Norsk Hydro ASA (NHY) Earnings Call Transcript & Summary

Welcome to Hydro's Capital Markets Day 2022. We will first start with a company update by our President and CEO, Hilde Merete Aasheim. Following Hilde, our EVP of Energy, Arvid Moss will go through how we leverage our energy capabilities and our portfolio. We will then have a Q&A session and break, before continuing at 9:35 with an update on our ambitious pathway to net zero and sustainable value creation with EVP of Bauxite and Alumina, John Thuestad; EVP of Aluminum Metal, Eivind Kallevik; EVP of Extrusions, Paul Warton; and EVP of Corporate Development, Trond Olaf Christophersen. This is followed by a Q&A session and the break. After our break, we will hear from our CFO, Pal Kildemo, who will give an update on Hydro's financial priorities at 11:20, following by another Q&A session. Following the presentations, we hope you will join us for lunch at 12:30. After lunch, there will be a roundtables for aluminum metal and recycling at 1:00 and sustainability and path to net zero at 2:00. Before welcoming our CEO, Hilde Merete Aasheim on stage. Let's start with the video. Thank you. [Presentation]

Good morning, and welcome from me as well. and thank you for joining Hydro's Capital Markets Day 2022. War in Europe, skyrocketing energy prices, spiking inflation, global economic slowdown, who would have imagined these headlines to be a reality 1 or 2 years ago. The past year has shown us how fast things can change in our business environment and how important it is to be robust and resilient. During the past 3 years, we have taken an important step to make Hydro more robust, enabling us to create value in strong as well as weaker markets. As we now face a more unpredictable global economy, I find great comfort in knowing that Hydro is well positioned to navigate through turbulence in the short term but without losing sight of our strategic positioning for the long-term opportunities. Hydro has always been in business for a reason. When founded in 1905, our objective was -- sorry, our objective was to resolve one of the world's biggest challenges at the time to feed a starving Europe and to end world hunger. Today, we are again at a defining moment in history. In the midst of the current geopolitical and macroeconomic landscape, the world need to accelerate the transition to combat the climate challenge. This year's Capital Markets Day is, therefore, not only about how we are executing on our 2025 strategy, but also how we will continue to create long-term value for all stakeholders in the years to come and to be part of the solutions in terms of the transition towards a more just and sustainable society. But let us first look at what we have achieved during the last year. In 2020, we set a clear ambition to lift profitability and drive sustainability. This last year, we have passed a number of milestones on our journey towards 2025 strategy, strengthening our position in low-carbon aluminum as well as growing in new energy solutions. The basis for achieving our targets is our people. We have a fantastic workforce in Hydro with 31,000 highly skilled, engaged and motivated employees around the world. That is why health, safety and well-being of our people is on the top of our strategic agenda. Coming out of the pandemic, I'm very happy to report today that we have had the best year ever when it comes to number of total recordable safety incidents. But in this area, we can never rest. Ensuring a safe working environment is a continuous effort, which needs attention by everyone every day at every shift. And I strongly believe that it is a direct link between the health, safety and well-being of our people and progress when it comes to our performance. For 2022, we had a target of NOK 7 billion in terms of improvement compared to 2018. And we are well on track to deliver on that by the end of this year. We are slightly behind on our commercial ambitions as these are, to some extent, market-dependent, and the current environment is more challenging. However, we are ahead when it comes to the positioning and margin contribution from our greener products. And it's really encouraging to see the traction for our low carbon products in the market and the premium also that we now achieve on these products. Then to recycling. In 2020, we set the target to double the use of post-consumer scrap by 2025. And following this, we have allocated capital and started executing on several recycling projects. And I'm happy that we are well on track to meet our targeted position with or without the Alumetal transaction which is still awaiting competition clearance. Then to Extrusions. Here, we have grown together with the customers, particularly in the Automotive segment. Our local expertise combined with a strong local and regional press system, both in Europe and in the U.S. are positioning us very well in the market these days. Then to the second pillar of our strategy, which is to grow in new energy. Also here, we are progressing well in both Hydro REIN, Hydro Havrand and Batteries. Over the last 1 to 2 years, REIN has delivered a significant progress on building its project pipeline. Although we have not completed a capital raise for REIN. We are still in an active process to raise the necessary capital to develop REIN. And we stick to the original position of developing REIN capital-light in Hydro with an attractive return on equity. REIN has also developed and undertaken attractive renewable projects in Brazil, supporting our operations in Alunorte in Bauxite & Alumina and Albras in Aluminum Metal. At last year's Capital Markets Day, we presented our renewed climate ambitions. And also here, I'm happy to report that we also in this area are making good progress particularly related to the fuel switch in Brazil and that we are well on track to deliver on our ambition of reducing emissions by 10% by 2025 and by 30% by 2030. We have delivered strong returns with ROIC share of 27% over the last 12 months, well above our target of 10% over the cycle. This is a result of a strong cost position, our long-term power contracts, favorable currency as well as high prices in aluminum as well as energy. And earlier this year, we could distribute NOK 6.85 dividend per share based on the 2021 earnings as well as introducing a first share buyback program since 2008, targeting up to NOK 2 billion in buybacks. Based on expectations of 2022 earnings, we aim to distribute between 50% to 70% of adjusted net income as a combination of dividends and share buyback. Just as important as our ability to deliver absolute returns -- is our ability to deliver relative returns. On this slide, we have compared ourselves with the relevant peers within our industry, where you can see that we have regained our position and have in total over the period outperform the upstream as well as our downstream peers. And this is our agenda every day, realize continued value creation through good operational and strategic positioning of Hydro. As we look forward, we believe that there is 2 megatrends in particular that will have a great impact on our business environment, with both of them posing risks but also opportunities. The world is standing at the geopolitical and geoeconomic crossroad. What we see around us as the controls of a new geopolitical reality, characterized by increased driver between powers, weaker global institutions, a decline in trust and increased polarization within societies. It is reasonable to believe that this new and more unpredictable geopolitical landscape will have a significant impact on the global economy, affecting trade, economic operation, supply chains and global development. The pandemic caused an early warning of the vulnerability in our global supply chains. And I believe that the Russian innovation of Ukraine has amplified this impression for government and industries alike. We now see a shift in attention where proven long-term supply -- security of supply, affordability and access to energy, minerals and strategic materials will become an increasingly important strategic advantage. Simultaneously, society is putting sustainability higher and higher on the agenda. With expectations towards industry no longer only based on us contributing to the change. We are expected to drive change, not by a few stakeholder groups, but by all politicians and regulators, customers, employees and among investors. Likewise, the current energy crisis has demonstrated how crucial access to affordable renewable energy is for society and industries to succeed with the green transition. With the market increasingly focused on how products are made, driven by a trend towards supply chain transparency, we expect new values to be given to the ESG front runners. What we see coming out of Brussels, Washington, D.C. and Beijing is legislation and ambitions aimed at securing access to strategic materials and increasing energy independence through targeted investments in renewable energy. But finally, also increasing focus on environmental and social sustainability. The EU has been the first mover, but we have seen that -- but we have seen last year that both U.S. and China are now positioning themselves towards resource resilience and new growth opportunities on the shoulders of the green transition. This expected race for green positions between the world's economic power is good news for climate and environment. It will also have a positive impact on demand for low carbon products and services, posting great opportunities for first movers. The transition towards a Net Zero economy is expected to be a key driver for aluminum demand towards 2030. We expect a global growth rate of semis of around 2.8% per year with 50% of demand coming from the Transport and Electrical segments. This is supported by the transition towards electrical vehicles and increased demand for renewable energy. With EV adoption growing especially strong in Europe and China, while solar panels and wind farms are being built everywhere. Reaching Net Zero on the global scale by 2050 will require unprecedented investments in nuclear energy solutions and infrastructure, which in some offer an upside exceeding these figures. One potential drag could be the struggling construction sector in China. Chinese construction consumes 15% of all aluminum globally, representing a major downside if it were to come to a collapse in the property market in China. Adding to the positive side, we also see great potential for growth in areas like packaging, where more and more consumers are moving away from plastic and towards aluminum. Behind the expected 2.8% annual growth in aluminum semis demand. There is a big difference between recycling and primary, with recycled aluminum being increasingly important to meet this anticipated growth in demand expected to grow at around 5.4% per year. In China, a large amount of scrap are being generated from the strong growth in construction over the past decades, and they are investing heavily in recycling. We see the same in Europe and North America with increasing investments in recycling as a more sustainable and energy saving method of serving a growing market. Even with strong growth in recycling, more primary aluminum will be needed in the years to come to meet the expected demand growth to balance the market. Based on current announced projects, which are likely or probable to be built, there is still a supply gap. This supply gap may be even larger in subsegment in the market like low carbon aluminum. As we expect a large share of the customers supplying the green transition like automotive and electrical to be carbon conscious, demanding greener aluminum. However, the likely and probable projects coming in the next 8 years outside China are anticipated to be driven by growth from Asia, Indonesia and India with high carbon footprints. This represents an opportunity for us to fill the gap in terms of low carbon aluminum. At the Capital Markets Day 2 years ago, we presented our strategic agenda towards 2025, aiming to strengthen our low carbon position to grow in new energy. This strategy was based on an analysis of how our capabilities matched the mega trends we saw around us. Decarbonization, electrification, circular economy and the opportunities we could seize by leveraging our competencies as well as competitive advantages. Many things have changed in our surrounding since we presented this strategy. However, the underlying mega trends favoring low-carbon aluminum, renewable energy and energy solutions are even stronger. So I will make the argument that our strategy is even more relevant today than it was back in 2020. During the past year, highly motivated by the strength and relevance of our strategic direction. We have made considerable progress. So let's spend some time now on reflecting on what we have achieved, how this has positioned us and what we plan going forward. And let me start to look at our cost position upstream. Through the last 10 years, the aluminum industry has suffered the consequence of a flat industry cost curve, which has limited the ability of attracting margin generation for a large part of the cost curve. This has changed over the last year and particularly during the last year, mostly driven by increasing energy prices, high value-added premiums and also growing premium for low carbon aluminum. The price for alumina and aluminum is typically set around the 19 percentile. With a steeper cost curve going forward, this should allow for better margin generation compared to last decade. If we start with alumina, we are today positioned on the 30 percentile on the cost curve with Alunorte producing at nameplate capacity with $150 per ton distance to the 19 percentile. Following our ongoing field switch efforts in Alunorte, this would increase the margin potential to $140 per ton. A global carbon regime would steepen the cost curve further and improve the relative competitive position of Alunorte as well as increase the margin creation potential. In aluminum, we are well positioned at the 17 percentile of the cost curve with a $1,000 per ton distance to the 19 percentile. This is driven by attractive long-term power contracts in most smelters and high value-added premiums, including greener premiums, especially in Europe. Also here, a global carbon regime would steepen and improve the relative position further. The biggest competitive advantage for Hydro is our renewable power and the large portfolio of long-term power contracts. We have a favorable position, both with regard to our robustness in the current situation as well as in the longer term, with long-term access to affordable renewable energy across 80% of our global smelter portfolio, which you see to the right on the slide. And this differentiates us, as you can see from the pie where our European peers need to cover large part of their energy demand in the spot market or are hedged through medium contracts, which expires in the coming years. Still, power prices also increasing in Norway, making sourcing post-2030 important. Through Hydro Energy and Hydro REIN, we are positioned to contribute to add new renewable capacity dedicated with PPAs to our operations, provided the right regulatory framework in Norway that, that is in place and efficient permitting by authorities. In Brazil, as I already mentioned, REIN has successfully strengthened our position in low-carbon alumina and aluminum through the long-term contracts to both Albras and Alunorte from wind and solar. In addition to working on securing power for the long term at competitive price levels, we are continuing to address the other levers of the cost curve through our improvement program and commercial activities. We have a long track record now of delivering ambitious improvement. And as mentioned earlier, we have delivered on our improvement ambitions up to now. The NOK 7 billion is within reach for this year. I'm happy to report that we are increasing our improvement ambition for 2025 from the original target of NOK 8.5 billion up to NOK 10 billion by 2025, which includes a rebasing and increased scope effect of around NOK 700 million. We even go by on 2025, where we have now set a target of NOK 11 billion by 2027, an additional NOK 3.5 billion in the coming years. I'm sure you would ask where does this improvement come from? In all business areas, we use the business system as a basis for our improvement work. It is a structured systematic way of working looking for ways to improve our processes and working more effectively and where we also engage our people in a continuous improvement process. I have traveled around in the company after we could start to travel again after COVID, and I'm really impressed to see all the initiatives that is ongoing in all parts of the Hydro organization. And that I'm really proud of. And this improvement initiatives result in higher productivity, improved consumption factors, lowering both variable and fixed costs through thousands of different initiatives accumulating to the NOK 11 billion target that we have set for 2027. In 2020, we launched also our commercial ambitions, and we see that they are also bearing fruits, with traction on our greener products, better product mix, higher margin and market share growth. Towards 2027, we raised our commercial ambitions by NOK 500 million, up towards NOK 3 billion, an additional NOK 1.4 billion in the coming years. Then to recycling. Recycling will play a vital role in the transition towards a low carbon economy and is a key component of our strategy to strengthen our position in low-carbon aluminum. We expect 35% to 40% of the estimated demand increase towards 2030 to be covered by post-consumer scrap. Profitability in recycling has been strong over the latter years, which you see on the slide, much supported by the record high billet premiums observed in 2022. This is expected to normalize in 2023 and the years to come, yet still at very attractive levels compared to the cost of capital. Recycling represent an opportunity for new profitable growth, while at the same time, reducing the carbon content in the products we bring to the market. The return on investments made in recycling lately, typically range from 15% to 30% internal rate of return. This is driven by our strong capabilities across the value chain, and Eivind will talk more about this later today. If the announced Alumetal transaction goes through, we will exceed our original target of doubling the use of PCS, increasing our PCS usage to 670,000 compared to our original target of 480,000 to 630,000 tonnes. I'm encouraged by strong margin and higher demand of recycled aluminum as well as attractive returns, combined with the project pipeline, meeting our existing targets, we aim to further increase our ambition to use 140,000 tonnes more PCS towards 2027 with a corresponding uplift of EBITDA of NOK 500 million in 2025 and additional NOK 500 in 2027. Let me then turn to Extrusion, which is another exciting growth area in Hydro. The team in Extrusion have worked really well to make the business area more resilient through focusing the portfolio more toward to the high-growth segments and where we have a competitive advantage, including automotive, system businesses and commercial transport in the U.S. At the same time, we have restructured our portfolio, closing 13 plants during 2019 and 2020 and divested 5 plants. On the top of that, we have realized cost savings related to SG&A and procurement savings. We are allocating more capital to extrusion to add capacity in attractive segments going forward. This includes strengthening our flagship plants in the portfolio for its Nenzing in Europe and Cressona in the U.S. And we will deliver close to NOK 1 billion in additional EBITDA towards 2025 from our growth projects compared to 2021. Being in the business area closest to the end customers, we see a strong pull from sustainable offerings and target margin uplift and market share gains through our offering of greener products. Extrusion represents the greatest contribution to our commercial ambitions. And moreover, we are creating close loop with customers and improving footprint through recycling growth. In sum, Extrusion has a robust platform for further shaping the market and delivering on our target to deliver NOK 8 billion in EBITDA by 2025. We given that the markets develop according to the CRU market forecasts. Then to Energy. The value contribution from the energy operation and markets has grown significantly over the latter years. Over the latter 12 months, Energy's EBITDA has been NOK 5.4 billion. If you look at the hydropower portfolio only and normalized production to 9.4 terawatt and take out the price area differences, this business will generate some NOK 3.5 billion in annual earnings going forward. An additional NOK 400 million in commercial contribution will come on the top of this. If we delivered the average over the last 3 years. We are estimated to deliver significantly above this in 2022. Then let me comment on the new energy units. Hydro REIN has made significant progress during the last year. They are now in execution with 4 projects, 3 in Brazil, 1 in Nordic. And contracted revenues from these projects from these PPAs amount to approximately $2.7 billion. EBITDA contribution in 2026 from these projects are estimated to approximately NOK 400 million to NOK 400 million. As I've already discussed, availability of renewable power is more critical than ever for Europe and in general, to meet society's climate challenge. For Hydro, REIN's contribution to bring forward more power reduction is also critical. Havrand -- Hydro Havrand is in the learning and early phase development, establishing owning and operating green hydrogen facilities. I'm excited that we are now maturing pilot project in Høyanger, where we will demonstrate that we can use hydrogen to replace natural gas in the casthouses to deliver close to 0 carbon aluminum through recycling of post-consumer scrap in Høyanger. Long term, making the fuel switch from natural gas to green hydrogen will be important for our decarbonization of our casthouses and recyclers across Hydro and operations also in Alunorte. The battery unit is growing with our recent investment in Vianode, remaining within its allocated capital frame in total NOK 3 billion in 2020 -- in the period from 2020 to 2025. Over the past year, we have matured a more focused battery strategy exploring opportunities within sustainable battery materials. We see that Europe is short on many upstream materials for cell manufacturing production and is a key target for EU to become more self-sufficient. Hydro's competence and capabilities in the processing of and recycling of battery materials are valuable and highly interesting for partners. By 2025, the battery unit is targeting a 3x value uplift on equity invested. An important part of our positioning going forward is our ability to demonstrate not only ambitions and targets related to such sustainability but real deliverables which has a positive impact for the climate, for the environment and for a just transition in society as a whole. As I said in my introduction, we are well on track to reach our CO2 ambitions related to Scope 1 and 2 by 2025 and by 2030. In a minute, I will announce our new scope 3 targets. However, it is important that we also deliver on our ambitions related to environment and the societal aspects of sustainability. Our environmental ambition focuses on protecting biodiversity as well as reducing our environmental footprint with a particular focus on eliminating landfilling or waste in the long term. And we are well on track on our one-to-one reforestration ambition and are firmly committed to our ambition of achieving no net loss biodiversity in new projects in Hydro. In 2023, we will also rehabilitate 100 hectares in our legal reserve. This is degraded land, not impacted by Hydro's operation and comes in addition to the rehabilitation activities in the mining operation under the 1:1 ambition. And just as a reference, in 2023, we will rehabilitate 165 hectares as part of the 1:1 rehabilitation. When it comes to eliminating landfilling or waste, it's great to see the progress using the pioneering dry backfill methodology in our Paragominas bauxite mine, reducing the need for new permanent tailings. At Alunorte, we are working with partners to identify opportunities to reutilize the bauxite residue in other industries. One partner is Wave Aluminum, who has developed a process for extracting iron ore and other metals from bauxite residue. Following years of lab testing, we will now work with Wave Aluminum to build a pilot plant at Alunorte to test this in full industrial scale. When it comes to social sustainability, our ambition is to improve the lives and livelihood in the communities where we operate throughout the world. We have focused particularly in Brazil, where we have made significant social investments, building social centers in Pará and a technical school in Barcarena. I was recently visiting Brazil, and I was proud to see the social centers, but the most vulnerable members of the community are able to learn skills for future employment and our access to basic services. We continue to support the sustainability Barcarena initiative and programs for local entrepreneurship, education, health and environmental initiatives. Then to Scope 3 targets. For many companies, including Hydro, Scope 3 emissions can be significantly larger than Scope 1 and 2 emissions. Our upstream scope 3 emissions are around 22 million tonnes, twice the size of our Scope 1 and 2 emissions, which were at 11.3 tonnes in 2020 -- 11.3 million tonnes in 2021. Our upstream scope emissions are dominated by sourced raw materials, especially metals including aluminum to our Aluminum Metal business as well as Extrusion. Setting upstream scope targets is in line with Hydro's climate strategy on greener sourcing, and it's important in order to reduce the carbon footprint of the products we deliver in the market. Reducing the footprint from purchased raw materials, including metals will be important for reducing our Scope 3 emissions. Increasing the post-consumer scrap will also be important in this context. And in addition to the planned fuel switch and decarbonization of Alunorte will lead to less emissions from production as well as transportation of fossil fuels. So towards 2030, we aim to reduce our upstream Scope 3 emissions per tonne aluminum delivered to the market by 30%. This target combines the metal delivered from aluminum metal as well as Hydro Extrusions. Our total upstream Scope 3 emissions Hydro aims to reduce our emission by 15% by 2030. The lower target on total emission is a result of expected growth towards 2030. Let me then add all our growth and strategic initiatives as well as improvement targets altogether into a full value potential overview, and the profitability road map in the next 5 years. Here, we have excluded the value from the new energy areas until final decisions are made in terms of ownership's sake. The last 12 months, we have generated an adjusted EBITDA of NOK 41.5 billion and the corresponding ROIC share of 27%. We are currently experiencing market headwinds. So if you correct for that using roughly today's market forward prices, this brings us down to an EBITDA level of NOK 20 billion. If we then add the improvement programs, commercial ambitions and recycling growth. Then we move back up towards NOK 30 million -- to NOK 30 billion, and ROIC share of 16%. There are, of course, elements which can pull in both directions here. However, with the current market prices and our planned improvements, our 2027 scenario looks rather robust. In sum, I believe Hydro has a unique position to create value in a new reality. We are robust enough to both navigate through the challenges we see in the short term while continuing to position ourselves for the long-term opportunities. First of all, we are a conglomerate of aluminum and energy competencies with highly dedicated and skilled employees around the global organization. Our teams are currently working on a variety of paths to decarbonize our operations and bring greener products to the market to meet the future demands. Our technology road map will put us at the very front in the industry in terms of low and ultimately 0 carbon aluminum. And based on our world-leading downstream position, we also shape the market by developing creative, innovative and sustainable solutions in close collaboration with the customers. We are well positioned in the attractive market segment that demand greener aluminum like automotive and building and construction. In addition, our innovation and sustainability agenda is interlinked to our commercial agenda. We have one of the lowest carbon footprints in our industry already today. And we have years of experience in recycling as well as energy solutions that we can scale and leverage, creating value for Hydro and society as a whole. Being part of the solution to the global challenge and a just sustainable transition. And with that, I will give the word to Arvid to talk more about the opportunities we see in energy. Thank you.

