Norsk Hydro ASA ($NHY)

Good morning, and welcome to Hydro's First Quarter 2026 Presentation and Q&A. We will shortly begin with a presentation by President and CEO, Eivind Kallevik, followed by a financial update from CFO, Trond Olaf Christophersen. We will then finish off with a Q&A session. If you like to ask questions in the Q&A, you can do so at any time during the presentation and you do it by typing your question into the chat box on your screen. When we then get to the Q&A, I will read your questions on your behalf directly to Eivind and Trond Olaf. And with that, I give the word to you, Eivind.

Thank you, Erik, and good morning, and welcome from me as well. As always, the first topic to cover is safety. And I would like to begin by saying that we are deeply saddened by the passing of a contractor at the Alunorte alumina refinery in Brazil on March 30. Our thoughts are with the family and loved ones at this very difficult time. Our priority is that they receive the necessary support and assistance going forward. Now the root cause is currently under investigation, and we do not get to know what led to this tragic incident. And if the investigation concludes that inadequate safety measures contributed to this incident, we will, of course, take this extremely seriously. We will learn from it, and we will implement appropriate actions to prevent this from happening in the future. And incidents like these are a stark reminder of why we must continue to put safety first at all of our plants every day and at every shift. Looking at Hydro as a whole, our overall safety performance remains strong with low injury and incident rates. And maintaining these levels requires continuous attention and commitment across the company. And let me underline, as I always do, the health, safety and well-being of our employees is our top priority. Now let's then continue with some highlights. This quarter, the adjusted EBITDA came in at NOK 8.7 billion. Due to high prices and strong market activity, operating capital is also higher, resulting in a negative free cash flow of NOK 4 billion. Adjusted RoaCE over the cycle came in at 10.1%, which again is above our target of 10% over the cycle. Looking more closely at the highlights behind these numbers. First, we saw continued strong operational performance upstream. Alumina production was up 3.4% and primary aluminum production was up 2.7% compared with the same quarter last year. On the other hand, power production and extrusion sales volumes decreased this quarter, driven by maintenance and hydrology in the energy area and continued soft markets within extrusions. Recycling delivered its strongest results since 2023, supported by a widening spread between product premiums and standard ingot premiums. We also maintained strong momentum on power sourcing and the HalZero facility in Porsgrunn is now successfully commissioned, ramping up as we speak. And I will get into some more detail on these two on the next slide. Looking back at the first quarter, we have to address the situation in the Middle East. Geopolitical tensions have impacted our market environment for quite a few years now and with the recent escalation in the Middle East directly impacting our operations in the region. Health and safety, of course, for our affected employees in the area is our top priority. And today, we have some 113 employees living in the GCC countries, and we are following up closely to support their safety as well as their well-being. On the production side, Qatalum is running at reduced capacity with around 40% curtailment as announced on March 3. At the same time, we are working hard to continue serving our customers through our global casthouse portfolio. And despite this backdrop, we continue to progress on our 2030 strategy of pioneering the green aluminum transition powered by renewable energy. First, on power sourcing, one of our key priorities is, of course, to secure long-term competitive renewable power. At the Investor Day in November, we highlighted the power sourcing gap expected in the coming years post 2030. Now closing that gap has been a key priority for us, and I'm pleased to report that our efforts are paying off. The open power position post 2030 has narrowed significantly following new contracts signed since November. This quarter, we signed an agreement with Alpiq amounting to 1.75 terawatt hours for the years 2031 to 2038. And just this week, we entered into two new contracts with Statkraft running from 2029 to 2038, adding some 12.3 terawatt hours of renewable energy to our sourcing portfolio. And finally, we are also happy to report that the HalZero test facility is now up and running and will be ramped up towards full test capacity in the third quarter of '26. And as we speak, structured testing activities are being conducted, including key safety systems, operational control systems, equipment designs and core production processes. While first metal is still to come some months ahead of us, I can confirm that we already produced our first droplet of aluminum. So not quite full production, but proof that we are on our way. If we turn to bauxite and alumina markets. In the first quarter, our attention has been on the situation in the Middle East and its impact on the supply-demand balance. With the region being a net importer of alumina, the