Norsk Hydro ASA (NHY) Earnings Call Transcript & Summary

Good day and welcome to the Norsk Hydro Conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Stian Hasle. Please go ahead, sir.

Thank you. Good morning, and welcome to this update on what measures Hydro is taking to strengthen our robustness in this very special situation. We will start with the presentation by CEO, Hilde Merete Aasheim, followed by a Q&A session, also joined by CFO, Pal Kildemo. In the stock exchange release we sent out yesterday, we included a presentation that will be used as a basis for Hilde's presentation now. This can also be found on hydro.com. And with that, I leave the work to you, Hilde.

Thank you, Stian, and good morning to all of you. As everyone knows, these are very special times for the entire world as well as for us in Hydro. The COVID-19 situation is a challenge to the global economy and continues to cause significant uncertainty for our people and our operations. Our top priority in this situation is the health and safety of our people and the communities where we operate. Secondly, we are doing our utmost to keep the wheels turning and generate cash and develop our business. If I then move to the next page. As I said, health and safety for our people and communities is our top priority. Hydro is following recommendations from local and international health authorities, and mitigating actions include alternating shifts, segregation of units, travel restrictions, social distancing and personal hygiene measures to protect employees and local communities in order to avoid the spread of the virus. All sites continue to follow Hydro COVID-19 production guidance or country rules whatever is stricter, with guidance frequently reviewed as more facts on the virus become available. In addition to international health and safety measures, Hydro is supporting local communities in their efforts and is also supplying materials and products to customers with key roles in handling of the COVID-19 pandemic. If I then turn to the next page. The COVID-19 situation is increasingly impacting the global economy and the demand for aluminum. GDP estimates for 2020 has been significantly revised downwards over the last couple of months, and external estimates are pointing towards global recession in 2020 with expected GDP growth down towards 0, down from around 2% to 3% not long ago, indicating how extreme the situation is. Most external consultants predict the Europe and the U.S. with negative GDP growth in 2020, Europe currently seeing the largest impact. We have seen closures across the aluminum value chain for ourselves as well as peers and customers on reduced demand as well as government-imposed restrictions. Automotive and building and construction represent around 50% of all aluminum demand globally and are the sectors being the hardest hit currently. We see OEMs in Europe and the U.S. have closed down for several weeks, and there is limited building activity across Europe. As a result of this, external expectations of global primary aluminum market surplus is obviously significantly higher than the latest Hydro estimate of 0.5 million to 1.0 million tonnes. The uncertainty is very large, and we will see developments in these estimates going forward. Governments are, of course, responding with fiscal measures and monetary support, but there is significant uncertainty of the effects going forward. If I turn to the next slide. With this backdrop, it is not surprising that LME prices have been moving downwards, starting the year at around $1,800, currently being at around $1,500. The same situation -- the same is the situation for all raw material prices, offsetting some, but not all of the pressure of lower LME prices. On the flip side, for Hydro, we have had tailwinds from the weakening Norwegian oil-dependent currency, providing aid primarily to our Norwegian smelter system. The graph on the left-hand side shows the LME development since the start of 2009 in U.S. dollar and Norwegian kroner, showing a steady decline in U.S. dollar, however, a fairly stable development in Norwegian kroner. As you all know, we are very sensitive to both LME as well as U.S. dollar to the Norwegian kroner, shown on the right-hand side where a 10% increase in LME impact our EBIT by more than NOK 3.5 billion. And a 10% weakening of the Norwegian kroner versus U.S. dollar is almost the same impact. Important to mention that we are, of course, also sensitive to many other factors such as other raw materials, alumina, premiums as well as volume development going forward. Then we move to the next slide. The significant market uncertainty weighs on all our businesses -- business areas in Hydro. But several of the business areas are not currently impacted by the coronavirus to a very large extent from an operational perspective. The Bauxite & Alumina area is still operating as normal, the same goes for Energy. And Rolled Products is also producing at normal levels, but here, we are expecting a negative impact of decline in automotive demand in the next coming weeks. Primary has been impacted by demand shortfall, but our primary smelters are still running as normal, with the exemption that we are utilizing the flexibility within our system to change product mix. But we're also using the flexibility we have to reduce demand shortfall by reducing production at our recyclers. Currently, 3 recycling facilities in Europe are closed. Let me turn to the next page to comment on Extruded Solutions. As we have communicated during the last week, Extruded Solutions is the business area in Hydro, which has been hit the hardest from the coronavirus with closure of plants and reduced production across the portfolio. Let me give you an update on the current situation, which is as follows. 