Good morning, all of you. Russia's attack on Ukraine is fueling energy prices globally. I mean the fares of energy shortage. And Europe is under severe pressure to get rid of its dependency on Russian gas. And the Nordic region is heavily influenced by the European power prices. The European Union's response has large been to increase its ambitions on renewables and energy supply with the challenge for Europe being to build enough renewables power fast enough. And new support mechanisms are developed to accelerate this transition. If you look at the graph to the bottom left, you see how European Union has increased its ambition when it comes to the part of energy that is supplied by renewable power. And to the top there, you see how they also have increased their ambitions to reduce the CO2 emissions. At the right hand, it shows how German and Nordic power prices, including, let's say, the using the effect of the recent volatility and increase since the gas shortage started to influence the power price. But it is important to see through this crisis. In some years, prices are expected to normalize towards renewable levelized cost of energy. And it has an indication here put at the bottom there, what do we think or what is the estimate for levelized cost of energy in the wind in the Nordics, which is EUR 20 to EUR 32 per megawatt an hour and for Germany, EUR 24 to EUR 44. And this is important because going forward, first of all, gas prices will come down. And together with the large amounts of incentivized renewable power production, this will, over time, reduce the power prices towards the level we saw before the invasion in Ukraine. And then it's important that the regions where we have abundant low-cost renewable resources will be attractive for energy-intensive industries and also then mean that there are opportunities to enter new long-term PPAs. And the Nordics is such a region, and that is so important for us, where we have so much of our operations. It will, point one in the Nordics, point one. It will make it possible us to enter new long-term PPAs. Second, it's a good place for REIN to develop its projects. Thirdly, green hydrogen production will require really low-cost renewable power to be competitive. And certainly, also the more energy-intensive part of battery production will have a good home where you see this kind of power prices that you can see in the Nordics. So all in all, yes, we are at the crisis situation now and security of supply of energy is critical. But when we come through these crisis, we will see still Nordics as a very, very good place to be to develop business. And let me then continue with, let's say, the market outlook for some of these areas. The energy crisis and the acute situation that we have in Europe, we see the shift to more renewables, electrification and decarbonization of industries. And that is so clear for us that there are very big growth opportunities in all these areas. You see here to the left, that Sweden and Norway will have an expansion of the capacity in solar and wind also 2.4x until 2030. We see green hydrogen will have an explosion in estimated demand. And we also see that when it comes to battery demand, it will increase substantially. And of course, this is only for electrical vehicle. You also see that batteries for storage now -- in stationary storage will increase as the world will need more also stability in the grid system. So many things will happen that will pull, let's say, these growth factors up. So then to a little bit of history with Hydro Energy. We started out in 1905, as you all know, with our power operations at Rjukan. In 1991, we engaged into the Norwegian power market that was liberalize at that time. And when we then acquired Vale's business in Brazil. In 2011, we also established a unit down there. And in 2015, Hydro Energy was established. In this period from 2016 and forward, we started to engage to in the wind power area, and we established a number of PPAs in the Nordics. And in 2020, we then established the Hydro REIN as a business unit to take this further. And the first battery investment was made in 2017. And as a consequence of our new strategy in 2020, we established the business unit, Batteries. And then as you know, the 2025 strategy has also Hilde pointed out, really created a change for us. And now in 2021, we also then established Hydro Havrand as the last unit. And when you see now the development of these 3 units, they are not going all in parallel. They are developing on their own merits, and we will see later how this now also flows into the strategy and the execution road map. But it is important to really now see what is it really that is inside the business that we have. We have in the Nordics and in Brazil, we have -- in total, we have 14 terawatt hours of operation in Norway, of which 9.4 is equity power. And we also see a growth potential in this area. Some of the investments will be in the Leiscraft DA. And we also see opportunities to expand our hydropower operations in Son with some 200 gigawatt hour. And all this, of course, will add valuable assets in the hydropower flexible production area. If we then move to our commercial side. We are also among the largest PPA buyers in Europe and in Brazil, we actually handled the second largest consumer portfolio in the country and are among the top 10% trading companies. And it's a very important, let's say, units to support our let's say, bauxite and alumina and Albras plant in Brazil. As Hilde also said earlier, PPAs and long-term sourcing of power is so important to stay competitive in the aluminum value chain. It creates predictable sourcing at competitive prices that is critical to really build stable operations in aluminum. And the strategy that we have had in Hydro has served us very well for the last decade. And you also see now in the current crisis that it really protect us from big changes. It is risk mitigating, and we are through the strategy that we follow and the way we are going to work forward it is our absolute clear ambition to avoid to be cornered and also to avoid big hits if there are abreast changes as also Hilde hint that, of course, the new geopolitical reality means that there will be faster changes. We have, as we see at the bottom there, we have a very solid cost position in Norway when it comes to power operation and market operations. We have the lowest cost per megawatt hour. And we also, as Hilde said, we now look at the underlying earnings from energy. We talk about the level in -- and this is excluding the new units, we talk about a level of roughly NOK 3.5 billion annually and on top of the NOK 400 million in the commercial platform. But then as you know, we are positioned with our portfolio that we can also take benefit from the price area differences, and that I think also Paul will revert to later today. But this is really the -- that the earnings platform from then Hydro Energy apart from the new business units. Let me then say a little bit why is, let's say, the -- what we have in Hydro why this is so important for the whole Hydro. I think Hilde mentioned it as well. But it is about the combination of what we have on operations and projects that we have built on for more than 100 years. But the way we have built also up the commercial positions, the way we take now new sourcing opportunities out in the market, the way we take sourcing over to a profile that fits our customers and the internal customers is very important that there are very few that really can sit both on the production side, the market side to optimize and really then serve the customers internally with the best energy solutions. So this is an important part of building a robust integrated hydro. And then lastly, which is, of course, extremely important is the total insight that we sit with in Hydro Energy when it comes to the market, the grid and the regulatory perspectives. It is a fact that energy markets are, let's say, very massively influenced by political regulation and especially when we also have to translate this into regulations to fit with the climate targets, then it's really important for us to understand where the opportunities come and also where the threats come from. But all in all, this leads us that we are a very good partner to decarbonize -- contribute to the decarbonized Hydro but we are also supporting other companies to really decarbonize in a good way. And just to show you, let's say, a picture of the Nordics because this is really where you see the full energy ecosystem, how it really looks like when you combine all the dots. It's about what kind of power operations do we have? What kind of sourcing do we have and what kind of offtake do we have? I mean, it's really an integrated ecosystem where we can sit and really see how do we optimize this from a commercial point of view and also to give the maximum value to our customers. We much -- let's say, then the -- also the growth opportunities that will come in the Nordics, as I talked about, that's the best place really to build new onshore wind and from a cost point of view, the key really for Norway and Sweden will be how do we get the licensing process that is good enough, how do we ensure that we are, let's say, a good local citizen. That is going to be important because it's a fact that this is the area where we could, let's say, really continue to build competitiveness for energy-intensive industries and also new green industries. And then there is one thing that I really want to also pinpoint. We have, for all this on the power side and also for carbon now, we have 1 common control center at Rjukan in Norway. That is where we operate and control all the power plants and also, we will, for the future, that's where we will also manage the wind mills from the hydrogen plans from. So that's control center, where we have the most competent people you're going to think about to do this is a fantastic asset for us. It's really something that's going to be very important also for the future. Then I will make some updates on Hydro REIN and Batteries and Havrand. Hydro REIN is, as also Hilde said, is the vehicle to grow in new renewables. It is so important to secure attractive long-term renewable power to our operations. It's a key for Hydro's road map to net zero. Access to renewable long-term and predictable price power, power simply remains the core to our aluminum value chain, both to reach the commercial targets and to reach our sustainability targets. And it is also very good that both the Nordics and Brazil will remain very good places to develop renewable power. Over the last 2 years, there has been significant progress in REIN and Hilde mentioned both the PPAs and the, let's say, the value that we have created through that for the other businesses. But let me also say a few words about how now the financials look for Hydro REIN. We have secured now 1.7 gigawatts in the 4 projects until 2026. The investment from a REIN perspective will be around NOK 3 billion. The equity CapEx into these projects when we also take into account farm down in Sweden and agreed in Brazil. And that will yield an EBITDA pro rata in 2026, also NOK 400 million to NOK 450 million. The ambition towards 2026 is to have an operation or construction portfolio of 3 gigawatts, and then we have 1.3 gigawatt on top. That will have an investment level of some NOK 2 billion to NOK 3.5 billion. And then the EBITDA estimated from that on a pro rata basis is of EUR 350 million to EUR 450 million. So in total, we talk here about an EBITDA level pro rata of NOK 750 million to NOK 900 million in 2026. And then we see that we can -- we have a corporate cost in addition for Hydro REIN which will be in the range NOK 100 million to NOK 200 million at the higher end of that range if we are continuing to grow at approximately same speed. And the 3 point gigawatt just to say that, that is representing only if we succeed with that, that represents some probably a production of PPAs towards Hydro of some 6 terawatt hour. And then you should remember that Hydro probably has a sourcing need towards 2030, of some 20 terawatt hours. So it's only a fraction of, let's say, what is needed to really deliver to Hydro's own needs. And then it's important to say that this is seen from a REIN perspective, the financials you see here. We are in active process, as you know, to seek private capital from others to REIN and the allocation of the financing of the strategy as well as the share of the EBITDA here, will therefore be pending the final solution and share owned by Hydro versus others. And of course, beyond the secure project, there will be flexibility in the growth ambition, and we will decide upon this, we did a new ownership structure when that comes in place. But this is -- as I said, this is our view seen from the REIN business unit perspective. And it is a clear focus now from Hydro REIN. When we have done, let's say, the large investments in Brazil to really now fuel build Bauxite & Alumina with their air boilers and their business and also Albras that we now focus more into the early-stage projects in the Nordics. These early development projects is really now key. It is -- we are developing them in a strategic partnership with landowners, customers and others to ensure that we also have the solid foundation to move forward. And we also will sell more, let's say, services as part of this to ensure that we get the profitability right. And to the left there, you see some of the projects that we are currently working on in the Nordics. If we then move to the Battery strategy. As Hilde also mentioned, we have now matured a more focused battery strategy that is really focused on sustainable battery materials. This leverage Hydro's capabilities, and it is established in positions, in attractive markets, in core markets in Europe where there's a clear shortage. We are now -- with currently building its first commercial and on material production line. Hydro World is working on recycling of batteries at the end of life. And then the third leg will be battery materials that we will selectively explore going forward. So our strategy and investments respond to an acute need for new shoring on the battery value chain in Europe. It is required, both from a security of supply point of view, but also to ensure sustainable production practices for this very important value chain in Europe. And then we maintain in our portfolio, also the ownership in Corvus and Northvolt. Northvolt is a small share, but it's been a very important part of the dialogue with the management in Northvolt has been very important for us in the Hydrovolt developments. Then to share with you some more facts on Vianode. It is extremely encouraging to see that with the technology that we have now in the Vianode and the green power into this production, we will take down a CO2 footprint with 90% compared to the emissions if this is produced in China. And this is absolutely critical for cell manufacturers in Europe to be able to deliver sustainable sales. So we feel that we are very well positioned on this. And you see here that we have now kicked off the three first steps here. Vianode is really a result 15-year work in Elkem. It has been accelerated in the last years. I mean now have both an operational laboratory and innovation center and an industrial pilot running in Kristiansand, producing customer samples. And we have signed up 2 MoUs with large cell manufacturers and more are very interested to work with us. So this I really believe will be an exciting journey for us going forward. And I would also just on the Battery just summarize where we are at. I think most of it is mentioned by Hilde and myself up to now. But we are focused on the deliveries up to '27 to deliver 3x the capital that we invest in this business. So let me then fin it off with Hydro Havrand, our green hydrogen leg. It is vital to decarbonize Hydro's industrial activities as well as other industries that are in the same situation, the hard-to-abate processes. The Havrand model can be scaled to offer decarbonization routes to industrials as well as other hydrogen users like Maritime sector. We are in an early development phase, but we are now maturing very interesting projects across our value chain, and we also work with external partners to look at larger scale steps as the next. Because this is a capital-intensive process, and we see that large -- other large industrials also need to take this step, and we need to do this together. So there is also one other important aspect. Green hydrogen is very energy intensive. So it's important that it's used for the right purposes and at the right places. And again, the Nordics and Brazil are good places to start. We need to find places where there is a low cost power that can be used for this and where there is really also customers close to. What needs to take place to make this profitable over time. First of all, we need scale, technology development needs to go faster. But it's also clear that now in the first phase, it is important with -- also support from governments around. And here, we see that both Repower EU is now very strong on this and on hydrogen, very clearly coming with incentives, not in detail yet, but that will come. The investment -- the Inflation Reduction Act in U.S. was very, very encouraging. And we see there that you can really get benefit from that also for green hydrogen. And in Norway, the recent agreement on the national budget includes the requirement for the government to put forward a plan for contractual difference for hydrogen in 2023, also very important. So there are many things that will happen in this area, both scaling and soft funding and industrial consumer development will have to go in parallel. And we take this step by step. We will contribute to the reduction of 30% in Hydro internally. And we have a large, let's say, volume to work on. But at the bottom also it's very important to say that when we come towards 2027, we will work this out together with partners both industrially and financially, we will seek capital, external capital both into the projects, large-scale projects, but also at Havrand topco level where we will grow together with external capital. So let me just have one last -- there it is. For me, the role that energy, as a competence center, the role that we have in Hydro is really so interesting to work with because it's so important for the total development of the company. And when we come to 2027, we really see how this business area and all the competence we contribute mid for the rest of Hydro is really going to deliver on Hydro as a both profitable company and a more sustainable company on the way to Net Zero. Then I invite Hilde up for the Q&A.