disruptions to aluminum production and shipping is expected to have a negative impact on the global alumina balance. In isolation, we estimate that the situation will increase oversupply outside China to around 2.7 million tonnes. If we include China, we expect global oversupply to be around 3 million tonnes. What remains to be seen is how much capacity will be curtailed in China, bringing the global oversupply down again. Looking into 2027, the estimates are uncertain, depending not just on the supply situation in China, but also the ramp-up of smelter capacity in the Middle East. Also as Indonesia increases production from its refineries and smelters, it will add more supply to the global market, influencing prices, trade flows and overall supply-demand balances accordingly. And as such, the pressure on COGS continued in Q1 with prices averaging around $307 per tonne compared to $310 per tonne at the end of 2025. The Atlantic differential did decrease at the beginning of the U.S., Israel, Iran conflict. However, this is primarily caused by higher oil prices driving up shipping costs. Then, if we move on to the aluminum market. This has clearly also been impacted by the situation in the Middle East. The region is a significant producer of aluminum, representing some 9% of global output, but it is also a major export region with some 4 million to 5 million tonnes exported on an annual basis. The combination of the announced curtailments in the region and the closure of the Strait of Hormuz severely impacts global metal supply. Both China and the world ex-China are now estimated to be undersupplied in 2026. And as we have all seen, this has resulted in a sharp increase in the LME aluminum price. The 3-month aluminum price began the quarter at $2,995 per tonne and finished above $3,400 per tonne. In addition to LME, the standard ingot premiums have increased both in Europe, the U.S., as well as in Japan. And the U.S. Midwest premium continued to climb from already high levels that reflect the 50% import duty on the Section 232 tariffs. The Midwest premium rose from just over $2,000 per tonne at the end of '25 to north of $2,500 at the end of the quarter. European premiums also climbed with duty paid standard ingot premiums moving from $335 at the start of the quarter to $587 at the end of March. Now speaking of premiums, the value-add product premiums and scrap prices also impacted the quarterly results. Hydro sells a high share of value-add products relative to the standard ingot sales. Following supply disruptions from the Middle East, the value-add premiums have increased even more than the standard ingot premiums. This positively impacts the cost of profitability, both at the smelters, but also importantly at our recyclers. So after a period of tough market conditions for our recyclers, we saw materially improved profitability in the first quarter. And the delta between the total sales price for extrusion ingots consisting of LME, ingot premium and billet up-charge and the metal input costs consisting of LME, some standard ingots and some scrap has continued to widen. Now as you can see, this delta is now very favorable in the U.S., supporting strong recycling profitability. In Europe, the delta has also developed positively, but at a lower level. The energy cost has also increased somewhat in Europe, which eats into some of the increased metal spread. At the Investor Day in November last year, we showed that the spot recycling margins in the U.S. were already strong and would theoretically support a NOK 1.8 billion annual EBITDA. Since then, the U.S. margins have continued to strengthen and the annualized run rate EBITDA in Q1 was actually around NOK 2.4 billion. If we move downstream, the extrusion market outlook remains uncertain. In Europe, the full year demand growth has been revised downwards since January with a flat Q1 estimate, declining markets in the second quarter and a modest recovery expected in the second half of the year. Full year growth is now expected at around 1%. In North America, the latest revised market figures indicate a poorer end to 2025 than what was reported in January, combined with a sharper market contraction in Q1. This is compensated for by a stronger recovery in the third and the fourth quarter, keeping the full year growth at 1%. Demand from building and construction was stable in the first quarter, but with some positive signs in Europe at the end of the quarter. Automotive demand is starting to improve, thanks to production growth of electrical vehicles in Europe, while the U.S. automotive story is the opposite, where headwinds in the EV production is negatively impacting the demand development. Some of the key U.S. segments are seeing some demand weakness in part due to the high product prices. This negatively impacts the Transportation segment, where trailer builds remained low. The HVAC&R growth rates are also negative. We expect that some of this is demand disruption from the high all-in metal prices in the U.S., the high interest rates and the destocking effects will also curb the demand. One bright spot in the U.S. is the electrical segment, where data center demand seems to be very robust. Other industrial segments experienced also negative growth in the period. And with that, let me give the word to Trond Olaf for the financial update.

