Good day, and welcome to the North Hydro Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Stijn Hessler. Please go ahead, sir.
Thank you.
Good morning, and welcome to this update on what measures Hydro is taking to strengthen our robustness in this very special situation. We will start with a presentation by CEO, Hilde Merete Asheim, followed by a Q and A session, also joined by CFO, Paul Hildemore. In the stock exchange release we sent out yesterday, we included a presentation that will be used as a basis for Hilde's presentation now. This can also be found on hydro.com. And with that, I leave the work to you, Hilde.
Thank you, Stian, and good morning to all of you. As everyone knows, these are very special times for the entire world as well as for us in Hydro. The COVID-nineteen situation is a challenge to the global economy and continues to cause significant uncertainty for our people and our operations. Our top priority in this situation is the health and safety of our people and the communities where we operate. Secondly, we are doing our utmost to keep the wheels turning and generate cash and develop our business.
If I then move to the next page. As I said, health and safety for our people and communities is our top priority. PEDRO is following recommendations from local and international health authorities. And mitigating actions include alternating shifts, segregation of units, travel restrictions, social distances and personal hygiene measures to protect employees and local communities in order to avoid the spread of the virus. All sites continue to follow Hydro COVID-nineteen production guidance or controls whatever is stricter, with guidance frequently reviewed as more facts on the virus become available.
In addition to international health and safety measures, Cesar is supporting local communities in their efforts and is also supplying materials and products to customers with key roles in handling of the COVID-nineteen pandemic. If I then turn to the next page, the COVID-nineteen situation is increasingly impacting the global economy and the demand for aluminum. GDP estimate for 2020 has been significantly revised downwards over the last couple of months, and external estimates are pointing towards global recession in 2020, with expected GDP growth down towards 0, down from around 2% to 3% not long ago, indicating how extreme the situation is. Most external consultants predict Europe and the U. S.
With negative GDP growth in 2020, Europe currently seeing the largest impact. We have seen closures across the aluminum value chain for ourselves as well as peers and customers on reduced demand as well as government imposed restrictions. Automotive and Building and Construction represents around 50% of all aluminum demand globally and all the sectors being the hardest hit currently. We see OEMs in Europe and the U. S.
Have closed down for several weeks, and there is limited building activity across Europe. As a result of this, external expectations of globally primary aluminum market surplus is obviously significantly higher than the latest feeder estimate of 0.5 to 1,000,000 tonnes. The uncertainty is very large, and we will see developments in these estimates going forward. Governments are, of course, responding with fiscal measures and monetary support, but there is significant uncertainty of the effect going forward. If I turn to the next slide.
With this backdrop, it is not surprising that LME prices have been moving downwards, starting the year at around $1800 currently being at around $1500 The same situation the same is the situation for all raw material prices, offsetting some, but not all, of the pressure of lower LME prices. On the flip side, for Hydro, we have had tailwinds from the weakening Norwegian oil dependent currency, providing aid primarily to our Norwegian smelter system. The graph on the left hand side shows the LMEA development since start over 2,009 in U. S. Dollar and Norwegian kroner, showing a steady decline in U.
S. Dollar, however, a fairly stable development in Norwegian kroner. As you all know, we are very sensitive to both LME as well as U. S. Dollar to the Norwegian kroner, shown on the right hand side, where 10% increase in LME impact our EBIT by more than DKK 3,500,000,000 and a 10% weakening of the Norwegian kroner versus U.
S. Dollar with almost the same impact. Important to mention that we are, of course, also sensitive to many other factors such as other raw materials, alumina, premiums as well as volume development going forward. Let me move to the next slide. The significant market uncertainty weighs on all our businesses business areas in Hydro.
But several of the business areas are not currently impacted by the coronavirus to a very large extent from an operational perspective. The bauxite and alumina area is still operating as normal, the same goes for energy. Our new product is also producing at normal levels, but here we are expecting a negative impact of declining automotive demand in the next coming weeks. Primary has been impacted by demand shortfalls, but our primary smelters are still running as normal, with the exception that we are utilizing the flexibility within our system to change product mix. But we're also using the flexibility we have to reduce the amount shortfall by reducing production at our recyclers.