Great. Thank you, Arvid. Then we will start the Q&A.

It's Liam Fitzpatrick from Deutsche Bank. I'll just start with one on REIN. So you mentioned the plan is still to take a capital-light approach and you're in talks. What is the confidence level that you'll get a deal done in the relative near term? The previous target was Q4, which has been missed. Should we expect something in Q1? And then can you comment on if that doesn't happen, what's the plan post that?

Yes. We are working. As I said, we are in an active process, and I do not want to give a time line for, let's say, exactly when these processes will end. You know very well that these processes from time now will have to mature in parallel with other processes, but we are confident that we will reach a conclusion, and I do not want to speculate beyond that.

Could I ask one quick follow-up. Can you elaborate on what sort of share you're aiming to?

We have said that we are -- our, let's say, strategy is to have a majority in REIN going forward.

Dan Major from UBS. Just another question on REIN, you've indicated the CapEx spend that you would look to carry this year at NOK 2.1 billion, excluding -- well, based on current projects. Can you give us a status on the time line for an excuse my pronunciation Feijão 1, I think it is, when do you expect to improve this project? And if you did, what would the uplift in the rate of cash burn be for REIN?

Well, I'm not sure if I understand 100% of the question. But what we say now is that to finish the projects that we have secured, that's the 1 in Sweden and the 3 in Brazil will take in total, NOK 2.5 billion. So that is really what it takes. That is the secured projects. And they are in the construction. And the first one through the session will come in production fourth quarter next year, and the rest will come in production in 2024.

So just to be clear, that includes the wind project that you recently secured in Brazil?

That includes the?

The NOK 2.1 billion includes the wind project?

Yes.

Yes, yes, yes.

Danielle Chigumira from Credit Suisse. On recycling, so you mentioned the strong returns you're currently generating there. How long do you think those can be maintained, given you also mentioned the significant increases in capacity you expect to see in China and elsewhere?

I think it's very much about what kind of scrap you're looking for. I mean the recycling can be done based on clean scrap, on process scrap. But what we are really looking for is to go deeper into the scrap pile. And the more difficult scrap, it is the better or the lower cost compared to standard ingots. And to handle that more difficult scrap is the capability that we are developing in terms of in terms of sorting and shredding so that we can get the metal on the furnace and be able to transform that into a good billet. So that capability that we have developed over the years is really what creates that margin because the plant itself, it's a casthouse. So that is where -- and that is why I think that we will be able to sustain that margin given that we are also able to -- which we have to work on to be out in the market to source this difficult scrap.

One follow-up on energy. So you mentioned the kind of a base level of EBITDA generation of the NOK 3.5 billion, does that include the normalization to the EUR 20 to EUR 30 per megawatt hour, you expect to see in long term for energy prices?

No, this is -- we have taken the last 12 months. And then we have taken out all the price area gains that we have had, and it normalized production up from as probably around 7.5%, that up to the 9.4% level. So that's the 2 adjustments we've made. And for reference, the average price in for the last 12 months has been NOK 2 per kilowatt hour. So that is just utilizing the -- or using the last 12 months, normalizing for no price or gain and production up to normal level. So it's not the speculation about the future. Paul will show some sensitivities later today.

Ioannis Masvoulas from Morgan Stanley. Questions from my side. The first on REIN again, given the challenging market in raising capital, are you reconsidering whether part of the existing hydropower footprint could be included into this vehicle because if you do have revenue-generating assets today, it completely changes the capital raising story. What's your view on that? And are there any restrictions around your contracts that don't allow you to do so?

I can start on that one. Hydropower in Norway is quite regulated from the government and let's say, the laws around that. So there is limited flexibility on that note. And it's a very different business. So we really want to have REIN as the development vehicle. It's a separate entity where we really want to utilize this as a growth vehicle and a capital-light manner. That's why we go in, in the early development projects with a higher ownership share and then go down to minority once we are ready to go into operation to really maximize the equity return for Hydro shareholders. So to combine this with, let's say, the classic large-scale hydro power units in Norway is really -- then you're creating something completely different. So it's really to have the focus on what range should be the business model we're in. I think we just have to ensure that, that is robust enough on its own merits.

Understood. And just another question on the cost curve you showed on Bauxite & Alumina, there is a fuel switch project, which could make a big difference in the economics, right? At the Q3 results, you talked about $80 million per quarter uplift. Can you talk about this LNG contract that you have in place? Is it a fixed price? Are there any indexations? How did you come up with such a big number? And how should we think about the contribution from that switch based on either spot or give us some sensitivities around it, I guess.

Well, the calculation is based on the contracts that we have made in terms of fueling to do the change from heavy oil to gas. And so there is a fixed contract, which is how long is it 15 years for the switch in Alunorte, which is the $80 million that comes in the end of second quarter.

And the power contracts are 20-year contracts at a U.S. dollar currency with an agreed indexation.

Yes.

Any other questions? I think we have room for 1 more and then...

Kenneth Sivertsen from Pareto. Just a quick one on Havrand. It seems like the scope has been lifted a bit. You mentioned now also hydrogen for the Maritime sector. What should we read into that one?

I think you should read into that, that Norway is a Maritime nation. And we know that when the government in Norway is looking for further incentives to decarbonize the Norwegian industry and society and transport sector. Maritime sector is one of those that they will target. And with our smelters being very close to the coast, you can imagine that there are combination opportunities where you create hubs that both can as they serve the over operations as well as serve the Maritime sector. And so this is not completely new. We have transport as part of, let's say, the scope earlier also, but we see that what's now coming in the Nordics or in Norway, especially can really be then a further trigger for the how fast this can come.

Great. Thank you very much. Then we have a break, and we'll meet back here again.

When do we meet back?

In 20 minutes. [Break]

[Presentation]

Aluminum is a fantastic material. It's lightweight, yet durable. It's strong yet formable and with a wide range of applications and properties, making it perfect fit for the green transition. And increasingly important, it is infinitely recyclable without losing its properties and you only need 5% to recycle it, 5% energy to recycle it. Several of these characteristics are not shared by materials that have historically competed with aluminum for market share. Steel is heavier and more corrosive. Copper is more expensive and also heavier, whereas composites and PVC are less recyclable and have a worse climate footprint as they do not have a clear road map to 0 emissions. So in its own right, aluminum is an important driver for a successful green transition where it is put into use. Light-weighted cars extending the range of battery electrical vehicles as an example. Its conductivity makes it well suited in electrical infrastructure, such as power lines and components for both solar and wind power generation. But in the green transition, it is as important that the aluminum used is produced with a low-carbon footprint as possible. Here, aluminum based on renewables have a clear advantage compared to the global average. Driving down the emissions throughout our value chain is not only a moral obligation. It's also a business opportunity. Looking towards 2030, we see the demand for aluminum in our main markets is set to grow at around 3% per year remaining strong, even in the challenging market conditions we see in the short term. But what is striking is that when we look at the low carbon aluminum, demand is accelerating and set to outpace the rest of the market with a current conservative estimate of 20% growth for low-carbon primary aluminum from 2022 to 2030. In fact, by 2030, we expect low carbon and recycled aluminum to make up a majority of the EU and North American market. This is based on 3 main drivers for low-carbon aluminum demand. First, stricter regulations on emissions intensity supported by increasing carbon costs. and external pressure to reduce Scope 3 emissions. Secondly, business and industry are increasingly committing to ambitious emission reduction targets to capture the third driver capturing value from a shift towards greener demand from end consumers who are motivated by reducing their own carbon footprint and driving demand for greener products. Hydro has a strong position today with our greener brands, Hydro REDUXA and Hydro CIRCAL. Both are market leaders in their categories and we are experiencing strong traction for these products in the market as we speak. We have become more confident year-by-year. That the low-carbon aluminum market will outpace the growth of the total aluminum market, supported by an increasing trend of customer commitments. When looking into the specific market segments, demanding low carbon aluminum. Transportation will be the major driver of demand. As many OEMs have set ambitious decarbonization target. There is Scope 3. We see a similar development in Building & Construction, where an increased share of low carbon aluminum will be needed to meet ambitious decarbonization targets also here. For many of these, their Scope 3 emissions represent the majority of their footprint. And they challenge their material suppliers, such as ourselves, asking how low can you go in the future? We are in close dialogue with several of larger OEMs and other ambitious customers on how we can collaborate to develop and deliver materials and products they need to reduce their emissions. One example is VELUX, which you will hear from now as they explain the impact of Hydro aluminum on their ability to execute on their climate targets. Let's have a look. [Presentation]

For more than 80 years, the VELUX Group has been improving people's living environments by introducing daylight and fresh air through the roof. The company manufactures roof windows, modular skylights, decorative blinds, sun screening products and roller shutters, plus Smart Home Solutions to operate them all with the aim to ensure people's health and well-being when inside buildings.

What is your strategy when it comes to the sustainability?

Well, our strategy when it comes to sustainability was launched 2 years ago. And 2 years ago, we committed ourselves to a sustainability strategy where we signed up to target both within Scope 1, 2 and 3, and it's all about the company driving a transformational change in order to become more sustainable. The second one is we want to create and develop innovative, sustainable products. And thirdly, we want to drive a responsible business. So our targets on Scope 1 and 2 is that we want to become carbon neutral in 2030. And on Scope 3, where we have a target that is tying up to the science-based targeting of 1.5 degrees, which has been approved, is that we want to take 50% out of our current carbon emissions. So very ambitious targets, and that's our target towards 2030.

With manufacturing operations in over 36 countries and approximately 12,500 employees, VELUX Group has a large influence on the industry and its trends, which is why the company strongly advocates for reducing carbon emissions in both building materials and from buildings. A few months ago, Hydro entered a partnership agreement with VELUX concerning the supply of low-carbon products, Hydro REDUXA and Hydro CIRCAL for use in the manufacturing of VELUX roof windows, flat roof windows and accessories shutters and blinds. This will help reduce the carbon emissions emitted per kilo of aluminum used in VELUX products and thereby contribute to its sustainability targets.