Thank you, Eivind, and good morning, and welcome from me as well. We will start with the financial highlights for the quarter. In comparing year-over-year, revenues fell by around 12%, NOK 50 billion for Q1, driven by lower alumina prices. For Q1, we delivered an adjusted EBITDA of NOK 8.7 billion and a reported EBITDA of NOK 7.1 billion. Adjusting items for the quarter was around NOK 1.6 billion, where the main item was unrealized derivative loss, mainly on LME-related contracts of NOK 1.5 billion. The adjusted EBIT for Q1 was NOK 6.1 billion with a reported EBIT of NOK 4.4 billion. In addition to the adjusting items to EBITDA, there was NOK 100 million in adjusting items impacting EBIT related to impairments, mainly in extrusions. The difference between the adjusted and the reported EBIT was, therefore, negative NOK 1.7 billion. Net financial expense for Q1 was a positive NOK 1.9 billion. This was driven by a foreign exchange gain of NOK 2.2 billion, mainly from unrealized effects on euro-denominated power contracts and debt, where a strong NOK gave a positive impact. Interest and other financial income was NOK 230 million, and interest and financial expenses was NOK 570 million. The income tax expense was NOK 1.9 billion in Q1, impacted by strong earnings before tax. The reported tax rate for Q1 was 31%. Overall, this resulted in an adjusted net income of NOK 4.1 billion with reported net income of NOK 4.3 billion. The total adjusting items to net income was NOK 280 million, which is the sum of the EBIT adjusting items plus the net foreign exchange gain of NOK 2.2 billion and an income tax effect of NOK 250 million. Adjusted net income was up from NOK 4 billion in the same quarter last year and up from NOK 1.7 billion in Q4. Consequently, adjusted earnings per share was NOK 2.07 per share for Q1 '26, up from NOK 1.63 per share in Q1 '25. Then moving to EBITDA and looking at the results Q1 versus Q4. Adjusted EBITDA increased from NOK 3.1 billion -- increased by NOK 3.1 billion from NOK 5.6 billion to NOK 8.7 billion. The main drivers were higher alumina prices, improved downstream results and normalizing eliminations. This was partly offset by the energy results and stronger NOK compared to U.S. dollar. Realized all-in aluminum and alumina prices contributed positively with around NOK 1.2 billion, where higher aluminum prices was partly offset by lower alumina prices. Upstream volume development had a net negative impact of NOK 300 million with lower sales volumes in B&A, partly offset by slightly higher sales in aluminum metal. Raw material costs increased by NOK 50 million, mainly due to somewhat higher energy and carbon prices in aluminum metal. Extrusions had a positive seasonal development from increased sales volumes of about NOK 650 million, combined with a positive margin effect of approximately NOK 500 million. In addition, recycling results in Metal Markets improved by NOK 100 million. Furthermore, we saw a net negative impact of NOK 500 million, mainly driven by lower production and loss of price area differences in the Energy business area. Fixed cost development was strong with decreasing fixed cost in Q1 with an impact of NOK 550 million. This is mainly explained by NOK 300 million lower fixed cost in Extrusions and NOK 200 million lower fixed cost in Bauxite & Alumina. We also saw a negative NOK 700 million in currency effects, mainly driven by the strong Norwegian kroner compared to the U.S. dollar. The final contribution of NOK 1.6 billion was driven by NOK 900 million in net other effects, mainly commercial activities in Metal Markets and Bauxite & Alumina, combined with realization of some previously eliminated internal margins amounting to about NOK 600 million. Then moving to the debt development. And when looking at the debt development through the quarter, net debt increased by NOK 3.2 billion from Q4 2025. Starting from Q4, net debt of NOK 9.7 billion, we had a positive contribution of NOK 8.7 billion in adjusted EBITDA in Q1. During Q1, we saw an increase in net operating capital of NOK 6.3 billion. The increase was driven by seasonal effects with increased sales at the start of the year and higher prices for our metal. Other operating cash flow was negative NOK 3.6 billion. This was mainly due to taxes paid and interest payments, and various other cash cost adjustments. We had net cash effective investments of NOK 2.7 billion in Q1. This reflects both the investment activity level in the businesses and cash flow outflow due to settlement for CapEx incurred in 2025, but paid in Q1. Put together, these elements resulted in a negative free cash flow of NOK 4 billion in Q1. There were no shareholder distribution in Q1, and we saw a positive other effect of NOK 800 million. This was mainly driven by the positive FX effect on debt, partly offset by payments of some new leases. Moving on to adjustments to net debt. We saw an increase in hedging collateral of -- and other by NOK 600 million, mainly due to higher prices. Our net positive pension position increased by NOK 400 million and other liabilities increased by NOK 100 million. All things considered, we ended up at an adjusted net debt position at the end of Q1 of NOK 21.6 billion. Then moving to the business areas and starting with Bauxite & Alumina. Adjusted EBITDA for Bauxite & Alumina decreased from NOK 5.1 billion in Q1 '25 to NOK 750 million in Q1 '26. This was mainly driven by lower alumina prices, but partly offset by higher sales, supported by the good operational performance at the Alunorte