Currently, 3 recycling facilities in Europe are closed. Let me turn to the next page to comment on Extruded Solutions. As we have communicated during the last week, Extruded Solutions is the business area in Hydro, which has been hit the hardest from the coronavirus, with closure of plants and reduced production across the portfolio. Let me give you an update on the current situation, which is as follows. 35% of the sites within Extruded Solutions are running at approximately normal levels as of today, but 40% are running at reduced levels, and it varies between plants.
And 25% of our sites are either closed or running at very low levels. The impact is felt across the whole portfolio and impacting deliveries to almost all sectors, primarily towards the building and construction and automotive as close to 70% of Extruded Solutions portfolio goes to transport, including automotive and the building and construction. The impact of the virus first hit Southern Europe with Italy, Spain and France having to close down. Over the last weeks, we have seen over the last week, we have seen additional countries being impacted, including India, South America and UK. As can be seen from Hydro's global impact overview map on the right hand side of the slide, the impact on our operations are to a large extent following the spread of the virus across the world.
Exclude Solutions are taking significant cost measures in this period, such as temporary layoffs where plants are closed or running at much reduced production. At this point, we have 1300 employees temporarily laid off in Extruded Solutions. We are closely monitoring the situation and would also continuously evaluate further measures to meet the deteriorating demand. And it's as no surprise there is significant uncertainty on market development into second quarter. Let me then turn to the next slide.
And let me start by saying that the situation we are in is extraordinary, and we need to take extraordinary actions. As explained earlier, we are temporarily curtailing several plants across both in extruded solutions and recyclers in primary metal. This is partly a result of customers closing down and reducing their call offs or regulatory requirements to close down. To safeguard liquidity, Hydro has decided to freeze capital expenditure in 2020 by NOK 2,000,000,000 until we have more visibility, resulting in an updated CapEx estimate for 2020 being NOK 7,500,000,000 to NOK 8,000,000,000 until further notice. With that to the fast deteriorating market, Hydro is now also postponing the restart of the 95,000 tons capacity at the Husqvist Aluminum plant in Norway.
The ramp up was originally planned to start in the first half of twenty twenty, but is now postponed at the earliest Q3 2020, of course, pending on market development and outlook in the second half of the year. We're also taking measures to reduce costs across the company, including force vacation, delaying projects and temporary layoffs. I would like to highlight that our improvement program efforts are moving forward with full speed with increased focus on the cost levers we can pull in these uncertain times. However, it will be hard to reach the overall target for 2020 of around SEK 4,000,000,000 due to the expected shortfall of volumes as well as market development. But the overall improvement target of NOK 7,300,000,000 for 2023 still stands.
The Corporate Management Board has decided to refrain from salary increase in 2020 as well as bonus payments for 2020, contributing to the collective effort in the current challenging situation. And the board has also resolved to amend the proposal of NOK 125,000,000 per share dividend payment, which I will come back to in more detail at the next slide. Because we are also taking mitigating actions to safeguard liquidity, visibility is low, high uncertainty of the length also of the situation. Therefore, the Board has decided to postpone dividend payments. The Board has resolved not to propose to the general meeting a dividend of not €1.25 per share as previously announced.
The Board will however propose to the general meeting that it is granted a power of attorney to distribute a dividend if it deems that market condition and Hydro's financial situation allows for it at a later stage. The decision to not pay the dividend as planned in May is not a decision we take lightly and comes as a result of the extraordinary times we are experiencing. Also impacting the decision is that we were recently downgraded to BA3 from RUDID and with a negative watch. We have clearly stated that the target is to be investment grade rating, which we deem is important for securing excess to competitive financing in the bond and debt market. With this as a backdrop, in combination with significant uncertainty, we believe that this is proper measures to safeguard the company's liquidity in certain times to the benefit of all stakeholders, including the shareholders.
