Is Supplying Low-Carbon Aluminium to Mercedes-Benz Changing the Investment Case for Norsk Hydro (OB:NHY)?

• Mercedes-Benz recently announced it is using Norsk Hydro’s low-carbon aluminium, produced with renewable energy and recycling, to manufacture the new electric CLA model, resulting in a 40% reduction in CO2 emissions compared to its predecessor.
• This collaboration reflects growing demand from major automakers for sustainable materials and highlights Hydro’s progress in supporting global decarbonisation efforts.
• Next, we’ll examine how Hydro’s partnership with Mercedes-Benz to supply low-carbon aluminium could further strengthen its sustainable metals investment narrative.

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Norsk Hydro Investment Narrative Recap

Owning shares in Norsk Hydro means believing in persistent global demand for sustainable, low-carbon aluminium, with the company's close ties to automakers like Mercedes-Benz reinforcing the investment story. While this collaboration strengthens Hydro’s sustainable metal credentials and may support near-term sentiment, it does not materially lessen the most pressing risk: ongoing weakness and margin pressure in core downstream segments such as Extrusions, especially from sluggish demand in Europe and North America.

The recently announced NOK 1 billion annual cost-cutting plan, including significant workforce reductions, is particularly relevant as Hydro faces both soft downstream markets and elevated input costs. These initiatives are intended to shore up margins and protect cash flow, positioning the company more defensively as market conditions fluctuate.

Yet, despite these efforts, it remains important for investors to remember that Hydro’s progress in sustainability does not fully offset ongoing vulnerability to weak end-market demand and...

Read the full narrative on Norsk Hydro (it's free!)

Norsk Hydro's outlook anticipates NOK208.1 billion in revenue and NOK15.0 billion in earnings by 2028. This reflects a projected annual revenue decline of 1.1% and an earnings increase of NOK5.4 billion from the current NOK9.6 billion.

Uncover how Norsk Hydro's forecasts yield a NOK65.93 fair value, a 4% downside to its current price.

Exploring Other Perspectives

Eight community members from Simply Wall St estimate Hydro’s fair value anywhere from NOK46.03 to NOK101.86 per share. In light of such differing views, consider how ongoing margin pressures in key downstream segments could shape the company’s future earnings and resilience.

Explore 8 other fair value estimates on Norsk Hydro - why the stock might be worth 33% less than the current price!

Build Your Own Norsk Hydro Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Norsk Hydro research is our analysis highlighting 4 key rewards that could impact your investment decision.
• Our free Norsk Hydro research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Norsk Hydro's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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