refinery. Compared to Q4 '25, the adjusted EBITDA decreased from NOK 1.4 billion to NOK 750 million in Q1 '26, mainly driven by lower sales volumes and prices as well as normalizing commercial results. This was partly offset by lower fixed costs and raw material costs. For Q2, we expect higher alumina production and sales. Realized alumina prices are estimated to decrease due to the Middle East supply disruptions impacting the commercial portfolio. We estimate that fully loaded raw material costs will increase, giving a negative impact of NOK 100 million to NOK 200 million. We expect lower energy costs of NOK 50 million to NOK 150 million based on lower Henry Hub gas prices and energy mix optimization. Fixed cost is estimated to increase by NOK 300 million to NOK 400 million from seasonal higher maintenance activities and social investments. Then, moving to aluminum metal. Adjusted EBITDA increased from NOK 2.5 billion in Q1 '25 to NOK 5 billion this quarter. The main drivers year-over-year were higher all-in metal prices and reduced alumina costs, partly offset by negative currency effects due to the stronger NOK compared to the U.S. dollar. Compared to Q1 '26 to Q4 '25, adjusted EBITDA for aluminum metal increased by NOK 1.3 billion. This was driven by higher all-in metal prices, including realized premiums and lower alumina cost. Feed costs remained flat from Q4 '25, while raw material costs increased marginally due to energy costs. This brings me then to the guiding for the next quarter. For Q2, aluminum metal has booked 67% of the primary production at USD 3,000 per metric tonne. This includes the effect of our strategic hedging program. Aluminum metal has also booked 51% of the premiums affecting Q2 at USD 571 per tonne. We expect realized premiums to end up in the range of USD 530 per tonne to USD 580 per tonne. Due to the Middle East situation, we expect lower sales volumes. On the cost side, carbon costs are expected to increase NOK 150 million to NOK 250 million, and energy costs are expected to increase by NOK 200 million to NOK 300 million, driven by coal and LME-links in some of the power contracts. Fixed costs are expected to be stable. Then, moving to Metal Markets. And for Metal Markets, the adjusted EBITDA increased from a negative NOK 14 million in Q1 '25 to a positive NOK 540 million in Q1 '26 due to higher results from both recycling and sourcing and trading activities. Excluding the currency and inventory valuation effects, the result for Q1 '26 was NOK 590 million, up from NOK 62 million in Q1 '25. Compared to Q4, the adjusted EBITDA for Metal Markets increased from negative NOK 56 million to NOK 540 million due to higher results, both from recycling, and from sourcing and trading activities. Recycling delivered its strongest results since mid-2023 with an adjusted EBITDA of NOK 160 million. As mentioned by Eivind earlier, we are, first and foremost, seeing the strong recycling margins in the U.S., where product premiums have increased more than the scrap metal input. For Q2, we expect the strong trend in recycling to continue with even better margins than in Q1. In our commercial segment, we anticipate a normalization of the contribution from sourcing and trading activities in Q2. And as always, we emphasize the inherent volatility of trading and currency fluctuations. Then moving to Hydro Extrusions. And in extrusions, the adjusted EBITDA increased year-over-year from NOK 1.2 billion to NOK 1.3 billion, driven by strong recycling margins. Compared to the previous quarter, the adjusted EBITDA improved from negative NOK 63 million in Q4 '25 to a positive NOK 1.3 billion in Q1 '26, driven by higher recycling margins and lower fixed costs, partly offset by somewhat lower sales and higher variable costs. In particular, this quarter's result was driven by improved recycling margins in the U.S., but also supported by overall positive cash cost development and some stabilization in the extrusion markets. For Q2, for extrusions, we should underline that we always compare the coming quarter to the same quarter last year due to the strong seasonality in this business. Looking at Q2, we expect higher sales volumes. The current strong recycling margins in the U.S. are expected to continue into Q2. And overall, margins for the business area are stable. Should the current foreign exchange rates continue through Q2, there will be a negative translation effect into the extrusion results measured in Norwegian kroner. Then, moving to the final business area, Energy. The adjusted EBITDA for Q1 decreased to NOK 780 million from NOK 1.2 billion in Q1 '25. The decrease was mainly due to lower production, due to power plant maintenance as well as loss on price area differences. Compared to Q4, the adjusted EBITDA decreased from NOK 1.1 billion to NOK 780 million, mainly due to lower production, again due to the power plant maintenance that we flagged in Q4 and also the loss on price area differences. The price area difference loss was NOK 186 million in Q1 '26, down from a gain of NOK 37 million in Q4 '25. Looking into Q2, as always, we should be aware of the inherent price and volume uncertainty in energy. For the next quarter, production is expected to fall well below historical Q2 levels due to the low water levels in the reservoirs and also the lowest snow levels seen in many decades in Norway. Price area differences are expected to improve somewhat compared to Q1. And this ends the business area presentation. And with that, I end the financial update and give the word back to Eivind.