If we look at the window, for example like we have here. How much of the window carbon footprint is actually linked to materials? And from that, again, how much is linked to aluminum?

Yes. So in a window and if we look at our products in our Scope 3, then 85% of that is linked to materials. So that's -- 85%. So that's a large amount of our product. So that is also, of course, the material is essential for us to address in order to achieve our overall target. When we then look at the window, we have glass, we have wood, we have metals and we have aluminum and aluminum is around 22% of our total product materials. So aluminum represents 22% of our products.

So lower CO2 footprint of the materials and the aluminum will have a really great impact.

That's correct. That's correct.

And then a final question from my side. And that is on your journey, on your sustainability road map, how important is the strategic partnerships like we have together with Hydro.

So I think back to the facts. So since 85% of our product is and our CO2 impact is related to materials, we can then make the CO2 reductions in absolute figures that we have to do if we don't work together with our partners like Hydro or our suppliers. So we need to work upstream so that we can make the CO2 savings that we need to do. We need to make the right choices of suppliers and partners in order to bring down our CO2. We can't do it on ourselves. I think there will be a battle over the next few years on who are able to support the manufacturers of products to deliver CO2 improved materials definitely.

Thank you so much.

Looking at our position today, we are already a leading player in terms of embedded emissions in our primary and recycled products. Our primary aluminum produced on renewable energy has 4.5x lower emissions than the world global primary average, placing it among the most carbon-efficient aluminum in the world. Looking at our Hydro CIRCAL 75R, the footprint is almost 8x lower than the global primary average. Yet looking forward, our customers expect us to do even better and we want to do better, and we can do better because we, as Hydro, we can impact every step in the aluminum value chain from mining to extrusion, including energy. Last year, we presented our updated climate targets and a concrete road map to 0 towards 2050. If you look at the composition of Hydro sources of greenhouse gases to the left of this slide, you see they can be divided into 4 main categories: the first, around 30% are the process emissions from the electrolysis process; the second is the natural gas we use in the casthouses for recycling and remelting aluminum extrusion processes and anode production. This is around 10%. The third is the CO2 footprint from the electricity we purchased so-called Scope 2, also around 30%. And the last 30% is related to fossil fuel consumption at Alunorte. Our road map and the initiatives we have in place until 2030 are primarily related to the food switch in Alunorte. In 2030, we are left with the hardest to abate emissions. But already now, we are working on new technologies, such as our HalZero technology and carbon capture and storage, both to address the electrolysis process emissions, and Eivind will talk more about that later today. For the gas we use in the casthouses, we are looking into alternative fuels such as green hydrogen. Addressing emissions from the purchased electricity is mainly outside of our control. However, we are also looking at alternatives at these locations. Hydro REIN and Hydro Havrand are working together with the business areas to contribute to strengthen their position in low-carbon aluminum through renewable sourcing and decarbonization. To sum up, there are 3 factors in particular, which we believe support our ambitions and our positioning towards low carbon aluminum. The first one is traction in the market. We see it for our low-carbon products today. And looking at the ambitions throughout market segments, we are convinced that there will be a substantial market for even lower aluminum going forward. Secondly, we are able to capitalize on our existing position by capturing a green premium for our greener brands. We do not sell a tonne of REDUXA or CIRCAL from aluminum metal if we do not get to receive a premium on the top of the value-added premium. The competition for greener and pull from consumers we see in the market shows that there is an increased willingness to pay for best-in-class materials. Thirdly and finally, we have the capabilities, take a leading position as a supplier of materials and solutions in the market. Therefore, we are raising the bar and aim to double our sale of greener products towards 2030. And how are we going to do that? Well, as I started out, every step on the path to 0 counts. In Hydro, we are in a unique position where most of the steps in the aluminum value chain are under one roof. The first steps we are taking is in Brazil, by Hydro Bauxite & Alumina and John's fantastic organization in Brazil. And with that said, I'll give the floor to you, John Thuestad, the Head of Bauxite & Alumina.

Thank you, Hilde. And you're absolutely right. I have a fantastic organization in Brazil. And as you can see, we are working very hard. And I guess you guessed I'm working with alumina. Look at my color of the hair. We are so engaged in this. But remembering back when I was here 3, 4 years ago, we came from a very different starting point. We had just gotten out of the embargo. And what I would like to talk about today is our priorities in the Bauxite & Alumina family would be to be a robust, stable supplier to both our favorite customers in-house, but also, of course, external customers with the right products for the right price. So we have created a more robust operational platform. We have increased our social reach and we are reducing our environmental and climate footprint to make sure we are taking a lead in the Bauxite & Alumina industry. And if you look at the abatement curve or the carbon emissions, we already in the industry have an average of 1.25 tonnes of carbon per tonne of alumina. Hydro and Bauxite & Alumina is at 0.65 tonnes of carbon per tonne of alumina. And with our recent actions, we will drive this down to 0.45 tonnes of carbon per tonne of alumina. And just remind ourselves that there's 4 units of bauxite becoming 1 unit of alumina. The 2 units of alumina becoming 1 unit of aluminum. So if you think about that, we will then attack the overall carbon challenge for liquid aluminum metal with a starting point of 1.4 tonnes of carbon per tonne of liquid metal. And we'll cut 25% of this by 2025, with the so-called fuel switch project, which is replacing oil and some coal with gas for steam production and calcination by 2030. We'll do additional electrification and then we'll cut another 25%. And in parallel, we are working to develop then or hydrogen/further electrification solutions. So we see a path to 0 by 2040. And then finally, we'll also reduce the bauxite mining part by electrifying the transportation element. So all in all, to me, we already have a proven solution for the first 25% and the second 25% reductions. We have a pilot already with an electric boiler that we put in, which will electrify steam production, and we have signed off with REIN renewable energy contracts for the next 20 years. We are putting in another 2 electric boilers within next 2 years. And the fuel switch, which we talked about earlier and Hilde mentioned, going from oil to gas. We already have the gas terminal ready in Barcarena. We will start transitioning our operations this year and then be ready by 2024. So all in all, it's a good story. And the reason it's a robust gas situation is that we are the first customer, but there also will be a combined cycle power plant in Barcarena, so it will be a very robust LNG position. We also had a question on why do we see this improved cost position. It's because we have a fixed transformation cost, and we have a 15-year Henry Hub link. And just for reference today, I think it's $5.5 per million Btu for gas in Henry Hub; and in Europe, it's $40. So if you link to Brent to oil, then you have that arbitrage, which is giving us this movement on the cost curve. But I started out with -- it's more for me, then only the carbon, it's social reach, it is environmental footprint. We need to look holistically on the business. And what we have done is to remove the need for tailing dams. We are looking at circular economy for the bauxite residue. And we have a very, very active social program. So I'll now show you a video summarizing what we have done over the last few years. and what we are doing going forward to secure both the operational license, the cost position, but also the social license to operate. And after the video, my favorite customer, Eivind Kallevik will come up and take over the journey. [Presentation]

So thank you, John. You are also my favorite supplier of alumina, clearly. So welcome to all of you. It's nice to be back also in person, I think, out of the 2D and back into 3D, which is good. And I think as Hilde said, we have already reduced our CO2 emissions from the aluminum smelters by more than 70% since 1990. But still, even after that fact, aluminum metal is still responsible for roughly half of Hydro's direct emissions. And I think it's also important to realize that these are really what we call hard-to-abate emissions, as mentioned by Hilde before. Now reducing these emissions will require a lot of ingenuity, innovation and dedicated efforts to succeed with. To do this, we have, as talked about before and earlier today, made a comprehensive road map consisting of 3 parallel paths to develop a 0 aluminum technology, 0 carbon aluminum technology. First of all, we are developing an entirely new aluminum process that we've called HalZero. The HalZero will reduce the use -- remove the use of anodes altogether and will emit only oxygen instead of CO2. And I will get back to this in a second or 2. Secondly, we are also working to develop a carbon capture and storage solution for the existing smelters we have to make them ready for Net Zero future. And finally, the fastest way to decarbonize production is really to grow in recycling of post-consumer scrap while decarbonizing the remelting process. But first of all, let's have a look at the HalZero process. In a second or 2. Yes. Thank you. [Presentation]

Looks good. Then we'll see it in reality soon. So to sum up, the HalZero process is really a breakthrough closed-loop aluminum technology, all brought together in a closed loop that eliminates the emissions of CO2 and emits only oxygen. And over the last years, we have had dedicated teams of scientists, who have made now significant steps on the way and a path forward. We received also funding from several funding bodies to further mature this technology and through experiments and modeling, combined with the industrial experience we have in the company, we have now confirmed this promising technology basis. The team is now preparing to build the HalZero test facility. We have done it in labs case. So now it's the next step to be built at the technology center we have at Floksand in Norway. The final engineering of the test facility is very close to completion. And pending the award of some further government funding, we can start construction already in 2023 to further take steps on maturing the technology. And if the ambitious time frame we have holds, we will see first metal coming out of this by 2026. The second path to zero emission aluminum goes through carbon capture and storage. This is really to protect all the great assets we have today already producing aluminum. And here, the collaboration we have with Verdox has already started to bear fruit. We have successfully completed the first stage at the Sunndal smelter in 2022, yielding good and important knowledge about the compatibility of the off gas and infrastructure we have, together with the Verdox capture technology. And based on this test, construction of the second test phase is installation of that has now started and the test will again start in the beginning of 2023 at one of the Norwegian smelters. Again, we receive support for this technology road map this time through Gassnova in Norway. We still to decide where we will put the final industrial test place in Norway. Several factors to be evaluated before we make that decision. Where is a good power source, how does the grid look like and so on and so forth, we'll come back to that towards the end of next year. At the same time, as we work on carbon capture directly from the off gas, we're also working with Verdox on direct air capture towards industrialization. We do believe that direct air capture is going to play a major role in reaching global climate targets, not at least by tackling the residual emissions from hard-to-abate sectors and industries around. While we still have some way to go in terms of proving up the technology to 100%, we are already now entering into dialogue with suppliers where we can both not to capture but transport and store the captured CO2, as this will be important both for the direct capture as well from air as well as from off-gases. The third path to zero emission aluminum goes through the use of post-consumer scrap. As you know, we have delivered the premium recycle product called Hydro CIRCAL for about 5 years now. And we see the demand for this continue to grow. Also important to say that the increased use of post-consumer scrap requires significant knowledge around sorting capabilities, which we're also spending development of technologies on. This year, we have further developed our high HalZero technology. This is based on laser-induced breakdown spectroscopy -- LIBS, let's call it that. I had that word yesterday. And the second pilot installation is now in operation at our St. Peter plant in Germany. And HalZero will enable us to further expand the Hydro CIRCAL production across more plants than what we do today. And this year, we reached another important milestone. We produced what we call CIRCAL 100R, which is based on 100% post-consumer scrap. Sits right over there at the end of the stage. For those of you who haven't taken a selfie with a unique product before, this is the time to do it. And this year, we have delivered more than 300 tonnes of Hydro CIRCAL 100R to my good friends in Hydro Extrusion, and I'm sure Paul Warton will come back and comment on this also later on in his presentation. Now while recycling, as Hilde said, only requires 5% of the initial energy it takes to produce primary aluminum. We still want to decarbonize all the CO2 we need to develop technologies on how to decarbonize our casthouses and recycling furnaces. And as announced previously, we are building a recycling plant also close to our Høyanger primary plant in Norway. Well I have to say that I will join Hilde when she says she is really excited that we are now collaborating good with Hydro Havrand, where we will build a green hydrogen plant at this site. We are together with Havrand currently maturing this project, which is still pending some governmental support in terms of developing the project from Enova, but this hydrogen plant is then built to produce some 5 megawatts of hydrogen. And this we will use to power one of the recycling furnaces on site. This pilot will be key for the continued decarbonization of the cost of operations that we have. And this is one of the very promising technologies we have to do exactly that. That means when successful, the recycled products that we will produce at Høyanger will be 100% decarbonized. The recycler will remelt 100% post-consumer scrap, and we will use this as a cold metal feedstock into the other primary plants in Norway, again, lowering the footprint of what we today know as Hydro REDUXA 4.0, down to 3.0 or even below. The recycling plant we'll use hydrogen instead of LNG, 5 megawatts. We have a plan also to do a step 2, which will then increase the hydrogen production up to 13 megawatts. Step 1 alone will save some 4,000 tonnes of CO2 and step 2 will double that amount. This is really the first pilot to show that our operational capabilities to do a full switch in a large industrial scale plant is possible, and the project will then start executing already in 2024. But in order for us to successfully deliver on the decarbonization strategies, we need to team up with front runners along the entire value chain. So John is going to do his part on the alumina side, but we also need to find customers who has ambitious plans. So working in strategic partnerships with customers and other players in the value chain is critical for us to achieve our ambitions for shaping the market for low and near 0 carbon aluminum. And today, I have to say that we are truly excited to announce a new strategic partnership with Mercedes-Benz. Mercedes-Benz and Hydro really share a very ambitious CO2 reduction road map post towards 2030 and beyond. So it's good to find demanding customers who we can cooperate with and find good road maps on together with. The objective for the collaboration is really to contribute to reducing the climate impact of the automotive industry by utilizing the full potential of aluminum as a low-carbon solution not only to replace conventional aluminum but also to replace other materials in the cars. Our 2 companies will then collaborate from '23 until 2030 and beyond to develop a common road map to find alloys and materials that we can use. The target is now to spearhead aluminum alloys for automotive applications with very low CO2 footprint and with the ambition towards 2030 to get close to 0. And I think also importantly, it's not only a road map. We also start delivering lower carbon products already in 2023 and Mercedes-Benz will be the first company to utilize our 3.0 -- REDUXA 3.0. so less than 3 kilos of CO2 per kilo of aluminum. It's a 25% reduction compared to REDUXA 4.0. That is currently the benchmark in the industry. So as already -- as Hilde has already said, we are delivering on our recycling strategy at high speed, and we will even increase our ambition when we go forward. As communicated at the last Capital Markets Day, we have made several investment decisions during the last couple of years, and we are well underway with execution. And only this year, we have broken ground both at the Casopolis recycling plant in the U.S. as well as a new recycling plant in Hungary. In the second quarter of this year, we announced a tender offer for 100% shares of the Polish recycler Alumetal. Alumetal is the second largest producer of aluminum secondary foundry alloys in Europe, with a production capacity of some 275,000 tonnes per year, 3 plants in Poland, 1 plant in Hungary. Now the original tender offer expired on October 12 this year. As one of the conditions under the tender offer was the European or the clearance by the commission was not obtained within the tender offer deadline. We, together with Alumetal is currently going through what is known as Phase II, and we aim to launch a new tender offer as soon as we reach the clearance from the commission. In Norway, we are progressing well on the ambition to increase the use of post-consumer scrap in the primary smelters. And in addition to the Høyanger recycling plants or investment decisions, which I just mentioned, we also made a decision to invest at the Årdal smelter in Norway. Other important achievements this year have been, as I mentioned, 300 tonnes of CIRCAL 100R out of Clervaux; certification of U.S. operations in Henderson and Commerce for CIRCAL production and delivering the first volumes of Hydro CIRCAL to the U.S. market. We also decided to expand the Cressona recycler in the U.S. No. Well, Hydro's strategy historically consisted of developing its own recycling portfolio, we are not yet active in the scrap-based PFA market today. And the ongoing M&A process of Alumetal offers an opportunity to diversify our scrap-based portfolio to the new area of secondary foundry alloys and to scrap-based PFAs as well. And during the year, we have identified further potentials for growth within our recycling business, and we are increasing our target. By 2027, we are now targeting an additional NOK 1 billion in EBITDA uplift. And we are increasing our PCS ambition by 100,000 tonnes over the same period. This will result in an EBITDA uplift versus 2021 of between NOK 1.4 billion to NOK 1.8 billion and roughly 2.5x the use of PCS. Recycling will also play a vital role towards the low-carbon economy. We see that more and more scrap is coming back from end-of-life resources. And recycling of post-consumer scrap is becoming increasingly important source of metal to the market. Roughly 35% to 40% of the expected growth towards 2030 of metal is forecasted to come from post-consumer scrap coming back. Now this development, we see further acceleration on driven by customer demand, driven by regulatory push and driven by support schemes, which includes, as Hilde said, European Green Deal. The spread between aluminum scrap prices has increased over the past couple of years as the demand side for PCS has really not met the increased supply of scrap coming back. This is largely being caused by lower demand for secondary foundry alloys, which has been the traditional outlet for post-consumer scrap and by China limiting scrap imports. Larger volumes of scraps are, on the other hand, still exported out of Europe, mainly to other Asian countries, representing a lost opportunity for value creation in Europe. We do expect scrap prices to stay below in relation to LME in the coming years. To your question, Danielle. This goes in particular for the lower quality and complex scrap price. Reduced exports would again underpin the price spread to -- relative to LME. And in aluminum metal, we have been able to steadily increase our EBITDA margin over the last couple of years by focusing on optimizing the raw material input mix, increased use of both consumer scrap and at the same time, achieving additional premium for the Hydro CIRCAL brand. Relative to the 5-year period running up to 2013, which is when we started to focus on recycling of post-consumer scrap, we have increased EBITDA margin over the last 5 years by a factor of 2.5. Despite attractive prices and sustainability profile, the use of post-consumer scrapping products other than SFA is limited due to its complexity. In order to expand the post-consumer scrap to more products and more segments efforts through the recycling value chain is required. Now if we start with scrap sorting, Hydro's main strategic objective is to source more post-consumer scrap, lower quality and maintaining a high value-added product portfolio. This we will achieve through further strengthening of the scrap sourcing organization, closer engagement with scrap suppliers and development and the rollout of common IT systems to support the scrap procurement across Hydro. Secondly, if we look at scrap sorting, developing a strong position, particularly in advanced sensor technologies is strategically important to secure the required quantities and qualities of PCS. Then upgrading low quality, low price graph, for use and extrusion ingots, sheet ingots and recycled scrap ingots will be an important contribution to bringing more used aluminum back into the loop as value-added products. Thirdly, allocation of capital to recycling growth, developing a strong asset base with capability to use even lower quality PCS is also a key component to develop our products for more end-use applications. We are, as I've already highlighted, well underway and executed the already decided investments, and we are developing a good and strong pipeline of further opportunities. Finally, as we've seen with Mercedes as well and the 100R, we need to develop the market for products with higher post-consumer scrap content. We will continue to market the Hydro CIRCAL to a wider customer base and with more advanced alloys. In addition, we are working with partnership with our customers and their customers to ensure that we meet the current and future requirements here under exploring new closed-loop concepts and new alloys and service solutions to meet their needs. So to sum it up, we are well positioned for further profitable growth in recycling, strong capabilities along the full value chain. We have unique flexibility when it comes to scrap sourcing, with multiple options for scrap consumption through the diverse product portfolio we have. We have in-house sorting capacity in St. Peter, Germany, and we also have developed new advanced sorting technology called High Sort. As an integrated aluminum company, we are in a unique position to lead adaptation of innovative green aluminum products with recycling. For instance, through downstream integration in Hydro extrusions or extruded solutions. We have a large and growing asset base, more than 25 recyclers in Europe and North America. In addition, we will utilize the primary capacity we have to blend in different scrap types. Strong metallurgical, technical and commercial competence to lead adaptation of innovative greener products. And last but not least, we have to work closely with our customers to ensure that we meet their current and future requirements and as well as exploring how we can meet these new and innovative ways with even more sustainable products. And on that note, I will do, as John said, calling me his favorite customers, I will introduce one of my favorite customers, which is Paul Warton from Extruded Solutions. Thank you.