The Board's proposal does not entail any change in our general dividend policy with a 40% payout ratio of reported net income over the cycle with NOK 1.25 per share considered to be the floor. To further safeguard liquidity, as I said, Hydro has decided to freeze around 25% of the remaining capital expenditure in 2020 by NOK 2,000,000,000 until we have more visibility. Updated CapEx estimate for 2020 is then NOK 7,500,000,000 to NOK 8,000,000,000 until further notice. The CapEx freeze involves all business areas and will be a mix of suspended growth and return seeking projects as well as certain sustaining projects. And we will have to get back to you with further details at a later stage.
It is important for me to highlight that we enter 2020 with a smaller balance sheet, strong liquidity and available credit lines.
At the
end of Q4 2019, we had a we had DKK 12,300,000,000 in cash and cash equivalents. And we also have a DKK 1,600,000,000 in a multicurrency revolving credit facility maturing in 2025, which is currently undrawn. So to round off, our top priority in this COVID-nineteen situation is health and safety for our employees and communities, while at the same time keeping the wheels turning to the extent possible, generating cash developing our business. At the same time, it's important for me that we need to think ahead and plan for the return to normal operations and continuing our agenda to lift profitability and driving sustainability.
Thank you, Hilde. Operator, we're now ready for questions.
Thank We will take our first question. Your line is open. Please go ahead.
Hi, good morning. Jatinder from Exane BNP Paribas. A couple of questions, please. Is the decision to roll back dividend predominantly to protect your credit rating? Because from a liquidity perspective, it doesn't seem like a constraint.
And then related to that, what's the merit in keeping NOK1.25 flow dividend? Does that imply that over a 10 year period you need to pay NOK12.5 percent NOK as dividend? Otherwise, why not just keep 40% payout and leave 1.25% aside? That's the first one. And second question, are you able to indicate your unit cost using spot measures assuming everything flows through?
We understand there is a time delay for ForEx and oil price and everything else to flow. But if everything else was to work properly, what would be your unit cost for tiny aluminum and alumina at spot measures? Thank you.
Hello, Jantir there. Nice to hear from you. I'll try and move throughout the questions. If we start with the dividend decision, and then this is a combination of factors. We are humbled to the situation that the world is experiencing, and we also see that even though we have a strong starting point with about SEK 12,000,000,000 cash at hand and also the revolving credit facility.
The spread, when it comes to expectations with respect to how this can develop going forward is quite significant. And there are low, moderate and even tougher scenarios. And as you know, we've experienced the situation from our company over some time where you see that it started developing in China, and there the situation played out in one way, but it could play out in other ways for the rest of the world. And to ensure that we're not putting our liquidity at jeopardy if this becomes a longer term scenario than what we saw in the eastern part of the world. We find it prudent to freeze the dividend as well as have capital expenditures at current point.
And that is one part of the equation. The other one is, of course, that we have, as part of our financial policy, a target to hold an investment grade credit rating. And when you are on negative watch or outlook in a situation with large uncertainty, we also need to ensure that we are taking the mitigating measures possible, which includes the dividend and CapEx freeze. We may have more information in just a couple of months' time. We I might have a clearer picture on how this develops, and then that could allow us to be evaluated.
For that current stage, given that the dividend comes up in such a short period of time, we do not have enough visibility. With respect to the comments on the dividend floor, the dividend floor is the floor in a situation where we see that we can keep our investment grade credit rating. So over the cycle, one should expect that floor as a minimum or whatever is lower of that and 40% of our net income. When it comes to your 3rd questions on unit cost, I have to disappoint you with not being able to give an exact answer there. As you're probably very aware of, there are extremely many moving parts these days, but we are also moving into Q1 reporting and should be able to give some more color on the specific financials there.
I guess you, as ourselves, follow the external markets. And if you start with the primary side, we have seen 10% to 15% declines in the raw materials across most categories compared to what we saw in the Q4. Alumina prices trading downwards at poker pitch also 10% to 15%. So all of our cost elements are moving in that direction. If you go even further upstream toward the alumina unit cost, then caustic soda is also in the market down around 10% or so.
Coal is now maybe moving more to 20% to 30%. And also fuel oil with the related update is approaching 40 percent decline. So quite a relief on costs in D and A and a somewhat smaller relief so far in Primary Metals.
