© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Hello, and welcome to the Hydro Q4 2021 presentation. My name is Josh, and I will be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions] I will now hand you over to your host, Line Haugetraa, to begin. Thank you.
Good morning, and welcome to Hydro's Q4 presentation and conference call. We will start off with a presentation by our CFO, Pal Kildemo, followed by a Q&A session. Note that you will need to be dialed into the conference call to ask questions. With that, I turn the microphone to you, Pal.
Good morning, and welcome from me as well. It is a pleasure to share both our fourth quarter and full year results today, the first year we combined the reporting of these. I also hope that you enjoy our new annual report, which has gone through a substantial improvement process over the latter months. Q4 has been a historical quarter from many aspects, and I would like to start with the key highlights. Let's then turn to Slide 2. For Q4, we report a record EBITDA of NOK 9 billion, while free cash flow came in at NOK 4.7 billion. We are pleased to see the continued positive trend in our 12-month rolling ROACE from right below 13% in Q3 to 18.6% in Q4, almost double our overall profitability goal of adjusted ROACE of 10% over the cycle. The tight markets that we have experienced over the latter quarters continued in the fourth quarter, and not only for aluminum. We also experienced tightened markets for alumina, energy and extruded products. Continued strong and increased market prices improved revenues and results, and we are proud to report new record results upstream and also in energy. And while market prices help a lot, so does our own improvement effort as every additional tonne or megawatt hour produced contribute significantly more to the bottom line than only a year ago. I'm therefore most pleased with our ability to deliver improvements 25% above the targeted level for 2021 at NOK 6.3 billion in total and NOK 2.6 billion for 2021 in isolation. In addition, we have delivered NOK 1.5 billion of our NOK 2.5 billion commercial ambition. On the back of the strong financials, the Board has decided to propose a cash dividend distribution of NOK 11.1 billion or 80% of adjusted net income from continuing operations to Hydro shareholders. This is at the top end of our 70% to 80% guidance from our recent Capital Markets Day in December. At the same Capital Markets Day, we also announced new ambitions within our 2 strategic pillars of strengthening our position in low-carbon aluminum and diversifying and growing in new energy. We have been busy since then, and I look forward to sharing our progress with you in these 2 areas a bit later. Let's then move to Slide 3. Let's first start with the market side. During the fourth quarter, the LME price increased from start to end, hitting a high of close to $3,200 per tonne. The product premiums also followed, reaching new highs with the European extrusion ingot billet premium trading over $1,600 per tonne. The European premiums moved upwards on tightening markets driven both by stronger demand, but mainly tighter supply. European demand is up 7% year-over-year, contributing to demand outside China being up by 5% compared to Q4 last year. This is in contrast to 6% weaker demand in China, bringing the band down by 2% for Q4 globally. However, the tight markets in the fourth quarter are primarily driven by the supply side reacting to soaring energy prices with especially European smelters exposed to spot energy markets, which saw their business operating costs increasing several thousand dollars. This in turn has led to significant curtailments with around 650,000 tonnes curtailed to date, contributing to the large deficit in world ex China estimated by CRU. According to CRU's cost model, around 700,000 tonnes more is at high risk of curtailment and around 400,000 tonne is at medium or high risk of curtailment. A potential curtailment of this would bring the total deficit closer to 3.5 million tonnes, confirming our view from Capital Markets Day that there seems to be a larger risk of a tighter market in 2022 than the opposite in the current energy price environment. China is still expected to be largely balanced in 2022. However, also here, we are seeing supply side risk, most recently represented by the COVID outbreaks in the Guangxi region. Let's move to Slide 4. In order to deliver on our strategic ambitions, we need to make progress every quarter. And even though it's only a couple of months since our last market update, we have seen good progress. We were structured to strengthen our position, to reduce our footprint and delivering low-carbon aluminum to our customers, as is exemplified here by our recently announced recycling investment in Cassopolis, which we are progressing well towards final build decision. Here, we contribute to our recycling growth ambitions while also entering the U.S. market with our Hydro CIRCAL green product, which consists of a minimum 75% post-consumer scrap content and is sold at a premium to nonbranded products. In addition, our journey to create new value through profitable growth in our new energy businesses continues at full speed. Let's move to Slide 5. Strengthening our position in low-carbon aluminum starts with having a robust position on the cost curve. And we have a long track record of establishing and delivering on targeted improvement programs in Hydro for every business area, every business unit and every person. And throughout these years, it has always been very important to ensure that the improvements can be traced back to the bottom line. Our newest program was initiated in 2019 with a baseline in 2018 when our adjusted EBITDA, excluding Hydro Rolling, amounted to NOK 15 billion. Since 2018, we have gotten good help from the market, as you can see here, with around NOK 10 billion in positive impact from aluminum and alumina prices as well as currency, only partially offset by NOK 2.1 billion in higher raw material costs. Downstream volumes, margins and Energy results contribute with another NOK 4.6 billion, and we then have NOK 2.4 billion in negative other effects like the Bauxite & Alumina, ship and motor outage, higher eliminations and nonrecurring scrapping of assets, in addition to NOK 3.4 billion in fixed cost inflation. Without our improvement efforts, our EBITDA today would have been NOK 21.7 billion, but adding the NOK 6.3 billion in improvement brings it to NOK 28 billion. And we still have NOK 2.2 billion to deliver in the years to come, which you should expect to contribute to our bottom line in the same way. I'm also pleased to confirm that we have delivered NOK 1.5 billion in commercial improvements compared to a baseline in 2018 and aim to deliver NOK 1 billion in the coming years, much supported by our targets to grow our sales of greener products and selling these at premium pricing. Let's then move to Slide 6. The world is moving from talk about future climate commitments to a real pull in the marketplace. And we are experiencing 2 things: first, the demand for aluminum as an enabler for emission reductions has been on the increase for some time; and secondly, customers across sectors such as automotive, packaging, building and construction and electronics are setting increasingly ambitious decarbonization targets for themselves. Access to low carbon and circular aluminum is essential for these industries to reduce their Scope 3 emissions. Hence, strengthening our position in low-carbon aluminum enables our customers to decarbonize, meeting both the regulatory requirements and increased