Thank you, Eivind. Much appreciated. First Brit on stage, not Norwegian. This is fun for me. It was even more fun this morning to listen to my Norwegian colleagues complaining about how cold it is in London today and it was very, very cold, of course. This is going to be a good presentation. I can tell you that now. Or there's no excuse for bad presentation because I had 90 minutes of additional time last night that was in my diary for something else. But unfortunately, we lost against France on Saturday, and I was not going to spend 90 minutes watching Morocco versus France. So good luck to France for the final on Sunday. What I will be talking to you about is Hydro Extrusions further downstream in the value chain. And I'll talk a lot about our growth prospects and profitability, tell you a little bit of orientation about who we are, a bit about how we got to where we are now with the results you see. And then, of course, how we're going to get to this NOK 8 billion commitment we made 1 year ago for 2025. And then towards the end, I'll talk more about sustainability, low carbon, high recycled content products in our portfolio and how this is contributing to this valuable journey for us. I'll then hand over to Trond Olaf. So extrusions, growth and profitability. Orientation. We have 4 business units, very different business units within Hydro Extrusions. Ones you probably know about are the extrusions in Europe and North America. These are the bigger ones. These are the engines of growth in extrusions. And when I say extrusions, this is casting recycling. This is extrusion presses and this is components often sophisticated value-added components with our customers. That's the business model in both Extrusion Europe and Extrusion North America, and these are sizable, scalable businesses with a strong leading market position. What we don't talk about so much in these environments is my other 2 business units. And I want to mention those today because these are really into innovative solutions, high growth markets with a range of customers, global customers. And my expectation of these 2 business units, they will grow much faster than the market. They should grow faster than extrusions in North America and Europe and they are highly value accretive in our story because their EBITDA per tonne is substantially higher than traditional extrusions business. So we'll talk a bit about these 2 business units during this presentation. So Extrusions Europe, of course, you know we're a strong player. We're into the secular markets where there are substantial growth opportunities. Of course, automotive, like weighting, and more recently, the electrification of the fleet. This is a really high growth area for us. And we're lucky with our infrastructure, we have high recycled capabilities in both Europe and North America, 1.2 million tonnes per year of recycled product that we produce. And this is, of course, satisfying our customer demands on recycled content. And also, it's a low-carbon solution for our customers as well because we are their challenge on Scope 3 reductions that they will target. TV is about to turn off. Okay. So moving on to how do we get to where we are today in terms of our performance. We've really lifted our profitability that you would have noticed. And it's really coming from these key drivers here. A lot of work has been done over the last few years on restructuring the portfolio and really driving presence in a right markets for us, attractive markets for us. Slide has just disappeared of the screens at the front. And of course, this is contributing a lot. You'll see in a moment on the waterfall chart to our improvement to get to where we are today on these operational portfolio restructurings. And also, Hilde mentioned it, Extrusion business system. This is our waste elimination improvement processes we run in the plants, all of our plants around the world. And this is also a big driver in our proven numbers as we go towards where we are today. And then, of course, customer and commercial focus, being the furthest downstream business in Hydro. This is really where we're working closely with customers, solving their problems, designing innovative, creative solutions for their market. And here, we're talking thousands of customers and thousands of new products every year. And this is really a value creator for us on our commercial ambitions. And as we said earlier, in the Hydro commercial ambitions going forward. This is also an area where we will deliver many of the group opportunities on the commercial side. And you've heard about our investments, the capacity growth. We have produced an awful lot of CapEx demands on my lords and masters to spend money in this business with high IRR return projects. Growth markets, high internal return, but you do have to invest. And one of the reasons we've not delivered on our commercial ambitions in the last 12 months is we did not have enough installed capacity to deliver on the customer opportunities were there. And we have to make sure we're not constraining our CapEx on current opportunities we see going into the future because what we spent today will deliver in 2 years' time, the revenue stream and the value creation opportunities. And of course, sustainability, you'll hear a lot about that today. This really is one of our tools in the marketplace, we are uniquely positioned, being fully integrated. We're uniquely positioned because of our high level of installed remote capacity and this closed-loop recycling with customers to really deliver on our customers' demands, which are really becoming more and more demanding to reduce their Scope 3 numbers. And you heard some examples today [indiscernible] being one with a very clear message. So we know where we want to grow, and we're well positioned to grow and this is helping our story. So this is where we are today and it gives you up to actual 2021, 5.7%. So a nice journey for 4.1% to 5.7%. You see on the right-hand side there, the plants. This is the 100 plants we've got around the world and the EBITDA margin. And you see here, clearly, all of our plants have improved. I wouldn't worry too much about the tail. We still have some that are negative, but these tend to be startup plants, building systems in India, building systems in Singapore. These are small absolute numbers, still negative, but these are investments for the future. And these will deliver on our value-creation ambitions. So starting from the left, the 0.3% underlying market growth. That has been extremely strong recently in Europe. That's where we've had an awful lot of our recovery. Less so in North America constrained by capacity, but we have had some following wins. But you see the main delta there is the improvement, the NOK 2 billion, and this is coming from restructuring from SG&A fixed cost reductions from procurement and from EPS. That's a significant number. And you'll see going forward, we have the same ambitious improvement levers going forward. And the commercial ambitions, this is a mix of, first of all, margin management. This is green margin that feeds into this number, and this is commercial excellence, normal part of our business. So this is a good journey from 4.1% to 5.7%, and you see all the plants contributing to that. So now let's talk about 2025 and the NOK 8 billion, give you some comfort that this is achievable. We're 1 year on. We are delivering on the numbers. You see year-to-date September, we're at NOK 6.7 billion, I think, for this year. So we're well on track to achieve that number. And we're confident because we look at our markets and that NOK 0.8 billion underlying market growth. This is coming. North America. This is coming on precision tubes, one of these new markets where we've got new products, substituting copper, in electrification, but also the HVAC&R market in North America, really contribute into these market -- underlying market growth, strong markets that we're in. And again, you see the core improvement levers. This is NOK 2 billion, it's NOK 1.3 billion. And this time, it's also procurement, but much more in the future, it's EBS. It's our Extrusion Business System, which is going to deliver on these cost improvements going forward. Very confident in that. And on commercial ambitions, again, that's similar to what I said before. This is mix, this is green. This is commercial excellence. And then finally, the NOK 0.9 billion, Hilde mentioned it, this is the investments that we've already committed to. This is where we're bringing on capacity on extrusions, augmentation in the remote system and value-added components with our customer to deliver finished parts. So this the NOK 0.9 billion, I'm extremely confident about. So NOK 8 billion, it should be clear, that was ambitious when we said that 1 year ago with what we delivered in the last year with the CapEx that's been committed from our shareholders this is absolutely achievable. These really the announcements that we've made publicly that's going to deliver NOK 0.9 billion, and has been our customers, the opportunities for low carbon solutions from us on their Scope 3 input. So it's casting, it's extrusion, and it's those market trends you see that are well documented. These really are written for us. What we're offering in these markets is really best in class. Recently, we announced the 12-inch automotive press in Hungary, very similar to the [indiscernible] in Denmark. And I can tell you, keeping up with our customer demands in this electrification and the need for components in aluminum extrusions, low carbon, high recycled content, all the numbers and directions you just see. Keeping up with the market demand is extremely challenging. So I am very confident in the investments we've made, we will execute on the installations, we would deliver on the customers' requirements, and we have to because they are there. They need us. So premier commitments taken us to where we are today. And another recent one announced, this is a very nice value accretive bolt-on acquisition in our core business, in our core markets. So this came on the market, family company. looking for a new owner and Hydro is a very good owner of this business. And this is classic for us. This is casting, this is extrusion, very interesting 12-inch press on extrusion as well that suits us very well, and it's a building systems operation as well. So this will be run as Building Systems business unit and also the Extrusions Europe business unit. And this is once it's gone through the regulatory framework, which should not be an issue. This fits very nicely with our business and our direction. So here, we buy market presence, and we buy a very nice bolt-on opportunity in cast, in extrusions and building systems. So this was nice. And I have to say, we're always on the lookout for these bolt-on M&A opportunities to really accelerate our growth and value creation journey. So that was a nice one in Germany. And I want to spend a bit of time on this greener Sweden. You heard a lot about HalZero, what we do on the primary side, what are we doing on my business? I have 100 plants around the world. And of course, we have a road map to 0. But what's nice for me, I can go to our customers, and I can say, and we're doing it today. So it's not just nice PowerPoint stuff. This is happening today. And with my colleagues in Hydro, this is very helpful for me. They support me on either REIN or Havrand to deliver on these reductions. And you see there how our Scope 2 will go to zero in Sweden through 2 steps, solar plus battery storage, that's the best, internal energy efficiencies. Step one, we're already committed to now. Batteries are arriving on the location. And then step 2, a bit more complicated. This is what you heard about from energy on the hydrogen conversion on the casthouse, supported by wind power as well. This will deliver in 2025, zero Scope 2. So you've heard a lot about what's happening on my input materials, my Scope 3, that's the primary side. That's the scrap side. So we're doing it on Scope 3, and we're doing it on Scope 1 and Scope 2. So I can demonstrate to my customers that we have a road map. And by the way, we're doing it. And we will be zero in Sweden by 2025. That's quite a powerful message. And then finally, Eivind gave me an opportunity in the market because CIRCAL, of course, in Building Systems has really helped develop our market position. This is one of the reasons the Hueck bolt-on acquisition of Building Systems is highly complementary, gives the Hueck systems a low-carbon solution in the market. And this was one we said, okay, let's really test it now with the 100% post-consumer scrap content. And it didn't take long. In Germany, there's this innovation part going up. And this is really owners, architects, specifiers who are listening, and this is what they want. And this is what they're prepared to pay for. So this project will go live, I think, in Q1 next year, we kick off. And you see the 95% reduction on carbon. I mean this is impressive. And this is what owners want being B and C commercial build, and this is what they're prepared to pay for. So absolutely, the market is there. This is a done deal. When that's up and running, we will certainly be happy to hold events there in the innovation park in Germany to let people experience what this feels like. So that's the end of my time. That's a good point to finish on and introduce Trond Olaf Christophersen, EVP, Corporate Development, to continue this message on our low carbon offering in the market.