Okay. Thank you.
You'll take our next question. Your line is open. Please go ahead.
Hi, guys. Dan Major from UBS. Few questions. Firstly, on working capital, given the substantial move lower, I guess, in prices for both input costs and finished products, can you give any steer on where you expect working capital to move in the current environment? That's the first question.
Thank you, Dan. This is also a question with an answer that consists of many parts, and I cannot give you an exact amount. However, as we indicated on Q4, typically, you have a seasonal build into the Q1, and you've seen that across our business areas also in historic years, which should give some indication. On top of that, you have some increase of inventories in parts of our value chain. We have safeguarded some alloying materials, some alumina stocks to set up to ensure that we are able to weather through in a situation where supply chains are impacted.
As you probably know from other companies, there are transport congestions and port facilities are moving a slower. So to ensure that we are able to weather such a situation, we have increased our inventories somewhat. But then on the flip side, you will have a positive effect from the reduce in prices. And the extent to that is hard to guide on a quarter by quarter basis because there's quite large timing effects here also. In addition, you should expect some operating capital effects out of the normal out of the normal when you curtail your operations as you sometimes have some material which flows through the system which builds up.
So those are all the elements which will most likely contribute to the total working capital, but the next exact figure, we will have to come back to that Q1 reporting.
So sorry, just to push on that. I guess the you're looking at those parts, it's probably more likely based on those comments that you build working capital due to inventory accumulation net over best guess at this point over the year. Is that fair?
Well, if you exclude the prices, you should expect a build into the Q1. And then on top of that, you will have some effect from normal inventory or extraordinary inventory build. And then you would have prices offsetting some of that. But the total sum, we will have to get back to Q1.
Okay. Fair enough. That's fine. Just on the balance sheet, I mean, on the you've obviously provided the information on the strong liquidity position. Can you do you have any covenants on any of your facilities?
No, not by a significant nature. I don't think we have any covenants left now. After the financial crisis, we worked quite hard to ensure that we would not have any covenants remaining for a similar situation again.
Okay, perfect. And then finally, just a question on well, first of all, within your CapEx guidance, what FX rate have you got implied in that? Because obviously, I guess, your ability to bring down not reported CapEx given the big move in the FX, there's a bit of an offset there. So what are you using on your yes, within that guidance?
Yes. Within that guidance, we are using close to current market FX rates. So when we move towards the range, which has been indicated, we've also taken into account the increase in CapEx that we would have as a result of the stronger dollar and also Europe that we have experienced across against the NOK.
Okay, perfect. Thank
you.
We'll take our next question. Your line is open. Please go ahead.
Hi, it's Liam Fitzpatrick from Deutsche Bank. Three questions just focusing around the cash burn at the moment. So post all of these measures and based on where capacity utilization currently is, are you burning cash or are you actually making are you covering most of your costs? Secondly, on the CapEx question, if this cycle is a prolonged downturn and we look into 2021, what sort of level could you reduce CapEx to if need be? And then the final third question on the hot topic of smelter closures.
Nothing has been announced so far. Can you give any comments on your thinking there and which smelters are particularly at risk? Thank you.
Yes. If we start with the first one on burning cash, I will have to get back to again those details when we come back to Q1 reporting as operating capital plays such a large part of the total equation. That being said, as you know, when most a lot of our Q1 is not so impacted by the COVID-nineteen situation. It's mostly March where the impact has been significant. But given that we already expected a build off of working capital in the Q1 and the effects that we've had now.
Typically, you shouldn't see a lot of free cash flow in the Q1. When it comes to the last point on the smelter closures, as you know and as Hilda recently communicated, we are taking measures step wise. We started last year adjusting somewhat to the market by curtailing 20% of our Slovalco smelter in Slovakia, which, as you can see from external cost curves, does not benefit from the same power and currency effect as you see in the Norwegian part of our operations. Since then, we have been working on utilizing market opportunities. We shipped volumes where that is possible from alloyed material to unalloyed material.