customer demand for greener products. A good indicator of this is the sale of our greener products, which increased by 200% from 2020 to a total of 286,000 tonnes for 2021. And we aim to double this by 2025. An exciting customer we are working with is Ford. And many of you will remember the impact Ford's decision to switch from steel to aluminum body on the Ford F-150 in 2015 had on global aluminum demand, as the Ford F-150 has been the best-selling vehicle in the U.S. for 45 years with 726,000 vehicles sold in 2021. Now Ford are launching the all-electric Ford F-150 Lightning, and we are happy to supply complex aluminum components to the Lighting. For producers of electrical vehicles, aluminum is a natural choice to reduce weight and maintain excellent crashworthiness. The seamless aluminum tubing used in the frame of the cab is a result of close collaboration between Hydro and Ford throughout the product life cycle from development to launch. In addition, I'm happy to say that we have signed a letter of intent. And we'll soon announce an R&D collaboration with a leading car manufacturer to contribute with expertise and supply of climate-neutral materials, enabling the creation of a carbon-neutral car by 2030. Let's move to Slide 7. In order to grow our sales of greener products, we launched our road map to net zero aluminum, and we are working across the value chain to deliver on this. We announced 3 parts to reaching zero-emission aluminum production within technology development, recycling of post-consumer scrap, carbon capture and storage for existing smelters and our proprietary HalZero technology for greenfield smelters. When it comes to our smelters, then we have passed 2 important milestones this quarter. The 2 key initiatives to decarbonize our existing smelters, it's through decarbonizing Alunorte and through capturing or not emitting carbon from the electrolysis process. When it comes to the first, decarbonizing Alunorte, we have passed 2 milestones recently on our target to reduce CO2 emissions by 30% by 2030. Firstly, we made the final business decision to invest BRL 1.3 billion to carry out the fuel switch project to replace heavy fuel oil with natural gas, reducing CO2 emissions by 700,000 tonnes. And secondly, we commissioned the first of 3 el boilers, which are the largest electrical boilers currently available, and will contribute to reducing 400,000 tonnes in carbon reduction annually as well as improving our bottom line. This will be the world's largest refinery electrification initiative and will be enabled by renewable energy through long-term PPAs in partnership with Hydro REIN. On the second area, I'm very happy to announce that we have invested in a minority position in the carbon capture company, Verdox, to support our road map to net zero. Verdox aims to deliver cost-efficient aluminum carbon capture technology and direct air capture technology for piloting starting from 2025. The Verdox technology is expected to be highly energy-effective and suited to capture carbon at very low concentrations. The technology has potential to deliver both cost-efficient off-gas capture and direct air capture capability to fully decarbonize the electrolysis process. Investments will ensure scale-up of aluminum-specific carbon capture technology with the aim of achieving industrial scale by 2030. Through our ownership, we will take part in the expected value uplift and supporting technology scaling and Verdox industrialization capabilities. Finally, in order to deliver on our climate ambitions, we need to work in a structured way at all our plants. In Poland, for example, the electricity grid mix is dominated by coal, which impacts the final footprint of our extruded products. The plant therefore decided to invest in a solar park to reduce the carbon footprint of the extrusion process by 80%, a significant reduction. Let's move to Slide 8. In order to enable our customers, ourselves and society as a whole to decarbonize, it is also important that we have good progress on building substance and value in our new energy growth areas. In addition to gradually approaching signing of PPAs on several key projects in the Hydro REIN portfolio in Brazil, we have also made good development on offshore wind -- onshore wind in the Nordics. Construction works at the 260-megawatt Stor-Skalsjön site will be restarted by Eolus and Hydro in Q1 2022, following recent signing of the balance of plant and turbine supply agreement contracts. This will follow the works already conducted by the previous owner. Hydro REIN and Eolus also signed a deal in December to jointly develop 672-megawatt onshore wind in the Swedish price areas, SE3 and SE4, a total of 9 projects. These are early-stage development projects, allowing Hydro REIN to take a large share of the value creation from early development to final project. In our batteries business, we also have some important developments. Hydro participated in a private placement for Corvus Energy and is now the largest owner. In Q4, Corvus had a strong growth in order intake and is well positioned for continued global uptake of marine battery systems. Our joint Hydro Northvolt battery recycling facility, Hydrovolt, in Fredrikstad, Norway is preparing for commercial production early Q2. Plant hot commissioning began in January, and Hydrovolt had a strong end-of-life battery sourcing order intake during Q4, including direct OEM contracts, and is building its order book into '23 and '24. When up and running shortly, Hydrovolt will be Europe's largest car battery recycling facility, and the company is also well positioned for vertical integration and scaling into Europe. Let's move to Slide 9. Then let's move over to the results and a high-level result overview. Adjusted EBITDA for the fourth quarter was NOK 9 billion, up from NOK 3.4 billion in the same quarter last year. On the positive side, we have experienced higher all-in metal prices within Aluminum Metal with realized LME prices up by 49% compared to Q4 '20, while realized premium is 152% higher compared to last year. Realized alumina prices also contributed positively as they are up 44% compared to last year, resulting in NOK 7.9 billion positive effect from aluminum and alumina prices. Upstream volumes are up on nameplate production at Alunorte and close to full production in Aluminum Metal, contributing another NOK 0.7 billion. And we also have higher results in Energy due to very high price levels and a large positive impact from area price differences. Lastly, on the positive side, we have NOK 0.6 billion increase from downstream volumes and margins where the positive margin development is also impacted by pricing gains as well as favorable billet premiums in the remelt operations. These positive developments are partly offset by higher raw material and fixed costs across the business areas, negative currency impacts, mainly driven by a weaker dollar against NOK and large negative eliminations. And we will dive into more detail on this when we go through each of the business areas. Let's move to Slide 10. If we then move to the key financials for the quarter. The year-over-year revenues increased by around 56% to NOK 46.4 billion for the fourth quarter. Compared to the third quarter, the increase was 26%, and developments here are also mainly related to higher prices for both comparisons. Adjusted EBITDA, as I mentioned, came in at NOK 9 billion. And for the quarter, there was around NOK 3.5 billion positive effects adjusted out of EBITDA. And that includes NOK 2.7 billion, mainly on unrealized mark-to-market effects on a 2022 power hedge for Slovalco and NOK 700 