35% of the sites within Extruded Solutions are running at approximately normal levels today but 40% are running at reduced levels, and it varies between plants. And 25% of our sites are either closed or running at very low levels. The impact is felt across the whole portfolio and impacting deliveries to almost all sectors, primarily towards the building and construction and automotive, as close to 70% of Extruded Solutions portfolio, closed the transport, including automotive and the building and construction. The impact of the virus first hit Southern Europe with Italy, Spain and France having to close down. Over the last weeks, we have seen -- over the last week, we have seen additional countries being impacted, including India, South America and the U.K. As can be seen from Hydro's global impact overview map on the right-hand side of the slide, the impact on our operations are to a large extent, following the spread of the virus across the world. Extruded Solutions are taking significant cost measure in this period, such as temporary layoffs where plants are closed or running at much-reduced production. At this point, we have 1,300 employees temporarily laid off in Extruded Solutions. We are closely monitoring the situation, and we'll also continuously evaluate further measures to meet the deteriorating demand. And as no surprise, there is significant uncertainty on market development into second quarter. Let me then turn to the next slide. And let me start by saying that the situation we are in is extraordinary, and we need to take extraordinary actions. As explained earlier, we are temporary curtailing several plants across both in Extruded Solutions and recyclers in Primary Metal. This is partly a result of customers closing down and reducing their call-offs all regulatory requirements to close down. To safeguard liquidity, Hydro have decided to freeze capital expenditure in 2020 by NOK 2.0 billion until we have more visibility, resulting in an updated CapEx estimate for 2020 being NOK 7.5 billion to NOK 8 billion until further notice. To adapt to the fast deteriorating market, Hydro is now also postponing the restart of the 95,000 tonnes capacity at the Husnes aluminum plant in Norway. The ramp-up was originally planned to start in the first half of 2020 but is now postponed at earliest Q3 2020, of course depending on market development and outlook in the second half of the year. We're also taking measures to reduce costs across the company, including force vacation, delaying projects and temporary layoffs. I would to like highlight that our improvement program efforts are moving forward with full speed, with increased focus on the cost levers we can pull in these uncertain times. However, it will be hard to reach the overall target for 2020 of around NOK 4 billion due to the expected shortfall of volumes as well as market development. But the overall improvement target of NOK 7.3 billion for 2023 still stands. The Corporate Management Board has decided to refrain from salary increase in 2020 as well as bonus payments for 2020, contributing to the collective efforts in the current challenging situation. And the Board has also resolved to amend the proposal of NOK 1.25 per share dividend payment, which I will come back to in more detail at the next slide. Because we are also taking mitigating actions to safeguard liquidity, visibility is low, high uncertainty of the length also of the situation. Therefore, the Board has decided to postpone the dividend payment. The Board has resolved not to propose to the general meeting a dividend of NOK 1.25 per share as previously announced. The Board will, however, propose to the general meeting that it is granted a power of attorney to distribute a dividend if it deems that market condition and Hydro's financial situation allow for it at a later stage. The decision to not pay the dividend as planned in May is not a decision we take lightly and comes as a result of the extraordinary times we are experiencing. Also impacting the decision is that we were recently downgraded to Baa3 from Moody's and with a negative watch. We have clearly stated that our target is to be investment-grade rating, which we deem is important for securing access to competitive financing in the bond and debt markets. With this as a backdrop, in combination with significant uncertainties, we believe that this is proper measures to safeguard the company's liquidity in certain times to the benefit of all stakeholders, including the shareholders. The Board's proposal does not entail any change in our general dividend policy with a 40% payout ratio of reported net income over the cycle with NOK 1.25 per share considered to be the floor. To further safeguard liquidity, as I said, Hydro has decided to squeeze around 25% of the remaining capital expenditure in 2020 by NOK 2 billion until we have more visibility. Updated CapEx estimate for 2020 is then NOK 7.5 billion to NOK 8 billion until further notice. The CapEx freeze involves all business areas and will be a mix of suspended growth and return-seeking projects as well as certain sustaining projects. And we will have to get back to you with further details at a later stage. It is important for me to highlight that we entered 2020 with a solid balance sheet, strong liquidity and available credit line. At the end of Q4 '19, we had NOK 12.3 billion in cash and cash equivalents. And we also have a USD 1.6 billion in a multicurrency revolving credit facility maturing in 2025, which is currently undrawn. So to round off, our top priority in this COVID-19 situation is health and safety for our employees and communities while at the same time, keeping the wheels turning to the extent possible, generating cash, developing our business. At the same time, it's important for me that we need to think ahead and plan for the return to normal operations and continuing our agenda to lift profitability and driving sustainability.