Thanks, Trond Olaf. And to wrap up today's session, I'll briefly summarize our priorities. Our #1 priority is, of course, safety, health and well-being for all our employees. The tragic incident at Alunorte has affected all of us, and we are following the investigation closely to understand what happened, learn from it and strengthen our work to prevent similar incidents for happening in the future if it is a work-related incident. Against the backdrop of heightened geopolitical uncertainty, building resilience is a key priority for us. Throughout the quarter, we have monitored the escalating situation in the Middle East closely, both to safeguard our people and to maintain reliable deliveries to customers. Staying on top of both the direct and indirect impacts will remain important also in the period going forward. This quarter, we have also taken important steps in recycling and within renewable power sourcing. We delivered our strongest recycling results since 2023, and we're narrowing the power sourcing gap through the signing of new and long-term PPAs. Finally, we continue to execute on our decarbonization and technology road map while capturing opportunities within low-carbon aluminum markets. And with the HalZero test facility now up and running, we have passed a significant milestone on our technology road map towards net zero aluminum by 2050 or before. Overall, we have made solid progress against the ambitions we have towards 2030 strategy in the first quarter, and we remain fully committed to delivering on it also going forward. And with that, thank you so much for your attention, and over to you, Erik.

Thank you, Eivind, and thank you, Trond Olaf. We will then commence the Q&A. And again as a reminder, if you do have questions, please type them in the box on the screen, and I will be reading them to Eivind and Trond Olaf on your behalf. And it looks like we have a few ones already.