million in positive effects of unrealized derivative effects on LME-related contracts. Moving on, we had adjusted depreciation and amortization of around NOK 2 billion in the quarter, resulting in an adjusted EBIT amounting to NOK 7 billion. Financial income of NOK 644 million for the fourth quarter includes a net foreign exchange gain of NOK 823 million, primarily relating to a stronger NOK versus the euro affecting the embedded derivatives in our Norwegian power contracts. Our tax expense amounted to NOK 2.2 billion or about 21% of income before tax, below our guidance. And the tax rate mainly reflects a high proportion of income in Norway and Slovakia, in addition to income in countries with unrecognized deferred tax assets. Overall, this provides a net income from continuing operations of NOK 8.5 billion, up from NOK 7.2 billion in the same quarter last year and up from NOK 1.1 billion in the third quarter. Adjusted net income was positive NOK 5.8 billion compared to NOK 1.1 billion last year and NOK 3.5 billion in the third quarter. Consequently, adjusted earnings per share were NOK 3.47, up from NOK 3.4 in Q4 '20 and NOK 0.5 in the third quarter. Let's then give an overview per business area and move to Slide 11. Adjusted EBITDA for Bauxite & Alumina increased from NOK 587 million in Q4 '20 to NOK 2.4 billion in Q4 '21. Higher alumina sales prices of $393 per tonne and insurance proceeds of around NOK 500 million from the crane decommission positively impacted the results. This was partly offset by higher raw material prices including fuel oil, coal and caustic, which increased costs by around NOK 900 million, with around 75% of that coming from the energy price movements. And this lifted the implied alumina cost from $233 to $289 per tonne. Production at Alunorte was slightly above nameplate capacity at 1.6 million tonnes. And if we compare results to the third quarter of '21, the adjusted EBITDA increased by NOK 1.4 billion. Higher alumina sales prices and volumes lifted results by NOK 1.3 billion, which was partly offset by higher costs driven mainly by energy, reducing results by around NOK 300 million. If we look into the first quarter, Alunorte production is expected to continue at around nameplate capacity. And in addition, if we compare to the fourth quarter and use current raw material prices based on market pricing, this indicates an increase in the raw material costs of around NOK 200 million to NOK 300 million. Let's then move to Slide 12, Aluminum Metal. For Aluminum Metal, this quarter, adjusted EBITDA increased from NOK 1.4 billion in Q4 '20 to NOK 4.7 billion in Q4 '21. The record results were mainly driven by higher all-in metal prices and volumes, partly offset by negative currency effects and higher raw material and fixed costs. Compared to the third quarter of '21, adjusted EBITDA for Aluminum Metal increased NOK 413 million driven by higher all-in metal prices, partly offset by higher raw material, fixed costs and slightly lower volumes. The negative cost elements adds up to around NOK 1.5 billion in total with around NOK 100 million in fixed costs being one-off in nature. Rise in gas and power prices have led to an increase in production costs in Europe, followed by the curtailment of several European smelters, including our own majority-owned primary aluminum plant, Slovalco in Slovakia. The capacity at Slovalco was reduced from 80% to 60% by mid-February, which constitutes an annual reduction of 35,000 tonnes. The curtailment of production has also led to a reversal of an existing margin hedge for Slovalco. The negative realized effects from the LME element is included in the fourth quarter with around NOK 260 million, while the much larger positive impact of the power element will be realized in 2022, in line with the physical profile of the power contract. The net positive realized effect of the closed hedge position was around positive NOK 350 million. For Q1, 61% of primary production is priced at $2,594 per tonne, while 59% of premiums affecting Q1 is booked at around $881. And in total, Q1 realized premium is expected to be in the range of $675 to $725 per tonne. Compared to the fourth quarter, we also expect increased raw material prices in Q1 '22. And if you use close to current market prices, that accounts to around NOK 650 million, mainly driven by higher carbon costs but also alumina. When it comes to CO2 compensation for 2022, then the reference price based on 2021 prices is up by around 100% from the reference price used for 2021 compensation, representing a significant upside from the current NOK 180 million quarterly compensation. Finally, unfortunately, a power failure at our Albras smelter in Brazil caused a shutdown of 25% capacity. The affected potline produces 110,000 tonnes of liquid aluminum annually. And the other 3 lines at Albras have not been affected and are running as normal. Albras expects to restart the first pots in early Q2, resuming normal operations at full in Q4 2022. Let's then move to Slide 13. This quarter, Metal Markets delivered an adjusted EBITDA of NOK 284 million compared to NOK 287 million in Q4 last year. The improvements this quarter is mainly driven by our strategic growth area, recycling, where we saw high demand in the extrusion ingot market resulting in increased premiums relative to Q4 last year. This was offset by negative effects from backwardation risk mitigation on the commercial side, driven by negative realized contango and negative unrealized effects also at the end of Q4. Excluding the currency and inventory valuation effects, the results for the quarter was NOK 315 million, which is 7% above the NOK 295 million in Q4 '20. When we look into the next quarter, as always, remember that trading results and currency effects in Metal Markets are, by nature, volatile. However, on the back of stronger premiums, you should expect continued stronger contributions from our recycling operations. And in that regard, we have earlier operated with an annual guidance on adjusted EBITDA of around NOK 650 million for the segment. In light of the market and portfolio development, we expect the 2022 EBITDA to be significantly above this guidance. Based on the current record high premiums, we expect an average quarterly EBITDA of NOK 300 million to NOK 400 million with seasonally higher amounts in Q1 and Q2. If premiums were to come down again, this figure would also decrease. Now let's move to Slide 14. When we move downstream and start with a volume update, then in Q4, Hydro extrusion saw a 3% increase in sales volume compared to Q4 '20. In Europe, underlying demand has continued to perform well across key segments, especially for the industrial and the building and construction segments. Commercial building and construction, although supported by public sector spending, is impacted by weaker orders, while the residential sector is experiencing continued strong demand on refurbishment. Demand in the industrial segment continues to advance in line with improving industrial production. On the other side, automotive demand continues to be negatively impacted by shortage of semiconductors and overall supply chain issues constraining automotive production for large OEMs. In North America, we see similar trends as in Europe. However, the increased labor shortage is impacting the volumes in the fourth quarter. Transportation continues to be strong, supported by strong orders with trailer industry build rates expected to increase almost 30% year-over-year. CRU estimates that the European demand will decrease by 4% for the first quarter of '22 compared to the same quarter last year, driven