Thank you, Hilde. Operator, we're now ready for questions.

[Operator Instructions] We will take our first question.

Jatinder from Exane BNP Paribas. A couple of questions, please. Is the decision to roll back dividend predominantly to protect your credit rating because from a liquidity perspective, it doesn't seem like a constraint? And then related to that, what's the merit in keeping NOK 1.25 floor dividend? Does that imply that over a 10-year period, you need to pay NOK 12.5 as dividend? Otherwise, why would just keep 40% payout and leave NOK 1.25 aside? That's the first one. Second question, are you able to indicate your unit cost using spot measures, assuming everything flows through? We understand there is a time delay for ForEx and oil price and everything else to flow but if everything else was to -- if everything was to work properly, what would be your unit cost for primary aluminum and alumina at spot measures?

Jatinder, nice to hear from you. I'll try and move throughout the questions. If we start with the dividend decision, and then this is a combination of factors. We are humbled to the situation that the world is experiencing. And we also see that even though we have a strong starting point with about NOK 12 billion cash at hand and also the revolving credit facility, the spread when it comes to the expectations with respect to how this can develop going forward is quite significant. And there are low, moderate and even tougher scenarios. And as you know, we've experienced the situation from our company over some time, where you see that it started developing in China. And there, the situation played out in one way, but it could play out in other ways for the rest of the world. And to ensure that we're not putting our liquidity at jeopardy if this becomes a longer-term scenario than what we saw in the Eastern part of the world, we find it prudent to freeze the dividend as well as capital expenditures at current point. That is the one part of the equation. The other one is, of course, that we have as part of our financial policy, a target to hold an investment-grade credit rating. And when you are on negative watch or outlook in a situation with large uncertainty, we also need to ensure that we are taking the mitigating measures possible, which includes the dividend and CapEx freeze. We may have more information in just a couple of months' time. We might have a clearer picture on how this develops, and then that could allow us to reevaluate. But at current stage, given that the dividend comes up in such a short period of time, we do not have enough visibility. With respect to the comment on the dividend floor, the dividend floor is a floor in a situation where we see that we can keep our investment-grade credit rating. So over the cycle, one should expect that floor as a minimum or whatever is lower of that and 40% of our net income. When it comes to your third question on unit cost, I have to disappoint you with not being able to give exact answer there. As you're probably very aware of, there are extremely many moving parts these days, but we are also moving into Q1 reporting and should be able to give some more color on the specific financials there. I guess you asked ourselves to follow the external markets. And if you start with the primary side, we have seen 10% to 15% decline in raw materials across most categories compared to what we saw in the fourth quarter, alumina prices trading downwards at -- it shows 10% to 15%. So all of our cost elements are moving in that direction. If you go even further upstream towards the alumina unit cost, then caustic soda is also in the market down around 10% or so. Coal is now maybe moving more to 20% to 30%. And also fuel oil with the related update is approaching 40% decline. So quite a relief on costs in B&A and a somewhat smaller relief so far in Primary Metal.

