries that matter.

During this year's COP, we were awarded the Energy Transition Changemaker for pioneering the green aluminium transition by the COP28 UAE Presidency. The acclaim comes as we make the push to construct a test facility for our HalZero technology at our technology center in Porsgrunn, Norway. HalZero is part of our technology roadmap to reduce emissions in the aluminum production process by emitting oxygen instead of CO2, as in current electrolysis processes. With the construction of the test facility, we aim to produce the first zero-emissions aluminum using HalZero by 2025 and achieve industrial-scale pilot volumes by 2030.

We also, together with Volvo Group , announced a strategic partnership to enable the global transport manufacturer to reach its 2040 target of delivering net zero vehicles. As partners in the First Movers Coalition, we further pledge to support each other’s journeys towards zero emission value chains.

The push to ban Russian aluminium from us and others also continued. 21 months after Feb 22, the war is still ongoing. Maintaining the economic pressure created by sanctions on Russia is therefore crucial. While we at Norsk Hydro have been advocating for a ban on the import of Russian aluminum since the start of the war and are pleased to see that now limited aluminum products are proposed to be in the scope of the EU’s 12th sanctions package, more than 85% of the total Russian aluminum exports to the EU remain outside the scope.

If aluminum sanctions are to have a true effect on Russia’s economy and thereby the country’s ability to wage war, much more comprehensive measures are needed. In addition to wires, foils, tubes, and pipes, the EU must ban the import of primary aluminum from Russia.

Furthermore, strict anti-circumvention rules are needed to ensure Russian aluminum does not find its way into products sold to Europe by routing it through third countries.

December has also been a month for the Global Finance Team. A key pillar of Norsk Hydro’s Finance strategy is competence development. This goes for the finance organization as a whole, but also for the management team. We are currently in the process of updating our Finance Strategy for 2030, as well as delivering our next wave of digital ambitions.

I have a strong and capable team to drive this journey together with me, but as part of the process we also spend time outside Hydro to see what good looks like.

It was as such great pleasure to?spend two days with the Extended CFO management team to visit SAP in Walldorf, and Takeda in Zurich.

At SAP we got an insight into what the future possibilities could look like with their software, and also how SAP uses SAP. Very good and transparent sharing, and especially their Digital Boardroom drives a lot of engagement.

Over the last year we have worked with The Hackett Group Inc. to benchmark our finance, IT and HR cost and quality on a global basis. I am happy to say that we are world class on total cost, but have some improvement potential in composition of cost, and what our people spend time on. We therefore spent some time with Takeda in Switzerland to learn about their digital Finance journey, while also sharing our experiences from areas where we are very mature, like ESG reporting.

All in all, the team returned with a lot of new insight in the backpack, and even more engaged to ensure we establish a bold and inspiring Finance 2030 strategy!

The most important part of my job is to ensure an engaged and competent organization, with team members smarter than myself. I am extremely proud of my management team, and I know they are the best of the best.

However, it is also nice when the external market acknowledges this, and I was very pleased that my management team covered 20% of E24.no's list of Young Leaders Economics Stars! Norsk Hydro's Head of Group Performance and Control, Baard Erik Haugen came in on second place, and Head of IR Martine Ramb?l Hagen came on top 10 list. I am very proud of them both, and they both contribute significantly every day to ensure Hydro pioneers the green aluminum transition.

At our Capital Markets Day, we announced that we just completed a companywide full potential exercise, looking into all areas of digital improvements, resulting in a large potential, where NOK 3 billion represents the bottom end of that range. We estimate that around NOK 2 billion of this is already captured in existing improvement efforts, but that leaves another NOK 1 billion stretch to put on the 2030 ambition.

To deliver on this, we need the right talent, and I was very pleased to welcome László (Laci) Kiss as Chief Digital Transformation Officer (CDTO) heading the Digital Transformation Office (DTO) at Hydro.

Finally, I was proud that Hydro has been included in the Dow Jones Sustainability index for 25 consecutive years, improving our score from 67 to 69 in 2023.

Looking forward.

In sum, 2023 has been a year of proven resilience and strategic execution and capital reallocation. Despite extrusion demand falling 10-20% year over year, and significantly more in the building and construction sector, we have maintained Extrusion margins, and used our inherent portfolio flexibility to maximize earnings across the company. If markets should further decline, we have also taken measures to prepare for this.

As such, I believe we have paved the way for a realistic and exciting growth pathway to 2030, where we will Pioneer the green aluminium transition and create significant stakeholder value along the way.

Into next year, I expect us to sign further strategic partnerships to deliver greener aluminium, and grow our share of premium priced earnings, as we make continued progress on our path to zero. We will continue to allocate capital into Extrusion and Recycling to capture high returning growth opportunities, while improving our position on the alumina and aluminium cost and carbon curves, fueled by renewable energy, as we close the Hydro Rein transaction and continue growing our renewables portfolio with Macquarie Asset Management .

The rest of the industry is looking to us, and we see our peers moving in similar directions. However, we have a head start, and we will ensure we use it well.

Welcome 2024, we are ready!!