by a weak automotive outlook. On the other hand, they expect a 10% increase in North America supported by a rebound in the important truck and trailer segment, solid demand in residential building and construction as well as strong demand in the industrial segments. Overall, extrusion demand is estimated to increase 6% and 3% in North America and Europe, respectively, in '22 compared to '21. However, this is dependent on improved automotive demand in the second half of 2022, and continued chip and supply chain issues here could represent a downside. If we then move to Slide 15 and look at the results for extrusion. Then adjusted EBITDA decreased from NOK 1 billion in Q4 '20 to NOK 665 million for Q4 '21. Higher net added value margins and sales volumes were offset by higher fixed and variable costs, including a significant increase in energy costs for unhedged exposure as well as a negative effect of NOK 330 million from nonrecurring scrapping of assets. Relative to Q3 '21, the adjusted EBITDA was lower due to seasonally lower volumes, higher fixed and variable costs and a negative effect from the nonrecurring scrapping of assets. This was partly mitigated by higher net added value margins. In the fourth quarter, we also completed the sale of our nonstrategic extrusion plant in India to Hindalco Industries, making this capital available for other exciting growth projects supporting our NOK 8 billion EBITDA ambition. The asset sale closed at $33 million on a cash-free and debt-free basis. Looking into the first quarter, we expect net added value margins to continue to increase. However, increasing inflation could create short-term margin pressure on fixed price contracts. In addition, we continue to experience supply chain volatility and labor shortage in North America. And the ongoing Omicron waves also creates global uncertainty, as do the current high and volatile energy prices for the parts of our energy portfolio which is unhedged. Finally, with the large recent movements we have seen in billet premiums, this could also result in an upside through both positive metal effects as well as stronger earnings at our remelters. Let's then move to Slide 16. If we move over to the energy markets, where prices are soaring driven by the tight supply for gas and coal and the carbon price continuously testing new highs. The high gas coal and carbon prices led to a sharp increase in European power prices. And the Nordic power prices followed the Continental prices up to some degree, particularly in December, which was colder than normal. Another aspect that is impacting us significantly is the spread in power prices within the Nordics, with power prices in the South being around 3x as high as in the North. We have the majority of our power production in the Southern price areas and a large part of our consumption in Central Norway, resulting in large positive gains on the area price exposure for Hydro Energy in the fourth quarter. And this also looks like it will continue into Q1, as you can see on the chart to the left. Let's move to Slide 17. The significantly higher power prices increased gain from area price differences, and a change in the power contract portfolio increased adjusted EBITDA for Energy by 311% from NOK 419 million in Q4 '20 to NOK 1.7 billion in the fourth quarter of '21. And this is the highest result on record for Hydro Energy. The large gain from price area differences amounted to NOK 800 million in Q4. Compared to the last quarter, the adjusted EBITDA increased by NOK 1.3 billion due to higher production resulting in net spot sales, higher power prices and increased gain from price area differences of around NOK 500 million. If we look into the first quarter, then the price and volume uncertainty are always large and production and prices will depend on hydrological conditions. However, we do see the hydrological balance in Nordics is currently normalizing. Due to changes in our contract portfolio, including increased contract purchases in the Northern pricing areas, we have 30% to 40% lower spot purchase in the Northern area and will lower our exposure to price area differences in 2022 compared to 2021. As of last Friday, the quarter-to-date average difference between Mid-Norway prices, NO3, and Southwest Norway, NO2, were at NOK 1,094 per megawatt hour compared to NOK 847 per megawatt hour for the fourth quarter. Therefore, even when you adjust for the lower spot purchase exposure, we expect the significant price area difference to continue in Q1 2022. Let's then move to Slide 18. If we dive into the developments in net debt, which turned to net cash during the quarter. Then based on the starting point of NOK 1.2 billion in net debt from Q3, our overall net position improved by NOK 4.4 billion quarter-on-quarter to NOK 3.2 billion in net cash. In Q4, we generated NOK 9 billion in adjusted EBITDA. Net operating capital increased NOK 1.5 billion, mainly driven by increased prices and the B&A insurance receivable. Other operating cash flow adjustments amounted to negative NOK 100 million, driven mainly by tax expenses and interest, offset by dividends from Qatalum. Net investments were NOK 2.8 billion for the quarter, in line with expectations. As a result, we generated free cash flow from operations of a positive NOK 4.7 billion in Q4. And this number also excludes cash optimization effects related to purchases of money market funds, reported as part of operating cash flow and included in short-term investments. In addition, we had a slight negative NOK 0.2 billion in other, mainly coming from currency effects and new leases. If we move to the adjusted net debt. We start by adjusting for the NOK 5.3 billion in collateral included in the net debt per Q4, mainly related to strategic and operational hedging positions. And the next adjustment of negative NOK 4.2 billion reflects, among else, asset retirement obligations as well as assets in Hydro's captive insurance company but are not available to service Hydro debt. And we also had a small pension liability of NOK 0.8 billion in the fourth quarter. With these adjustments, we end up with an adjusted net debt position of NOK 7 billion at the end of Q4. If we then move to Slide 19, then looking at the full year. We also see a significant improvement in our financial position from NOK 7.8 billion in net debt into 2021 to ending the year with a positive cash position of NOK 3.2 billion. The main uplift here also comes from adjusted EBITDA, contributing NOK 28 billion, driven by strong earnings due to strong prices. And net operating capital increased NOK 8.6 billion, mainly driven by increased prices and currency and can largely be broken down as follows: around NOK 7 billion to NOK 7.5 billion is driven by pricing effects; around NOK 1 billion is driven by higher receivables related to the Bauxite & Alumina insurance and CO2 compensation in Aluminum Metal; and then the remaining NOK 0.5 billion is related to targeted building inventory, either safety stocks or higher volumes, to support the higher sales in the current strong markets.Investments amounted to NOK 6.9 billion, offset by NOK 0.7 billion in proceeds from sales of property, plant and equipment, excluding the rolling transaction, resulting in net investments of NOK 6.2 billion in total. And then we subtract our NOK 1.25 per share dividend payment and add in the cash flow from discontinued operations less lease effects to get to the NOK 3.2 billion. And if we look at the adjusted net debt for the year as a whole, the sale of Rolling contributed significantly to the decrease in pension liabilities of around NOK 10 billion. And relative