We will take our next question.

Dan Major from UBS. A few questions. Firstly, on working capital. Given the substantial move lower, I guess, in prices for both input costs and finished products. Can you give any steer on where you expect working capital to move in the current environment? That's the first question.

Thank you, Dan. This is also a question with an answer that consists of many parts, and I cannot give you any exact amount. However, as we indicated on Q4, typically, you have a seasonal build into the first quarter. And you've seen that across our business areas, they are also in historic years, which should give some indication. On top of that, you have some increase of inventories in parts of our value chain. We have safeguarded some alloying materials, some alumina stocks, et cetera, to ensure that we are able to weather through in a situation where supply chains are impacted. As you probably know from other companies, there are transport congestions and port facilities are moving a bit slower. So to ensure that we are able to weather such a situation, we have increased our inventory somewhat. But then on the flip side, you will have a positive effect from the reduce in prices. And the extent to that is hard to guide on a quarter-by-quarter basis because there's quite large timing effect here also. In addition, you should expect some operating capital effect out of the normal when you curtail your operations as you sometimes have some material, which flows through the system, which builds up. So those are all the elements which will most likely contribute to the total working capital, but an exact figure, we will have to come back to that first quarter reporting.

So sorry, just to push on, I guess, the -- you're looking at those parts, it's probably more likely based on those comments that you build working capital due to inventory accumulation net over best guess at this point over the year, is that fair?

Well, if you exclude the prices, you should expect a build into first quarter. And then on top of that, you will have some effect from normal inventory or extraordinary inventory build, and then you will have prices offsetting some of that. But the total sum, we will have to get back to Q1.

Okay. Fair enough. That's fine. Just on the balance sheet and on the -- you have obviously provided the information on the strong liquidity position. Can you -- do you have any covenants on any of your facilities?

Not very significant nature. I don't think we have any covenants left now after the financial crisis, we worked quite hard to ensure that we would not have any covenants remaining for a potential similar situation again.

Okay, perfect. And then finally just question on -- well, first of all, within your CapEx guidance, what FX rate have you got implied in that? Because obviously, I guess, your ability to bring down NOK reported Capex, given the big move in the FX. There's a bit of an offset there. So what are you using on your -- yes, within that guidance?

Yes. Within that guidance, we are using close to current market FX rates. So when we move towards the range which has been indicated, we've also taken into account increase in CapEx that we would have as a result of the stronger dollar and also euro that we have experienced across -- against the NOK.

[Operator Instructions] We will take our next question.

Liam Fitzpatrick from Deutsche Bank. Three questions, just focusing around the cash burn at the moment. So post all of these measures, and based on where capacity utilization currently is, are you burning cash? Or are you actually making -- are you covering most of your costs? Secondly, on the CapEx question. If this cycle is a prolonged downturn and we look into 2021, what sort of level could you reduce CapEx to if need be? And then the final third question on the hot topic of smelter closures. Nothing has been announced so far. Can you give any comments on your thinking there? And which smelters are particularly at risk?

Yes. If we start with the first one on burning cash, I will have to get back to, again, those details when we come back to first quarter reporting as operating capital plays such a large part of the total equation. That being said, as you know, when most -- a lot of our first quarter is not so impacted by the COVID-19 situation, it's mostly March where the impact has been significant. But given that we already expected a build of working capital in the first quarter and the extra effects that we've had now, typically, you shouldn't see a lot of free cash flow in the first quarter. When it comes to the last point on the smelter closures, as you know and as Hilde recently communicated, we are taking measures stepwise. We started last year adjusting somewhat to the market by curtailing 20% of our Slovalco smelter in Slovakia, which as you can see from external cost curves, does not benefit from the same power and the currency effect, as you see in the Norwegian part of our operations. Since then, we have been working on utilizing market opportunities. We shifted volumes where that is possible from alloyed material to unalloyed materials. We are just remelting capacity, which is one of the more short-term mitigating actions that we can use. And then we've also pushed out the Husnes restock to give some flexibility into our portfolio and ensure that we adjust towards market. If this situation prevails and the demand shortfall becomes even larger, then we will continue having to evaluate how we move through our curtailment measures. In this discussion, it's also important for me to inform that the Norwegian smelters have moved quite a bit down on the cost curve, given the currency movement. But if at the end of the day, you're not able to sell your product and building inventory is not an option for us in this situation. The second question, I wrote down [ just ] cycle. Could you repeat that one?