Thank you, Paul, and good morning. So I would like to present our market approach when it comes to our greener product offerings. And Hydro has a unique position in the low-carbon aluminum market. Our integrated control over the whole value chain gives us control and support key decarbonization capabilities along the whole value chain at every process step from bauxite mining to the final aluminum solution. And that enabled us to take a holistic approach when we look at the carbon footprint of the final aluminum solution and work with the end consumer in mind. My colleagues have presented our strong starting point when it comes to our carbon footprint in the whole value chain. And they also presented road maps to improve in the years ahead. And just to summarize and give some more flavor on that, we have John presenting the bauxite and alumina area. Currently operating in the first quarter, best quarter when it comes to CO2 footprint for the alumina, but by 2025, then operating best 10%. We have Ivan with aluminum metal currently delivering one of the lowest carbon footprint primary aluminum in the market. But with the technology road maps you have with the HalZero and the carbon capture and storage. You will target and go towards 0 also for the primary metal in the future. We have energy currently with captive renewable energy and also renewable energy-based power purchasing agreements but also in the future with REIN and Havrand haram as key decarbonization enablers for the whole value chain of Hydro. Then we have recycling. We have around 2 million tonnes of recycling capacity in Hydro today. And in the future, we are growing our recycling capacity but also growing the recycling of post-consumer scrap in the whole company. And last but not least, we have extrusion business, working very closely with our customers today and delivering low carbon solutions to our customers. And in the future, you're also growing in close loop recycling with the customers and also decarbonizing your operations. And all in all, and based on all of these positions, we then have the leading low-carbon product portfolio available in the market to our customers today. The portfolio is based on a wide product range, but it's also available in increasingly differentiated and unique segments of lower and lower carbon footprint material. So -- and this is starting with our REDUXA low-carbon certified aluminum coming from the Norwegian smelters to the truly unique near 0 aluminum produced on 100% post-consumer scrap. And then with the CO2 footprint below 0.5 kilo of CO2 per kilo of aluminum. And with this product portfolio, we can meet our customers' ambitious plan to deliver low carbon products already today. But we also have a product portfolio available today where we can work together with them on their journey to decarbonize their products also in the future towards the ultimate goal of net-zero products. But our product portfolio is not static with the road maps we have presented today. We also have a product road map where we will develop new and lower carbon solutions also in the years ahead to stay really in the frontier when it comes to low carbon solutions to the market. For us, this started some years back when we launched the REDUXA, the low-carbon REDUXA brand and also the CIRCAL brand based on recycling of post-consumer scrap. And last year, we announced that we produced our first near 0 metal, as I mentioned. And as Paul just announced, we have now our first project where we are delivering this metal to the customers. And today also, upgrading the REDUXA 4.0 and now delivering REDUXA 3.0 to our customers also in the future. And with our technology road maps, our recycling growth and also our energy growth we will be able to develop more and more unique products in the future, reducing the footprint of our metal and work closely with the customers in the years to head towards net zero. And finally, we have traction in the market with our winner product offerings. We work very closely with individual key customers that have ambitious decarbonization plans. And we heard earlier today about our partnership with Mercedes Benz, with our partnership with VELUX and other customers that we have close partnerships with and how we collaborate with them to reduce their CO2 footprint in their final solutions in the market. And these are really the examples and illustrate how we work in the market, especially with the ambitious customers that have the highest targets to reduce CO2 footprint and really develop the market and bring the market forward with limited volumes, especially for those most ambitious customers. And we will continue to do this with those selected partnerships, delivering aluminum with even lower carbon footprint over the coming number of years. So all in all, our market approach contributes to delivering on our ambition of lifting profitability, in this case, based on our unique greener product offerings and at the same time delivering on and driving sustainability. So that's basically the summary of how we work in the market to develop the market for greener products and then delivering on our overall strategy. So I will end my presentation here on the market side, and then we will move over to Q&A. So then I will invite back on in my colleagues, Helena, John, Ivan and Pal.

Great. Then we will start the Q&A for this section.

It's Danielle Chigumira from Credit Suisse. Thinking about the decarbonization of primary aluminum, obviously, you have HalZero and CCS on a similar timeline. Which one are you worried about more in terms of the time line, in terms of maturation of the technology, et cetera, which one are you more worried about?

No, I think -- not -- I mean it's worried in a sense that these are still early development stages. I think what makes me less worried is that the whole series, we approve it in lab scale. We are designing and we will build Stage 2 of HalZero in 2023. Verdox, we have done the first test phase at Sunndal. We are building the second step of that. And of course, when you go from step 1 to step 2, you're relatively comfortable that you have control of the technology and the integration towards the industrial or industrial plants where we need to have them. So still early TRI levels. But when we pass from one step to another, we're confident that we can solve the challenges we have in such development projects.

All right. A follow-up on recycling. So in terms of the EBITDA uplift that you're talking to, what does that assume in terms of the realized premium that you're getting for CIRCAL? Is it the same as the realized additional premium that you're getting now? Or you're assuming a higher premium in the future?

So what we have seen both for REDUXA and for CIRCAL over the last couple of years is that we see an increase in the premium of the existing products. And then obviously, as we are reducing the CO2 footprint down to REDUXA 3.0 or we are going to [ 400 R]. We expect and we do see increased premiums above the CIRCAL 75R and we see increased premiums for the REDUXA 3.0 compared to 4.0.

Dan Major from UBS. Two questions. First on extruded. That's encouraging. You're sticking with your NOK 8 billion medium-term target. Can you give us any more color on near-term trading conditions, order book for '23? I'm not trying to front run Paul's presentation, but it says NOK 2.8 billion negative on the waterfall for extrusion EBITDA, kind of what assumptions are baked in there? I know you usually follow CRU as a sort of lead, but can you give us some more sense on trading conditions and outlook for 2023 on EBITDA for extruded?

Yes, sure. Good question because, of course, it's turbulent at the moment to say the least. I'll come back to the NOK 1 billion number in a minute. Really, since the summer, there has been an adjustment in the demand pattern. And we saw such a heavy fast recovery from the COVID days. In Europe, if you look at the CRU, the market jumped, I think, 23% in Europe. So down 9% and then up 23% in consecutive years. I can tell you that is really demanding to satisfy our customers. So of course, customers want to book capacity, they place more orders, the lead time goes out. So when you do get to a calm in of the consumption, then of course, customers stop ordering, because they got inventory, things slow down. So we suffer. We suffer fast. So what I can say now, we suffered, the industry suffered from really the summer onwards. And it was a steep decline, but now it's stabled out. And it's stabled out at a level that we should not be alarmed about because if I look back to 2018, 2019, it's about the same level, but it was an adjustment in Q4. And then we look at CRU forecast in Europe for Q1, Q2. I think Q1 is like minus 23% year-on-year and Q2, it improves to minus 19%. So these are big negative numbers, but we mustn't forget that 1 year ago, Q1, Q2 this year was still boom times and customers placing orders to book capacity on long lead times. So I don't get too stressed about these negative numbers. It's going to be tough in H1, but we're already adjusting in Q4 now. And then I look at CRU in Q3, Q4 in Europe again, and this jumps up 8%, I think, or plus numbers anyway in Q3, Q3, Q4. So we've adjusted. We're now operating at a lower level to last year, but we see things improving in H2. Of course, this has to come through because of inflation, because of the war, because of many, many issues. There's reason to be pessimistic, but underlying requirements of extrusions and aluminum in our markets is super strong. So personally, I'm confident we'll go through another debt and a recovery, but it will recover. North America, again, in CRU, you see a much -- well, almost unnoticeable reduction or calm in of the heavy market -- strong market conditions. And they're talking single-digit numbers adjustment. So I think minus 4% as we go into end of year, Q4 now. And then, again, it's difficult in Q1, but you're only sort of 0, minus 5% in Q1, Q2, and then again, it recovers in H2. So yes, it's adjusting. We've adjusted our cost base, but we shouldn't be over-alarmed about the ongoing consumption levels in our markets. The NOK 2.3 billion you mentioned, Paul will cover in more details. But if I recall, this is linked to the -- you could argue one-off premium opportunities that were in the market, mainly on the billet shape premium. And I think half of that was in my business area with my 1.2 million tonnes of capacity. In the U.S., we still see strong premiums for next year. In Europe, it has calmed a lot, and that's part of our adjustment to normal operating numbers in the cost outs. So again, not alarming for me. And even though it's reduced, but the billet premium numbers for me are still reasonable numbers for us to earn returns on.

Okay. Just yes. Just a follow-up on your comments around the sort of sharp fall intake. Your sense of the customers, it would be fair to say they've probably destocked their inventory now. Is that a fair assumption based on that comment?

Yes, that's why I feel we saw reductions probably the last 3 months of minus 20%, minus 25% on order intake, but the main impact was on the lead time. It was just coming in from record levels in weeks to more normalized levels. My industry typically is running on 2, 3 weeks' lead time in the height of the activity, these lead times went from 3 weeks to like 6 months and then customers are placing orders, of course. Forecast demand orders for 7 months and 8 months, and that's when it gets a bit misty.

And then just one final question for me on the extruded products business, if I could. The valuation on the recent acquisition you just announced about 5x EBITDA seems quite reasonable, but obviously, that's coming off a post-COVID recovery number. Can you give us a sense of the valuation on a sort of normalized EBITDA basis?

I think the numbers we're referring to 2021. And of course, we see the numbers for 2022, which are higher than 2021. So '21, really looking at the history was more normalized in terms of the operating numbers for that business. So I'd argue it was a low multiple of quite normal numbers. Next year will be tough, like everyone in Europe for H1. Building systems, particularly for B&C. I'm less worried about the casting and the exclusion because we have opportunities with our customers, especially in automotive to utilize that capacity, especially on the 12-inch press.

Ioannis Masvoulas from Morgan Stanley. A couple of questions from my side. The first, I guess, adding to Danielle's question around your confidence on the technology side of things. Can you talk about the Karmøy pilot plant that you were working on a few years ago with a target to bring power intensity down to 10-megawatt hour over time from 14? I don't see that being a key focus right now. If you can give us a bit of a background there, that would be very useful.

Sure. So the common technology pilot has been up and running for quite some time. And we have met all the targets that we set out, both in terms of production tonnages, if you like, but also on the energy efficiency of that pilot. So that's all signed off in a way. So that's producing according to what we expected it to. The question for us, of course, is more when we are going to -- at what point will we build more capacity in terms of primary capacity. On what basis do we do that? Do we build it on the new HalZero technology? Or do we build it and expand, for instance, the common [indiscernible] technology and then the CO2 capture next to it. Still too early to be a judge of which one will be the most relevant solution. But that's part of what we'll be discussing over the next couple of years.

So there is a capital-intensive process switching to the new technology?

The new technology, when we look at HalZero, the estimates we have currently, is that the CapEx per tonne will be roughly the same as building a whole [indiscernible].

I see. Okay. Great. And just a second question around low carbon premiums. If we compare REDUXA to circa, you get about a 50% reduction in CO2 intensity. How does that translate to a high premium? Do you get 2x or 3x the premium when you sell CIRCAL relative to REDUXA? Just give us a rough idea, it would be very useful.

Yes. So we will not comment directly on the premiums. That's sort of the negotiations we have with the individual customers. But just to give a small hint, you will find some of the benefits of that in the commercial improvement program in Hydro. That's partly where you will find sort of the gains from our [indiscernible] product sales.

Any other questions? I think we have 4 more.

Kenneth Sivertsen from Pareto. Just one quick on the alumina market. It seems a bit down. And I guess given the cost curve that a losing money. Have you seen anything on the supply side that might balance out the market?

Yes. We see it -- there's been gradual reductions in the alumina capacity has been taken out. But on the primary side, they've also taken out capacity due to the energy situation. So it's kind of been slower than we anticipated. Generally, if you look historically, alumina has adjusted relatively quick because of storage issues and the way it's kind of set up. Now, it's been a different situation. So we are waiting more or less for who's going to cave in because, I mean, you produce today's raw material cost, there's a lot of refineries underwater.

And going to recycling, it seems to be even more important going for long term. Is it on the table, just a separateness own segment, is that something you just considering? Or is it too integrated?

I think as of today, we do -- or we will do recycling in 3 different parts. So we do recycling within pulse area, important in the [indiscernible] cost that he has directly influencing the extruded results. In my area, we have the independent recyclers, 5 in Europe, 2 in the U.S., want to be built or on the construction, but then we will also do recycling in the primary cost losses. So sort of to separate that out and to do that as 1 reporting unit, I'll find probably be challenging in the short run, at least. So expect it to be as it is.

Great. Thank you very much. Then we will have another break, and we'll be back here at 11:20. Thank you. [Break]