to the Q4 2020 adjusted net debt of NOK 23.3 billion, we see an improvement of NOK 16.3 billion. Let's then move to Slide 20. Strong cash generation and a more robust balance sheet enables us to deliver on our ambition to pay attractive dividend to shareholders over the cycle. The Board of Directors has therefore proposed a dividend of NOK 5.4 per share, equal to 80% of adjusted net income from continuing operations to Hydro shareholders for 2021. This represents a payout of NOK 11.1 billion and almost the same pay amount as the previous 4 years combined. This also represents a year-end yield of 7.8%. The proposed dividend represents a combination of 50% ordinary dividends and 30% extraordinary dividends. And as always, the final distribution for 2021 is subject to approval by the Annual General Meeting on May 10, 2022. In the start of 2021, Hydro's Board of Directors decided to increase the ordinary dividend target from 40% to a minimum of 50% of adjusted net income over the cycle, maintaining the minimum level of NOK 1.25 per share. From 2017 through '21, we have delivered on the policy by returning an average dividend payout ratio of 71%, translating to an average dividend yield over the past 5 years of 4.1%. Let's then now move to the last slide. And let me finish with an update on our capital return dashboard, summarizing our key financial targets and priorities. At the end of Q4, we ended at NOK 85 billion capital employed and delivered an underlying 12-month rolling ROACE of 18.6%. We've recorded a strong improvement in the ROACE in Q4, and we have delivered well above our target of 10% for the year as a whole with a good outlook for 2022 also. Looking at our balance sheet and the key ratio of adjusted net debt to EBITDA. Then we are at a ratio of 0.4x, well -- 0.4, well within our goal of less than 2 over the cycle, supporting our proposed 80% dividend payout. In Q4, we also saw a continued strong free cash flow of NOK 4.7 billion, bringing our overall free cash flow for the year to NOK 10.5 billion despite the build in operating capital of NOK 8.6 billion over the same period, mainly driven by price and currency. And if prices maintain at similar levels in 2022, we should expect stronger operational cash flows as the NOK development stabilizes. Improvements were realized by year-end '21, amounting to NOK 7.8 billion, well above target, making us more robust. And finally, we have ensured capital discipline and targeted capital allocation and spent NOK 6.9 billion from the initial internal -- initial target of NOK 8.5 billion. And on that note, I would like to thank you all for joining the presentation today, and open the session for questions.
Thank you, Pal. We will now start the Q&A. Please note that you will need to dial in to the conference call to be able to ask questions. It will not be possible to ask questions over the webcast. Operator, we're now ready for questions.
[Operator Instructions] And our first question comes from the line of Liam Fitzpatrick from DB.
Pal, 2 or 3 questions. Just firstly, on the power division. Obviously, a very strong set of numbers. There's a few moving parts which you talked us through there. Last quarter, you gave us kind of the uplift, which I think you said ended up being NOK 800 million in terms of the regional spreads. Can you give us a similar number for Q1 given all these different moving parts? That's the first question. Secondly, on extrusions, you're highlighting some cost pressures. So if we look at the NOK 1.7 billion in Q1 last year, should we be thinking a similar sort of range for that division in Q1? I'll keep it to 2 questions. So those are the 2.
Thank you, Liam, and thank you for joining us today on the call. As you say, there has been a lot of moving parts within the Energy business area from the pricing perspective. And the guiding we gave at Q3, if you adjusted that for the actual market prices we experienced during the quarter, actually ended quite spot on. So as you know, we ended up around NOK 800 million for the fourth quarter. Then if you look into the first quarter, there are more moving parts. You don't only have the prices. You also have movements in the actual exposed position. If you start with the prices, if you say that we realized around NOK 800 million, and you divided that by the price spread that we had in the quarter of NOK 847, then -- and multiplied that by the current price in the market which is NOK 1,094, that should bring the price area difference up to around NOK 1.05 billion or so. But then as I said, we have a lower area price exposure, 30% to 40% lower. So if you take 60% to 70% of that NOK 1.05 billion or so, you will get closer to NOK 600 million to NOK 700 million. So if you use prices realized so far, if you use the guidance on the exposure, then you would be between NOK 600 million and NOK 700 million. But just remember that these are price differences are extremely volatile now. We've seen a big pressure downwards in prices. So it's good to update that with the final difference at the end of the quarter.
Understood. And just to be clear, that's a NOK 600 million to NOK 700 million uplift versus Q4? I mean, just on the...
Absolute amount. That's absolute amount. It would be somewhat lower than Q4. So it would compare to the NOK 800 million we had in Q4.
Okay. Understood. And then when you said on the spot sales -- sorry, you said stock volumes are normalizing or Hydro is normalizing in Q1. I assume that, I mean, that means normalizing up, i.e., higher spot sales.
All else equal, if you have high energy prices at the start of the year, if you have a strengthening hydrological balance and the forward curve tends to look -- to fall towards the end of the year -- or the mid of the year, then you should expect that to impact production positively. And then your second question, I guess, was on extrusion and looking into the first quarter. Also here, there are several moving parts which might impact each other in one direction or the other. So given that we're in a situation where we are continuing to expect higher results driven by improvement programs, we have seen a tick up in costs in the fourth quarter. These things should work against each other, which should indicate that the first quarter, as we see it now, should not be significantly worse than the first quarter last year. Of course, there are some moving parts here. You have the billet premium. If billet premium strengthens further from the price level we're seeing today, then you could get a metal price effect as well as increased results in the remelters. But on the flip side, if you have a very strong energy price development in the European area now, that could impact negatively. So those are the moving parts, and we will have to see at the end of the quarter how they even each other out.
Our next question comes from the line of Jack O'Brien from Goldman Sachs.
First question is just whether Norsk Hydro could now be into a new era of distributions. I guess if we take a look at your balance sheet, you've ended the year with $3 billion of -- or NOK 3 billion of net cash. Yes, you've got CapEx stepping up to NOK 11 billion in 2022. But assuming that the early backdrop remains relatively supportive, particularly given the curtailment, do you think we could see an era now of higher dividends? I mean, you've just paid out 80% in FY '22. Do you think there's a scope for that to now be the new normal? And even if early prices were to reverse, of course, you would get a massive working capital unwind as well. So just trying to understand what the threats are to perhaps a sustainably high dividend.