Yes, just on CapEx, just if we look ahead and this cycle remains weak, what sort of level can you get CapEx down to? Is it sort of NOK 6 billion to NOK 7 billion, which I think is your sustaining level?

Well, we've had this discussion many times with respect to what are our low levels and what should you expect as an over-the-cycle sustaining CapEx level. And what we're doing here currently is that we are postponing and pushing projects out in time if this CapEx freeze remains throughout the year. So we're not taking away activities to a large extent because most of the sustaining CapEx is necessary to complete within a certain period of time. So what we've done in this first instance is that we've looked at what is possible to freeze in a situation where we need to ensure sufficient liquidity as its uncertainty is so high. Going forward, we will then have to reevaluate if the situation prolongs to see if there are other measures that can be taken or if there are other alternatives to get CapEx down. But to give a concrete answer on the long-term CapEx guidance level, this has not changed from earlier communicated levels.

We'll take our next question.

This is Ioannis Masvoulas from Morgan Stanley. Two questions left from my side. The first on Bauxite & Alumina division. So we've seen significant pressure on alumina prices in recent weeks. And if we do eventually see smelter perhaps coming through that would probably exacerbate the global alumina surplus. Are you still committed to ramping up how you noted to full capacity by the end of this year? And then the second question, regarding the measures you announced yesterday, you talked about temporary layoffs and broader cost cutting. Is there anything you could quantify here in terms of cost benefit for 2020?

Thank you, Ioannis. Good to hear from you. Well, on the Bauxite & Alumina side, we are, as you know, progressing -- or we have, as you know, been progressing quite well on the ramp-up and the level that we were at moving into the 2020. We did not leave a lot of alumina left to get back into the market. So we still continue with the ramp-up as long as we have offtake for our volume, given the very low position on the cost curve, which Bauxite & Alumina experiences. As for the Norwegian system, Alunorte has also benefited significantly from the depreciation of the Brazilian reais, together with the falling fuel oil caustic prices. The Bauxite & Alumina market is typically quicker to react than the primary metal market, given that there is limited possibilities to store alumina over longer periods of time. And when you get an oversupply in Bauxite & Alumina markets or at least alumina markets, then typically, you see that the high-cost alumina producers have to react more quickly than what you see on the smelter side. So we believe that as long as we have offtake for our volume, the B&A and the Alunorte refinery is among the most robust in the industry. When it comes to broader cost-cutting measures, we will come back to the status on improvement program when we deliver our first quarter report. As you know, our improvement program is a combination of many elements from cost reductions up to volume increases and improvements in other operational parameters. We are impacted on the improvement program side now by lower volumes, especially in the downstream business area, but also in Primary Metal, as we took out the Slovalco last year and also Albras, which was -- curtailed 25% at the start of this year. Our improvement program will be impacted by those elements. On the other side, we are working even more intensive on the cost side. And a lot of cost is taken out also just due to the situation that we are in now with temporary layoff, et cetera. But an exact figure on that, we will have to revert to at a later stage as this becomes clearer as to how long the situation will last. Giving a full year guidance now might be premature if this situation develops in a different direction from what we see currently.

[Operator Instructions] We'll take our next question.

It's Amos Fletcher from Barclays here. Just give me -- a couple of questions. Firstly, on the decision to produce more P1020 material rather than cutting Primary Metal production. I just wanted to ask, previously, we were at about 80% of your smelter output in value-added products, where will that move going forward based on the changes that you've announced?