Good day, all. It's a pleasure to be back after some years on the screen. And it's nice to see familiar and new faces here in the audience today. Today is the highlight of my year. It's the day I have the chance to dive into the financial components of today's Hydro as well as the future Hydro. And I truly believe that the sum of all the exciting initiatives you have seen presented here today, positions and differentiates Hydro very well in the coming years and even decades with potential for satisfactory returns over the cycle. And I will go through the numbers that support this. The main message is the same since 2019 as we continue to lift cash flow and deliver high returns, supplemented with good distributions to our shareholders. The outlook is more challenging than this time last year. So I will go through how we are addressing this in the certain markets while also working to maintain and strengthen our original 2025 targets as well as setting new and ambitious 2027 targets. But let's first here start with a summary of the last 12 months, which I must say has delivered impressive results. Apart from bauxite and alumina, all business areas have increased returns with our strategic growth areas of recycling and extrusions contributing significantly in addition to very solid returns in aluminum metal. The earnings potential from our energy business in times of tight energy markets has also been very evident. So 27 percentage points, 300%, 400% in respective improvements in ROACE, EBITDA and free cash flow since 2019 deserves some celebration. There has also been a significant increase in distribution through both dividends and buybacks for yourself during the years. All this has resulted in a solid balance sheet, well within targeted levels. However, going forward, you should expect us to aim for an adjusted net debt of around NOK 25 billion over the cycle, in line with our capital update -- structure update target from the second quarter of this year. And this is to ensure an efficient balance sheet. We see very high volatility in current revenue and cost drivers. And the resulting net margin for a large part of our industry makes it challenging to fully understand the high-cost capacity that is still online. But acknowledging that there might be changes to the supply side in the months to come as well as the demand side, we have here converted the main changes in revenue and input factors into a 2023 earnings scenario. If market spot prices realized at current forward curve, except for energy, where we here have used the last 12 months, and we take the last 12 months from Q3 as a starting point. We get a reduced price and currency effect of around NOK 15.8 billion. If we then do a normalization of recycling margins to the NOK 1.7 billion level, which is close to what we had in 2021 and we also take 10% lower European extrusion demand, flat demand in North America, in line with CRU expectations, then we reduced by a further NOK 2.8 billion. If we then normalize energy production levels up to the 9.4 terawatt hours, add the positive effects from the Rà¸ldal-Suldal DA process that we've been through, we increased results with another NOK 3.9 billion. And finally, if we add our planned improvements and growth, then this high-level sensitivity analysis would result in a full year result of around NOK 29 billion. And the difference between this chart and the one Hilde showed earlier is that this is for 2023. So it only takes into account those improvements. There are many smaller and larger items, which have not been taken into account. However, this should give a good indication. So even in the current market environment, next year is looking strong from a historical perspective. And the natural hedge from our energy business area makes us robust in the current market environment, where lower demand is partly driven by the very high energy prices. What is certain is that this will not be the actual results for 2023. And there is both an up and a downside risk to this number. And it is important that we addressed both the short-term uncertainty, but also the long-term opportunities. The financial framework that we introduced in 2019 has been a good compass to navigate several different market environments from COVID, to the best integrated aluminum margins we have seen since 1988 to the current war and energy crisis. This framework has developed over the years. strengthening the focus on sufficient transparency, understanding and stretching targets within sustainability metrics to ensure that we improve our cost of capital advantage through sustainable financing good ESG credentials and also lower the risk in our portfolio. The framework is used actively in the current market environment. And those who know me well, they know that I'm not a big sports fan, However, I would like to use the sports analogy of playing defense and offense at the same time as a description for how we work today. Playing defense is done through the main short-term improvements and mitigating actions. These include a strengthened and extended improvement program into 27, ambitious operating capital reduction targets for 2023 and concrete contingency measures already in place, but with more potential addition in the toolbox and 25% of our integrated aluminum market secured margin secured for '23, '24 and now also to some extent, for '25. Since we have played defense well, we also have the ability to play offense, which for us is both to deliver and stretch our strategic growth ambition and address opportunity in the current market environment, like, for example, the recently announced Hueck transaction in extrusions. We will continue our clear framework for capital allocation, and we will deliver on our strategic CapEx road map to strengthen our position as the leading low-carbon aluminum producer capturing the above 20% annual demand growth expected for greener aluminum. This is balanced with our newly communicated capital structure target, ensuring continued healthy distribution to our shareholders in the coming years if the market allows for it. And finally, as for the last 3 years, we will ensure that every business area has clear profitability road maps to exceed their respective return targets. Let's start with our current improvement ambitions, including the improvement program, commercial ambitions and the strategic growth initiatives. We will now stretch the improvement program to NOK 11 billion for 2027, whereof NOK 0.7 billion comes from a rebasing of the program to reflect a somewhat healthier margin level than the previous 2018 baseline. So just as we see higher inflation impacting CapEx, we see the current market environment impacting the margins that we generate from our improvements. In addition, the new program also includes new portfolio and scope added since 2019. And the commercial ambitions are stretched to NOK 3 billion in total and the recycling growth target to NOK 3.1 billion to NOK 3.5 billion. Improvements that are remaining to be delivered, they fall within 3 main categories. First, we have NOK 2.4 billion from operational excellence. Here, the majority of the bauxite and alumina improvement will come from the Alunorte fuel switch project and other energy efficiency initiatives. In aluminum metal and extrusion, the main improvements are delivered through continuous improvements of operational parameters in the different plants enabled through our business systems. The second category is procurement. And when we launched the procurement targets in 2019, they were around NOK 400 million. We have then since then have worked systematically across and within every business area and have stretched the ambition year after year. The total amount of procurement payments is now at NOK 1.4 billion, where NOK 0.6 billion of these still remain to be delivered. This is a NOK 0.2 billion increase from last year, where the majority comes from initiatives in extrusions. Finally, we have improvements in fixed cost where the majority will come from aluminum metal with efficiency improvements through robotization, automation and some from extrusion through energy efficiency measures, which impact fixed cost. Bauxite and Alumina is largely stable as inflation above index, higher overburden and DRS costs are offset by other fixed cost improvements. This requires some CapEx and the estimated annual CapEx to deliver on the remaining improvements is around NOK 1.2 billion per annum. Next, we have the commercial ambitions. These are highly dependent on developments in the market. The current market environment is making it more challenging in the short term, but we have stretched the target by NOK 0.5 billion to 2027 primarily coming from commercial projects in extrusions, which are being finalized after '25. The majority of the remaining improvement in aluminum metal come from new products and increasing revenue from greener products in B&A from achieving higher premiums from alumina or hydrate and an extrusion for market share growth. The estimated annual CapEx to deliver on the remaining commercial improvements is estimated around NOK 0.4 billion per annum. Lastly, it's the recycling ambitions now increased to NOK 3.1 billion to NOK 3.5 billion for '27, which is lower than the record 2022 earnings, but NOK 1.4 billion to NOK 1.8 billion more to deliver compared to a normalized margin level as we, for example, had in 2021, which on an exclusion income premium is not that far from what we're seeing in the market today. Although it is difficult to predict the market, there is consensus that the first quarters of 2023 will be more challenging than the latter ones. CRU expects European primary demand for 2023 to decline around 15% year-over-year in Q1, around 8% in Q2 and then slight increases in Q3 and Q4. Since we announced in September, the curtailment of capacity at our Norwegian smelters, Husnes and Karmøy, we have reduced annual capacity by around 100,000 tonnes, and we aim to further reduce to around 130,000 tonnes. The curtailments are in line with the weakening market demand, and we expect to restart when the market picks up again. However, if there is a further market weakening, further curtailments may be required. The excess power that we don't use in sold in the market through a combination of spot and forward contracts. Around 50,000 tonnes of primary cast house capacity is currently curtailed together with around 45,000 tonnes of recycling capacity in metal markets and 18,000 tonnes in extrusions. Note that the curtailment in extrusions are also a result of high level of inventory during the fall months. The capacity that we have in the stand-alone cost houses and the remelters are the short-term swing capacity that can quickly be ramped up if markets were to rebound sharply as we saw after COVID. We have worked on improving portfolio flexibility over the latter years, allowing us to switch between value-added products in periods of falling demand which is especially valuable in periods of low alternative value of power. In addition to adjusting capacity to market demand, we have been securing margins and raw material exposure. This includes a certain amount of gas and power hedges in place for part of our '23 exposure in remelters and extruders integrated aluminum margin hedges in place for volumes in '23, '24 and '25 for B&A and aluminum metal. And 50% dollar BRL hedges in place for Alunorte and Albras for '23 and '24. Delivering on our improvement and growth ambitions requires capital. In the current market environment, we expect a significant amount of capital to be released from inventories and CO2 compensation in the coming quarters and year. The CO2 compensation for 2021 is due to be paid this week. From 2019, we have worked targeted to reduce inventories across the company. Following a strong build in 2018 and in the following quarters. Inventory days, they gradually reduced. However, the monetary values were increasing in line with the strengthening price environment. This was also further supported by strong demand and raw material supply challenges. From the start of a combination of increased safety stocks, especially material, which is exposed to China and seasonality started reversing the positive trend. And into the third quarter, the market started falling faster than production driving increases in relative and absolute inventory level. And this is in addition to a large increase in CO2 compensation receivables. We are now working aggressively to reduce inventories again. And we expect also a gradual positive pricing effect if prices remain where they have been as of late. We have said bottom-up ambitions per plant per business area, resulting in an estimate of 46 days at the year-end of '23. If you use current market prices, this will result in a cash effect of around NOK 8 billion at current price levels. If we also spent some time on strategic hedging. We started a strategic hedging activity in 2020, following a long period of nonsatisfactory margins, returns and cash flow. Following the launch of our 2025 strategy and ambition to strengthen our position in low-carbon aluminum, we wanted to ensure a more robust position in the lower parts of the cycle, to allow delivery of our long-term objectives, while also increasing the probability of delivering on our rate targets over the cycle. As a CFO, I'm not happy with blaming the market in periods of low returns. And I believe we should use the full toolbox to deliver on our return requirements. A key element of the strategic hedging activity was not purely to sell LME forward, but to lock in as large an extent of the integrated margin as possible. That is the reason why, despite the strongest markets since 1988, our strategic hedging portfolio is NOK 1 billion negative until November 22, where the NOK 4.2 billion negative impact of aluminum sales is to a large extent compensated by NOK 3.1 billion gains on the raw material side. Looking forward, based on current exposure, we are NOK 2.9 billion out of the aluminium LME, NOK 100 million in the aluminium currency and NOK 400 million in the money on raw materials. This leads to a total NOK 3.4 billion out of the money on the activity since inception. On the right-hand side, you can see the current integrated margins where we have locked those in and also the positions out in time where the longer end of the curve is closer to the actual market. With our strong starting point, our implemented temporary and medium-term contingency measures and our integrated strategic hedges, we are comfortable to continue to play offense and allocate growth capital according to our strategic modes, which remain the same as they did in 2019. We are not scaling back return-seeking capital but rather continuing with our selective growth projects to ensure that they are up and running and ready to supply the coming strong growth for low carbon aluminum. So as in latter years, return-seeking capital will primarily be allocated to ensuring a low cost and carbon position upstream, selective growth in recycling and extrusions and supporting the development of our new energy growth areas until we have raised the capital for Hydro REIN and Hydro Havrand. Let's then have a look at what this means for the actual capital allocation, probably as the favorite slide of the audience here today. If we start with 2022 than we indicated at our Q3 reporting that we might push some CapEx out into the coming years in light of the current market environment and compared to our guiding of NOK 12.5 billion, excluding REIN, which we, at that point in time, guided for at NOK 1 billion to NOK 1.5 billion. We are now estimating around NOK 10.4 billion for 2022, with NOK 1.2 billion on top for REIN. If we then revert to our '23 to '25 in guiding from the Capital Markets Day '21 of around NOK 10 billion, then we estimate around NOK 1.7 billion of additional inflation and currency effects compared to last year. Based on the currency rate, which is close to current market conditions. If we also add the NOK 2.1 billion of carryover from 2022, this brings us around NOK 13.8 billion. And if we include some internal reprioritization or reduction of CapEx, we end up at around NOK 13.5 billion before M&A and REIN investments. We recently announced the acquisition of Hueck and extrusion and also have the ongoing AluMetal transaction of around 2.3%, bringing us to a total potential of around NOK 16.5 billion, including M&A. If we are not successful with the ongoing capital raise for REIN in 2023, this is another NOK 2.5 billion on top, and Havrand is expected to be fairly limited in '23. When it comes to our guiding to '24 to '26, then this is NOK 2.5 billion higher than last year, reflecting somewhat higher inflation, but similar currency effects as for but also a strengthening of our growth ambitions in recycling and in extrusions. The profitability and robustness on a large share of our return-seeking portfolio is expected to be strong and I will get back to the specific details in a couple of slides. We estimate that around 40% of our CapEx is classified as aligned according to the EU taxonomy. This is in line with our estimates last year. But since then, we have confirmed that hydropower investments in Norway are now aligned and also a higher share of recycling investments are expected to be aligned. However, since a higher share of total CapEx due to inflation is in nonaligned areas, the percentage is relatively stable from last year. As in '21, we expect the figure to be closer to 55% if we are able to include our investments in fuel switch projects and in batteries. Let's also have a look at the development in expected sustaining CapEx in the short and the long term. As this is the CapEx that is necessary to sustain our operations and where we have less flexibility to make adjustments in the short term. Here, we estimate to end the year around NOK 1 billion lower than what we guided for, lifting the estimate for 2023. And when we also add NOK 1.1 billion here in inflation and FX and make some further postponements into '24 and '26. We end up at a level of around NOK 8 billion for 2023. For '24 to '26, the totality of extraordinary projects is somewhat lower reducing our guidance to NOK 7.5 billion and even a further reduction of around NOK 0.5 billion when looking at the long term in real 2026 terms. The main deviations from our long-term guidance of 5.5 from last year is around NOK 1 billion in FX and inflation in addition to around NOK 0.5 billion, which is related to the strategic growth portfolio, which also needs to be sustained when up and running. We have an ambitious growth portfolio as we believe that this will significantly improve our competitive position within our industry and also because we have a portfolio of very attractive projects, giving returns significantly above our cost of capital. On the chart, you see to the left here, we have taken our planned net nonsustaining investments for the period '23 to '26. If we start with the first category in green, then these are clear climate reducing investments, excluding recycling. This includes the Fuel suite project at Alunorte, the el boilers, which combined are expected to deliver around returns around the 10% to 20% range but much higher at current spot prices. The el boilers in Alunorte didn't take many months to pay down when you see the market prices for energy now. It also includes CO2 abatement CapEx in aluminum metal which is expected to deliver an attractive upcharge premium when we produce products on the basis of this. The next bucket is the recycling investments where projects range from 15% to 30% IRR for a business segment, which has an estimated nominal cost of capital of around 7%. The returns here have been strong and growing, and the CapEx per dollar of NPV is very attractive in a portfolio perspective. Extrusion investments are similar, but even with higher expected returns, as several of these investments give improvements across all 3 categories: fixed cost, operational efficiency and, of course, commercial value. Several of the extrusion investments will be able to deliver above their cost of capital purely due to the reduction in fixed costs and increased efficiency, which gives us comfort even in a scenario where the market further deteriorates. So in total, the project portfolio, as we see the world today in extrusion, ranges between 20% to 35% IRR. We then have the net CapEx estimated to be spent in REIN, where we are targeting equity IRR of 10% to 12%. And in Havrand, given the current maturity of the portfolio, the estimated net CapEx is estimated to be low in the short term. And we'll get back to that as it matures. For batteries, we estimate an average normal cost of capital around 8%. However, there are large variances within the different segments in the battery value chain and of the projects we have in the pipeline, we are looking at IRRs of around 10% to 20% based on what we see today. Finally, we have other return-seeking investments, which includes upgrades to the Norwegian hydropower plants and the most profitable projects at our smelters. So in total, these are the returns that we are chasing through our proposed capital allocation. We have the flexibility to choose whether we go ahead with these or not. And if the market outlook or other factors changes these expectations, then we can pull the breaks. But as we see the world today, these are vital to deliver on our EBITDA and return ambitions, which I will revert to a bit later. One of the most important areas to work on to improve our relative cost of capital is within sustainable financing. And last year, we announced that we were developing our sustainable financing framework. I am therefore happy to report on 3 developments since last year. Firstly, we launched our sustainable financing framework in the second quarter. This year, incorporating both green and sustainably linked financing framework, which can be used for future financing projects with 2 specific KPIs that will be used. This is our ambitions to reduce carbon emissions, and it's also our ambition to increase capacity for recycling of post aluminum -- aluminium post-consumer scrap. The framework received a second-party opinion by CICERO Shades of Green, giving the framework the second highest ranking of medium green with our governance and structure and processes being ranked as excellent. Secondly, supporting our new capital structure ambitions, including a target to keep our gross debt level relatively stable. We established an EMTN program to streamline future bond issuances, allowing rapid utilization of our new sustainable financing framework. And finally, we were pleased to recently use both our sustainable financing framework and the EMTN program in the recent issuance of 3 billion sustainably linked bonds, fixed and floating with a 6-year tenure. These were the first SLB issues in the Norwegian corporate investment-grade market and the SLB priced below initial price guidance and below the fair value curve, which could be seen as a proxy for the SLB pricing effect. So as we gradually transition from regular bonds to greener options, we expect the pricing benefit gradually to spread across our total gross debt portfolio making a noteworthy difference as long as we deliver on our greener KPIs. To underpin our position as an industry leader within ESG, it is also important that we live up to external expectations while also striving to improve our position year after year. That is why we have been striving for transparency and good ESG reporting for more than 3 decades. But good reporting is not enough. The actions we are reporting on must be integrated into our business strategy and also our risk management processes. And we are proud to be consistently recognized by leading ESG raters, some even say we are the leader in our industry. And still, we know that staying among the best requires continuous work. I am pleased to share that we have further improved on several ESG ratings since 2022. And the one I'm the proudest of is the Morningstar rating, Sustainalytics, which measures ESG risk level. We are now rated as low ESG risk as 1 of only 3 companies among the 200 companies in diversified metals. Let's then move to the sum of everything we have been through today, our profitability road maps. Here we visualize what Hydro does to at least but preferably well exceed our 10% over the cycle throughout the target and what the different business areas do to meet their respective return targets. In addition, we'll go through some upside and drivers and downside risks for value creation in the period to come. These scenarios show adjusted EBITDA cash flow and rate potential after we have delivered on the planned improvement measures and with different pricing scenarios in 2027. These scenarios are not forecasts, but a simplified indicative long-term potential based on sensitivities. In the additional information in the book that you've been given, you'll find a detailed description of the assumptions that have been used for these calculations as well as a list of additional factors that will influence the results positively or negatively, and that are not taken into account here. At the end of our third quarter, we had around NOK 116 billion in capital employed, with almost 70% allocated upstream and around 1/4 in extrusions. We have adjusted EBITDA for the last 12 months in Q3 as a starting point, where we are currently at approximately 27% RoaCE. If we adjust the prices further to current forward prices, RoaCE decreases to 16%, at 5-year average, we see a RoaCE of 13%. And if you use a third-party analyst CRU and their expectations, we see RoaCE of 19%. This, of course, indicates that our returns are very much dependent on market and macro developments. But at least these scenarios indicate significant or satisfactory profitability based on what we are targeting within the company today. The cash flow scenarios are this year updated to show the cash flow after long-term sustaining CapEx, tax, lease payments and interest expenses indicating cash flow available for return-seeking and growth CapEx and also shareholder distribution. If we look at the upside drivers and downside risk, I think of the most interesting upside scenarios is the additional pricing benefits on top of what we, I would say, have conservatively included here in our greener portfolio. As we move down on the carbon footprint closer to near 0, we expect exponential developments in premiums. The macro environment could be subject to even tougher times ahead. However, we could also see a scenario with tight supply/demand for aluminum as was expected before the recent war broke out. In addition, in line with the capital allocation framework, we will continue to review our portfolio to identify noncore and nonperforming assets and we will only be executing on growth projects with high return potential as we have been through today. On the risk side, in addition to general macro and financial uncertainty, operational disruptions, project execution, ability to deliver on improvements may reduce this potential. In addition, inflation pressure could rise and/or continue at this very high level going forward. For Hydro to reach our overall ambition, each and every business area need to do their part and deliver above their return targets. In bauxite and alumina, we have 23% of Hydro's capital employed, and we have a return target of 10%. Here, we have had a return of 7% on average since 2018. The low returns have been attributable to challenges in the aluminum market, the embargo situation and also other operational challenges, which we now believe that we have reduced the risk of happening again through different mitigating actions within our operations, but also on the social side. Although the last 12 months rolling and planned improvement potential indicate that RoaCE above our return ambitions, the current market prices and the prices we have experienced over the last 5 years indicate a challenging profitability situation. However, if you use CRU's long-term forecast, we have a more acceptable profitability. Although we do not believe that the current margin environment with 50% of refineries being below water is sustainable over time and something needs to give. The past and current returns from D&A are not good enough. And we are working across many access to improve this going forward. Several of these are underway. You have the tailings dry backfill reducing CapEx. You have the fuel switch project with very strong contributions at current spot, and you also have existing commercial improvements, like, for example, adjusting the balance between alumina and hydrant. However, going forward, one of the main upside drivers also here is the ability to get better prices for our alumina, both due to exceptional quality and the positive impact it has on high-performance smelters but also due to the fact that we are moving more quickly towards the bottom of the global mean alumina carbon cost curve, where we are already placed at the first quartile and moving into the first decade. While we have reduced the risk of operational disruptions and specific country risk over the latter years, through asset integrity improvement and being a better neighbor, these are still present, and we need to continue to manage them well. If we then move to aluminum metal and metal markets, we see a very different picture. Aluminum metal accounts for around 43% of Hydro's capital employed with additional around 5% allocated to metal markets. With 10% return target, aluminum metal reached an average return of 14% since '18, above their target. And if you look at the last 12 months rolling, RoaCE reached 38% and digitalizing the very strong markets we have just been through. Metal Markets as a separate reporting area, has also delivered good returns of 27, well above their return target of 7% to 8% and due to good results and profitable growth in recycling, combined with still a relatively small share of capital employed. Going forward, in the different market scenarios, the combined RoaCE for aluminum metal and metal markets will be between 12% at last 5-year average to 21% using CRU long-term assumptions. As for Hydro, I believe the most significant upside scenarios are represented by the current steep cost curve, increased focus on carbon footprint and the fact that around 50% of smelters are currently on the water. On the risk side, even though we have several mitigating actions in place, safeguarding our relative position is important and in certain demand environment represents an absolute risk. We have also seen a lot of regulatory developments over the latter years, and although the most recent changes was a net positive for aluminum metal, it could also be a net negative. Extrusions account for around 1/4 of [indiscernible] capital employed. And since 2018, extrusions has delivered RoaCE at of around 8%, in line with the return target. However, if we look at the last 12 months rolling, extrusion has received has achieved a RoaCE of around 11%, significantly above the average last 12 months and its return requirements. Looking at the RoaCE potential, the identified improvements will lift Q3 last 12-month rolling RoaCE from 11% to 16%. As with the other business area, further upside in extrusion is also represented through greener product pricing and volumes, but also organic and inorganic growth as we have seen examples of earlier this week. On the risk side, in addition to market and operational performance, the key risk for solution is inflation pressure and the current macro environment. Finally, moving to our Energy business area, energy accounts for around 8% of Hydro's capital employed. The energy business has seen a RoaCE of around 20% since '18, well above the return target of 7% to 8%. If we look at the Q3 last 12 months rolling, Energy has delivered an EBITDA of NOK 5.1 billion, significantly above the average since 2018. And there is an additional upside if we normalize production volume and add the positive effect from the Roldal-Suldal case, lifting EBITDA to NOK 9 billion. However, market scenarios based on the long-term forward curve or the prices we've seen the last 5 years illustrate a downside with EBITDA between NOK 1.4 billion to NOK 2.6 billion, but this doesn't include any price area differences or the additional upside we see in commercial effects going forward. Further upside in the traditional energy operations could come from additional growth opportunities, commercial and operational improvements and stronger energy markets on the back of increasing demand for renewable energy at a high pace. On the risk side, markets could, of course, always go in the other direction, and we are exposed to regulatory and framework conditions, including tax. When it comes to the new growth areas, we believe they represent an upside from a valuation perspective as we build substance across the different ventures. And in the battery business, we have seen 2x return on invested capital over the last 24 months and of the targeted investment levels of NOK 2.5 billion to NOK 3 billion, we target a minimum of 3x return on invested capital. As we've seen from the cash flow scenarios on Hydro level, there is sufficient room for both more return-seeking growth or additional shareholder distribution on top of the minimum of the dividend policy in most scenarios. And we aim to maintain competitive shareholder distribution going forward also. During the period of 2014 to 2021, we have delivered on the policy and returned an average dividend yield over the past 7 years of around 3.8%. This is lifted by the yield of 10% for 2021 earnings, which stands out in an industrial context, but so does also our historical yield. We were pleased to update our capital structure policy and targets in Q2 this year and also to distribute in accordance, including the introduction of our share buyback program for the first time since 2008, which we have completed 41% of at the end of last week. For 2022, we aim to utilize this framework and as a starting point, we take NOK 23 billion in adjusted net debt because this reflects the earnings from the higher part of the cycle. We then add the buffer of around NOK 4 billion to this to cater for the 2 M&A transactions, which have been announced this year where the cash effect will most likely come next year, which is Alumetal and Hueck. This buffer also includes a certain amount to reflect the uncertainty which we see in operating capital release at year-end. And that is what gives the current guidance of 50% to 70% of adjusted net income. This will be a combination of dividends and share buybacks and the final split will depend on the total distribution. Final distribution for '22 will be proposed at the release of our fourth quarter in February 23, and proposed approved by the Annual General Meeting in May 23. And with that, I would like to welcome Hilde back on stage for her final comments and our last Q&A.