Jack, a good question. And if your market analysis materializes with respect to LME prices, it will be some very different years for a company like Hydro compared to what we've had the last decade or so. Our ambition is to pay a minimum of 50% of adjusted net income over the cycle. And but the payment will reflect the current and expected future financials. So in a scenario where you have stronger markets, where you have a strong outlook, that makes us or the Board more comfortable to increase the recommendation. Because, as you say, we have a robust balance sheet. We have many safeguarding measures in place, huge building operating capital, strategic hedging. So even if you were to reverse to an average margin type scenario, it would not necessarily mean a large deterioration on cash for us. So when you ask what scenario could be negative for Hydro going forward, it's more the scenario where we have a very strong push on costs and not the responding movement on LME. So you have a cost-driven margin squeeze. So far, we've seen that being taken quite well out by the 90th percentile on the curve and how the LME prices move. But that is, of course, a risk. So it's a round and long answer, but in general, of course, strong markets, robust balance sheet, good operations, delivering on improvement programs is a good recipe for increasing payments to shareholders going forward also.
And can I just check that when we think about REIN and Havrand, I think in the past you've mentioned that Hydro's capital sort of injection requirements should be fairly limited. You'll rely on external capital for that. Perhaps just again thinking of threats to CapEx and the extent to which cash flow could come in lower than expected. So perhaps, could you just give an update on when we should hear more on REIN and Havrand? I might have missed that during the call, and also sort of likely capital requirements.
Yes. No, REIN and Havrand are into a bit different situations, where REIN is in a phase now where they are spending cash, and we'll also have a ramp-up in cash spend as more and more projects mature towards final investment decision. Havrand is more in the situation where projects are being matured, concepts and the like. So we don't expect large cash necessary for Havrand in the coming year. That's more into 2023 and the like. The ambition for us is still the same as it has been since day 1: capital-light, attracting external capital for REIN within 2021. We are aware that the market environment around us has changed a bit over the latter year and, therefore, ensuring that we have sufficient substance, good profitable projects which is attractive from third-party investors is what we're working to mature. So nothing has changed internally other than we're using a bit more time to build substance than what we thought at the start of last year.
And then I'll just squeeze one last in, which is in terms of your cost improvement program, obviously going well. Of the couple of billion NOK still that you're hoping to deliver, which divisions should we see that cost benefit coming through? And again, just thinking with respect to offsetting any high costs that may be coming this year, next and so on.
Well, if we look purely at the operational improvement programs and the NOK 2.2 billion that you referred to. Firstly, remember that a lot of this is not necessarily cost-driven. It is also improving efficiency in operations and likewise squeezing out more volumes and also reducing consumption of raw materials. So as a starting point, this NOK 2.2 billion are going to be worth more than NOK 2.2 billion in the coming phase if we continue with today's margins. And the 2 business areas which deliver the most of those are Aluminum Metal and extrusions. As you know, extrusions has an ambition to improve EBITDA to NOK 8 billion, and Aluminum Metal still has quite a bit left on their improvement program. The largest part of the B&A improvement program was to get the operations back to stable level at nameplate capacity. So the additional improvements are more incremental compared to the 2 other improvement areas. But we are working, as we always do, to identify new improvements, and we'll keep to continue to update you on a yearly basis as that materializes.
Our next question comes from the line of Jason Fairclough from Bank of America.
A couple of questions for me. First on Primary Metal. How do you think about the incentive price to consider adding capacity? And what volume optionality do you have in the portfolio? Second, just on your decarbonization efforts. You've got your aluminum peers, Rio Tinto and Alcoa, working together on lower-carbon aluminum smelting via an inert anode. You seem to be looking at carbon capture for the last 2 tonnes of CO2. So why the different approach?
Jason, a pleasure to have you on the call. When it comes to the primary side, we have little possibility to increase at existing operations. Basically, unfortunately, the only real volume increase that we see going forward is ramping Albras up after the power incident we had on Saturday. And then the question is if we are able to find an attractive energy contract for Slovalco, which is running at 60% capacity. Apart from that, we are running pretty much full, and it's more incremental creep through debottlenecking, improvement efforts, et cetera, which will contribute. When it comes to incentive prices for building new aluminum smelting capacity, we are still in the phase where we define the aluminum metal as sustain and improve, meaning we want to move aluminum down the cost curve and ensure that we produce as green metal as possible. But we are, as you referred to, preparing alternatives for the period to come through our technology developments within green aluminum. So we have 3 pathways that we're currently exploring now, Jason. One of them is, as you mentioned, the carbon capture and carbon storage. This is what we believe will be most relevant for existing operations. The new technology is probably, for our part at least, expected to be used mostly for greenfield. But we have a way to go on existing operations, and there that could make sense. And we're very happy to have made progress with Verdox, the company that we announced, our small acquisition into today, as they have a technology which seems to be very feasible for aluminum production. But we also have a second pathway, which is our own HalZero technology, which is also carbon-free but not based on inert anodes but based on our chloride process, where the carbon goes in loop. And we have had good progress in RMB or lab setting so far. And we are gradually rolling this out towards smaller and potential industrial piloting as we see that this succeeds. And as we see, there is a demand for this material in the market. And that was the NOK 2 billion or so capital that we allocated at our Investor Day to ensure that we move forward with these pathways. The third one is recycling of aluminum, ensuring that we get to 100% post-consumer scrap usage, combined with hydrogen in the casthouses. So we are working across 3 axises. We believe that the aluminum industry needs to see success in -- be it HalZero or Elysis or other initiatives so that we also have a carbon-free alternative in the period to come.
Okay. If I could just ask a tricky one here, Pal. We were worried about magnesium in the third and fourth quarter of last year. Is magnesium no longer an issue?
Well, as responsible for finance, you never rule out issues completely. And it's still a tighter market than what was the case going back in 1.5 year or so. But the market has improved somewhat. Prices have come down, and we have visibility and safety and supplies into the third quarter -- well into the third quarter. So it's not as pressing an issue as it was in the midst of the third to fourth quarter, but it's still high on the agenda to ensure that we continue to mitigate here.
Our next question comes from the line of Ioannis from Morgan Stanley.
So the first question is again on capital allocation. You indicated that free cash flow this year is likely to be much stronger than last year if the current market environment persists. So that would put you firmly into a net cash position even after the significant dividend that you've announced. Shall we assume that any excess cash comes back to shareholders? Or are you also considering accelerating some of your growth projects?