We are just remelting capacity, which is one of the more short term mitigating actions that we can use. And then we've also pushed out the Husqvist restock to give some flexibility into our portfolio and ensure that we adjust towards market. If this situation prevails and the demand shortfall becomes even larger, then we will continue having to evaluate how we move through our curtailment measures. In this discussion, it's also important for me to inform that the Norwegian's measures have moved quite a bit down on the cost curve given the currency movements. But if at the end of the day, you're not able to sell your product, then building inventory is not an option for us in this situation.
The second question, I wrote down the Buchta cycle. Could you repeat that one?
Yes. Just on CapEx, just if we look ahead and this cycle remains weak, what sort of level can you get CapEx down to? Is it sort of $6,000,000,000 to $7,000,000,000 which I think is your sustaining level?
Well, as we've had this discussion many times with respect to what are our low levels and then what should you expect as an over the cycle sustaining CapEx level. And what we're doing currently is that we are postponing and pushing projects out in time if this CapEx freeze remains throughout the year. So we're not taking away activities to a large extent because most of the sustaining CapEx is necessary to complete within a certain period of time. So what we've done in this first instance is that we've looked at what is possible to freeze in a situation where we need to ensure sufficient liquidity as this uncertainty is so high. Going forward, we will then have to reevaluate if this situation prolongs to see if there are other measures that can be taken or if there are other alternatives to get CapEx down.
But to give a concrete answer on the long term CapEx guidance level, this has not changed from earlier communicated levels.
Thank you.
We'll take our next question. Your line is open. Please go ahead.
Hello. This is Ioannis Mosvilias from Morgan Stanley. Thanks for taking my questions. Two questions left from my side. The first on bauxite and alumina division.
So we've seen significant pressure on alumina prices in recent weeks. And if we do eventually see smelter cuts coming through, that would totally exacerbate the global alumina surplus. Are you still committed to ramping up Alunorte to full capacity by the end of this year? And then the second question regarding the measures you announced yesterday, you talked about temporary layoffs and broader cost cutting. Is there anything you could quantify here in terms of cost benefit for 2020?
Thank you.
Thank you, Janis. Good to hear from you. On the bauxite and alumina side, we are, as you know, progressing or we have, as you know, been progressing quite well on the ramp up and the levels that we were at moving into the 2020. We did not leave a lot of alumina left to get back into the market. So we still continue with the ramp up as long as we have offtake for our volume, given the very low position on the cost curve, which bauxite and alumina experiences.
As for the Norwegian system, Alunorte has also benefited significantly from the depreciation of the Brazilian reais, together with the falling fuel oil caustic prices. The bauxite and alumina market is typically quicker to react than the primary metal market, given that there is limited possibilities to store alumina over longer periods of time. And when you get an oversupply in both types and alumina markets or at least alumina markets, then typically, you see that the high cost alumina producers have to react more quickly than what you see on the smelter side. So we believe that as long as we have offtake for our volume, then B and A and the other North Sea refinery is among the most robust in the industry. When it comes to broader cost cutting measures, we will come back to status on our own improvement program when we deliver our Q1 report.
As you know, our improvement program is a combination of many elements from cost reductions up to volume increases and improvement in other operational parameters. We are impacted on the improvement program side now by lower volumes, especially in the downstream business areas, but also in primary metals, which we've talked about for last year and also Albras, which was a curtailed 25% at the start of this year. So our improvement program will be impacted by those elements. On the other side, we are working even more intensive on the cost side, and a lot of cost is taken out also just due to the situation that we are in now with the temporary layoffs, etcetera. But an exact figure on that, we will have to revert to at a later stage as this becomes clearer as to how long the situation will last.
Given a full year guidance now might be premature if this situation develops in a different direction from what we see currently.
That's great. Thanks very much.
We'll take our next question. Your line is open. Please go ahead.
Good morning, guys. It's Amos Fletcher from Barclays here. Just give me a couple of questions. Firstly, on material rather than cutting primary metal production. I just wanted to ask, previously we were at about 80% of your smelter output in value added products.
Where will that move going forward based on the changes that you've announced?