Thank you, Paul. As a team, we have been looking forward to share with you what we have been working on this past year. But all good things must come to an end, and that includes the Capital Markets Day. And to sum it up, I would like to round off with our investment proposal. We have delivered on a broad range of the ambitions we set out in 2019, and we have significantly improved our track record on relative shareholder value creation. I truly believe that we are currently in a position to continue to do this going forward. We have a low and robust cost position with an ambition to further improve and in an industry with a steeper cost curve. This can cater for good and improved margin generation. Aluminum demand is, as we have talked about, is supported by the mega trends and the demand for low carbon aluminum looks especially strong and is expected to increase from current estimates. To capture this amount, we have a realistic pathway to near 0 aluminum, an increasing portfolio of low-carbon aluminum products demanding higher and higher premiums as the carbon content increases. We also have a large portfolio of profitable growth projects, allowing us to strategically allocate growth capital to the parts of the value chain which we believe will lift but also make our returns more robust in the decades to come. Finally, this is all supported by a solid financial framework, ensuring financial strength and flexibility, while also enabling competitive shareholder distribution. I believe Hydro has a unique position to create value in this new reality. Based on the factors that I just mentioned. And I look forward to seize these opportunities, increasing value to all stakeholders. Thank you.

Then we have a Q&A.

Then we have our final Q&A. Should we start here, maybe?

Major from UBS again. Perhaps a few questions on just some of the assumptions into your spot or indicative EBITDA estimates for 2023. The first one is how much benefit from the fuel switch project you expect to embed in next year? You obviously indicated the $80 million a quarter on a medium term. What's the assumption should we be thinking for 2023?

This does not include any fuel switch. So that will come on top of that.

Okay. So just to be clear on that, I mean, the run rate of EBITDA at [ 320 ] aluminum price is not a lot. Is that what we should be expecting in that NOK 28 billion there's not much contribution from B&A.

If you use the current spot prices or spot prices move a lot from day to day. But let's say, the one we had when we set the Q3 '22 cost curve. And then you have an oldworthy upside from the fuel switch project on top of these numbers. This is based on the portfolio as it looks today. And then we stress it with market prices, not including the fuel switch effect in the base, but it comes through the improvement program effect, but that is done on more conservative market prices. So we have an additional upside from that.

Okay. So just to clarify on that. Within the NOK 29 billion, what alumina price are you factoring in a...

In the NOK 29 billion, we have an alumina price of $325.

Okay. So that would imply not much EBITDA contribution from Alunorte.

No.

Yes, very clear. And then just a second one, a similar question on the premiums, the realized premium on a group basis, what are you embedding in that NOK 29 million?

Very close. We've taken the spot market premiums that we see now, and we've run them through our portfolio. So I think we're around for [ 410, 15 ] mark as a realized premium, which is quite close to what you, for example, saw in 2021.

Okay. And then just final one for me. I mean when we look at the cash outflows and you've provisioned for the [ 4 billion ] of M&A, internally, do you have sort of target? Or how do you look at the incremental bolt-on acquisitions in extruded or elsewhere in the portfolio? How should we be thinking about that going forward?

It's a good question, and we evaluate it on a case-by-case and portfolio perspective. It's -- we have, as any good companies, we have things that we think make more sense that we have on the radar in a situation where the market allows us to at least consider it at a decent price. But other things, they come up and then we review. And then we see we have the capacity for it? Is there other things that we should do prioritize in order to put this in. So we don't have a clear M&A ambition for any given year. We have an ambition to for example, increase a certain amount of recycling capacity. And part of that, we filled through organic and part inorganic growth for the extrusion, it's more on a case-by-case basis.

Super thanks.

Just a couple of questions from my side. Again, to Dan's point around the EBITDA bridge for 2023. In terms of the other assumptions, what CO2 concession are you assuming there? And then secondly, what price area gains are you assuming as well, if any?

Similar as of this year.

Both the conversation because you were guiding for a step-up next year?

Yes. But you also had some extraordinary CO2 compensation this year. related to back in time. So they will net each other out to some extent, but there will be some difference.

Very clear. And on the slide where you show the IRRs across the different initiatives I noticed that for Hydro REIN, you show 10% to 12%, that's levered or unlevered IRR?

That is on the levered IRR. That is everything that we do throughout the project. So that's from development phase through project execution, potentially including Havrand also. So that project is potentially -- that IRR is potentially different from the actual project IRR. That's what you generate out from the total journey on a given project.

Understood. And maybe one last question for me on the carbon border tax. There was some, well, development this week with EU. But I just wanted to figure out on scope 2, is there any clarity on what the latest plan assumes? Whether it's included or not because, obviously, that's going to have an impact on your CO2 compensation over time.

Yes -- that is not clear. I mean the scope 1 is included, but still, we wait for more confirmation related to the indirect into the scope 2. There was a question over here.

It's Jatinder from BNP Paribas Exane. Could you please break down for us the components behind your 600 million assumptions on inflation building 2023 CapEx by energy, raw material, wages and et cetera. Could you clarify, have you assumed this 2022 inflation to stick through to the whole of 2023?

I think you will find that we've used what is probably a conservative view on inflation. The current level that you're seeing in 2022, we have not included to the full extent. So we've taken a top-down view on the different regions where we are exposed. And use the KPI in inflation and not the specific inflation per material, et cetera.

And what is the inflation component in your 2024 to 2026 revised CapEx number?

I guess it varies between 5% and 10% for the different areas.

Thank you.

Thank you. Is there any other questions? There's one.

Two questions. Maybe give Paul a break on this round. On the M&A front, you touched on it, but if you I guess I'm trying to think about what deals you are thinking about going forward? Is it mainly going to be focused on extrusions and recycling? Or would you, at some point, consider anything more upstream. And then there's nothing in today on Qatalum. Will you still own that in 5 to 10 years?

Could you take the first or so should I?

You can take both.

Well, I think as Paul said, the strategic modes are still guiding our allocation of growth capital. So where you're still in the sustained and improved mode in the upstream part. And I think the -- if you look at the Western world, there are hardly any new builds on the table in terms of building new smelters because of the technology race that is ongoing in terms of finding a technology that can produce without carbon in the electrolysis. So we are also holding that for that reason. When it -- so it is like you say, it's in recycling and extrusion that we do have growth see growth opportunities, at least as we see it now. When it comes to Qatalum, Qatalum is a good plant. It has a long-term gas contract what we're working on with the Qatar Petroleum, it could there be an opportunity to blend in more low carbon or renewable energy in terms of solar power so that we can get the carbon footprint down from Qatalum. But other than that, we will be -- I believe we will be an owner in Qatalum for the next 5 to 10 years.

[ Sam Arison ] from Affirmative Investment Management. I just wanted to ask about the sustainable financing framework, if I could. So I thought it was interesting that Hydro published both a sustainability linked and a green bond framework. I just wanted to ask if you could explain sort of what drove the decision to issue under the sustainability linked framework? And can we expect to see any green bonds issued in the next year or so?

Yes. For this current purpose, we view the sustainability as the one fitting our needs the best. But are evaluating green bond issuances also in the time to come.

Thank you. Are there any other questions? No. Then we would just like to thank you very much for joining us today, and we hope that you will join us for lunch and the roundtables starting at 1:00. Thank you very much.