Well, we have a communicated CapEx ambition that we've gone to the market with. And this covers strategic growth areas such as extrusion and recycling. And as you know, we have quite a good track record on moving these projects going forward, and we also have a longer pipeline. So we -- as we do every year, we will run strategic processes to evaluate if there is a market or a capacity for increasing this even further, and then we will evaluate that versus extra returns to shareholders. So this is a constantly moving evaluation. But as of today, we have the CapEx guidance that we have and we have the dividend policy that we have.
Okay. The second question on the CO2 compensation. You flagged the fact that the reference CO2 price has doubled. Shall we expect a similar development in the compensation that you booked through the P&L starting in Q1?
Well, if you look at the basis for what we recognize, then it should indicate a higher recognition in Q1 also, yes.
Okay. Understood. And the last question. There have been a number of one-offs in Q4. I just wanted to check, on Aluminum Metal you showed NOK 360 million of one-offs. Are those part of the adjusted EBITDA line or not? And secondly, within that, can you talk about the eliminations line which was a pretty big number this quarter?
Yes. No, and firstly, we try to adjust out as little as possible from the results. What we are just out is mainly periodization effects, costs related to closure, environmental costs relating to closed sites, et cetera. But the effects that were included in the results this quarter were either related to assets in operation or things that have already been excluded from the results which now were brought in. So if you look at, for example, Aluminum Metal, the NOK 360 million composes 2 items: one is NOK 100 million one-off on fixed cost noncash effect, and the other NOK 260 million is basically the closing of a hedging position that we had on LME. And the hedge that we closed on Slovalco is actually a very positive hedge because the power contract has increased so much. But due to the LME element being a financial future and the power element being a physical forward, accounting rules differs when and whether you book the effects in different periods. So the LME effect was taken in Q4 and the other power effect will come in 2022. So we will have a positive power effect in 2022 from the realization there. And then on...
Great. And then on eliminations?
Eliminations, basically we have -- we sell quite a lot internally across our operations. So in Bauxite & Alumina, we supply our whole system with alumina. And in the Q4, fourth quarter, you had a very good development in margins for alumina. So the results for Bauxite & Alumina should be strong on the back of that. But then Bauxite & Alumina sells this alumina to Aluminum Metal. It sits on both for a while. It's a small time in the inventory. And Aluminum Metal uses it to create aluminum, which is not sold externally in the same period. So to ensure that you don't count the profit, which has been generated outside of the -- or only generated inside the company, you need to eliminate the positive result on alumina. And that is what drives the eliminations up. As you see, the other line and the other-like costs are more according to guidance and are a bit higher in Q4, as they usually are following a calm Q3. Going forward, that effect should of course reverse. So if you have a strong increase in the fourth quarter and then prices remain where they are for alumina, then you will get that back as a reversal on the elimination line in the -- either coming or the quarter after that. But if prices continue to increase for alumina, you might have a new negative elimination, which offsets the positive that you have reversed. And if prices decrease in the first quarter, you could get very strong positive eliminations. So it's difficult to guide at current stage to what the eliminations will be at the start of the quarter. But this is, of course, something we should have better insight into at the end of the quarter.
Our next question comes from the line of Amos Fletcher from Barclays.
I just wanted to ask a couple of questions in respect of Slovalco, just on -- a further question on how easy is it to secure long-term, low-cost energy contracts in Europe at the moment. And hence, what do you think is the risk of some of the closed European smelter capacity returning?
Yes. It's a good question, Amos. And from our perspective and for Slovalco's perspective, unfortunately, it's not very easy to source long-term competitive power contracts in a European context. And we've been working quite aggressively on this long time before we had the latest movements on gas and CO2 emissions, et cetera. So as I mentioned in my presentation, currently, we see more risk of smelters being challenged by the really high power prices than the opposite way. What could change that picture is, of course, if local governments or countries act. The aluminum industry is still a noteworthy industry with supply chains on both sides. And I think in order to be able to create a cost-competitive power contract, you will need something more than just market prices currently.
Okay. and then I just wanted to ask about working capital build in 2022. If spot prices stay where they are, what sort of [indiscernible] do you see with capital...
Yes. The line was a bit bad, but I think you asked about what the capital build would be in 2022 at current spot prices. And we -- of course, we ended the year with somewhat low prices -- or not low prices, but lower compared to where we were at the highest and where we are now. So there is some upside to operating capital given current price environment. But I would have to get back to you with an exact guiding on sensitivities there, Amos. But we can follow up on that.
Our next question comes from the line of Daniel Major from UBS.
My line wasn't very good earlier. But I just wanted to check on Liam's question around the uplift in power. Is that NOK 600 million to NOK 700 million increase delta quarter-on-quarter in the area of payments in Q1?
No, it's the NOK 600 million to NOK 700 million compared to the NOK 800 million we had in Q4. So it's a reduction of a couple of hundred millions.
Okay. Very clear. And on the recycling side, you've previously indicated that split between Primary Metal and Metal Markets. Can you tell us how much attributable EBITDA is coming directly from recycling and what the sort of upside there is there?
Yes. If you look at the current pricing environment, then most of the remelter premiums are impacting Metal Markets. And then you will be getting a more and more positive impact in Aluminum Metal as we use more scrap in the process. Like for example, we are doing now at Høyanger where we're introducing 40,000 tonnes of scrap. So what I said in my presentation is that typically, we have guided on a level of NOK 650 million or so for Metal Market segment as a whole on an annual basis. And it's been well above that this year, as you're very well aware of. And if you use the prices we see in the market now, you're probably closer to NOK 400 million per quarter in average. And then we've given a range of NOK 300 million to NOK 400 million because of course the premium swing quite significantly now. And you should expect that to be quite a bit higher in the first and second quarter than the latter due to seasonality. And that uptick is purely driven by recycling.
Okay. And would you expect that to continue to grow in subsequent years?
Well, It should continue to grow because we are growing volumes also. So this is mainly just the price-related impact. If you look at our recycling ambition from, for example, Investor Day, that should come on top of that and, of course, also with a higher margin than what was used for those calculations. So significant profitability applies for recycling if market continues to be where they are.
Okay. And then final question just on REIN. You previously given an indication of a capital raise in 2022. Can you, one, give us any indication on time line within the year? And two, can you give us any sort of range or indication of your expectation of the capital outlay for this business from -- directly from Norsk Hydro this year?