Yes. I think where you have the biggest possibility to divert the capacity. That is on the primary foundry alloys side, where you typically have alloys -- foundry alloys, which you can produce at ingots. Some of this can be produced for LME requirements, and some of this can be sold for traders. Our PFA lines are in total around 0.5 million tonnes of our portfolio. And currently, we are not diverting those amounts towards ingots, but there lies the possibility there. However, what we've -- what we should be aware of is that this is -- only on primary foundry alloys we have this possibility. So even if there is a 0.5 million tonne possibility there, you might move into a situation where extrusion demand becomes so weak that you're not able to produce extrusion billet. And if you're not able to utilize mitigating measures like remelter curtailment or selling alloy billet towards downstream customers, then you might have to look at the electrolysis capacity at the end of the day.

Okay. So in other words, I guess, we should expect your premium realization to drift downwards as a result of the changes?

Yes. You should expect it to drift downwards as the result of two elements. One is that premiums are trending downwards in the market. They have over the quarter, hasn't been so big changes on extrusion ingots since the COVID-19 situation emerged. But through the quarter, we saw some development. But the shift from value-add to standard ingot will definitely impact the premium level.

And then I also wanted to ask about on the CapEx side. Can you give us a feel of out of the NOK 2 billion reduction, how much is split between maintenance and growth, i.e., how much you'll need to potentially spend in 2021 from deferred maintenance?

If you look at what we did on the CapEx side then we have -- the reductions are around 50-50 level, with 50% coming out in sustaining and 50% coming out in return-seeking. And just to give some flavor on that, most of return-seeking and growth investments, which have the possibility for cash release are frozen currently whereas in sustaining, we have reduced around 25% of the sustaining CapEx.

What I was going to ask, is there -- have you got any detail on the sort of rough splits of business areas where that's coming from?

I don't have the split per business area as of now, but we can get back to that in Q1 report.

And then finally, just to ask, can you give us a bit more detail on your expectations for the potential impact on Rolled Products? For example, can you actually get your workers into the German operations at the moment? And maybe what percentage of your sales book you think could be at risk?

For the Rolled Products business, we are in different market segments, and we see that in the can business, we have seen actually a good and stable development. So that has sort of made us, let's say, keep the operation going. While we see now that the call-offs from the automakers has declined week-on-week, and so we are now preparing for potentially curtailment or [indiscernible] relating to low order intake on the automotive part. So we have been able, for some time, to shift from different product areas, but now we see that the automotive industry is sort of the area where we see deteriorating demand, and we have to take the necessary measures to mitigate that.

And as for our other business areas, Amos, it is very difficult to give an exact estimate on reduced production or demand resulting to production because as we've seen across the markets, some customer closures last for some days and some weeks and some are longer. So to giving a figure now, would probably need to be advised in just a matter of update. We do, however, expect the Rolled as we see extrusion to gradually be more impacted on the automotive side. But if you look at our total portfolio, just across the different product area categories, then we are benefiting from -- as Hilde mentioned from can and oil markets and have taken some market share there lately. But this can also just be a short-term effect, so we will be careful with rolling them out in time.

We'll take our next question.

This is Henry Van from Trafigura. I wanted to ask about how the recycling rates at your facilities have changed because of COVID-19, particularly relating to the scrap inputs at your extrusion facilities and your whole product facilities in Germany?

Was it Henry?

Yes, it was.

Yes. Well, our product flows are impacted from what we're seeing now. But at this stage, we will not give any more concrete information of our changes in impact factors at facilities.

We'll take our next question.

It's Karl Mathisen from Folketrygdfondet. Just looking at the map showing curtailments. Is it fair to say that the map showed the incremental change in production demand that you see due to COVID-19? So that means that North America is pretty weak already kind of in January, February on the construction truck side? So that means that auto was still fairly good when you made this map? Is that kind of a reasonable assumption to make?