Yes. I think where you have the biggest possibility to divert capacity, that is on the primary foundry alloys side, where you typically have alloyed foundry alloys, which you can produce as ingot. Some of this can be produced for LME requirements, and some of this can be sold for traders. Our PFA lines are in total around 500,000 tons of our portfolio. And currently, we are not diverting those amounts towards INGOP, but there lies a possibility there.
However, what we've what you should be aware of is that this is only on primary foundry alloys we have this possibility. So even if there is a 500,000 ton possibility there, you might move into a situation where extrusion demand becomes so weak that you're not able to produce extrusion villa. And if you're not able to utilize mitigating measures like remelter curtailments or selling some alloy debilit towards downstream customers, then you might have to look at electrolytes the capacity at the end of the day.
Okay. So in other words, I guess we should expect your premium realization to kind of drift downwards as a result of the changes? Yes.
You should expect it to drift downwards as a result of 2 elements. One is that premiums are trending downwards in the market they have over the quarter. Hasn't been so big changes on exclusioning, but since the COVID-nineteen situation emerged, But through the quarter, we saw some development. But the shift from value add to standard ingots definitely impacts the premium level.
You give us a feel of the out of the $2,000,000,000 reduction, how much is split between maintenance and growth, I. E, how much you'll need to potentially spend in 2021 from deferred maintenance?
If you look at what we did on the CapEx side, then we have the reductions are around 50-fifty level, with 50% coming out in sustaining and 50% coming out in return seeking. And just to give some flavor on that, most return seeking and growth investments, which have the possibility for cash per lease are frozen currently, whereas in sustaining, we have reduced around 25% of sustaining CapEx.
Okay. And I was going to ask you, have you got any detail on the sort of rough split of business areas where that's coming from?
I don't have the split for business area as of now, but we can get back to that in Q1 report.
Okay. And then finally, just to ask, can you give us a bit more detail on your expectations for the potential impact on rolled products? For example, can you actually get your workers into the German operations at the moment? And maybe what percentage of your sales book you think could be at risk?
For the Rolled Products business, we are in different market segments. And we see that in the can business, we see it actually a good and stable development. So that has sort of made us, let's say, keep the operation going. While we see now that the call offs from the automakers have declined week on week, and so we are now preparing for potentially curtailment or curtailment relating to low order intake on the automotive part. So we have been able for some time to shift from different product areas, but now we see that the osmolter industry is the sort of the area where we see deteriorating demand, and we have to take the necessary measures to mitigate that.
And as for our other business areas, Amos, it is very difficult to give an exact estimate on reduced production or demand resulting to production because as we've seen across the markets, some customer closures last for some days and some weeks and some are longer. So to give you a figure now, we'd probably need to be revised in just a matter of update. We do, however, expect the rolled, as we've seen the exclusion, to gradually be more impacted there on the automotive side. But if you look at our total portfolio just across the different product area categories, and then we are benefiting someone, as Hilleur mentioned, from can and oil markets and have taken some market share there lately. But these can also just be short term effect, so we will be careful with rolling them out in time.
Okay. Thank you very much.
You'll take our next question. Your line is open. Please go ahead.
Hello. This is Henry Van from Trafigura. I wanted to ask about how the recycling rates at your facilities have changed because of COVID-nineteen, particularly relating to the scrap inputs at your extrusion facilities and your raw product facilities in Germany?
Hello. Was it Henry?
Yes, it was.
Yes. Our total flows are impacted from what we're seeing now. But at this stage, we will not give any more concrete information of our changes in impact factors at the development facilities.
You'll take our next question. Your line is open. Please go ahead. Your line is open. Please go ahead.
Yes. It's Karl Matheson from Volkswagen. I'm just looking at the map showing curtailments. Is it fair to say that the map showed incremental change in production demand that you see due to COVID-nineteen? So that means that North America is pretty weak already kind of in January, February on the construction truck side.
So that means that auto still fared a good when
you made this map. Is that kind of reasonable assumption to make?
I think this map shows more how our operations are currently impacted. So there will be demand implications, which you can observe, which has not triggered a reduction in operations yet. So as you can see from the colors, where you have the red areas is typically where you have a close down, and a lot of that is, of course, due to demand reductions as the customers have stopped producing. Other places. It could be due to ourselves having to stop producing to government imposed requirement.
