New Hydro boss tackles tough business environment

Norwegian aluminium producer Norsk Hydro is focused on the fundamentals of money-making in an increasingly difficult business environment, its new chief executive said.

"Today, Hydro is influenced by the challenges in Brazil, weak returns and an unstable macro situation," Hilde Merete Aasheim said. "My priority will be to establish a clear direction and create a new momentum for improvements and make Hydro robust."

Hydro is still awaiting approval from the federal court in Brazil to restart full operations at the Alunorte alumina refinery — the largest in the world — following last year's embargo on 50pc of its production after Hydro admitted to unlicensed emissions of untreated water during heavy rains. State authorities lifted the embargo in January, but the federal court is yet to clear the refinery for a full restart.

There have been suggestions of politically motivated delays to that approval process, but the Brazilian economy experienced its first quarterly contraction since 2016 in the first quarter after three consecutive months of falls in the central bank's activity index — a proxy for gross domestic product (GDP). Further delays to the restart of full operations at such a large employer are consequently unlikely, particularly given President Jair Bolsonaro's election pledge to propel economic growth in a country bruised by recent recession.

Elsewhere, the trend of protectionist tariffs that began with the unpredictable trade policies of US president Donald Trump is understandably a big concern for Aasheim. Just this week the US announced another slate of tariffs against Chinese goods, and China retaliated with new tariffs of its own on US products, despite earlier confidence from markets that the trade tensions had started to ease.

"It is hard to predict the future, but we are supporting free and fair trade," Aasheim said. "For global companies, trade tariffs could distort the normal trade flow and create artificial diversions. For the aluminium industry, this could have negative, regional effects."

As for Hydro's "weak returns", Aasheim is specifically targeting the rolled products unit, the restructuring of which was one of the agenda items highlighted when Hydro announced the new chief executive's promotion from her previous role as head of primary metal at the company. But she gave no details on how that restructuring would play out.

"The rolled products area has had too low profitability for a period of time," Aasheim said. "That is not sustainable, and we are now reviewing this and will spend time to look into details. The outcome of this process will determine our options, so it is too early to conclude."

Aasheim's tenure began during a tough time for Hydro, beginning as it did just a day after the announcement of a cyber-attack on Hydro's operations that saw stoppages among its primary metal and rolled products facilities after its entire worldwide network went down. Although production across the company's units is still yet to fully recover, the scale of the attack could have had a much greater impact if not for the systems Hydro has in place, and no ransom money was paid to the hackers responsible for the attack.

"We had systems in place that enabled us to maintain production in four of five business area, with more manual work," Aasheim said.

Hydro's reputation as a reliable supplier took a hit last month when it agreed to pay $46mn to US space agency Nasa for the failures of two space missions because of faulty materials supplied by Sapa Profiles — now a fully owned subsidiary of Hydro.

As Hydro looks to bounce back from these events, Aasheim is concentrating on the fundamental aspects of the company's business — reliable operations and technological innovation.

"We need to build on Hydro's strengths — solid operations, technology and responsibility," she said. "This is what has given Hydro a solid position among our customers, employees, local societies and the world around us. We are to build on these strengths and further develop them. My ambition is that innovation and sustainability will set us apart and secure our position in the low-carbon society."