First one is from Liam on Q2 cost and FX. Can you run through the raw material, energy and FX cost uplifts for Q2 versus Q1 for B&A and aluminum? Over the last month, where have you seen the biggest upward pressure on spot input cost?

So I think I gave most of the numbers in my presentation on both B&A and aluminum metal. We've seen going into Q2, we actually see somewhat lower energy costs for Bauxite & Alumina, mainly because of the gas exposure to the Henry Hub price in the U.S., and we had quite high gas prices initially this year due to the cold winter in the U.S. So for B&A, not a strong or actually slightly lower energy cost. For aluminum metal, we do see higher energy costs. And this is then mainly driven, as I said, by the indices in some of the power contracts linked to coal prices and also aluminum prices. So I think those are the main moving parts, also increasing carbon costs going into Q2, and I also gave the numbers during the presentation.

Second question is from Patrick. Can you please provide some comments regarding pet coke and carbon anode inventory levels in aluminum metal? And can you comment on alumina inventory levels at Qatalum?

So I think overall, we're -- when it comes to pet coke and anodes, if that's sort of the question is general for the portfolio, we are quite comfortable. We have normal levels for that. When it comes to Qatalum, we have alumina in the silos. We haven't given any updates in terms of other types of production levels than roughly the 60% that we have today, which should give you an indication that we have sufficient alumina for the moment.

And that also answers Amos's question. So we'll jump to Marcus. Can you please comment on the expected ramp-up profile for Qatalum and what conditions would be required for that to commence?

So Qatalum is preparing for the ramp-up. We have a fantastic team in Qatalum working on this, and we will come back guiding on when that will restart and when -- how we see the ramp-up schedule when that has been confirmed. But again, the team is working hard on that locally.

Another question from Liam. On energy, could spot sales be negative in Q2? And how weak do you expect Q2 output to be?

So yes, spot sales can be negative in energy. But we will be very careful to say anything about the production in Q2 because this depends so much on the hydrology. So if we have a wet spring in Norway, production will increase and then vice versa with a very dry development. So this is so weather dependent, the production in Q2. So that's why we're not guiding on it. But the best thing we can say is to look at the reservoir levels in the southern part of Norway and then at historical references. And as I said, now especially the snow reservoirs are at a decade low level. So that at least gives some indications.

And then there's a question from Anup, which was partially covered by Eivind, excluding Qatalum, what is the magnitude of production loss in the GCC currently? Is Qatalum able to import alumina into its plant? Did EGA's recent announcement of alumina sale help?

So if you look at analyst expectations in terms of production loss in the GCC countries, that's estimated to be roughly 3 million tonnes in total. So if you deduct Qatalum's curtailment for [indiscernible] so 2.8 million tonnes roughly should be out of market per the analyst reports that we also can see from the external market. On the alumina side, I think I've covered it. The Qatalum team is working hard on getting alumina into the plant also for the more dated or times out ahead.

Then, we have two questions from Duncan. I think we do one at a time. Number one, it appears your alumina costs vary significantly throughout the year, particularly fixed cost, which doesn't appear to be fixed, as you say. Can you provide some clarity on your all-in cost for alumina so we can assess annual profitability better?

So when it comes to the fixed cost development in Bauxite & Alumina, and the situation in Brazil is that you have these wet seasons with -- where you have very heavy rainfall, and that impacts all the activity in the Bauxite & Alumina business area, both when we are able to do maintenance and also some part of the operations. So that's why you will see that we have the seasonal effects on the fixed costs, very much driven by the weather in Brazil and when we are able to do these type of activities. So -- but if you follow this all year, you will typically see that no activity in Q1 because that's when we have the wet season, and then you will see a catch-up through the rest of the year.