And so what the colors are showing in North America and Canada is more that our business and operations are still operating more normal than what we see in South America, Europe and India. However, we expect these pictures to change going forward, as you've seen on automotive and other areas with the customers also closing down there. So this situation will probably become more red in the weeks to come.
Okay.
Thanks. We'll take our next question. Your line is open. Please go ahead.
Hi, Jatinder again from Exane BNP Paribas. Couple more questions. On hostess restart, you have put earliest restart timeline as 3Q, but given the level of uncertainty that you're indicating, are there CapEx implications if you were to delay it much further, say, mid of 2021? How much of CapEx will escalate? And does it mean that you also need to get rid of all the people who are working on the project and then rehiring process and everything else takes much longer.
That's why you can't delay it or is there much more flexibility both financially and from logistics perspective? 2nd question, on your rolled product demand side, you indicated not much impact so far, which is very different for steel companies are saying where some of the automotive based plants are running 10%, 15% utilization rates. What's the key difference between your automotive demand versus what steel guys are facing? And related to that, this should be a fairly long lead time business. How are your order books currently looking like?
Thank you.
I can comment on the Husnes side. The project at Husnes is almost finished. It's not that much left. So that will be finished using the our own people to finish the project. Then we're coming to the summer, and we will use some of our people to summer release.
And then if the market is continuing to deteriorate, we will face a situation temporary relief. So we will discuss the Husqvist situation based on the how the market is developing and take a decision at the earliest in Q3. And that's but it's very much based on the market outlook when the decision will be taken to start up BoostNet.
And if we move over to Rolled Products, Jafinder, then as we maybe didn't make it clear enough, we are not experiencing large impacts to operations now in rolling. We have been able to produce orders for a period of time, and we've also been able to redivert volume declines from automotive into especially TAM due to being able to take market share as we see some peers are not producing. But we are definitely feeling the impact of automotive, and automotive will decline as part of our portfolio. And going forward, we expect those effects to be stronger. So what you're seeing with the steel guys, you should expect it to come for Gravapart also.
And on order books across the downstream system, we are seeing reductions going forward, of course.
Okay. Thank you.
We'll take our next question. Your line is open. Please go ahead.
Hi, Dan from UBS again. Two of the questions. Firstly, just check some numbers when we think about your net debt position at the end of the quarter. If I look at the FX breakdown of your debt and then the spot currency rates at the end of the quarter, there's about just over 10% move. Should we just be marking to market the translation effect on your debt, so you get about independent of any other movements, just over 10% increase in net debt on the quarter due to the movement in the NOK?
Yes. We haven't made large changes in composition of our debt when it comes to currencies. So that sensitivity should still be valid. It's a good point you're taking up both on the debt side, but also when it comes to the embedded derivatives in our power contracts. Both of these are quite significantly affected by the currency moves we've seen as of late.
And just to when I think about the net debt as opposed to the gross debt, what currency do you hold most of your cash in? Is that in held in NOK?
It's a combination. We have cash in NOK and dollars.
Okay. All right. And then the second point on just on the downstream. You're clearly temporarily closing facilities because of the weak demand and the current environment. Is this an opportunity to accelerate the restructuring of these businesses?
And do you think you can take this as an opportunity to look to push margins and be in a stronger position as we emerge from this?
Thank you, Dan, for that question. We will use this time also for the further positioning of the company. And so while we are in this turmoil, we will obviously work on to see how we can make our portfolio more robust, and we will have to come back on that when they have something to announce.
Okay. Thanks.
It appears there are no further questions at this time. Mr. Stian Hesse, I'd like to turn the conference back to you for any additional or closing remarks.
Thank you, and thank you all for joining us today. And obviously, if you have follow-up questions, please do not hesitate to contact us. I would also like to remind you of the silent period related to our Q1 reporting, which starts 2 weeks prior to us announcing or releasing the quarter. The quarterly release is on April 9, whereas then the silent period starts on April 15. Thank you, and have a nice day.