I think this map shows more how our operations are currently impacted. So there will be demand implications, which you can observe, which has not triggered a reduction in operations yet. So as you can see from the colors, where you have the red areas, is typically where you have a closedown, and a lot of that is, of course, due to demand reductions as the customers have stopped producing. Other places, it could be due to ourselves having to stop produce due to government-imposed requirement. So what the colors are showing in North America and Canada is more that our business and operations are still operating more normal than what we see in South America, Europe and India. However, we expect this picture to change going forward. As you've seen on automotive and other areas with the customers also closing down there. So this -- the situation will probably become more red in the weeks to come.

[Operator Instructions] We'll take our next question.

Jatinder, again, from Exane BNP Paribas. A couple more questions. On Husnes restart, you have put earliest restart time line as 3Q. But given the level of uncertainty that you're indicating, are there CapEx implication if you were to delay it much further, say, mid of 2021, how much of CapEx will escalate? And does it mean that you also need to get rid of all the people who are working on the project and then rehiring process and everything else takes much longer, that's why you can't delay it or is there much more flexibility both financially and from logistics perspective? Second question, on your Rolled Product demand side, you indicated not much impact so far, which is very different, but steel companies are saying that some automotive-based plants are running 10%, 15% utilization rates. What's the key difference between your automotive demand versus what steel guys are facing? And related to that, this should be a fairly long lead time business, how are your order books currently looking like?

I can comment on the Husnes side. The project at Husnes is almost finished. It's not that much left. So that will be finished using our own people to finish the project. Then we're coming to the summer, and we will use some of our people to summer release. And then if the market is continuing to deteriorate, we will face a situation of temporary relief. So we will discuss the Husnes situation based on how the market is developing and take a decision at the earliest in Q3. And that -- it's very much based on the market outlook when the decision will be taken to start up Husnes.

And if we move over to Rolled Products, Jatinder, then as we maybe didn't make it clear enough. We are not experiencing large impacts to operations now in rolling. We have been able to produce orders for a period of time. And we've also been able to re-divert volume declines from automotive into especially [ TAM ] due to being able to take market share as we see some peers are not producing. But we are definitely feeling the impact of automotive, and automotive will decline as part of our portfolio. And going forward, we expect those effects to be stronger. So what you're seeing with the steel guys, you should expect to come from our part also. And on order books across the downstream system, we are seeing reductions going forward, of course.

We'll take our next question.

Dan from UBS again. Two other questions. Firstly, just check some numbers when we think about your net debt position at the end of the quarter. If I look at the FX breakdown of your debt and then the spot currency rates at the end of the quarter, this is about just over 10% move. Should we just be marking to market the translation effect on your debt, so you get about independent of any other movements, just over a 10% increase in net debt on the quarter due to the movement in the NOK?

We haven't made large changes in composition of our debt when it comes to currency. So that sensitivity should still be valid. It's a good point you're taking up both on the debt side, but also when it comes to the embedded derivatives in our power contracts, both of these are quite significantly affected by the currency moves we've seen as of late.

And just to -- when I think about the net debt as opposed to the gross debt, what currency do you hold most of your cash in? Is it held in NOK?

It's a combination. We have cash in NOK and dollars.

All right. And then the second point just on the downstream, you're clearly temporarily closing facilities because of the weak demand and the current environment. Is this an opportunity to accelerate the restructuring of these businesses? And do you think that you can take this as an opportunity to look to push margins and be in a stronger position as we emerge from this?

Thank you, Dan, for that question. We will use this time also for the further positioning of the company. And so while we are in this turmoil, we will obviously work on to see how we can make our portfolio more robust. And we will have to come back on that when we have something to announce.

[Operator Instructions] It appears there are no further questions at this time. Mr. Stian Hasle, I would like to turn the conference back to you for any additional or closing remarks.

Thank you, and thank you all for joining us today. And obviously, if you have follow-up questions, please do not hesitate to contact us. I would also like to remind you of this silent period related to our Q1 reporting, which starts 2 weeks prior to us announcing or releasing the quarter. The quarterly release is on April 9, whereas then the silent period starts on April 15. Thank you, and have a nice day.

This concludes today's call. Thank you for your participation. You may now disconnect.