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As part of the strategic review of Rolled Products, Hydro has decided to initiate a comprehensive restructuring program in its rolling business with the aim to significantly improve profitability.
Hydro’s rolling business has shown disappointing financial performance over the last years. “We are taking forceful actions to improve our profitability,” says Einar Glomnes, Executive Vice President Rolled Products. The restructuring includes the planned closure of parts of the foil production at Grevenbroich as well as efficiency measures across the organization.
“Our cost position in parts of our foil business is too high, mainly due to manning-intensive and manual production processes, and we are also facing strong competition in this market segment. As a consequence, we are planning to close our foil mainline,” says Glomnes. In September 2018, Hydro announced the exit of the foil conversion business by December 31, 2019. These closures combined represents approximately 30% of the overall foil production of Rolled Products.
The total restructuring consists of a planned reduction of personnel cost of up to €60 million per year. This will lead to a redundancy of up to 735 full time equivalents (FTEs). This number includes the FTE reduction of 226 employees through the planned closure of the foil mainline by end of 2020 and 117 FTEs through the exit of the conversion business by end of 2019. Efficiency measures throughout all Rolled Products sites will close the gap up to 735 FTEs and is planned to be delivered by 2024, with the majority by the end of 2022. These measures are necessary to reduce costs and improve profitability at Rolled Products.
The total restructuring cost is around €160 million, of which €100 million to €120 million will be taken as a provision in Q3 2019. Parts of the manning reduction are dependent on limited capital expenditure. Rolled Products will further strengthen its focus on growth markets like the automotive and can business, where Hydro has recently made significant investments in the new Automotive Line 3 at Grevenbroich as well as a state-of-the-art recycling facility for used beverage cans in Neuss.
“Our products are well perceived by our customers. This feedback is rooted in our high-quality products and product consistency as well as our secure supply and timely deliveries. It is now on us to turn our strength into better results,” says Glomnes.
Hydro is a global supplier of aluminium with activities throughout the value chin. It is a fully integrated aluminium company with 35,000 employees in 40 countries on all continents, combining local expertise, worldwide reach and unmatched capabilities in R&D.
In addition to production of primary aluminium, rolled and extruded products and recycling, Hydro also extracts bauxite, refines alumina and generates energy to be the only 360° company of the global aluminium industry. Hydro is present within all market segments for aluminium, with sales and trading activities throughout the value chain serving more than 30,000 customers.
Based in Norway and rooted in more than a century of experience in renewable energy, technology and innovation, Hydro is committed to strengthening the viability of its customers and communities, shaping a sustainable future through innovative aluminium solutions.
Legal name: Norsk Hydro ASA
Business areas: Bauxite & Alumina, Primary Metal, Rolled Products, Extruded Solutions, Energy
Number of employees: 35,000
Company presence in around 40 countries worldwide
President and CEO: Hilde Merete Aasheim
Revenue 2018: NOK 159,337 million
Underlying EBIT 2018: NOK 9,069 million
Net income from continuing operations 2018: NOK 4,323 million