I'm sorry, Dan. It's 2 questions that I don't have much more to give than what I already have. We -- it will be -- or our ambition is now to do it within the year. Of course, the earlier the better from a capital perspective, but we will ensure that the substance is sufficient so we get the best value risk setup. So it's within 2021 is all I can say there. And the same goals for the cost side. If we see that this pulls much longer into the year of 2021, then we can evaluate if we should spend some time in the second quarter to get back on some more details relating to CapEx. But until then, CapEx inflow is somewhat more limited from our side, and we would prefer to present all details regarding REIN in the prospectus to the IPO.
Our next question comes from the line of Krishan Agarwal from Citi.
Most of my questions have been asked. A couple of questions left. On the CO2 compensation, you said that recognition will go up in Q1. So how should we think about the cash or the realization of that due to compensation in the cash flow?
Yes. So far, there's been no cash compensation because we're still awaiting the final approvals of this from a regulatory perspective in Norway. And the latest, I believe, I read on this is that one believes the cash effect for 2021 to come into the later part of 2022. And then you'll probably see a similar setup for 2022 without me having all the details there now.
Got it. So NOK 180 million quarterly run rate, so we are looking something between NOK 500 to NOK 600 million cash coming in 2022?
Yes. We had somewhat lower in the first quarter. I guess we had NOK 120 million in the first quarter, and then we have 3 quarters of NOK 180, yes. So that's the totality.
Okay. And then second question is on the hedging. So you haven't disclosed any incremental hedging in the quarter. So has that, the hedging, sort of stopped? Or it's just kind of a temporary pause in terms of volume hedging on aluminum as well as the currency?
No, I think if you look at the additional factors impacting Hydro in our quarterly report, we have updated the hedging which has been done up to report date. Basically, what we've done is that we closed part of the Slovalco hedge, as I mentioned, sold the LME -- sorry, bought back the LME and sold the power. And then we reentered the LME hedge for the legacy part of the company for 2022. So we're still at around 450,000 tonnes or so for 2022. And then for 2024, going into the year, we had hedged around 20,000 tonnes. We've put 80,000 tonnes on top of that. Now we're around 100,000 tonnes for 2024.
Our next question comes from the line of Jatinder Goel from BNP Paribas.
Two questions. First one, on hedging. Is 2022 hedging evenly spread in terms of $2,200 price? Or is there a greater variation as we move between the quarters?
Evenly spread, more or less. We hedge annual contracts. So yes, evenly spread.
Just another one. On power outage in Brazil, we had a power outage, I think, in 2019 as well or 2020. Is there any diagnosis so far for this power outage? And is REIN the only solution? Or is there anything else the company can do to ensure more operating sustainability?
Well, we have, as you referred to -- mentioned that it was an internal power impact, which is different from the event last time for Albras where it was an external event. And for Albras, as for Alunorte, we take this seriously with respect to ensuring that we continue to work on our maintenance programs, ensuring that we are ahead of these events and then learning from every one of them to see how we can mitigate for similar things in the period to come. So for everything that impacts our operations, we learn from it and we implement mitigating actions to reduce the risk of that happening going forward. Going forward, in addition, we will have the discussion with the insurance companies to see how they view it and if we can have this compensated.
Our next question comes from the line again from Liam Fitzpatrick from DB.
Just one quick follow-up on Slovalco, which you touched on. It's now operating at 60% of capacity. Can you just give us your outlook for the smelter and just remind us when the power contracts are up for renewal?
Yes. Liam, it's basically this year we have left. So our long-term contract is expired. This year, we're running on the hedged volumes and for 2023. If we don't find a long-term solution or short-term, power prices are at an attractive level to lock in a good margin, then it will be challenging to continue to operate at Slovalco for primary aluminum.
[Operator Instructions] The next question comes again from Jason Fairclough from Bank of America.
Just a quick one on your joint venture in the Middle East, so Qatalum. Once upon a time, there was a plan to double the production at this site. Is that completely off the cards now? Or is that something that you'd revisit at some point?
Well, at the moment, as I mentioned earlier, for us, as Hydro, the focus is on sustaining and improving the operations that we have. And we're not in any discussions regarding increased capacity based on whole area of technology for the time being.
Our next question comes from the line of Truls Engene from SEB.
Apologies if this has already been addressed. But on Aluminum Metal and the outlook for Q1, could you please elaborate and quantify the higher raw material costs you expect in Q1 compared to Q4, please?
Yes. No, for the first quarter in Aluminum Metal, there's 2 cost elements based on how we see market prices now. And of course, market prices are volatile that we expect to increase the cost base. And it's alumina which, I guess, you have a good overview over; and it's carbon, which is less visible, I guess, from an external perspective. Our totality based on market prices today is that, that accounts for around NOK 650 million compared to the fourth quarter.
And also on the -- just a quick follow-up on the LME hedge on Slovalco. You said that there will be a positive effect on the power price in 2022? How will that be booked throughout the year?
That will be booked with the profile of the contract. So basically, it will be spread out overall 4 quarters, totality.
And that will come as a positive effect in LME?
That will come as a positive effect in Aluminum Metal. So now we've taken a hit of NOK 260 million negative on LME. And then we expect well around NOK 600 million or so positive in power realization during 2022. So around NOK 150 million per quarter compared to all else equal.
We do have another question from Ioannis from Morgan Stanley.
Just a quick follow-up for me. In light of the rising geopolitical tensions in the past few weeks, are you seeing any shift in purchasing patterns among your customer industries in Europe, either in terms of restocking or preference for domestic material?
That's a good question, Ioannis. In general, there has been an attempt to restock for quite some period of time. So it's kind of -- it's a bit difficult to separate out what drives the restocking. As you know, the markets have been so tight that customers have been struggling to get hold of what they need in the first place. So I'm not in any position to say if anything's changed due to the tension in the market. What we from other industries is that, of course, people are more proactively discussing their open power exposures and the source of different goods and material. But we haven't anything particular to report from our industry.
Thank you. We have no further questions on the line so I'll hand you back over to the hosts.
Okay. Thank you for -- thank you very much, operator, and thank you all for joining us today. And please don't hesitate to contact us in IR if you have any further questions. Wish you all a great day. Thank you.
Thank you.