And then the second part of the question was, would you be able to share some thoughts how you expect the aluminum market to balance given the significant oversupply today and the wave of production coming? What are the tipping points?

So the typical part where you would see curtailment if you -- again, if you believe history is a predictor for the future, and China will be sort of the clearing part for any oversupply of alumina that we see in the market. And typically, historically, China has been the area where we see curtailments more rapidly than what we see in the Western part of the world.

Then, we have a question from Winston. Could you comment on why the hedging for aluminum price for Q2 is only at $3,000 per tonne, which is lower than the average for Q1 -- with a correction here, lower than the average LME aluminum price for Q1?

So as we have communicated to the market, we have this strategic hedging program, where we hedge roughly 25% of our primary production for roughly 2 years ahead. So that is also impacting the realized aluminum prices. So that is the main explanation for the difference between what you see in the forward market and the prices we are realizing.

And then from Alain, extrusions, the outlook is pointing to further improvements quarter-on-quarter, while CRU downgraded their outlook for Europe. What is driving this improvement for your business? Is it U.S. recycling or consumer prebuying restocking? Any color on how consumers are behaving across your end markets?

So for extrusions going into Q2, there are several drivers for the improved volumes as we see it. We have some more sales to automotive, which is really driven by contracts that we have announced earlier, and we see now start of production for many of these models, and this will drive higher sales volumes for us, but it's not really driving the underlying market demand. And, then other drivers as well is that -- I mean, there is certainly uncertainty in the markets of supply and as an integrated company, we have a strong position. And we are working a lot in the market to try to support our customers through this situation to support the overall market situation. But it's too early to say sort of the total consequences of this. But the main driver again is the automotive and higher sales to new models.

Then, another one from Liam, continuing on recycling. Did extrusions in the U.S. benefit from any one-off gains from higher premiums in Q1? And do you expect any gains in Q2? And also, can you provide a range for Metal Markets recycling EBITDA in Q2?

So when you look at the recycling in the U.S. or the results within extrusions, there is a little bit of what we call inventory gain, but predominantly, it's driven from the widening gap between billets being sold and the input cost for producing those billets at our recyclers. When it looks for recycling EBITDA targets in the second quarter, I think with the widening that we saw towards the end of the quarter, I'm not going to give you a specific number, but there is room for improvement also going into the second quarter compared to what we saw in the first quarter of this year.

And then a question from Bengt. Where are premiums today? And also looking further ahead, could you share some thoughts on the impact into Q3 based on your value-add exposure?

So typically, then in Europe, this depends very much on the product. But the billet premiums, extrusion ingots, that is a very important product for us where we have a significant share of our sales in Europe. We now see $1,100 per tonne in the market. We have given the guiding on the total booked premiums for Q2. So these are the premiums that we are booking for additional volumes in Q2, but also into Q3 and Q4. Now also other products are up, but typically extrusion ingot market is the market, where we typically book quarterly contracts, while the other markets are more typically yearly contracts. So I think that is where you will see the biggest impact on the higher value-added products premiums in the market.

Then we have a question from [indiscernible]. Could you please share some thoughts on how you expect working capital to evolve from here? Will it follow the usual pattern? Or will it remain elevated given the war effects on prices and freight?

So remember, when we look at net operating capital and we look sort of at our physical inventories, the performance of controlling inventories are very good. So the big increase that we see is really driven by the increase in LME and the increase in billet premium, which in reality is a good thing because it reflects that we will also realize higher earnings going forward. Then looking forward, I think you should think about this as a more normal seasonal development, assuming that price levels stay around the levels where they are today.

Thank you, Eivind. And I think that covers the follow-up question from Alain as well. And there seems to be no further questions. So then we will say thank you for joining us here today. And if you have any further questions, then please don't hesitate to reach out to Investor Relations. Have a good day. Thank you.